Registration No. 2-75276
File No. 811-3346
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
PRE-EFFECTIVE AMENDMENT NO. ___ / /
POST-EFFECTIVE AMENDMENT NO. 33 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 / X /
Amendment No. 34 / X /
OPPENHEIMER SERIES FUND, INC.
-------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Two World Trade Center, New York, New York 10048-0203
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(Address of Principal Executive Offices)
(212) 323-0200
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(Registrant's Telephone Number)
Andrew J. Donohue
OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
/ / Immediately upon filing pursuant to paragraph (b)
/ X / On February 19, 1998 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / On ___________, 1996 pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a) (2)
/ / On _________, pursuant to paragraph (a)(2) of Rule 485.
<PAGE>
OPPENHEIMER SERIES FUND, INC.
FORM N-1A
Cross Reference Sheet
Part A of
Form N-1A Disciplined Value Fund
Item No. Prospectus Heading
- --------- ------------------
1 Cover Page
2 Expenses; A Brief Overview of the Fund
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; Investment Objective and Policies; Investment
Risks; Investment Techniques and Strategies; How
the Fund is Managed--Organization and History
5 Expenses; How the Fund is Managed; Back Cover
5A Performance of the Fund
6 How the Fund is Managed--Organization and History; The Transfer
Agent; Dividends, Capital Gains and Taxes
7 How to Buy Shares; How to Exchange Shares; Special Investor
Services; Service Plan for Class A Shares; Distribution and
Service Plan for Class B Shares; Distribution and Service Plan
for Class C Shares; How to Sell Shares; Shareholder Account
Rules and Policies
8 How to Sell Shares; Special Investor Services
9 **
Part B of
Form N-1A Disciplined Value Fund
Item No. Heading in Statement of Additional Information
- --------- -----------------------------------------------
10 Cover Page
11 Cover Page
12 **
13 Investment Objective and Policies; Other Investment Restrictions
14 How the Fund is Managed - Directors and Officers of the Fund;
15 How the Fund is Managed - Major Shareholders
16 How the Fund is Managed; Distribution and Service Plans
17 Brokerage Policies of the Fund
18 Additional Information About the Fund
19 About Your Account- How to Buy Shares; How to Sell Shares;
How to Exchange Shares
20 Dividends, Capital Gains and Taxes
21 How the Fund is Managed; Brokerage Policies of the Fund
22 Performance of the Fund
23 Financial Statements
- ---------------------
** Not applicable or negative answer.
<PAGE>
OPPENHEIMER SERIES FUND, INC.
FORM N-1A
Cross Reference Sheet
Part A of
Form N-1A Disciplined Allocation Fund
Item No. Prospectus Heading
- --------- ------------------
1 Cover Page
2 Expenses; A Brief Overview of the Fund
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; Investment Objective and Policies; Investment
Risks; Investment Techniques and Strategies; How the Fund is
Managed--Organization and History
5 Expenses; How the Fund is Managed; Back Cover
5A Performance of the Fund
6 How the Fund is Managed--Organization and History; The Transfer
Agent; Dividends, Capital Gains and Taxes
7 How to Buy Shares; How to Exchange Shares; Special Investor
Services; Service Plan for Class A Shares; Distribution and
Service Plan for Class B Shares; Distribution and Service Plan
for Class C Shares; How to Sell Shares; Shareholder Account
Rules and Policies
8 How to Sell Shares; Special Investor Services
9 **
Part B of
Form N-1A Disciplined Allocation Fund
Item No. Heading in Statement of Additional Information
- --------- ----------------------------------------------
10 Cover Page
11 Cover Page
12 **
13 Investment Objective and Policies; Other Investment Restrictions
14 How the Fund is Managed - Directors and Officers of the Fund;
15 How the Fund is Managed - Major Shareholders
16 How the Fund is Managed; Distribution and Service Plans
17 Brokerage Policies of the Fund
18 Additional Information About the Fund
19 About Your Account- How to Buy Shares; How to Sell Shares;
How to Exchange Shares
20 Dividends, Capital Gains and Taxes
21 How the Fund is Managed; Brokerage Policies of the Fund
22 Performance of the Fund
23 Financial Statements
- ---------------------
** Not applicable or negative answer.
<PAGE>
OPPENHEIMER SERIES FUND, INC.
FORM N-1A
Cross Reference Sheet
Part A of LifeSpan Income Fund, LifeSpan Balanced Fund,
Form N-1A LifeSpan Growth Fund
Item No. Prospectus Heading
- --------- ------------------
1 Cover Page
2 Expenses; A Brief Overview of the Funds
3 Financial Highlights; Performance of the Funds
4 Front Cover Page; Investment Objectives and Policies; Investment
Risks; Investment Techniques and Strategies; How the Funds Are
Managed--Organization and History
5 Expenses; How the Funds Are Managed; Back Cover
5A Performance of the Funds
6 How the Funds Are Managed--Organization and History; The Transfer
Agent; Dividends, Capital Gains and Taxes
7 How to Buy Shares; How to Exchange Shares; Special Investor
Services; Service Plan for Class A Shares; Distribution and
Service Plan for Class B Shares; Distribution and Service Plan
for Class C Shares; How to Sell Shares; Shareholder Account
Rules and Policies
8 How to Sell Shares; Special Investor Services
9 **
LifeSpan Income Fund
Part B of LifeSpan Balanced Fund
Form N-1A LifeSpan Growth Fund
Item No. Heading in Statement of Additional Information
- --------- -----------------------------------------------
10 Cover Page
11 Cover Page
12 **
13 Investment Objectives and Policies; Other Investment Restrictions
14 How the Funds Are Managed - Directors and Officers of the Fund;
15 How the Funds Are Managed - Major Shareholders
16 How the Funds Are Managed; Distribution and Service Plans
17 Brokerage Policies of the Funds
18 Additional Information About the Funds
19 About Your Account-How to Buy Shares; How to Sell Shares; How to
Exchange Shares
20 Dividends, Capital Gains and Taxes
21 How the Funds Are Managed; Brokerage Policies of the Funds
22 Performance of the Funds
23 Financial Statements
- ---------------------
** Not applicable or negative answer.
<PAGE>
OPPENHEIMER
Disciplined Value Fund
Prospectus Dated February 19, 1998
Oppenheimer Disciplined Value Fund is a mutual fund that seeks long term growth
of capital by investing primarily in common stocks with low price-earnings
ratios and better-than-anticipated earnings.
Realization of current income is a secondary consideration. In selecting
investments for the Fund, the investment advisor uses a quantitative value
oriented investment discipline in combination with fundamental securities
analysis. The Fund may also invest in corporate and U.S. Government debt
obligations and short-term debt instruments. The Fund may also use "hedging"
instruments to seek to reduce the risks of market fluctuations that affect the
value of the securities the Fund holds. Please refer to "Investment Policies and
Strategies" for more information about the types of securities the Fund invests
in and refer to "Investment Risks" for a discussion of the risks of investing in
the Fund.
This Prospectus explains concisely what you should know before investing
in the Fund. Please read this Prospectus carefully and keep it for future
reference. You can find more detailed information about the Fund in the February
19, 1998 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).
(logo) OppenheimerFunds
Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the F.D.I.C. or any other agency, and
involve investment risks, including the possible loss of the principal amount
invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents
A B O U T T H E F U N D
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
A B O U T Y O U R A C C O U N T
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Class Y Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Appendix A: Special Sales Charge Arrangements
<PAGE>
A B O U T T H E F U N D
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.
o Shareholder Transaction Expenses are charges you pay when you buy or
sell shares of the Fund. Please refer to "About Your Account" starting on page
__ for an explanation of how and when these charges apply.
Class A Class B Class C Class Y
Shares Shares Shares Shares
- ------------------------------------------------------------------------------
Maximum Sales Charge on 5.75% None None None
Purchases (as a % of
offering price)
- ------------------------------------------------------------------------------
Maximum Deferred Sales Charge None(1) 5% in the 1% if None
(as a % of the lower of the first year, shares are
original offering price or declining redeemed
redemption proceeds) to 1% in within 12
the 6th months of
year and purchase(2)
eliminated
thereafter(2)
- -------------------------------------------------------------------------------
Maximum Sales Charge on None None None None
Reinvested Dividends
- -------------------------------------------------------------------------------
Exchange Fee None None None None
- -------------------------------------------------------------------------------
Redemption Fee None(3) 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 __)in Class A shares, you may have to pay a sales charge of up to 1% if you
sell your shares within 12 calendar months (18 months for shares purchased prior
to May 1, 1997) from the end of the calendar month during which you purchased
those shares. See "How to Buy Shares - Buying Class A Shares" below.
(2) See "How to Buy Shares - Buying Class B Shares," and "How to Buy Shares -
Buying Class C Shares" below for more information on the contingent deferred
sales charges.
(3) There is a $10 transaction fee for redemption proceeds paid by Federal Funds
wire, but not for redemptions paid by check or ACH transfer through AccountLink.
o 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):
Class A Class B Class C Class Y
Shares Shares Shares Shares
- -------------------------------------------------------------------
Management Fees 0.577% 0.577% 0.577% 0.577%
- -------------------------------------------------------------------
12b-1 Plan Fees 0.250% 0.990% 0.990% 0.000%
- -------------------------------------------------------------------
Other Expenses 0.243% 0.273% 0.293% 0.203%
- -------------------------------------------------------------------
Total Fund 1.070% 1.840% 1.860% 0.780%
Operating Expenses
The numbers for Class A, Class B and Class C shares in the table above are
based on the Fund's expenses during its last fiscal year ended October 31, 1997.
These amounts are shown as a percentage of the average net assets of each class
of the Fund's shares for that period. Class Y shares were not publicly offered
before December 16, 1996; therefore, the Class Y Annual Fund Operating Expenses
have been annualized and are based on expenses for the period December 16, 1996
until October 31, 1997.
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 of 0.25% and
annual asset-based sales charges of 0.75%. These plans are described in greater
detail in "How to Buy Shares."
The actual expenses for each class of shares in future years may be more or
less than the numbers in the chart, depending on a number of factors, including
the actual value of the Fund's assets represented by each class of shares.
o 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 $90 $113 $181
- -------------------------------------------------------------------
Class B Shares $69 $88 $120 $177
- -------------------------------------------------------------------
Class C Shares $29 $58 $101 $218
- -------------------------------------------------------------------
Class Y Shares $ 8 $25 $ 43 $ 97
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 $90 $113 $181
- -------------------------------------------------------------------
Class B Shares $19 $58 $100 $177
- -------------------------------------------------------------------
Class C Shares $19 $58 $101 $218
- -------------------------------------------------------------------
Class Y Shares $ 8 $25 $ 43 $ 97
*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.
o What is the Fund's Investment Objective? The Fund seeks long-term growth
of capital by investing primarily in common stocks with low price-earnings
ratios and better-than-anticipated earnings. Realization of current income is a
secondary consideration.
o What Does the Fund Invest In? Under normal market conditions, the Fund
expects to invest primarily in common stocks. The Fund may also invest in U.S.
Government securities and corporate debt obligations, including corporate bonds
rated below investment grade securities (commonly called "junk bonds") and may
invest to a limited degree in foreign securities. The Fund may write covered
calls and use certain types of "hedging instruments" and "derivative
instruments" to seek to reduce the risks of market fluctuations that affect the
value of the securities the Fund holds. These investments are more fully
explained in "Investment Objective and Policies" starting on page __.
o Who Manages the Fund? The Fund's investment advisor is OppenheimerFunds,
Inc., which (including subsidiaries) advises investment company portfolios
having over $75 billion in assets at December 31, 1997. 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 M. Antos is the senior portfolio manager and he is
assisted by Michael C. Strathearn and Kenneth B. White. Please refer to "How the
Fund is Managed," starting on page __ for more information about the Manager and
its fees.
o How Risky is the Fund? All investments carry risks to some degree. The
Fund's investments in stocks are subject to changes in their value from a number
of factors such as changes in general stock market movements. A change in value
of a particular stock may result from an event affecting the issuer. These
changes affect the value of the Fund's investments and its share prices for each
class of its shares. The Fund's investments in convertible fixed income
securities are subject to interest rate risks and credit risks which can
negatively impact the value of the security and the Fund's net asset value per
share. In addition, the Fund may invest in high-yield, lower rated convertible
fixed income securities. Such securities are considered speculative and may be
subject to greater market fluctuations and risks of loss of income and
principle and have less liquidity than investments in higher-rated securities.
There are certain risks associated with investments in foreign securities,
including those related to changes in foreign currency rates, that are not
present in domestic securities.
In the Oppenheimer funds' spectrum, the Fund is considered a growth fund
that is considerably more aggressive than equity income or growth and income
funds because it invests for long-term growth of capital in common stocks that
tend to be more volatile than other investments. While the Manager tries to
reduce risks by diversifying investments, by researching securities before they
are purchased for the Fund's portfolio, and in some cases may use hedging
techniques, there is no guarantee of success in achieving the Fund's objective
and your shares may be worth more or less than their original cost when you
redeem them. Please refer to "Investment Risks" starting on page __ for a more
complete discussion of the Fund's investment risks.
o 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.
o Will I Pay a Sales Charge to Buy Shares? The Fund offers an investor
four classes of shares. All classes have the same investment portfolio, but
different expenses. Class A shares are offered with a front-end sales charge,
starting at 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. The Fund
also offers Class Y shares to certain institutional investors. Such shares are
not available for sale to individual investors.
o How Can I Sell My Shares? Shares can be redeemed by mail or by telephone
call to the Transfer Agent on any business day or through your dealer. Please
refer to "How To Sell Shares" on page
__. The Fund also offers exchange privileges to other Oppenheimer funds,
described in "How to Exchange Shares" on page __.
o 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 __. Please remember that past performance
does not guarantee future results.
Financial Highlights
The table on the following pages presents selected financial information about
the Fund, including per share data and expense ratios and other data based on
the Fund's average net assets.
Class Y shares have been offered since December 16, 1996. The information for
the Fund's fiscal year ended October 31, 1997 and fiscal period ended October
31, 1996 has been audited by KPMG Peat Marwick LLP, the Fund's independent
auditors, whose report for the fiscal year ended October 31, 1997 is included in
the Statement of Additional Information. The information in the tables for the
fiscal periods prior to 1996 was audited by the Fund's previous independent
auditors.
-3-
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS CLASS A
--------------------------------------------------------------
YEAR ENDED OCTOBER 31, YEAR ENDED DECEMBER 31,
1997 1996(4) 1995 1994 1993
============================================================================================================
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $19.65 $17.84 $14.20 $15.14 $14.20
- ------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .23(5) .15 .25 .22 .30
Net realized and unrealized gain (loss) 4.91(5) 1.88 4.88 (.32) 2.64
------ ------ ------ ------ ------
Total income (loss) from investment
operations 5.14 2.03 5.13 (.10) 2.94
- ------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.07) (.10) (.25) (.22) (.30)
Distributions from net realized gain (1.41) (.12) (1.24) (.62) (1.70)
------ ------ ------ ------ ------
Total dividends and distributions to
shareholders (1.48) (.22) (1.49) (.84) (2.00)
- ------------------------------------------------------------------------------------------------------------
Net asset value, end of period $23.31 $19.65 $17.84 $14.20 $15.14
====== ====== ====== ====== ======
===========================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(6) 27.60% 11.41% 36.40% (0.65)% 20.91%
===========================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $371,810 $180,784 $118,118 $78,390 $64,495
- ------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $234,314 $135,940 $98,063 $71,956 $54,682
- ------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.05% 1.01%(8) 1.53% 1.50% 1.95%
Expenses 1.07% 1.13%(8) 1.22% 1.02% 1.05%
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(9) 103.1% 73.9% 69.7% 98.5% 99.7%
Average brokerage commission rate(10) $0.0700 $0.0697 -- -- --
</TABLE>
1. For the period from December 16, 1996 (inception of offering) to October 31,
1997.
2. For the period from May 1, 1996 (inception of offering) to October 31, 1996.
3. For the period from October 2, 1995 (inception of offering) to December 31,
1995.
4. For the ten months ended October 31, 1996. The Fund changed its fiscal year
end from December 31 to October 31. On March 18, 1996, OppenheimerFunds, Inc.
became the investment advisor to the Fund.
5. Per share amounts calculated based on the average shares outstanding during
the period.
6. 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.
2
<PAGE>
<TABLE>
<CAPTION>
CLASS B
- ----------------------------------------------------------- --------------------------------------
YEAR ENDED PERIOD ENDED
OCTOBER 31, DECEMBER 31,
1992 1991 1990 1989 1988 1997 1996(4) 1995(3)
======================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
$14.40 $11.62 $13.05 $11.00 $9.80 $19.77 $18.08 $17.83
- -------------------------------------------------------------------------------------------------
.26 .25 .34 .51 .20 .09(5) .05 .02
1.44 4.00 (1.36) 3.30 1.20 4.91(5) 1.83 1.40
------ ------ ------ ------ ------ ------ ------ ------
1.70 4.25 (1.02) 3.81 1.40 5.00 1.88 1.42
- -------------------------------------------------------------------------------------------------
(.26) (.25) (.34) (.51) (.20) (.04) (.07) (.02)
(1.64) (1.22) (.07) (1.25) -- (1.41) (.12) (1.15)
------ ------ ------ ------ ------ ------ ------ ------
(1.90) (1.47) (.41) (1.76) (.20) (1.45) (.19) (1.17)
- -------------------------------------------------------------------------------------------------
$14.20 $14.40 $11.62 $13.05 $11.00 $23.32 $19.77 $18.08
====== ====== ====== ====== ====== ====== ====== ======
=================================================================================================
11.99% 36.91% (7.98)% 34.86% 14.32% 26.61% 10.43% 8.04%
=================================================================================================
$45,600 $40,716 $35,202 $37,323 $26,285 $83,291 $5,854 $717
- -------------------------------------------------------------------------------------------------
$42,432 $36,087 N/A(7) N/A(7) N/A(7) $30,019 $2,903 $306
- -------------------------------------------------------------------------------------------------
1.74% 1.74% 2.73% 3.90% 1.95% 0.22% 0.22%(8) 0.21%(8)
1.12% 1.19% 1.19% 1.18% 1.23% 1.84% 1.88%(8) 1.97%(8)
- -------------------------------------------------------------------------------------------------
141.7% 148.3% 144.0% 169.8% 246.1% 103.1% 73.9% 69.7%
-- -- -- -- -- $0.0700 $0.0697 --
</TABLE>
7. Not available.
8. Annualized.
9. 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, 1997 were $378,742,662 and $293,562,259, respectively.
10. 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.
3
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (CONTINUED) CLASS C CLASS Y
---------------------- ------------
YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31,
1997 1996(2) 1997(1)
==========================================================================================
<S> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $19.57 $18.79 $20.31
- -------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .10(5) .06 .31(5)
Net realized and unrealized gain (loss) 4.85(5) .94 4.20(5)
------ ------ ------
Total income (loss) from investment operations 4.95 1.00 4.51
- -------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.04) (.10) (.07)
Distributions from net realized gain (1.41) (.12) (1.41)
------ ------ ------
Total dividends and distributions to shareholders (1.45) (.22) (1.48)
- -------------------------------------------------------------------------------------
Net asset value, end of period $23.07 $19.57 $23.34
====== ====== ======
=====================================================================================
TOTAL RETURN, AT NET ASSET VALUE(6) 26.64% 5.35% 23.62%
=====================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $10,243 $715 $90,994
- -------------------------------------------------------------------------------------
Average net assets (in thousands) $ 4,477 $342 $51,775
- -------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 0.17% 0.04%(8) 1.21%(8)
Expenses 1.86% 1.87%(8) 0.78%(8)
- -------------------------------------------------------------------------------------
Portfolio turnover rate(9) 103.1% 73.9% 103.1%
Average brokerage commission rate(10) $0.0700 $0.0697 $0.0700
</TABLE>
1. For the period from December 16, 1996 (inception of offering) to October 31,
1997.
2. For the period from May 1, 1996 (inception of offering) to October 31, 1996.
3. For the period from October 2, 1995 (inception of offering) to December 31,
1995.
4. For the ten months ended October 31, 1996. The Fund changed its fiscal year
end from December 31 to October 31. On March 18, 1996, OppenheimerFunds, Inc.
became the investment advisor to the Fund.
5. Per share amounts calculated based on the average shares outstanding during
the period.
6. 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.
7. Not available.
8. Annualized.
9. 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, 1997 were $378,742,662 and $293,562,259, respectively.
10. 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.
4
<PAGE>
Investment Objective and Policies
Objective. The Fund seeks long term growth of capital by investing primarily in
common stocks with low price-earnings ratios and better-than-anticipated
earnings. Realization of current income is a secondary consideration.
Investment Policies and Strategies. Under normal circumstances, most of the
Fund's assets will be invested in stocks. The Manager chooses stock investments
for the Fund using a quantitative value oriented investment discipline in
combination with fundamental securities analysis. A stock may have a low
price-earnings ratio (for example, below the price-earnings ratio of the S&P 500
Index) because it is out-of-favor in the market. When an out-of-favor company
demonstrates better earnings than what most analysts were expecting, this is
referred to as a favorable earnings surprise. This may cause market analysts and
investors to reevaluate the issuer's earnings expectations and the
price-earnings multiple, which in turn may cause the company's stock price to
increase in value.
As stocks with low price-earnings ratios and favorable earnings surprises
are identified, the Manager uses fundamental securities analysis to select
individual stocks for the Fund. When the price-earnings ratio of a stock held by
the Fund moves significantly above the multiple of the overall stock market, or
the company reports a material earnings disappointment, the Fund will normally
sell the stock.
The Fund may invest the remainder of its net assets (up to 10% under
normal circumstances) in long-term U.S. Government securities and corporate debt
obligations, including convertible bonds, which may be rated as low as B by
Moody's Investors Service, Inc. ("Moody's") or Standard and Poor's Corporation
("Standard & Poor's"), Fitch Investors Service, Inc., Duff & Phelps, Inc. or
another nationally recognized statistical rating organization. The Statement of
Additional Information contains a more detailed discussion of the debt
securities the Fund may invest in. Under normal market conditions, the Fund may
maintain up to 15% of its net assets in cash and cash equivalent investments.
When market conditions are unstable, the Fund may invest without limit in
high-quality short-term debt securities for temporary defensive purposes, as
described below.
Consistent with the foregoing policies, the Fund may invest to a limited
degree in securities of foreign issuers, including issuers in developing
countries. Please refer to "Foreign Securities" below.
o 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.
o Foreign Securities. The Fund may purchase equity and debt securities
issued by foreign companies or issued or guaranteed by foreign governments. The
Fund may purchase securities in any country, developed or underdeveloped.
Investments in securities of issuers in underdeveloped countries or countries
that have emerging markets generally may offer greater potential for gain but
involve more risk and may be considered highly speculative. As a matter of
fundamental policy, the Fund may not invest more than 10% of its total assets in
foreign securities, except that the Fund may invest up to 25% of its total
assets in foreign equity and debt securities that are (i) issued, assumed or
guaranteed by foreign governments or their political subdivisions or
instrumentalities, (ii) assumed or guaranteed by domestic issuers, including
Eurodollar securities, or (iii) issued, assumed or guaranteed by foreign issuers
having a class of securities listed for trading on The New York Stock Exchange.
The Fund will hold foreign currency only in connection with the purchase or sale
of foreign securities. There are special risks of investing in foreign
securities described in "Investment Risks" below.
o Portfolio Turnover. "Portfolio turnover" describes the rate at which the
Fund traded its portfolio securities during a fiscal year. For example, if a
fund sold all of its securities during the year, its portfolio turnover rate
would have been 100%. Portfolio turnover affects brokerage costs the Fund pays.
The Fund ordinarily does not engage in short-term trading to try to achieve its
objective. The Financial Highlights table above shows the Fund's portfolio
turnover rates during prior fiscal years.
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.
o 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.
o Foreign Securities 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 value of
the securities denominated in that foreign currency. Foreign issuers are not
subject to the same accounting and disclosure requirements that U.S. companies
are subject to. The value of foreign investments may be affected by exchange
control regulations, expropriation or nationalization of a company's assets,
foreign taxes, delays in settlement of transactions, changes in governmental,
economic or monetary policy in the U.S. or abroad, or other political and
economic factors. More information about the risks and potential rewards of
investing in foreign securities and other types of securities are contained in
the Statement of Additional Information.
o Special Risks of 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.
o Special Risks of Hedging Instruments. 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.
o Special Risks of 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" below.
Investment Techniques and Strategies
The Fund may also use the investment techniques and strategies described below.
These techniques involve certain risks. The Statement of Additional Information
contains more information about these and other practices, including limitations
on their use that may help to reduce some of the risks.
o 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.
o 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.
o 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.
o 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% (the Board may increase that limit to 15%) of its total
assets in illiquid and restricted securities (including repurchase agreements
having a maturity beyond 7 days, portfolio securities which do not have readily
available market quotations, and time deposits maturing in more than 2 days).
The Fund has undertaken (as a matter of non-fundamental policy) to apply this
restriction to 10% of its net assets. The Fund's 10% limitation on illiquid
securities does not apply to certain restricted securities that are eligible for
resale to qualified institutional buyers. The Manager has no present intention
of investing more than 5% of the Fund's net assets in Illiquid and Restricted
securities. Illiquid securities include repurchase agreements maturing in more
than seven days, or certain participation interests other than those with puts
exercisable within seven days. The Manager monitors holdings of illiquid
securities on an ongoing basis to determine whether to sell any holdings to
maintain adequate liquidity.
o Temporary Defensive Investments. When the Manager believes it is
appropriate (for example, because of unstable market conditions), the Fund can
hold large amounts of cash or invest without limit in money market instruments
for temporary defensive purposes. This is in contrast to the Fund's ability to
hold, under normal market circumstances, up to 15% of its net assets in cash and
cash equivalent investments. 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
dollars (U.S.) of assets.
The Fund may also invest in obligations of foreign branches of U.S. banks
(referred to as Eurodollar obligations) and U.S. branches of foreign banks
(Yankee dollars) as well as foreign branches of foreign banks. These investments
involve risks that are different from investment in securities of U.S. banks.
o Hedging. The Fund may write covered call options on securities, stock
indices and foreign currency. It may purchase and sell certain kinds of exchange
traded futures contracts, forward contracts, and options on futures, and broadly
based stock indices and foreign currencies. These are all referred to as
"hedging instruments." While the Fund has not engaged and does not intend to
engage extensively in hedging, the Fund may use these instruments for hedging
purposes.
The Fund may write covered call options and buy and sell futures and
forward contracts for a number of purposes. It may do so to try to manage its
exposure to the possibility that the prices of its portfolio securities may
decline, or to establish a position in the securities market as a temporary
substitute for purchasing individual securities. Some of these strategies, such
as selling futures and writing covered calls, hedge the Fund's portfolio against
price fluctuations.
Other hedging strategies, such as buying futures, tend to increase the
Fund's exposure to the securities market. See the Statement of Additional
Information for a further discussion of the hedging instruments the Fund may
purchase or sell. There are special risks of using hedging instruments,
described in "Investment Risks" above.
o Derivative Investments. Derivative investments may be used by the Fund
in some cases for hedging purposes and in other cases to seek income. In the
broadest sense, exchange-traded options and futures contracts (discussed in
"Hedging," above) may be considered "derivative investments." There are special
risks in investing in derivatives discussed in the "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:
o 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.
o The Fund cannot invest more than 25% of its assets in securities of
issuers in any single industry, provided that this limitation shall not apply to
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. For the purpose of this restriction, each utility that
provides a separate service (e.g., gas, gas transmission, electric or telephone)
shall be considered a separate industry. This test shall be applied on a pro
forma basis using the market value of all assets immediately prior to making any
investment. The Fund has undertaken as a matter of non-fundamental policy to
apply this restriction to 25% or more of its total assets.
o 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.
o 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.
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 (with the exception
of the regulatory percentage limits in the Statement of Additional Information
that apply to borrowing). Additional investment restrictions are listed in
"Other 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 Growth Account.
The Company (and each series, including the Fund) is governed by a Board
of Directors, which is responsible for protecting the interests of shareholders
under Maryland law. The Directors meet periodically throughout the year to
oversee the Fund's activities, review its performance, and review the actions of
the Manager. "Directors and Officers of the 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 four classes of shares, Class A, Class B, Class C
and Class Y. All classes invest in the same investment portfolio. Each class has
its own dividends and distributions, and pays certain expenses which may be
different for the different classes. Each class may have a different net asset
value. Each share has one vote at shareholder meetings, with fractional shares
voting proportionally on matters submitted to the vote of shareholders. Shares
of each class may have separate voting rights on matters in which interests of
one class are different from interests of another class, and shares of a
particular class vote as a class on matters that affect that class alone. Shares
are freely transferrable. Please refer to "How the Fund is 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 subsidiaries) currently manages investment companies, including other
Oppenheimer funds, with assets of more than $75 billion as of December 31, 1997,
and with more than 3.5
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 management services provided to the Fund by the Manager, and the
services provided by the Distributor and the Transfer Agent to shareholders,
depend on the smooth functioning of their computer systems. Many computer
software systems in use today cannot distinguish the year 2000 from the year
1900 because of the way dates are encoded and calculated. That failure could
have a negative impact on handling securities trades, pricing and account
services. The Manager, the Distributor and Transfer Agent have been actively
working on necessary changes to their computer systems to deal with the year
2000 and expect that their systems will be adapted in time for that event,
although there cannot be assurance of success.
o Portfolio Management. The Fund has a portfolio management team consisting
of three portfolio managers. The principal Portfolio Manager of the Fund is
Peter M. Antos. He is a Vice President of the Fund and a Senior Vice President
of the Manager and has been the senior portfolio manager of the Fund's portfolio
since 1989. He is also a Chartered Financial Analyst and serves as a portfolio
manager of other Oppenheimer funds. Mr. Antos was employed since 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 and Mr.
Kenneth B. White are also Vice Presidents and portfolio managers of the Fund and
Vice Presidents of the Manager. Each is also a Chartered Financial Analyst, and
each was employed, since 1985 and 1987, respectively, by Connecticut Mutual Life
Insurance Company, the parent of G.R. Phelps, prior to joining OppenheimerFunds,
Inc. on March 1, 1996. Both have been portfolio managers for the Fund since
1989.
o 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
year ended October 31, 1997 was 0.58% of the average annual net assets for each
class of shares that were offered. Class Y shares were only offered during a
portion of the fiscal year ended October 31, 1997.
The Fund pays expenses related to its daily operations, such as custodian
fees, certain 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 Fund" in the Statement of Additional
Information. That section discusses how brokers and dealers are selected for the
Fund's portfolio transactions. When deciding which brokers to use, the Manager
is permitted by the Investment Advisory Agreement to consider whether brokers
have sold shares of the Fund or any other funds for which the Manager serves as
investment advisor.
o 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.
o 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.
o 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 year ended October 31, 1997, followed by a
graphical comparison of the Fund's performance to an appropriate broad-based
market index.
o Management's Discussion of Performance. During the Fund's fiscal year
ended October 31, 1997, the Fund's positive performance was affected principally
by the overall strong performance of the U. S. stock market, although the market
experienced significant volatility near the end of the fiscal year. The Manager
maintained its strategy of targeting stocks with low price-to-earnings ratios
and recent positive earnings surprises. The Fund benefited from its investments
in the technology, finance and energy sectors. The Fund experienced
disappointing performance from its investments in the utilities sector. The
Fund's portfolio holdings, allocations and strategies are subject to change.
o 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, Class
C and Class Y shares of the Fund held until October 31, 1997. 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. In the case of Class Y shares,
performance is measured from the inception of the class on December 16, 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
measurement of the performance of the U.S. equity 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, which does
not include debt securities. Moreover, the index performance data does not
reflect any assessment of the risk of the investments included in the index.
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments
in:
Oppenheimer Disciplined Value Fund (Class A) and the S&P 500 Index
[Graph]
Average Annual Total Return of Class A Shares of the Fund at 10/31/97(2)
1 Year 5 Years 10 Years
- ------- --------- -----------
20.27% 18.70% 17.06%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments
in:
Oppenheimer Disciplined Value Fund (Class B) and the S&P 500 Index
[Graph]
Average Annual Total Return of Class B Shares of the Fund at 10/31/97(3)
1Year Life of Class
- ------- -----------------
21.61% 20.76%
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.
The performance information in the graphs for the S&P 500 Index begins on
10/31/87 for Class A shares and on 9/30/95 for Class B shares.
1. The Fund changed its fiscal year end from December to October.
2. The commencement of operations of the Fund (Class A shares) was 10/1/87.
Performance data for Class A shares begins on 10/31/87. Class A returns are
shown net of the current applicable 5.75% maximum initial sales charge.
3. Class B shares of the Fund were first publicly offered on 10/2/95. The
average annual total returns are shown net of the applicable 5 % and 3%
contingent deferred sales charges, respectively, for the 1-year period and the
Life of Class. The ending account value in the graph is net of the applicable 3%
contingent deferred sales charge. Different contingent deferred sales charges
applied to redemptions of Class B shares prior to 3/18/96.
Past performance is not predictive of future performance. Graphs are not drawn
to same scale.
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments
in:
Oppenheimer Disciplined Value Fund (Class C) and S&P 500 Index
Average Annual Total Return of Class C Shares of the Fund at 10/31/97(4)
1Year Life
- ------- ---------
25.64% 21.19%
Class Y Shares
Comparison of Change in Value of $10,000 Hypothetical Investments
in:
Oppenheimer Disciplined Value Fund (Class Y) and S&P 500
Cumulative Total Return of Class Y Shares of the Fund at 10/31/97(5)
Life of Class
- -----------------
23.62%
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.
The performance information in the graphs for the S&P 500 Index begins on
4/30/96 for Class C shares and on 12/31/96 for Class Y shares.
4. Class C shares of the Fund were first publicly offered on 10/2/95. The
average annual total return for the 1-year period is shown net of the applicable
1% contingent deferred sales charge. 5. Class Y shares of the Fund, first
publicly offered on 12/16/96, are offered at net asset value without sales
charge to certain institutional investors.
Past performance is not predictive of future performance. Graphs are not drawn
to same scale.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors four different classes of shares.
The different classes of shares represent investments in the same portfolio of
securities but are subject to different expenses and will likely have different
share prices.
o 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 "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 Retirement Plans), in shares of one or more Oppenheimer funds, you
will not pay an initial sales charge, but if you sell any of those shares within
12 months of buying them, (18 months if the shares were purchased prior to May
1, 1997), you may pay a contingent deferred sales charge. The amount of that
sales charge will vary depending on the amount you invested. Sales charge rates
are described in "Buying Class A Shares" below.
o 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.
o 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.
o Class Y Shares. Class Y Shares are offered only to certain institutional
investors that have special agreements with the Distributor.
Which Class of Shares Should You Choose? Once you decide that the Fund is an
appropriate investment for you, the decision as to which class of shares is
better suited to your needs depends on a number of factors which you should
discuss with your financial advisor. The Fund's operating costs that apply to a
class of shares and the effect of the different types of sales charges on your
investment will vary your investment results over time. The most important
factors to consider are how much you plan to invest and how long you plan to
hold your investment. If your goals and objectives change over time and you plan
to purchase additional shares, you should re-evaluate those factors to see if
you should consider another class of shares.
In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund. We 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.
o 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.
o 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.
o 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.
o 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.
o 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. The
Distributor may pay additional periodic compensation from its own resources to
securities dealers or financial institutions based upon the value of shares of
the Fund owned by the dealer or financial institution for its own account or for
its customers.
How Much Must You Invest? You can open a Fund account with a minimum initial
investment of $1,000 and make additional investments at any time with as little
as $25. There are reduced minimum investments under special investment plans:
o 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.
o Under pension and profit-sharing plans, 401(k) plans, Individual
Retirement Accounts (IRAs) and through wrap fee accounts sponsored by certain
broker-dealers, 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.
o 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.
o 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.
o Buying Shares Through Your Dealer. Your dealer will place your order with
the Distributor on your behalf.
o 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.
o Payment by Federal Funds Wire. Shares may be purchased by Federal Funds
Wire. The minimum investment is $2,500. You must first call the Distributor's
Wire Department at 1-800-525-7041 to notify the Distributor of the wire, and
receive further instructions.
o 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.
o 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.
o 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 or the order is received and transmitted to the Distributor by
an entity authorized by the Fund to accept purchase or redemption orders. The
Fund has authorized the Distributor, certain broker-dealers and agents or
intermediaries designated by the Distributor or those broker-dealers to accept
orders. In most cases, to enable you to receive that day's offering price, the
Distributor or an authorized entity 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 normally your order must be transmitted 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:
Front-End Sales Front-End Sales
Charge as Charge as a Commission as
Percentage of Percentage of Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
- ------------------------------------------------------------------------------
Less than $25,000 5.75% 6.10% 4.75%
- ------------------------------------------------------------------------------
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
- ------------------------------------------------------------------------------
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
- ------------------------------------------------------------------------------
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
- ------------------------------------------------------------------------------
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
- ------------------------------------------------------------------------------
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter" under
Federal securities laws.
o 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:
o Purchases aggregating $1 million or more;
o 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,
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;
o 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 purchase; or
o Purchases by a retirement plan qualified under section 401(a) or 401(k)
if the retirement plan has total plan assets of $500,000 or more.
The Distributor pays dealers of record commissions on those purchases in
an amount equal to (i) 1.0% for non-Retirement Plan accounts, and (ii) for
Retirement Plan accounts, 1.0% of the first $2.5 million, plus 0.50% of the next
$2.5 million, plus 0.25% of purchases over $5 million, calculated on a calendar
year basis. That commission will be paid only on those purchases that were not
previously subject to 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 purchased prior to May 1, 1997, within
18 months of the end of the calendar month of their purchase, a contingent
deferred sales charge (called the "Class A contingent deferred sales charge")
may be deducted from the redemption proceeds. A Class A contingent deferred
sales charge may be deducted from the redemption proceeds of any of those shares
purchased on or after May 1, 1997 that are redeemed within 12 months of the end
of the calendar month of their purchase. That sales charge will be equal to 1.0%
of the lesser of (1) the aggregate net asset value of the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gains
distributions) or (2) the original offering price (which is the original net
asset value) of the redeemed shares. However, the Class A contingent deferred
sales charge will not exceed the aggregate amount of the commissions the
Distributor paid to your dealer on all Class A shares of all Oppenheimer funds
you purchased subject to the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is payable, the
Fund will first redeem shares that are not subject to the sales charge,
including shares purchased by reinvestment of dividends and capital gains, and
then will redeem other shares in the order that you purchased them. The Class A
contingent deferred sales charge is waived in certain cases described in
"Waivers of Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges of
shares under the Fund's Exchange Privilege (described below). However, if the
shares acquired by exchange are redeemed within 12 calendar months (18 months
for shares purchased prior to May 1, 1997) of the end of the calendar month of
the end of the calendar month of the purchase of the exchanged shares, the sales
charge will apply.
o 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:
o 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 Distributor will add the value, at current
offering price, of the shares you previously purchased and currently own to the
value of current purchases to determine the sales charge rate that applies. The
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.
o 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.
o 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. In
order to receive a waiver of the Class A contingent deferred sales charge, you
must notify the Transfer Agent which conditions apply.
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:
o the Manager or its affiliates;
o 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;
o registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the Distributor for
that purpose;
o 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;
o 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);
o 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);
o (1) investment advisors and financial planners who have entered into an
agreement for this purpose with the Distributor and who charge an advisory,
consulting or other fee for their services and buy shares for their own accounts
or the accounts of their clients, (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 (that have entered into an agreement for this purpose with the
Distributor) who buy shares for their own accounts may also purchase shares
without sales charge but only if their accounts are linked to a master account
of their investment advisor or financial planner on the books and records of the
broker, agent or financial intermediary with which the Distributor has made such
special arrangements (each of these investors may be charged a fee by the
broker, agent or financial intermediary for purchasing shares);
o 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;
o 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;
o any unit investment trust that has entered into an appropriate agreement
with the Distributor; or
o 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 commenced by December 31, 1996.
Waivers of Initial and Contingent Deferred Sales Charges in Certain
Transactions. Class A shares issued or purchased in the following transactions
are not subject to Class A sales charges:
o shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party;
o 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;
o 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;
o shares purchased and paid for with the proceeds of shares redeemed in
the past 30 days from a mutual fund (other than a fund managed by the Manager or
any of its subsidiaries) on which an initial sales charge or contingent deferred
sales charge was paid (this waiver also applies to shares purchased by exchange
of shares of Oppenheimer Money Market Fund, Inc. that were purchased and paid
for in this manner); this waiver must be requested when the purchase order is
placed for your shares of the Fund, and the Distributor may require evidence of
your qualification for this waiver; or
o 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:
o to make Automatic Withdrawal Plan payments that are limited annually to
no more than 12% of the original account value;
o involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (see "Shareholder Account Rules and Policies,"
below);
o if, at the time of purchase of shares (prior to May 1, 1997) the dealer
agreed in writing to accept the dealer's portion of the sales commission in
installments of 1/18th of the commission per month (and no further commission
will be payable if the shares are redeemed within 18 months of purchase); or
o if, at the time of purchase of shares (if purchased during the period
May 1, 1997 through December 31, 1997), the dealer agreed in writing to accept
the dealers portion of the sales commission in installments of 1/12th of the
commission per month (and no further commission will be payable if the shares
are redeemed within 12 months of purchase);
o 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;
o for distributions from Retirement Plans having 500 or more eligible
participants, except distributions due to termination of all of the Oppenheimer
funds as an investment option under the Plan; and
o for distributions from 401(k) plans sponsored by broker-dealers that
have entered into a special agreement with the Distributor allowing this waiver.
o 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 Contingent Deferred Sales Charge
of 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.
o Automatic Conversion of Class B Shares. 72 months after you purchase
Class B shares, those shares will automatically convert to Class A shares. This
conversion feature relieves Class B shareholders of the asset-based sales charge
that applies to Class B shares under the Class B Distribution and Service Plan,
described below. The conversion is based on the relative net asset value of the
two classes, and no sales load or other charge is imposed. When Class B shares
convert, any other Class B shares that were acquired by the reinvestment of
dividends and distributions on the converted shares will also convert to Class A
shares. The conversion feature is subject to the continued availability of a tax
ruling described in "Alternative Sales Arrangements-Class A, Class B and Class C
Shares" in the Statement of Additional Information.
Buying Class C Shares. Class C shares are sold at net asset value per share
without an initial sales charge. However, if Class C shares are redeemed within
12 months of their purchase, a contingent deferred sales charge of 1.0% will be
deducted from the redemption proceeds. That sales charge will not apply to
shares purchased by the reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge will be based on the lesser
of the net asset value of the redeemed shares at the time of redemption or the
original offering price (which is the original net asset value). The contingent
deferred sales charge is not imposed on the amount of your account value
represented by the increase in net asset value over the initial purchase price.
The Class C contingent deferred sales charge is paid to compensate the
Distributor for its expenses of providing distribution-related services to the
Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order: (1) shares acquired
by reinvestment of dividends and capital gains distributions, (2) shares held
for over 12 months, and (3) shares held the longest during the 12-month period.
Distribution and Service Plans for Class B and Class C Shares. The Fund has
adopted Distribution and Service Plans for Class B and Class C shares to
compensate the Distributor for its costs in distributing Class B and C shares
and servicing accounts. Under the Plans, the Fund pays the Distributor an annual
"asset-based sales charge" of 0.75% per year on Class B shares that are
outstanding for six years or less and on Class C shares. The Distributor also
receives a service fee of 0.25% per year under each Plan.
Under each Plan, both fees are computed on the average of the net asset
value of shares in the respective class, determined as of the close of each
regular business day during the period. The asset-based sales charge and service
fees increase Class B and Class C expenses by up to 1.00% of the net assets per
year of the respective class.
The Distributor uses the service fees to compensate dealers for providing
personal services for accounts that hold Class B or C shares. Those services are
similar to those provided under the Class A Service Plan, described above. The
Distributor pays the 0.25% service fees to dealers in advance for the first year
after Class B or Class C shares have been sold by the dealer and retains the
service fee paid by the Fund in that year. After the shares have been held for a
year, the Distributor pays the service fees to dealers on a quarterly basis.
The asset-based sales charge allows investors to buy Class B or C shares
without a front-end sales charge while allowing the Distributor to compensate
dealers that sell those shares. The Fund pays the asset-based sales charges to
the Distributor for its services rendered in distributing Class B and Class C
shares. Those payments are at a fixed rate that is not related to the
Distributor's expenses. The services rendered by the Distributor include paying
and financing the payment of sales commissions, service fees and other costs of
distributing and selling Class B and Class C shares.
The Distributor currently pays sales commissions of 3.75% of the purchase
price of Class B shares to dealers from its own resources at the time of sale.
Including the advance of the service fee, the total amount paid by the
Distributor to the dealer at the time of sales of Class B shares is therefore
4.00% of the purchase price. The Distributor retains the Class B asset-based
sales charge. The Distributor may pay the Class B service fee and the
asset-based sales charge to the dealer quarterly in lieu of paying the sales
commission and service fee advance at the time of purchase.
The Distributor currently pays sales commissions of 0.75% of the purchase
price of Class C shares to dealers from its own resources at the time of sale.
Including the advance of the service fee, the total amount paid by the
Distributor to the dealer at the time of sale of Class C shares is therefore
1.00% of the purchase price. The Distributor may pay the Class C service fee and
asset-based sales charge to the dealer quarterly in lieu of paying the sales
commission and service fee advance of the time of purchase. 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. At October 31, 1997, the end of the
Class B Plan year, the Distributor had incurred unreimbursed expenses in
connection with sales of Class B shares of $1,907,692 (equal to 2.29% of the
Fund's net assets represented by Class B shares on that date). At October 31,
1997, the end of the Class C Plan Year, the Distributor incurred unreimbursed
expenses in connection with sales of Class C shares of $111,000 (equal to 1.08%
of the Fund's net assets represented by Class C shares on that date.) 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. In order to
receive a waiver of Class B or Class C contingent deferred sales charge, you
must notify the Transfer Agent which conditions apply.
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:
o 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);
o 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);
o returns of excess contributions to Retirement Plans;
o 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;
o shares redeemed involuntarily, as described in "Shareholder Account Rules
and Policies" below;
o distributions from OppenheimerFunds prototype 401(k) plans and from
certain Massachusetts Mutual Life Insurance Company prototype 401(k) plans (1)
for hardship withdrawals; (2) under a Qualified Domestic Relations Order, as
defined in the Internal Revenue Code; (3) to meet minimum distribution
requirements as defined in the Internal Revenue Code; (4) to make "substantially
equal periodic payments" as described in Section 72(t) of the Internal Revenue
Code; (5) for separation from service; or (6) for loans to participants or
beneficiaries; or
o distributions from 401(k) plans sponsored by broker-dealers that have
entered into a special agreement with the Distributor allowing this waiver.
Waivers for Shares Sold or Issued in Certain Transactions. The contingent
deferred sales charge is also waived on Class B and Class C shares sold or
issued in the following cases:
o shares sold to the Manager or its affiliates;
o shares sold to registered management investment companies or separate
accounts of insurance companies having an agreement with the Manager or the
Distributor for that purpose; or
o shares issued in plans of reorganization to which the Fund is a party.
Buying Class Y Shares. Class Y shares are sold at net asset value per share
without sales charge directly to certain institutional investors, such as
insurance companies, registered investment companies and employee benefit plans,
that have special agreements with the Distributor for this purpose. These
include Massachusetts Mutual Life Insurance Company, an affiliate of the
Manager, which may purchase Class Y shares of the Fund and other Oppenheimer
funds (as well as Class Y shares of funds advised by MassMutual) for asset
allocation programs, investment companies or separate investment accounts it
sponsors and offers to its customers. Individual investors are not able to
invest in Class Y shares directly.
While Class Y shares are not subject to initial or contingent deferred
sales charges or asset-based sales charges, an institutional investor buying the
shares for its customers' accounts may impose charges on those accounts. The
procedures for purchasing, redeeming, exchanging, or transferring the Fund's
other classes of shares (other than the time those orders must be received by
the Distributor or Transfer Agent in Denver) and the special account features
available to purchasers of those other classes of shares described elsewhere in
this Prospectus do not apply to Class Y shares. Instructions for purchasing,
redeeming, exchanging or transferring Class Y shares must be submitted by the
institutional investor, not by its customers for whose benefit the shares are
held.
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 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.
o 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.
o 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.
o 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.
o 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.
o Selling Shares. You can redeem shares by telephone automatically by
calling the PhoneLink number and the Fund will send the proceeds directly to
your AccountLink bank account. Please
refer to "How to Sell Shares" below for details.
Shareholder Transactions by Fax. Requests for certain account transactions may
be sent to the Transfer Agent by fax (telecopier). Please call 1-800-525-7048
for information about which transactions are included. Transaction requests
submitted by fax are subject to the same rules and restrictions as written and
telephone requests described in this Prospectus.
OppenheimerFunds Internet Web Site. Information about the Fund, including your
account balance, daily shares prices, market and Fund portfolio information, may
be obtained by visiting the OppenheimerFunds Internet Web Site, at the following
Internet address: http://www.oppenheimerfunds.com. In 1998, the Transfer Agent
anticipates offering certain account transactions through the Internet Web Site.
To find out more information about those transactions and procedures, please
visit the Web Site.
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:
o 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.
o 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:
o Individual Retirement Accounts including rollover IRAs, for individuals
and their spouses and SIMPLE IRAs offered by employers
o 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
o SEP-IRAs (Simplified Employee Pension Plans) for small business owners
or people with income from self-employment
o Pension and Profit-Sharing Plans for self-employed persons and other
employers
o 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.
o 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.
o 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):
o You wish to redeem more than $50,000 worth of shares and receive a check
o The redemption check is not payable to all shareholders listed on the
account statement
o The redemption check is not sent to the address of record on your account
statement
o Shares are being transferred to a Fund account with a different owner or
name
o Shares are redeemed by someone other than the owners (such as an
Executor)
o 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:
o Your name
o The Fund's name
o Your Fund account number (from your account statement)
o The dollar amount or number of shares to be redeemed
o Any special payment instructions
o Any share certificates for the shares you are selling
o The signatures of all registered owners exactly as the account is
registered, and
o Any special 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:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
Send courier or Express Mail requests to:
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.
o To redeem shares through a service representative, call 1-800-852-8457
o To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address on the
account statement, or, if you have linked your Fund account to your bank account
on AccountLink, you may have the proceeds wired to that bank account.
o 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.
o Telephone Redemptions Through AccountLink or Wire. There are no dollar
limits on telephone redemption proceeds sent to a bank account designated when
you establish AccountLink. Normally the ACH transfer to your bank is initiated
on the business day after the redemption. You do not receive dividends on the
proceeds of the shares you redeemed while they are waiting to be transferred.
Shareholders may also have the Transfer Agent send redemption proceeds of
$2,500 or more by Federal Funds wire to a designated commercial bank account if
the bank is a member of the Federal Reserve wire system. There is a $10 fee for
each Federal Funds wire. To place a wire redemption request, call the Transfer
Agent at 1-800-852-8457. The wire will normally be transmitted on the next bank
business day after the shares are redeemed. There is a possibility that the wire
may be delayed up to seven days to enable the Fund to sell securities to pay the
redemption proceeds. No dividends are accrued or paid on the proceeds of shares
that have been redeemed and are awaiting transmittal by wire. To establish wire
redemption privileges on an account that is already established, please contact
the Transfer Agent for instructions.
Selling Shares Through Your Dealer. The Distributor has made arrangements to
repurchase Fund shares from dealers and brokers on behalf of their customers. To
find out more information about this service contact your dealer or broker.
Brokers or dealers may charge for that service. Please refer to "Special
Arrangements for Repurchase of Shares from Dealers and Brokers" in the Statement
of Additional Information for more details.
How To Exchange Shares
Shares of the Fund may be exchanged for shares of certain Oppenheimer funds at
net asset value per share at the time of exchange, without sales charge. To
exchange shares, you must meet several conditions:
o Shares of the fund selected for exchange must be available for sale in
your state of residence.
o The prospectuses of the Fund and the fund whose shares you want to buy
must offer the exchange privilege.
o You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them; after the account is open 7 days, you
can exchange shares every regular business day.
o You must meet the minimum purchase requirements for the fund you
purchase by exchange.
o 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:
o 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."
o 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:
o Shares are normally redeemed from one fund and purchased from the other
fund in the exchange transaction on the same regular business day on which the
Transfer Agent receives an exchange request that 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.
o 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.
o 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.
o 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.
o If the Transfer Agent cannot exchange all the shares you request because
of a restriction cited above, only the shares eligible for exchange will be
exchanged.
Shareholder Account Rules and Policies
o 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.
o 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.
o 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.
o 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.
o 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.
o Dealers that can perform account transactions for their clients by
participating in NETWORKING through the National Securities Clearing Corporation
are responsible for obtaining their clients' permission to perform those
transactions and are responsible to their clients who are shareholders of the
Fund if the dealer performs any transaction erroneously or improperly.
o 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.
o 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 federal funds wire, certified check or arrange with your bank
to provide telephone or written assurance to the Transfer Agent that your
purchase payment has cleared.
o 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.
o 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.
o "Backup Withholding" of Federal income tax may be applied at the rate of
31% from taxable dividends, distributions and redemption proceeds (including
exchanges) if you fail to furnish the Fund a correct and properly 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 underreport your income to the Internal Revenue Service.
o 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.
o To avoid sending duplicate copies of materials to households, the Fund
will mail only one copy of each annual and semi-annual report to shareholders
having the same last name and address on the Fund's records. However, each
shareholder may call the Transfer Agent at 1-800-525-7048 to ask that copies of
those materials be sent personally to that shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund intends to declare and pay dividends separately for Class A,
Class B, Class C and Class Y shares from net investment income, if any,
annually. Normally, dividends are paid in December, but the Board of Directors
can change that date. The Board may also cause the Fund to declare dividends
after the close of the Fund's fiscal year (which ends October 31st). Dividends
paid on Class A and Class Y shares generally are expected to be higher than for
Class B and Class C shares because expenses allocable to Class B and Class C
shares will generally be higher than for Class A and Class Y shares. There is no
fixed dividend rate and there can be no assurance that the Fund will pay any
dividends.
Capital Gains. The Fund may make distributions annually in December out of any
net short-term or long-term capital gains. Long-term capital gains will be
separately identified in the tax information your Fund sends you after the end
of the year. There can be no assurance that the Fund will pay any capital gains
distributions in a particular year.
Distribution Options. When you open your account, specify on your application
how you want to receive your distributions. For OppenheimerFunds retirement
accounts, all distributions are reinvested. For other accounts, you have four
options:
o 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.
o 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.
o 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.
o Reinvest Your Distributions in Another Oppenheimer Fund Account. You can
reinvest all distributions in the same class of shares of another Oppenheimer
funds account you have established.
Taxes. If your account is not a tax-deferred retirement account, you should be
aware of the following tax implications of investing in the Fund. The Fund's
distributions from long-term capital gains are taxable to shareholders as
long-term capital gains, no matter how long you held your shares. Dividends paid
by the Fund from short-term capital gains and net investment income, including
certain net realized foreign exchange gains, are taxable as ordinary income.
These dividends and distributions are subject to Federal income tax and may be
subject to state or local taxes. Your distributions are taxable as described
above, whether you reinvest them in additional shares or take them in cash.
Corporate shareholders may be entitled to the corporate dividends received
deduction for some portion of the Fund's distributions treated as ordinary
income, subject to applicable limitations under the Internal Revenue Code. Every
year the Fund will send you and the IRS a statement showing the aggregate amount
and character of the dividends and other distributions you received for the
previous year. So that the Fund will not have to pay taxes on the amount it
distributes to shareholders as dividends and capital gains, the Fund intends to
manage its investments so that it will qualify as a "regulated investment
company" under the Internal Revenue Code, although it reserves the right not to
qualify in a particular year.
o "Buying a Dividend." 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.
o 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.
o 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.
o 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.
-4-
<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) Oppenheimer Quest for
Value Fund, Inc., Oppenheimer Quest Growth & Income Value Fund, Oppenheimer
Quest Opportunity Value Fund, Oppenheimer Quest Small Cap Value Fund and
Oppenheimer Quest Global Value Fund, Inc. on November 24, 1995, when
OppenheimerFunds, Inc. became the investment adviser to those funds, and (ii)
Quest for Value U.S. Government Income Fund, Quest for Value Investment Quality
Income Fund, Quest for Value Global Income Fund, Quest for Value New York
Tax-Exempt Fund, Quest for Value National Tax-Exempt Fund and Quest for Value
California Tax-Exempt Fund when those funds merged into various Oppenheimer
funds on November 24, 1995. The funds listed above are referred to in this
Prospectus as the "Former Quest for Value Funds." The waivers of initial and
contingent deferred sales charges described in this Appendix apply to shares of
the Fund (i) acquired by such shareholder pursuant to an exchange of shares of
one of the Oppenheimer funds that was one of the Former Quest for Value Funds,
or (ii) purchased by such shareholder by exchange of shares of other Oppenheimer
funds that were acquired pursuant to the merger of any of the former Quest for
Value Funds into an Oppenheimer fund on November 24, 1995.
Class A Sales Charges
o Reduced Class A Initial Sales Charge Rates for Certain Former Quest
Shareholders.
o 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.
Front-End Front-End
Sales Charge as Sales Charge as Commission
Number of Eligible a Percentage of a Percentage of as Percentage
Employees or Members Offering Price Amount Invested of Offering Price
- -------------------------------------------------------------------------
9 or fewer 2.50% 2.56% 2.00%
- -------------------------------------------------------------------------
At least 10 but
not more than 49 2.00% 2.04% 1.60%
For purchases by Qualified Retirement plans and Associations having 50 or
more eligible employees or members, there is no initial sales charge on
purchases of Class A shares, but those shares are subject to the Class A
contingent deferred sales charge described on pages __ to __ of this Prospectus.
Purchases made under this arrangement qualify for the lower of the sales
charge rate in the table based on the number of eligible employees in a
Qualified Retirement Plan or members of an Association or the sales charge rate
that applies under the Rights of Accumulation described above in the Prospectus.
In addition, purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they qualified to
purchase shares of any of the Former Quest For Value Funds by virtue of
projected contributions or investments of $1 million or more each year.
Individuals who qualify under this arrangement for reduced sales charge rates as
members of Associations, or as eligible employees in Qualified Retirement Plans
also may purchase shares for their individual or custodial accounts at these
reduced sales charge rates, upon request to the Fund's Distributor.
o 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:
o 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.
o 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.
o 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:
o 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.
o 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
o 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.
o 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.
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
o 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.
o 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.
A-1
<PAGE>
Oppenheimer Disciplined Value Fund
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Advisor
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
OppenheimerFunds Internet Web Site
http://www.oppenheimerfunds.com
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
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
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. PR0375.001.0298 Printed on recycled paper
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER DISCIPLINED VALUE FUND
Graphic material included in Prospectus of Oppenheimer Disciplined Value
Fund: "Comparison of Total Return of Oppenheimer Disciplined Value Fund with the
S&P 500 Index - Change in Value of $10,000 Hypothetical Investments in Class A,
Class B and Class C Shares of Oppenheimer Disciplined Value Fund and the S&P 500
Index."
Linear graphs will be included in the Prospectus of Oppenheimer
Disciplined Value 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
10/31/87 through 10/31/97, in the case of the Fund's Class B, that graph will
cover the period from inception (10/2/95) through 10/31/97, and in the case of
Class C shares, that graph will cover the period from the inception (5/1/96)
through 10/31/97 in the case of Class Y shares, that graph will cover the period
from inception (12/16/96) through 10/31/97. The graph will compare such values
with hypothetical $10,000 investments over the same time periods in the S&P 500
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, is set forth in the Prospectus under
"Performance of the Fund - Comparing the Fund's Performance to the Market."
Oppenheimer
Fiscal Disciplined Value S&P 500
Period Ended Fund A Index
- ------------ ----------------- -------
10/31/87 $9,425 $10,000
12/31/87 $9,537 $9,874
12/31/88 $10,904 $11,509
12/31/89 $14,704 $15,150
12/31/90 $13,531 $14,679
12/31/91 $18,524 $19,141
12/31/92 $20,746 $20,598
12/31/93 $25,084 $22,669
12/31/94 $24,920 $22,967
12/31/95 $33,990 $31,588
10/31/96 $37,868 $36,838
10/31/97 $48,321 $48,663
Oppenheimer
Fiscal Disciplined Value S&P 500
Period Ended Fund B Index
- ------------ ----------------- -------
10/02/95(1) $10,000 $10,000
12/31/95 $10,804 $10,602
10/31/96 $11,930 $12,364
10/31/97 $14,805 $16,332
Oppenheimer
Fiscal Disciplined Value S&P 500
Period Ended Fund C Index
- ------------ ----------------- -------
5/01/96(2) $10,000 $10,000
10/31/96 $10,534 $10,908
10/31/97 $13,341 $14,409
Oppenheimer
Fiscal Disciplined Value S&P 500
Period Ended Fund Y Index
- ------------ ----------------- -------
12/16/96(3) $10,000 $10,000
10/31/97 $12,361 $12,531
- ---------------------
(1) Class B shares of the Fund were first publicly offered on 10/02/95.
(2) Class C shares of the Fund were first publicly offered on 5/01/96.
(3) Class Y shares of the Fund were first publicly offered on 12/16/96.
<PAGE>
Oppenheimer Disciplined Value Fund
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Statement of Additional Information dated February 19, 1998
This Statement of Additional Information for Oppenheimer Disciplined Value
Fund (the "Fund") is not a Prospectus. This document contains additional
information about the Fund and supplements information in the Fund's Prospectus
dated February 19, 1998. It should be read together with the Prospectus which
may be obtained by writing to the Fund's Transfer Agent, OppenheimerFunds
Services, at P.O. Box 5270, Denver, Colorado 80217 or by calling the Transfer
Agent at the toll-free number shown above.
CONTENTS
Page
About the Fund
Investment Objective and Policies.............................................
Investment Policies and Strategies ....................................
Other Investment Restrictions.............................................
How the Fund is Managed.......................................................
Organization and History..................................................
Directors and Officers of the Fund........................................
The Manager and Its Affiliates............................................
Brokerage Policies of the Fund................................................
Performance of the Fund.......................................................
Distribution and Service Plans................................................
About Your Account
How to Buy Shares.............................................................
How to Sell Shares............................................................
How to Exchange Shares........................................................
Dividends, Capital Gains and Taxes............................................
Additional Information About the Fund.........................................
Financial Information About the Fund
Independent Auditors' Report..................................................
Financial Statements..........................................................
Appendix: Industry Classification..........................................A-1
<PAGE>
ABOUT THE FUND
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.
o 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 Fund'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.
o 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."
o 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).
o 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.
o 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.
o High Yield Securities. The Fund may invest in high-yield/high risk
securities (commonly called junk bonds).
OppenheimerFunds, Inc. (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 OppenheimerFunds, Inc.
(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.
o 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.
o 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.
o 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").
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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:
o 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.
o 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.
o 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.
o Equity Securities. Additional information about some of the types of
equity securities the Fund may invest in is provided below.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o Tax Aspects of Covered Calls and Hedging Instruments. The Fund intends
to qualify as a "regulated investment company" under the Internal Revenue Code
(although it reserves the right not to qualify). That qualification enables the
Fund to "pass through" its income and realized capital gains to shareholders
without the Fund having to pay tax on them. This avoids a "double tax" on that
income and capital gains, since shareholders normally will be taxed on the
dividends and capital gains they receive from the Fund (unless the Fund's shares
are held in a retirement account or the shareholder is otherwise exempt from
tax).
o 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.
o 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.
o 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.
o 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
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% 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% of its total
assets in the obligations of any one bank; and (b) purchase more than either (i)
10% 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.
(3)Invest more than 25% 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% 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% 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% 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% 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% 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% of its total assets, taken at market value at the time of the
investment, would be invested in such securities. However, up to 25% 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% 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.
(16) Buy securities if 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 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. Oppenheimer Series Fund, Inc. (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 Connecticut Mutual Growth Account to Oppenheimer
Disciplined Value Fund.
As a Maryland corporation, the Company (and each of its series, including
the Fund) is not required to hold, and does not plan to hold, regular annual
meetings of shareholders. The Fund will hold meetings when required to do so by
the Investment Company Act or other applicable law, or when a shareholder
meeting is called by the 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 Fund. The Fund's Directors and officers and their
principal occupations and business affiliations during the past five years are
listed below. The address for 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 also trustees or directors of Oppenheimer California
Municipal Fund, Oppenheimer Capital Appreciation Fund, Oppenheimer Developing
Markets Fund, Oppenheimer Discovery Fund, Oppenheimer Enterprise Fund,
Oppenheimer Global Fund, Oppenheimer Global Growth & Income Fund, Oppenheimer
Gold & Special Minerals Fund, Oppenheimer Growth Fund, Oppenheimer International
Growth Fund, Oppenheimer International Small Company Fund, Oppenheimer Money
Market Fund, Inc., Oppenheimer Multi-Sector Income Trust, Oppenheimer
Multi-State Municipal Trust, Oppenheimer Multiple Strategies Fund, Oppenheimer
Municipal Bond Fund, Oppenheimer New York Municipal Fund, the other series in
the Oppenheimer Series Fund, Inc., Oppenheimer U.S. Government 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 and Messrs. Spiro, Donohue, Bishop, Bowen, Farrar and
Zack hold the same respective offices with the New York- based Oppenheimer funds
as with the Fund. As of February 9, 1998, the Directors and officers of the Fund
as a group owned less than 1% of the outstanding Class A, Class B, or Class C
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 (one of the
Directors of the Fund listed below, Ms. Macaskill, and one of the officers, Mr.
Donohue, are trustees of that plan) other than the shares beneficially owned
under that plan by the officers of the Fund listed above.
Leon Levy, Chairman of the Board of Directors; Age: 72
31 West 52nd Street, New York, NY 10019
General Partner of Odyssey Partners, L.P. (investment partnership) (since 1982)
and Chairman of Avatar Holdings, Inc. (real estate development).
Robert G. Galli, Director; Age: 64
19750 Beach Road, Jupiter Island, FL 33464
Formerly he held the following positions: Vice Chairman of OppenheimerFunds,
Inc. (the "Manager") (October 1995-December 1997); 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: 74
591 Breezy Hill Road, Hillsdale, NY 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: 49
President (since June 1991), Chief Executive Officer (since September 1995) and
a Director (since December 1994) of the Manager; President and director (since
June 1991) of HarbourView; Chairman and a director of SSI (since August 1994),
and SFSI (September 1995); President (since September 1995) and a director
(since October 1990) of OAC; President (since September 1995) and a director
(since November 1989) of Oppenheimer Partnership Holdings, Inc., a holding
company subsidiary of the Manager; a director of Oppenheimer Real Asset
Management, Inc. (since July 1996); President and a director (since October
1997) of OppenheimerFunds International Ltd., an offshore fund manager
subsidiary of the Manager ("OFIL") and Oppenheimer Millennium Funds plc (since
October 1997); President and a director of other Oppenheimer funds; a director
of the NASDAQ Stock Market, Inc. and of Hillsdown Holdings plc (a U.K. food
company); formerly an Executive Vice President of the Manager.
Elizabeth B. Moynihan, Director; Age: 68
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. Randall, Director; Age: 70
6 Whittaker's Mill, Williamsburg, VA 23185
A director of Dominion Resources, Inc. (electric utility holding company),
Dominion Energy, Inc. (electric power and oil & gas producer), Texan
Cogeneration Company (cogeneration company), Prime Retail, Inc. (real estate
investment trust); 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: 67
40 Park Avenue, New York, NY 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 River Bank America (real estate
manager); Trustee, Financial Accounting Foundation (FASB and GASB); formerly New
York State Comptroller and trustee, New York State and Local Retirement Fund.
Russell S. Reynolds, Jr., Director; Age: 66
8 Sound Shore Drive, Greenwich, CT 06830
Founder Chairman of Russell Reynolds Associates, Inc. (executive recruiting);
Chairman of Directorship Inc. (corporate and governance consulting); a director
of Professional Staff Limited (U.K.); a trustee of Mystic Seaport Museum,
International House and Greenwich Historical Society.
Donald W. Spiro, Vice Chairman and Director*; Age: 72
Chairman Emeritus (since August 1991) and a director (since January 1969) of the
Manager; formerly Chairman of the Manager and the Distributor.
Pauline Trigere, Director; Age: 85
498 Seventh Avenue, New York, NY 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and sale of
women's fashions).
Clayton K. Yeutter, Director; Age: 67
1325 Merrie Ridge Road, McLean, VA 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) and Texas Instruments, Inc. (electronics);
formerly (in descending chronological order) IMC Global Inc. (chemicals and
animal feed), 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.
Peter M. Antos, Vice President and Portfolio Manager; Age: 52
One Financial Plaza, 755 Main Street, Hartford, CT 06103-2603
Chartered Financial Analyst; Principal Portfolio Manager, Vice President of the
Fund and Senior Vice President of the Manager and HarbourView (since March
1996); portfolio manager of other Oppenheimer funds; previously Vice President
and Senior Portfolio Manager, Equities - Connecticut Mutual Life Insurance
Company and its subsidiary - G. R. Phelps & Co. ("G. R. Phelps") (1989- 1996).
Michael C. Strathearn, Vice President and Portfolio Manager; Age 45
One Financial Plaza, 755 Main Street, Hartford, CT 06103-2603
Chartered Financial Analyst; Vice President of the Fund, the Manager and
HarbourView (since March 1996); portfolio manager of other Oppenheimer funds;
previously a Portfolio Manager, Equities-Connecticut Mutual Life Insurance
Company (1988-1996).
Kenneth B. White, Vice President and Portfolio Manager; Age 46
One Financial Plaza, 755 Main Street, Hartford, CT 06103-2603
Chartered Financial Analyst; Vice President of the Fund, the Manager and
HarbourView (since March 1996); portfolio manager of other Oppenheimer funds;
previously a Portfolio Manager, Equities-Connecticut Mutual Life Insurance
Company (1992-1996); Senior Investment Officer, Equities-Connecticut Mutual Life
Insurance Company (1987-1992).
George C. Bowen, Treasurer; Age: 61
6803 South Tucson Way, Englewood, CO 80112
Senior Vice President (since September 1987) and Treasurer (since March 1985) of
the Manager; Vice President (since June 1983) and Treasurer (since March 1985)
of the Distributor; Vice President (since October 1989) and Treasurer (since
April 1986) of HarbourView; Senior Vice President (since February 1992),
Treasurer (since July 1991)and a director (since December 1991) of Centennial;
President, Treasurer and a director of Centennial Capital Corporation (since
June 1989); Vice President and Treasurer (since August 1978) and Secretary
(since April 1981) of SSI; Vice President, Treasurer and Secretary of SFSI
(since November 1989); Treasurer of OAC (since June 1990); Treasurer of
Oppenheimer Partnership Holdings, Inc. (since November 1989); Vice President and
Treasurer of Oppenheimer Real Asset Management, Inc. (since July 1996); Chief
Executive Officer, Treasurer and a director of MultiSource Services, Inc., a
broker-dealer (since December 1995); an officer of other Oppenheimer funds.
Andrew J. Donohue, Secretary; Age: 47
Executive Vice President (since January 1993), General Counsel (since October
1991) and a Director (since September 1995) of the Manager; Executive Vice
President (since September 1993), and a director (since January 1992) of the
Distributor; Executive Vice President, General Counsel and a director of
HarbourView, SSI, SFSI and Oppenheimer Partnership Holdings, Inc. since
(September 1995) and MultiSource Services, Inc. (a broker-dealer) (since
December 1995); President and a director of Centennial (since September 1995);
President and a director of Oppenheimer Real Asset Management, Inc. (since July
1996); General Counsel (since May 1996) and Secretary (since April 1997) of OAC;
Vice President of OFIL and Oppenheimer Millennium Funds plc (since October
1997); an officer of other Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer; Age: 39
6803 South Tucson Way, Englewood, CO 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); an
officer of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for
the Manager.
Scott T. Farrar, Assistant Treasurer; Age: 32
6803 South Tucson Way, Englewood, CO 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); Assistant
Treasurer of Oppenheimer Millennium Funds plc (since October 1997); an officer
of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for
the Manager.
Robert G. Zack, Assistant Secretary; Age: 49
Senior Vice President (since May 1985) and Associate General Counsel (since May
1981) of the Manager, Assistant Secretary of SSI (since May 1985), and SFSI
(since November 1989); Assistant Secretary of Oppenheimer Millennium Funds plc
(since October 1997); an officer of other Oppenheimer funds.
- -------------------------------------------
*A Director who is an "interested person" of the Company as defined in the
Investment Company Act.
o Remuneration of Directors. The officers of the Fund are affiliated with
the Manager. They and the Directors of the Fund who are affiliated with the
Manager (Ms. Macaskill and Mr. Spiro) receive no salary or fee from the Fund.
The remaining Directors of the Fund received the compensation shown below from
the Fund, during its fiscal year ended October 31, 1997. The compensation from
all of the New York-based Oppenheimer funds includes the Fund and is
compensation received as director, trustee or member of a committee of the Board
during the calendar year 1997.
Retirement
Benefits Total Compensation
Aggregate Accrued as From All
Compensation Part of New York-based
Name and Position From the Fund Fund Expenses Oppenheimer Funds(1)
Leon Levy
Chairman and Director $12,760 $754 $158,500
Benjamin Lipstein
Study Committee
Chairman, Audit
Committee Member
and Director(2) $11,029 $652 $137,000
Elizabeth Moynihan
Study Committee Member
and Director $7,768 $459 $96,500
Kenneth A. Randall
Audit Committee
Chairman and Director $7,124 $421 $88,500
Edward V. Regan
Proxy Committee Chairman,
Audit Committee Member
and Director $7,044 $416 $87,500
Russell S. Reynolds, Jr.
Proxy Committee Member
and Director $2,636 $156 $32,750
Pauline Trigere
Director $4,709 $278 $58,500
Clayton K. Yeutter
Proxy Committee Member
and Director $5,273 $312 $65,500
(1) For the 1997 calendar year.
(2) Committee position held during a portion of the period.
The Fund 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.
Deferred Compensation Plan. The Board of Directors has adopted a Deferred
Compensation Plan for disinterested directors that enables directors to elect to
defer receipt of all or a portion of the annual fees they are entitled to
receive from the Fund. Under the plan, the compensation deferred by a Director
is periodically adjusted as though an equivalent amount had been invested in
shares of one or more Oppenheimer funds selected by the Director. The amount
paid to the Director under the plan will be determined based upon the
performance of the selected funds. Deferral of Director's fees under the plan
will not materially affect the Fund's assets, liabilities or net income per
share. The plan will not obligate the Fund to retain the services of any
Director or to pay any particular level of compensation to any Director.
Pursuant to an Order issued by the Securities and Exchange Commission, the Fund
may, without shareholder approval and notwithstanding its fundamental policy
restricting investment in other open-end investment companies, as described on
page 19 of the Statement of Additional Information, invest in the funds selected
by the Director under the plan for the limited purpose of determining the value
of the Director's deferred fee account.
Major Shareholders. As of February 9, 1998, 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, Class C or Class Y shares except the following: (i) MML Securities
Corporation, 1414 Main Street, Springfield, Massachusetts 01144, which owned
2,021,084.058 Class A shares (or 10.64% of the then outstanding Class A shares);
(ii) Mass Mutual Life Insurance Company, 1295 State Street, Massachusetts 01111,
which owned 1,311,665.574 Class A shares (or 6.90% of the then outstanding Class
A shares); (iii) Merrill Lynch Pierce Fenner & Smith Inc., 4800 Deer Lake Drive
East, Jacksonville, Florida 32246, which owned of record for the benefit of its
customers, 39,421.189 Class C shares (or 6.85% of the then outstanding Class C
shares); (iv) Mass Mutual Life Insurance Company, Investment Account N4, 1295
State Street, Massachusetts 01111, which owned the following Class Y shares in
separate accounts: 1,668,407.957 Class Y shares (or 33.67% of the then
outstanding Class Y shares); 1,404,833.779 Class Y shares (or 28.34% of the then
outstanding Class Y shares); 1,400,326.945 Class Y shares (or 28.26% of the then
outstanding Class Y shares) and 481,981.668 Class Y shares (or 9.71% of the then
outstanding Class Y shares).
The Manager and its 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 Mr. Spiro) serve as Directors of the
Funds.
The Manager and the Fund have a Code of Ethics. It is designed to detect
and prevent improper personal trading by certain employees, including portfolio
managers, that would compete with or take advantage of the Fund's portfolio
transactions. Compliance with the Code of Ethics is carefully monitored and
strictly enforced by the Manager.
o Portfolio Management. The Portfolio Manager of the Fund is Peter M.
Antos, who is principally responsible for the day-to-day management of the
Fund's portfolio. Mr. Antos' background is described in the Prospectus under
"Portfolio Management." Other member of the Manager's Equity Portfolio
Department, particularly Michael C. Strathearn and Kenneth B. White, provide the
Portfolio Manager with counsel and support in managing the Fund's portfolio.
o The Investment Advisory Agreement. 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 Investment Advisory
Agreement or by the Distributor under a Distribution Agreement (defined below)
are paid by the Fund. The Investment 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 year ended December 31, 1995, the Fund paid $613,378 in
management fees to G.R. Phelps & Co., the Fund's investment advisor. For the
fiscal period ended October 31, 1996 the Fund paid $719,186 in management fees,
some of which was paid to G.R. Phelps & Co., investment advisor, prior to March
18, 1996. For the fiscal year ended October 31, 1997, the Fund paid $1,850,924
in management fees to the Manager.
Under the Investment Advisory Agreement, the Manager has undertaken that
if the total expenses of the Fund in any fiscal year should exceed the most
stringent state regulatory requirements on expense limitations applicable to the
Fund, the Manager's compensation under the Investment Advisory Agreement will be
reduced by the amount of such excess. For the purpose of such calculation, there
shall be excluded any expense borne directly or indirectly by the Fund which is
permitted to be excluded from the computation of such limitation by such statute
or state regulatory authority. At present, that limitation is imposed by
California, and limits expenses (with specific exclusions) to 2.5% of the first
$30 million of average net assets, 2% of the next $70 million of average net
assets and 1.5% of average net assets in excess of $100 million. Any assumption
of the Fund's expenses under this limitation would lower the Fund's overall
expense ratio and increase its total return during any period in which expenses
are limited.
The 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 Investment 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 such Agreement
relates. The Investment 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.
o 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 year ended
December 31, 1995, the fiscal period ended October 31, 1996 and the fiscal year
ended October 31, 1997, the aggregate sales charges on sales of the Fund's Class
A shares were $559,650, $534,988 and $885,737, respectively, of which the
Distributor and an affiliated broker-dealer retained $0, $341,543 and $558,864
in those respective years. During the Fund's fiscal year ended October 31, 1997
the contingent deferred sales charges collected on the Fund's Class B shares
totalled $31,154. During the fiscal year ended October 31, 1997, sales charges
advanced to broker/dealers by the Distributor on sales of the Fund's Class B
shares totalled $835,875 of which $259,154 was paid to an affiliated
broker/dealer. During the Fund's fiscal year ended October 31, 1997 there were
no contingent deferred sales charges collected on the Fund's Class C shares.
During the fiscal year ended October 31, 1997, sales charges advanced to
broker/dealers by the Distributor on sales of the Fund's Class C shares totalled
$55,818 of which $7,702 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.
o The Transfer Agent. OppenheimerFunds Services, the Fund's transfer agent,
is responsible for maintaining the Fund's shareholder registry and shareholder
accounting records, and for shareholder servicing and administrative functions.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of the duties of
the Manager under the Investment Advisory Agreement is to arrange the portfolio
transactions for the Fund. The Investment 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 Investment
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 Investment 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 Investment 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 Investment 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 Fund (those Directors of the Fund who are not
"interested persons" as defined in the Investment Company Act, and who have no
direct or indirect financial interest in the operation of the advisory agreement
or the Distribution 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.
During the Fund's fiscal year ended October 31, 1997, the total brokerage
commissions paid by the Fund was $892,947 of that amount, during the same
period, $892,324 was paid to brokers as commissions in return for research
services, the total aggregate dollar amount of those transactions was
$606,710,134.
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, Class C
and Class Y 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.
o Yields
o Standardized Yield. The "standardized yield" (referred to as "yield") is
shown for a class of shares for a stated 30-day period. It is not based on
actual distributions paid by the Fund to shareholders in the 30-day period, but
is a hypothetical yield based upon the net investment income from the Fund's
portfolio investments for that period. It may therefore differ from the
"dividend yield" for the same class of shares described below. It is calculated
using the following formula set forth in rules adopted by the Securities and
Exchange Commission designed to assure uniformity in the way that all funds
calculate their yields:
a-b 6
Standardized Yield = 2 ((------ + 1) - 1)
cd
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense reimbursements).
c = the average daily number of shares of that class outstanding during
the 30-day period that were entitled to receive dividends.
d = the maximum offering price per share of 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 for a 30-day period may differ from the yield for
other periods. The SEC formula assumes that the standardized yield for a 30-day
period occurs at a constant rate for a six-month period and is annualized at the
end of the six-month period. Additionally, because each class of shares is
subject to different expenses, it is likely that the standardized yields of the
Fund's classes of shares will differ for any 30-day period.
o Dividend Yield. The Fund may quote a "dividend yield" for each class of
its shares. Dividend yield is based on the dividends paid on shares of a class
during the actual dividend period. To calculate dividend yield, the dividends of
a class declared during a stated period are added together and the sum is
multiplied by 12 (to annualize the yield) and divided by the maximum offering
price on the last day of the dividend period. The formula is shown below:
Dividend Yield = Dividends paid x 12
---------------------------------------------
Maximum Offering Price (payment date)
The maximum offering price for Class A shares includes the current maximum
initial sales charge. The maximum offering price for Class B and Class C shares
is the net asset value per share, without considering the effect of contingent
deferred sales charges. The Class A dividend yield may also be quoted without
deducting the maximum initial sales charge.
o Total Return Information
o 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 )
o 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% (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% for the sixth year
and none thereafter) is applied to the investment result for the time period
shown (unless the total return is shown at net asset value, as described below).
For Class C shares, the 1.0% contingent deferred sales charge is applied to the
investment result for the one-year period (or less). Class Y shares are not
subject to a sales charge. Total returns also assume that all dividends and
capital gains distributions during the period are reinvested to buy additional
shares at net asset value per share, and that the investment is redeemed at the
end of the period.
The average annual total returns on an investment in Class A shares of the
Fund for the one year, five year and ten year periods ended October 31, 1997
were 20.27%, 18.70% and 17.06%, respectively. The cumulative total return on
Class A shares for the ten year period ended October 31, 1997 was 383.22%. For
the fiscal year ended October 31, 1997 and the period from October 2, 1995 (the
date Class B shares were first publicly offered) through October 31, 1997, the
average annual total returns on an investment in Class B shares of the Fund were
21.61% and 20.76%, respectively. The cumulative total return on an investment in
Class B shares of the Fund for the period from October 2, 1995 through October
31, 1997 was 48.05%. For the fiscal year ended October 31, 1997 and the period
from May 1, 1996 (the date Class C shares were first publicly offered) through
October 31, 1997, the average annual total returns on an investment in Class C
shares of the Fund were 25.64% and 21.19%, respectively. The cumulative total
return on an investment in Class C shares of the Fund for the period from May 1,
1996 to October 31, 1997 was 33.41%. For the period from December 16, 1996 (the
date Class Y shares were first publicly offered) through October 31, 1997, the
cumulative total return on an investment in Class Y shares was 23.62%.
o Total Returns at Net Asset Value. From time to time the Fund may also
quote an "average annual total return at net asset value" or a cumulative "total
return at net asset value" for Class A, Class B, Class C or Class Y shares, 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, 1997 were
27.60%, 20.12% and 17.76%. The average annual total returns at net asset value
for the Fund's Class B shares for the one year period ended October 31, 1997 and
for the period from October 2, 1996 (inception of the class) through October 31,
1997 were 26.61% and 21.93%. The average annual total returns at net asset value
for the Fund's Class C shares for the one year period ended October 31, 1997 and
for period May 1, 1996 (inception of the class) through October 31, 1997 were
26.64% and 21.19%.
The cumulative total returns at net asset value of the Fund's Class A
shares for the period from inception to October 31, 1997 was 526.66%. For Class
B shares, the cumulative total returns at net asset value for the period from
inception through October 31, 1997 was 51.05%. For Class C shares, the
cumulative total return at net asset value from inception to October 31, 1997
was 33.41%. The cumulative total return at net asset value for the Fund's Class
Y shares for the period December 16, 1996 (commencement of the public offering
of the Class) through October 31, 1997 was 23.62%.
Other Performance Comparisons. From time to time the Fund may publish the
ranking of its Class A, Class B, Class C or Class Y shares by Lipper Analytical
Services, Inc. ("Lipper"), a widely- recognized independent mutual fund
monitoring service. Lipper monitors the performance of regulated investment
companies, including the Fund, and ranks their performance for various periods
based on categories relating to investment objectives. The Lipper performance
rankings are based on total returns that include the reinvestment of capital
gains distributions and income dividends but do not take sales charges or taxes
into consideration.
From time to time the Fund may publish the star ranking of the performance
of its Class A, Class B, Class C or Class Y shares by Morningstar, Inc., an
independent mutual fund monitoring service. Morningstar ranks mutual funds in
broad investment categories: domestic stock funds, international stock funds,
taxable bond funds, municipal bond funds, based on risk-adjusted total
investment returns. The Fund is ranked among domestic stock funds. Investment
return measures a fund's or class's one, three, five and ten-year average annual
total returns (depending on the inception of the fund or class) in excess of
90-day U.S. Treasury bill returns after considering the fund's sales charges and
expenses. Risk measures a fund's or class's performance below 90-day U.S.
Treasury bill returns. Risk and investment return are combined to produce star
rankings reflecting performance relative to the average fund in a fund's
category. Five stars is the "highest" ranking (top 10%), four stars is "above
average" (next 22.5%), three stars is "average" (next 35%), two stars is "below
average" (next 22.5%) and one star is "lowest" (bottom 10%). The current star
ranking is the fund's or class's 3-year ranking or its combined 3-and 5-year
ranking (weighted 60%/40%, respectively, or its combined 3-,5- and 10-year
ranking (weighted 40%, 30% and 30%, respectively), depending on the inception of
the fund or class. Rankings are subject to change monthly.
The Fund may also compare its performance to that of other funds in its
Morningstar category. In addition to its star 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.
The total return on an investment made in Class A, Class B, Class C or
Class Y shares of the Fund may also be compared with the performance for the
same period of the S&P 500 Index, a broad based index of equity 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
reported shows the effects of taxes Other indices may provide useful
comparisons. The performance of the Fund's Class A, Class B, Class C or Class Y
shares may also be compared in publications to (i) the performance of various
market indices or other investments for which reliable performance data is
available, and (ii) to averages, performance rankings or other benchmarks
prepared by recognized mutual fund statistical services.
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 or Morningstar.
From time to time, the Fund's Manager may publish rankings or ratings of
the Manager (or the Transfer Agent), by independent third-parties, on the
investor services provided by them to shareholders of the Oppenheimer funds,
other than the performance rankings of the Oppenheimer funds themselves. These
ratings or rankings of shareholder/investor services by third parties may
compare the Oppenheimer funds services to those of other mutual fund families
selected by the rating or ranking services, and may be based upon the opinions
of the rating or ranking service itself, using its own research or judgment, or
based upon surveys of investors, brokers, shareholders or others. in relation to
other equity funds.
When comparing yield, total return and investment risk of an investment in
Class A, Class B, Class C or Class Y shares of the Fund with other investments,
investors should understand that certain other investments have different risk
characteristics than an investment in shares of the 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 the 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
The Fund has adopted a Service Plan for Class A Shares and Distribution and
Service Plans for Class B and Class C shares under Rule 12b-1 of the Investment
Company Act. Pursuant to 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
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 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 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 the Fund
automatically convert into Class A shares after six years, the Fund is required
to obtain the approval of Class B as well as Class A shareholders for a proposed
amendment to 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 Fund 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 Prospectus 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 Fund's Independent
Directors. Initially, the Board of Directors has set the fee at the maximum rate
and set no minimum amount.
For the fiscal period ended October 31, 1997, payments under this Class A
Plan totaled $531,007, of which $398,124 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 Prospectus. 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,
1997, total $298,040 of which $255,139 was retained by the Distributor and
$10,106 was paid to an affiliate of the Distributor. Payments made under the
Class C plan for the fiscal year ended October 31, 1997, totaled $44,504 of
which $37,067 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 Rules of Fair
Practice of the National Association of Securities Dealers, Inc. The Distributor
anticipates that it will take a number of years for it to recoup (from 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. A
fourth Class of Shares may be purchased only be certain institutional investors
at net asset value per shares ("Class Y Shares").
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, Class C and Class Y shares
recognizes two types of expenses. General expenses that do not pertain
specifically to any class are allocated pro rata to the shares of each class,
based on the percentage of the net assets of such class to the Fund's total net
assets, and then equally to each outstanding share within a given class. Such
general expenses include (i) management fees, (ii) legal, bookkeeping and audit
fees, (iii) printing and mailing costs of shareholder reports, Prospectuses,
Statements of Additional Information and other materials for current
shareholders, (iv) fees to unaffiliated 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, Class C and Class Y 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, Martin Luther King Jr. 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, Class C and
Class Y shares of the Fund may be significantly affected on such days when
shareholders do not have the ability to purchase or redeem shares.
The Fund'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 the
Automated Quotation System ("NASDAQ") of the Nasdaq Stock Market, Inc. for which
last sale information is regularly reported are valued at the last reported sale
price on the principal exchange for such security or NASDAQ that day (the
"Valuation Date") or, in the absence of sales that day, at the last reported
sale price preceding the Valuation Date if it is within the spread of the
closing "bid" and "asked" prices on the Valuation Date or, if not, the closing
"bid" price on the Valuation Date;
(ii) equity securities traded on a foreign securities exchange are valued
generally at the last sales price available to the pricing service approved by
the 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, if unavailable, at the mean
between "bid" and "asked" prices obtained from the principal exchange or two
active market makers in the security on the basis of reasonable inquiry;
(iii) a non-money market fund will value (x) debt instruments that had a
maturity of more than 397 days when issued, (y) debt instruments that had a
maturity of 397 days or less when issued and have a remaining maturity in excess
of 60 days, and (z) non-money market type debt instruments that had a maturity
of 397 days or less when issued and have a remaining maturity of sixty days or
less, at the mean between "bid" and "asked" prices determined by a pricing
service approved by the Fund's Board of Directors or, if unavailable, obtained
by the Manager from two active market makers in the security on the basis of
reasonable inquiry;
(iv) money market-type debt securities held by a non-money market fund
that had a maturity of less than 397 days when issued and have a remaining
maturity of 60 days or less, and debt instruments held by a money market fund
that have a remaining maturity of 397 days or less, shall be valued at cost,
adjusted for amortization of premiums and accretion of discount; and
(v) 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) and (iii) above), the security may be priced at the mean
between the "bid" and "asked" prices provided by a single active market maker
(which in certain cases may be the "bid" price if no "asked" price is available)
provided that the Manager is satisfied that the firm rendering the quotes is
reliable and that the quotes reflect the current market value.
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 or mortgage-backed 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.
Relations by virtue of a remarriage (step-children, step-parents, etc.) are
included.
o The Oppenheimer Funds. The Oppenheimer funds are those mutual funds for
which the Distributor acts as the distributor or the sub-distributor and include
the following:
Limited Term New York Municipal Fund
Oppenheimer Bond Fund for Growth
Oppenheimer California Municipal Fund
Oppenheimer Champion Income Fund
Oppenheimer Developing Markets Fund
Oppenheimer Disciplined Allocation Fund
Oppenheimer Disciplined Value Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Equity Income Fund
Oppenheimer Florida Municipal Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer High Income Fund
Oppenheimer Insured Municipal Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer International Bond Fund
Oppenheimer International Growth Fund
Oppenheimer International Small Company Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Growth Fund
Oppenheimer LifeSpan Income Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street California Municipal Fund
Oppenheimer Main Street Income & Growth Fund
Oppenheimer MidCap Fund
Oppenheimer Municipal Bond Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer New York Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Real Asset Fund
Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer U.S. Government Trust
Panorama Series Fund Inc.
Rochester Fund Municipals
the following "Money Market Funds":
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Oppenheimer Cash Reserves
Oppenheimer Money Market Fund, Inc.
There is an initial sales charge on the purchase of Class A shares of each
of the Oppenheimer funds except Money Market Funds (under certain circumstances
described herein, redemption proceeds of Money Market Fund shares may be subject
to a CDSC).
o 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.
o Terms of Escrow That Apply to Letters of Intent.
(1)Out of the initial purchase (or subsequent purchases if necessary) made
pursuant to a Letter, shares of the Fund equal in value 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 Prospectus entitled "How to Exchange Shares," and the escrow will
be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a bank account, a
check (minimum $25) for the initial purchase must accompany the application.
Shares purchased by Asset Builder Plan payments from bank accounts are subject
to the redemption restrictions for recent purchases described in "How To Sell
Shares," in the Prospectus. Asset Builder Plans also enable shareholders of
Oppenheimer Cash Reserves to use those accounts for monthly automatic purchases
of shares of up to four other Oppenheimer funds. If you make payments from your
bank account to purchase shares of the Fund, your bank account will be
automatically debited normally four to five business days prior to the
investment dates selected in the Account Application. Neither the Distributor,
the Transfer Agent nor the Fund shall be responsible for any delays in
purchasing shares resulting from delays in ACH transmission.
There is a front-end sales charge on the purchase of 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 other than
public school 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 or association has made special arrangements with the
Distributor and all members of the group or association participating in or
eligible to participate in the plan(s) purchase Class A shares of the Fund
through a single investment dealer, broker, or other financial institution
designated by the group. "Group retirement plan" also includes qualified
retirement plans and non-qualified deferred compensation plans and IRAs that
purchase Class A shares of the Fund through a single investment dealer, broker,
or other financial institution, provided that broker-dealer has made special
arrangements with the Distributor for the purpose of qualifying those plans to
purchase Class A shares of the Fund at net asset value but subject to a
contingent deferred sales charge.
In addition to the discussion in the Prospectus relating to the ability of
Retirement Plans to purchase Class A shares at net asset value in certain
circumstances, there is no initial sales charge on purchases of Class A shares
of any one or more of the Oppenheimer funds by Retirement Plans ("Plan") in the
following cases:
(i) the recordkeeping for the Plan is performed on a daily valuation basis
by Merrill Lynch Pierce Fenner & Smith, Inc. ("Merrill Lynch") and, on the date
the Plan Sponsor signs the Merrill Lynch Recordkeeping Service Agreement, the
Plan has $3 million or more in assets invested in mutual funds not advised or
managed by Merrill Lynch Asset Management, L.P. ("MLAM") that are made available
pursuant to a Service Agreement between Merrill Lynch and the mutual fund's
principal underwriter or distributor and in funds advised or managed by MLAM
(collectively, the "Applicable Investments"); or
(ii) the recordkeeping for the Plan is performed on a daily valuation
basis by an independent record keeper whose services are provided through a
contract or alliance arrangement with Merrill Lynch, and on the date the Plan
Sponsor signs the Merrill Lynch Record Keeping Service Agreement, the Plan has
$3 million or more in assets, excluding money market funds, invested in
Applicable Investments; or
(iii) the Plan has 500 or more eligible employees, as determined by the
Merrill Lynch plan conversion manager, on the date the Plan Sponsor signs the
Merrill Lynch Record Keeping Service Agreement.
For Plans whose records are maintained on a daily basis by Merrill Lynch
or an independent record keeper under a contract or alliance arrangement with
Merrill Lynch, if on the date the Plan Sponsor signs the Merrill Lynch Record
Keeping Service Agreement the Plan has less than $3 million in assets, excluding
money market funds, invested in Applicable Investments, then the Plan may only
purchase Class B shares of any one or more of the Oppenheimer funds. Otherwise,
the Plan will be permitted to purchase Class A shares of any one or more of the
Oppenheimer funds. Any such Plans that currently invest in Class B shares of the
Fund will be transferred to Class A shares of the Fund once the Plan has reached
$5 million invested in Applicable Investments.
Any redemptions from Plans whose records are maintained on a daily basis
by Merrill Lynch or an independent record keeper under a contract with Merrill
Lynch that are currently invested in Class B shares of the Fund shall not be
subject to the Class B CDSC.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the Prospectus. The
information below supplements the terms and conditions for redemptions set forth
in the Prospectus.
o Involuntary Redemptions. The 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 100. 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.
o 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.
o 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 Fund 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 that you
purchased subject to an initial sales charge or the Class A contingent deferred
sales charge when you redeemed them, or (ii) Class B shares that were subject to
the Class B contingent deferred sales charge when you redeemed them. This
privilege does not apply to Class C shares. The reinvestment may be made without
sales charge only in Class A shares of the Fund or any of the other Oppenheimer
funds into which shares of the Fund are exchangeable as described below, at the
net asset value next computed after the Transfer Agent receives the reinvestment
order. The shareholder must ask the Distributor for that privilege at the time
of reinvestment. Any capital gain that was realized when the shares were
redeemed is taxable, and reinvestment will not alter any capital gains tax
payable on that gain. If there has been a capital loss on the redemption, some
or all of the loss may not be tax deductible, depending on the timing and amount
of the reinvestment. Under the Internal Revenue Code, if the redemption proceeds
of Fund shares on which a sales charge was paid are reinvested in shares of the
Fund or another of the Oppenheimer funds within 90 days of payment of the sales
charge, the shareholder's basis in the shares of the Fund that were redeemed may
not include the amount of the sales charge paid. That would reduce the loss or
increase the gain recognized from the redemption. However, in that case the
sales charge would be added to the basis of the shares acquired by the
reinvestment of the redemption proceeds. The Fund may amend, suspend or cease
offering this reinvestment privilege at any time as to shares redeemed after the
date of such amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a contingent
deferred sales charge of 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 "Trustee,
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
Trustee and the Transfer Agent assume no responsibility to determine whether a
distribution satisfies the conditions of applicable tax laws and will not be
responsible for any tax penalties assessed in connection with a distribution.
Special Arrangements for Repurchase of Shares from Dealers and Brokers. The
Distributor is the Fund's agent to repurchase 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 Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of the Fund
valued at $5,000 or more can authorize the Transfer Agent to redeem shares
(minimum $50) automatically on a monthly, quarterly, semi-annual or annual basis
under an Automatic Withdrawal Plan. Shares will be redeemed three business days
prior to the date requested by the shareholder for receipt of the payment.
Automatic withdrawals of up to $1,500 per month may be requested by telephone if
payments are to be made by check payable to all shareholders of record and sent
to the address of record for the account (and if the address has not been
changed within the prior 30 days). Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on this basis.
Payments are normally made by check, but shareholders having AccountLink
privileges (see "How To Buy Shares") may arrange to have Automatic Withdrawal
Plan payments transferred to the bank account designated on the OppenheimerFunds
New Account Application or signature-guaranteed instructions. 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
Prospectus under "Class B Contingent Deferred Sales Charge" or in "Class C
Contingent Deferred Sales Charge").
By requesting an Automatic Withdrawal or Exchange Plan, the shareholder
agrees to the terms and conditions applicable to such plans, as stated below, as
well as the Prospectus. These provisions may be amended from time to time by the
Fund and/or the Distributor. When adopted, such amendments will automatically
apply to existing Plans.
o 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.
o 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 Prospectus, shares of a particular class of Oppenheimer funds
having more than one class of shares may be exchanged only for shares of the
same class of other Oppenheimer funds. Shares of the Oppenheimer funds that have
a single class without a class designation are deemed "Class A" shares for this
purpose. All of the Oppenheimer funds offer Class A, B and C shares except
Centennial America Fund, L.P., Centennial California Tax Exempt Trust,
Centennial Government Trust, Centennial New York Tax Exempt Trust, Centennial
Tax Exempt Trust and Oppenheimer Money Market 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. A current list of funds showing which
funds offer which classes may be obtained by calling the Distributor at
1-800-525-7048
For accounts established on or before March 8, 1996 holding Class M shares
of Oppenheimer Bond Fund for Growth, Class M shares can be exchanged only for
Class A shares of other Oppenheimer funds. Exchanges to Class M shares of
Oppenheimer Bond Fund for Growth are permitted from Class A shares of
Oppenheimer Money Market Fund, Inc. or Oppenheimer Cash Reserves that were
acquired by exchange from Class M shares. Otherwise no exchanges of any class of
any Oppenheimer fund into Class M shares are permitted.
Class A shares of Oppenheimer funds may be exchanged at net asset value
for shares of any Money Market Fund. Shares of any Money Market Fund purchased
without a sales charge may be exchanged for shares of Oppenheimer funds offered
with a sales charge upon payment of the sales charge (or, if applicable, may be
used to purchase shares of Oppenheimer funds subject to a contingent deferred
sales charge). However, shares of Oppenheimer Money Market Fund, Inc. purchased
with the redemption proceeds of shares of other mutual funds (other than funds
managed by the Manager or its subsidiaries) redeemed within the 30 days to that
purchase may subsequently be exchanged for shares of other Oppenheimer funds
without being subject to an initial or contingent deferred sales charge,
whichever is applicable. To qualify for that privilege, the investor or the
investor's dealer must notify the Distributor of eligibility for this privilege
at the time the shares of Oppenheimer Money Market Fund, Inc. are purchased,
and, if requested, must supply proof of entitlement to this privilege.
No contingent deferred sales charge is imposed on exchanges of shares of
either class purchased subject to a contingent deferred sales charge. However,
when Class A shares acquired by exchange of Class A shares of other Oppenheimer
funds purchased subject to a Class A contingent deferred sales charge are
redeemed within 12 months (18 months for shares purchased prior to May 1, 1997)
of the end of the calendar month of the initial purchase of the exchanged Class
a shares, the Class A contingent deferred sales charge is imposed on the
redeemed shares (see "Class A contingent Deferred Sales Charge" in the
Prospectus). The Class B contingent deferred sales charge is imposed on Class B
shares acquired by exchange if they are redeemed within 6 years of the initial
purchase of the exchanged Class B shares. 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. 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 Prospectus 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. 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. The Bank of New York is the Custodian of the Fund's assets. The
Custodian's responsibilities include safeguarding and controlling the Fund's
portfolio securities, collecting income on the portfolio securities and handling
the delivery of such securities to and from the Fund.
The previous custodian was State Street Bank and Trust Company.
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.
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
================================================================================
The Board of Directors and Shareholders of
Oppenheimer Disciplined Value Fund:
We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer Disciplined Value Fund as of October 31, 1997, and
the related statement of operations for the year then ended, the statements of
changes in net assets for the year then ended and the ten months ended October
31, 1996, and the financial highlights for the year ended October 31, 1997 and
the ten months ended October 31, 1996. 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 financial highlights for the four 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 audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997 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
position of Oppenheimer Disciplined Value Fund as of October 31, 1997, the
results of its operations for the year then ended, the changes in its net assets
for the year then ended and the ten months ended October 31, 1996, and the
financial highlights for the year ended October 31, 1997 and the ten months
ended October 31, 1996, in conformity with generally accepted accounting
principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Denver, Colorado
November 21, 1997
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments October 31, 1997
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
================================================================================
Common Stocks--88.0%
- --------------------------------------------------------------------------------
Basic Materials--5.6%
- --------------------------------------------------------------------------------
Chemicals--2.3%
Du Pont (E.I.) De Nemours & Co. 96,600 $5,494,125
- --------------------------------------------------------------------------------
Lubrizol Corp. (The) 43,400 1,670,900
- --------------------------------------------------------------------------------
Nalco Chemical Co. 59,200 2,368,000
- --------------------------------------------------------------------------------
Rohm & Haas Co. 39,000 3,249,187
-----------
12,782,212
- --------------------------------------------------------------------------------
Metals--0.7%
Allegheny Teledyne, Inc. 124,900 3,286,431
- --------------------------------------------------------------------------------
Oregon Steel Mills, Inc. 29,100 612,919
-----------
3,899,350
- --------------------------------------------------------------------------------
Paper--2.6%
Fort James Corp. 209,362 8,309,054
- --------------------------------------------------------------------------------
International Paper Co. 92,600 4,167,000
- --------------------------------------------------------------------------------
Westvaco Corp. 64,500 2,116,406
-----------
14,592,460
- --------------------------------------------------------------------------------
Consumer Cyclicals--10.4%
- --------------------------------------------------------------------------------
Autos & Housing--2.6%
Ford Motor Co. 73,100 3,193,556
- --------------------------------------------------------------------------------
Goodyear Tire & Rubber Co. 117,700 7,370,962
- --------------------------------------------------------------------------------
Lear Corp.(1) 77,100 3,705,619
-----------
14,270,137
- --------------------------------------------------------------------------------
Leisure & Entertainment--2.9%
Alaska Air Group, Inc.(1) 100,700 3,360,862
- --------------------------------------------------------------------------------
America West Holdings Corp., Cl. B(1) 181,600 2,689,950
- --------------------------------------------------------------------------------
AMR Corp.(1) 54,900 6,392,419
- --------------------------------------------------------------------------------
UAL Corp.(1) 42,000 3,680,250
-----------
16,123,481
- --------------------------------------------------------------------------------
Media--0.7%
McGraw-Hill, Inc. 57,000 3,726,375
- --------------------------------------------------------------------------------
Retail: General--3.5%
Dayton Hudson Corp. 65,800 4,133,062
- --------------------------------------------------------------------------------
Federated Department Stores, Inc.(1) 41,200 1,812,800
- --------------------------------------------------------------------------------
May Department Stores Cos. 61,500 3,313,312
- --------------------------------------------------------------------------------
Penney (J.C.) Co., Inc. 134,200 7,875,862
- --------------------------------------------------------------------------------
VF Corp. 27,500 2,457,812
-----------
19,592,848
9 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Retail: Specialty--0.7%
Brylane, Inc.(1) 19,300 $838,344
- --------------------------------------------------------------------------------
Payless ShoeSource, Inc.(1) 52,700 2,938,025
-----------
3,776,369
-------------------------------------------------------------------------------
Consumer Non-Cyclicals--5.9%
- --------------------------------------------------------------------------------
Food--2.6%
American Stores Co. 271,900 6,984,431
- --------------------------------------------------------------------------------
Kroger Co.(1) 63,500 2,071,687
- --------------------------------------------------------------------------------
Safeway, Inc.(1) 90,800 5,277,750
-----------
14,333,868
- --------------------------------------------------------------------------------
Healthcare/Supplies & Services--1.9%
Tenet Healthcare Corp.(1) 215,470 6,585,302
- --------------------------------------------------------------------------------
WellPoint Health Networks, Inc.(1) 81,700 3,737,775
-----------
10,323,077
- --------------------------------------------------------------------------------
Household Goods--1.4%
Premark International, Inc. 283,500 7,672,219
- --------------------------------------------------------------------------------
Energy--12.3%
- --------------------------------------------------------------------------------
Energy Services & Producers--5.6%
Diamond Offshore Drilling, Inc. 163,100 10,152,975
- --------------------------------------------------------------------------------
Global Marine, Inc.(1) 211,300 6,576,712
- --------------------------------------------------------------------------------
Oryx Energy Co.(1) 193,200 5,325,075
- --------------------------------------------------------------------------------
Tidewater, Inc. 137,100 9,005,756
-----------
31,060,518
- --------------------------------------------------------------------------------
Oil-Integrated--6.7%
Amoco Corp. 99,900 9,159,581
- --------------------------------------------------------------------------------
Chevron Corp. 126,700 10,508,181
- --------------------------------------------------------------------------------
Exxon Corp. 43,600 2,678,675
- --------------------------------------------------------------------------------
Mobil Corp. 98,800 7,193,875
- --------------------------------------------------------------------------------
Occidental Petroleum Corp. 273,800 7,632,175
-----------
37,172,487
- --------------------------------------------------------------------------------
Financial--20.9%
- --------------------------------------------------------------------------------
Banks--7.4%
Bank of New York Co., Inc. (The) 95,000 4,470,937
- --------------------------------------------------------------------------------
BankAmerica Corp. 104,400 7,464,600
- --------------------------------------------------------------------------------
BankBoston Corp. 58,600 4,750,262
- --------------------------------------------------------------------------------
Comerica, Inc. 33,500 2,648,594
- --------------------------------------------------------------------------------
First Union Corp. 179,500 8,806,719
- --------------------------------------------------------------------------------
NationsBank Corp. 46,500 2,784,187
10 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Banks (continued)
Norwest Corp. 73,000 $2,340,563
- --------------------------------------------------------------------------------
Wells Fargo & Co. 27,400 7,983,675
-----------
41,249,537
- --------------------------------------------------------------------------------
Diversified Financial--5.6%
American Express Co. 50,000 3,900,000
- --------------------------------------------------------------------------------
Crescent Real Estate Equities, Inc. 180,600 6,501,600
- --------------------------------------------------------------------------------
Money Store, Inc. (The) 79,000 2,241,625
- --------------------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co. 83,100 4,071,900
- --------------------------------------------------------------------------------
Salomon, Inc. 75,900 5,896,481
- --------------------------------------------------------------------------------
Travelers Group, Inc. 123,700 8,659,000
-----------
31,270,606
- --------------------------------------------------------------------------------
Insurance--7.9%
AFLAC, Inc. 59,800 3,042,325
- --------------------------------------------------------------------------------
Allstate Corp. 27,100 2,247,606
- --------------------------------------------------------------------------------
Chubb Corp. 60,300 3,994,875
- --------------------------------------------------------------------------------
Conseco, Inc. 176,800 7,712,900
- --------------------------------------------------------------------------------
Equitable Cos., Inc. 129,800 5,346,138
- --------------------------------------------------------------------------------
Jefferson-Pilot Corp. 32,825 2,537,783
- --------------------------------------------------------------------------------
Marsh & McLennan Cos., Inc. 70,000 4,970,000
- --------------------------------------------------------------------------------
MBIA, Inc. 67,000 4,003,250
- --------------------------------------------------------------------------------
Torchmark Corp. 176,300 7,029,963
- --------------------------------------------------------------------------------
Travelers Property Casualty Corp., Cl. A 83,800 3,027,275
-----------
43,912,115
- --------------------------------------------------------------------------------
Industrial--13.8%
- --------------------------------------------------------------------------------
Electrical Equipment--1.3%
AMP, Inc. 100,300 4,513,500
- --------------------------------------------------------------------------------
Hubbell, Inc., Cl. B 61,994 2,731,611
-----------
7,245,111
- --------------------------------------------------------------------------------
Industrial Services--0.5%
Viad Corp. 152,600 2,784,950
- --------------------------------------------------------------------------------
Manufacturing--10.9%
Aeroquip-Vickers, Inc. 79,000 4,112,938
- --------------------------------------------------------------------------------
AGCO Corp. 190,500 5,524,500
- --------------------------------------------------------------------------------
Case Corp. 124,400 7,440,675
- --------------------------------------------------------------------------------
Deere & Co. 157,300 8,277,913
- --------------------------------------------------------------------------------
Dover Corp. 41,500 2,801,250
- --------------------------------------------------------------------------------
Harsco Corp. 46,000 1,909,000
- --------------------------------------------------------------------------------
Ingersoll-Rand Co. 152,100 5,922,394
11 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Manufacturing (continued)
PACCAR, Inc. 80,600 $3,632,038
- --------------------------------------------------------------------------------
Parker-Hannifin Corp. 151,200 6,322,050
- --------------------------------------------------------------------------------
Textron, Inc. 130,900 7,567,656
- --------------------------------------------------------------------------------
U.S. Industries, Inc. 275,100 7,393,313
-----------
60,903,727
- --------------------------------------------------------------------------------
Transportation--1.1%
Burlington Northern Santa Fe Corp. 63,700 6,051,500
- --------------------------------------------------------------------------------
Technology--13.1%
- --------------------------------------------------------------------------------
Aerospace/Defense--2.3%
General Dynamics Corp. 26,700 2,167,706
- --------------------------------------------------------------------------------
Lockheed Martin Corp. 35,071 3,333,937
- --------------------------------------------------------------------------------
Raytheon Co. 60,000 3,255,000
- --------------------------------------------------------------------------------
TRW, Inc. 70,600 4,041,850
-----------
12,798,493
- --------------------------------------------------------------------------------
Computer Hardware--8.1%
CHS Electronics, Inc.(1) 49,350 1,205,991
- --------------------------------------------------------------------------------
Compaq Computer Corp.(1) 121,650 7,755,188
- --------------------------------------------------------------------------------
International Business Machines Corp. 94,000 9,217,875
- --------------------------------------------------------------------------------
Lexmark International Group, Inc., Cl. A(1) 38,700 1,182,769
- --------------------------------------------------------------------------------
Pitney Bowes, Inc. 54,500 4,322,531
- --------------------------------------------------------------------------------
Quantum Corp.(1) 182,500 5,771,563
- --------------------------------------------------------------------------------
Storage Technology Corp. (New)(1) 187,800 11,021,513
- --------------------------------------------------------------------------------
Xerox Corp. 57,000 4,520,813
-----------
44,998,243
- --------------------------------------------------------------------------------
Computer Software/Services--0.4%
Electronic Data Systems Corp. 58,000 2,243,875
- --------------------------------------------------------------------------------
Electronics--2.2%
National Semiconductor Corp.(1) 121,300 4,366,800
- --------------------------------------------------------------------------------
Philips Electronics NV, NY Shares 57,400 4,498,725
- --------------------------------------------------------------------------------
SCI Systems, Inc.(1) 73,200 3,220,800
-----------
12,086,325
- --------------------------------------------------------------------------------
Telecommunications/Technology--0.1%
AT&T Corp. 16,900 827,044
- --------------------------------------------------------------------------------
Utilities--6.1%
- --------------------------------------------------------------------------------
Electric Utilities--0.6%
FPL Group, Inc. 39,800 2,057,163
- --------------------------------------------------------------------------------
NIPSCO Industries, Inc. 25,500 1,120,406
-----------
3,177,569
12 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Gas Utilities--2.8%
Columbia Gas System, Inc. 215,800 $15,591,550
- --------------------------------------------------------------------------------
Telephone Utilities--2.7%
Ameritech Corp. 28,000 1,820,000
- --------------------------------------------------------------------------------
Bell Atlantic Corp. 67,500 5,391,563
- --------------------------------------------------------------------------------
Frontier Corp. 126,400 2,733,400
- --------------------------------------------------------------------------------
US West Communications Group 133,700 5,322,931
------------
15,267,894
------------
Total Common Stocks (Cost $401,026,732) 489,733,940
Face
Amount
================================================================================
Short-Term Notes--7.2%
- --------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
5.50%, 11/10/97(2) $10,000,000 9,986,250
5.46%, 11/14/97(2) 10,000,000 9,980,284
5.47%, 11/7/97(2) 10,000,000 9,990,883
- --------------------------------------------------------------------------------
Federal National Mortgage Assn., 5.46%, 11/4/97(2) 10,000,000 9,995,454
------------
Total U.S. Government Obligations (Cost $39,952,871) 39,952,871
================================================================================
Repurchase Agreements--3.0%
- --------------------------------------------------------------------------------
Repurchase agreement with Zion First
National Bank, 5.68%, dated 10/31/97, to be
repurchased at $16,507,810 on 11/3/97,
collateralized by U.S. Treasury Nts.,
5.125%-6%, 2/28/98-11/15/98,
with a value of $16,863,612 (Cost $16,500,000) 16,500,000 16,500,000
- --------------------------------------------------------------------------------
Total Investments, at Value (Cost $457,479,603) 98.2% 546,186,811
- --------------------------------------------------------------------------------
Other Assets Net of Liabilities 1.8 10,150,181
------------ ------------
Net Assets 100.0% $556,336,992
============ ============
1. Non-income producing security.
2. Short-term notes are generally traded on a discount basis; the interest
rate is the discount rate received by the Fund at the time of purchase.
See accompanying Notes to Financial Statements.
13 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities October 31, 1997
- --------------------------------------------------------------------------------
================================================================================
Assets
Investments, at value (cost $457,479,603)--see
accompanying statement $546,186,811
- --------------------------------------------------------------------------------
Cash 97,315
- --------------------------------------------------------------------------------
Receivables:
Investments sold 14,028,734
Shares of capital stock sold 1,578,469
Interest and dividends 697,331
- --------------------------------------------------------------------------------
Other 6,352
------------
Total assets 562,595,012
================================================================================
Liabilities
Payables and other liabilities:
Investments purchased 5,475,009
Shares of capital stock redeemed 358,893
Distribution and service plan fees 99,450
Directors' fees--Note 1 62,264
Transfer and shareholder servicing agent fees 48,636
Other 213,768
------------
Total liabilities 6,258,020
================================================================================
Net Assets $556,336,992
============
================================================================================
Composition of Net Assets
Par value of shares of capital stock $ 23,863
- --------------------------------------------------------------------------------
Additional paid-in capital 397,103,823
- --------------------------------------------------------------------------------
Undistributed net investment income 2,934,887
- --------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 67,567,211
- --------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 88,707,208
------------
Net assets $556,336,992
============
14 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share
(based on net assets of $371,809,526 and 15,948,062
shares of capital stock outstanding) $23.31
Maximum offering price per share (net asset value plus
sales charge of 5.75% of offering price) $24.73
- --------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price per
share (based on net assets of $83,290,683 and 3,572,324
shares of capital stock outstanding) $23.32
- --------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price
per share (based on net assets of $10,243,102 and
444,018 shares of capital stock outstanding) $23.07
- --------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering
price per share (based on net assets of $90,993,681
and 3,898,705 shares of capital stock outstanding) $23.34
See accompanying Notes to Financial Statements.
15 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended October 31, 1997
- --------------------------------------------------------------------------------
================================================================================
Investment Income
Dividends (net of foreign withholding taxes of $1,499) $4,898,669
- --------------------------------------------------------------------------------
Interest 1,658,497
------------
Total income 6,557,166
================================================================================
Expenses
Management fees--Note 4 1,850,924
- --------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 531,007
Class B 298,040
Class C 44,504
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4
Class A 299,864
Class B 34,197
Class C 5,436
Class Y 13,124
- --------------------------------------------------------------------------------
Shareholder reports 160,889
- --------------------------------------------------------------------------------
Registration and filing fees:
Class A 34,531
Class B 19,550
Class C 2,315
Class Y 20,407
- --------------------------------------------------------------------------------
Legal and auditing fees 62,274
- --------------------------------------------------------------------------------
Directors' fees and expenses--Note 1 61,101
- --------------------------------------------------------------------------------
Accounting service fees--Note 4 15,000
- --------------------------------------------------------------------------------
Insurance expenses 8,342
- --------------------------------------------------------------------------------
Other 21,355
------------
Total expenses 3,482,860
================================================================================
Net Investment Income 3,074,306
================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain on investments 67,704,492
- --------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation on investments (16,812,534)
------------
Net realized and unrealized gain 50,891,958
================================================================================
Net Increase in Net Assets Resulting from Operations $53,966,264
============
See accompanying Notes to Financial Statements.
16 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended October 31,
1997 1996
=====================================================================================
<S> <C> <C>
Operations
Net investment income $ 3,074,306 $ 1,149,629
- -------------------------------------------------------------------------------------
Net realized gain 67,704,492 13,385,207
- -------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (16,812,534) 665,122
------------- -------------
Net increase in net assets resulting from operations 53,966,264 15,199,958
=====================================================================================
Dividends and Distributions to Shareholders
Dividends from net investment income:
Class A (641,547) (669,566)
Class B (12,589) (11,039)
Class C (1,655) (1,428)
Class Y (3) --
- -------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (12,873,125) (841,952)
Class B (496,006) (19,962)
Class C (63,782) (1,789)
Class Y (69) --
=====================================================================================
Capital Stock Transactions
Net increase in net assets resulting from
capital stock transactions--Note 2:
Class A 164,714,499 49,316,623
Class B 75,670,149 4,851,609
Class C 8,998,996 696,522
Class Y 79,722,352 --
=====================================================================================
Net Assets
Total increase 368,983,484 68,518,976
- -------------------------------------------------------------------------------------
Beginning of period 187,353,508 118,834,532
------------- -------------
End of period (including undistributed
net investment income of $2,934,887 and
$479,425, respectively) $ 556,336,992 $ 187,353,508
============= =============
</TABLE>
See accompanying Notes to Financial Statements.
17 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
---------------------------------------------------------------
Year Ended October 31, Year Ended December 31,
1997 1996(4) 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $19.65 $17.84 $14.20 $15.14
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .23(5) .15 .25 .22
Net realized and unrealized gain (loss) 4.91(5) 1.88 4.88 (.32)
------------- ------------- ------------- -------------
Total income (loss) from investment operations 5.14 2.03 5.13 (.10)
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.07) (.10) (.25) (.22)
Distributions from net realized gain (1.41) (.12) (1.24) (.62)
------------- ------------- ------------- -------------
Total dividends and distributions to shareholders (1.48) (.22) (1.49) (.84)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $23.31 $19.65 $17.84 $14.20
============= ============= ============= =============
====================================================================================================================================
Total Return, at Net Asset Value(6) 27.60% 11.41% 36.40% (0.65)%
====================================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $371,810 $180,784 $118,118 $78,390
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $234,314 $135,940 $98,063 $71,956
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.05% 1.01%(7) 1.53% 1.50%
Expenses 1.07% 1.13%(7) 1.22% 1.02%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 103.1% 73.9% 69.7% 98.5%
Average brokerage commission rate(9) $0.0700 $0.0697 -- --
</TABLE>
1. For the period from December 16, 1996 (inception of offering) to October 31,
1997.
2. For the period from May 1, 1996 (inception of offering) to October 31, 1996.
3. For the period from October 2, 1995 (inception of offering) to December 31,
1995.
4. For the ten months ended October 31, 1996. The Fund changed its fiscal year
end from December 31 to October 31. On March 18, 1996, OppenheimerFunds, Inc.
became the investment advisor to the Fund.
5. Per share amounts calculated based on the average shares outstanding during
the period.
6. 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.
18 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B Class C Class Y
- ------------------------- -------------------------------------------- --------------------------- -------------
Period Ended Period Ended
Year Ended October 31, December 31, Year Ended October 31, October 31,
1993 1992 1997 1996(4) 1995(3) 1997 1996(2) 1997(1)
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
$14.20 $14.40 $19.77 $18.08 $17.83 $19.57 $18.79 $20.31
- -------------------------------------------------------------------------------------------------------------------------------
.30 .26 .09(5) .05 .02 .10(5) .06 .31(5)
2.64 1.44 4.91(5) 1.83 1.40 4.85(5) .94 4.20(5)
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
2.94 1.70 5.00 1.88 1.42 4.95 1.00 4.51
- -------------------------------------------------------------------------------------------------------------------------------
(.30) (.26) (.04) (.07) (.02) (.04) (.10) (.07)
(1.70) (1.64) (1.41) (.12) (1.15) (1.41) (.12) (1.41)
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
(2.00) (1.90) (1.45) (.19) (1.17) (1.45) (.22) (1.48)
- -------------------------------------------------------------------------------------------------------------------------------
$15.14 $14.20 $23.32 $19.77 $18.08 $23.07 $19.57 $23.34
========== ========== ========== ========== ========== ========== ========== ==========
===============================================================================================================================
20.91% 11.99% 26.61% 10.43% 8.04% 26.64% 5.35% 23.62%
===============================================================================================================================
$64,495 $45,600 $83,291 $5,854 $717 $10,243 $715 $90,994
- -------------------------------------------------------------------------------------------------------------------------------
$54,682 $42,432 $30,019 $2,903 $306 $4,477 $342 $51,775
- -------------------------------------------------------------------------------------------------------------------------------
1.95% 1.74% 0.22% 0.22%(7) 0.21%(7) 0.17% 0.04%(7) 1.21%(7)
1.05% 1.12% 1.84% 1.88%(7) 1.97%(7) 1.86% 1.87%(7) 0.78%(7)
- -------------------------------------------------------------------------------------------------------------------------------
99.7% 141.7% 103.1% 73.9% 69.7% 103.1% 73.9% 103.1%
-- -- $0.0700 $0.0697 -- $0.0700 $0.0697 $0.0700
</TABLE>
7. Annualized.
8. 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, 1997 were $378,742,662 and $293,562,259, respectively.
9. 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.
19 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies
Oppenheimer Disciplined Value 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. The
Fund's investment objective is to seek capital appreciation by investing
primarily in common stocks with low price-earnings ratios and
better-than-anticipated earnings. The Fund's investment advisor is
OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B, Class C
and Class Y shares. Class A shares are sold with a front-end sales charge. Class
B and Class C shares may be subject to a contingent deferred sales charge. All
classes of shares have identical rights to earnings, assets and voting
privileges, except that each class has its own expenses directly attributable to
that class and exclusive voting rights with respect to matters affecting that
class. Classes A, B and C have separate distri bution and/or service plans. No
such plan has been adopted for Class Y shares. 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 an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of 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.
20 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
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 year ended
October 31, 1997, a provision of $57,489 was made for the Fund's projected
benefit obligations and payments of $3,016 were made to retired directors,
resulting in an accumulated liability of $62,449.
- --------------------------------------------------------------------------------
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. The character of the distributions made during the year from net
investment income or net realized gains may differ from its ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the fiscal year in which the income or realized gain was recorded by
the Fund.
The Fund adjusts the classification of distributions to shareholders
to reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended October 31, 1997, amounts have been reclassified to reflect an
increase in undistributed net investment income of $36,950. Additional paid-in
capital was decreased by the same amount.
- --------------------------------------------------------------------------------
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. 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.
21 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
2. Shares of Capital Stock
The Fund has authorized 500 million of $0.001 par value shares of capital stock.
Transactions in shares of capital stock were as follows:
<TABLE>
<CAPTION>
Year Ended October 31, 1997(2) Period Ended October 31, 1996(1)
------------------------------ --------------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 3,692,585 $ 80,366,467 3,132,678 $ 59,597,763
Dividends and distributions
reinvested 682,565 13,378,298 79,955 1,491,345
Issued in connection with the
acquisition of Oppenheimer
Value Stock Fund--Note 6 7,652,373 178,988,994 -- --
Redeemed (5,280,662) (108,019,260) (630,553) (11,772,485)
-------------- -------------- -------------- --------------
Net increase 6,746,861 $ 164,714,499 2,582,080 $ 49,316,623
============== ============== ============== ==============
- ------------------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 1,144,402 $ 25,787,163 261,924 $ 4,955,930
Dividends and distributions
reinvested 25,026 494,015 1,535 28,899
Issued in connection with the
acquisition of Oppenheimer
Value Stock Fund--Note 6 2,351,076 55,109,219 -- --
Redeemed (244,280) (5,720,248) (6,999) (133,220)
-------------- -------------- -------------- --------------
Net increase 3,276,224 $ 75,670,149 256,460 $ 4,851,609
============== ============== ============== ==============
- ------------------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 289,313 $ 6,258,500 36,414 $ 694,306
Dividends and distributions
reinvested 3,239 63,228 172 3,206
Issued in connection with the
acquisition of Oppenheimer
Value Stock Fund--Note 6 150,017 3,478,897 -- --
Redeemed (35,084) (801,629) (53) (990)
-------------- -------------- -------------- --------------
Net increase 407,485 $ 8,998,996 36,533 $ 696,522
============== ============== ============== ==============
- ------------------------------------------------------------------------------------------------------------------------------------
Class Y:
Sold 4,130,366 $ 85,062,741 -- $ --
Redeemed (231,661) (5,340,389) -- --
-------------- -------------- -------------- --------------
Net increase 3,898,705 $ 79,722,352 -- $ --
============== ============== ============== ==============
</TABLE>
1. 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.
2. For the year ended October 31, 1997 for Class A, B and C shares and for the
period from December 16, 1996 (inception of offering) to October 31, 1997 for
Class Y shares.
22 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
3. Unrealized Gains and Losses on Investments
At October 31, 1997, net unrealized appreciation on investments of $88,707,208
was composed of gross appreciation of $92,346,522, and gross depreciation of
$3,639,314.
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of 0.625% of the first
$300 million of average annual net assets, 0.50% of the next $100 million and
0.45% of average annual net assets in excess of $400 million. The Manager acts
as the accounting agent for the Fund at an annual fee of $15,000 plus
out-of-pocket costs and expenses reasonably incurred.
For the year ended October 31, 1997, commissions (sales charges paid
by investors) on sales of Class A shares totaled $885,737, of which $558,864 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 $835,875 and $55,818, respectively, of which $259,154 and
$7,702, respectively, was paid to an affiliated broker/dealer. During the year
ended October 31, 1997, OFDI received contingent deferred sales charges of
$31,154 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 shareholder accounts that hold Class A shares. Reimbursement
is made quarterly at an annual rate that may not exceed 0.25% of the average
annual net assets of Class A shares of the Fund. OFDI uses the service fee to
reimburse brokers, dealers, banks and other financial institutions quarterly for
providing personal service and maintenance of accounts of their customers that
hold Class A shares. During the year ended October 31, 1997, OFDI paid $398,124
to an affiliated broker/dealer as reimbursement for Class A personal service and
maintenance expenses.
23 Oppenheimer Disciplined Value Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
4. Management Fees and Other Transactions with Affiliates (continued)
The Fund has adopted Distribution and Service Plans for Class B and Class C
shares to compensate OFDI for its 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 for its
services rendered in distributing Class B and Class C shares. OFDI also receives
a service fee of 0.25% per year to compensate dealers for providing personal
services for accounts that hold Class B and Class C shares. Each fee is 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 year ended October 31, 1997,
OFDI paid $10,106 to an affiliated broker/dealer as compensation for Class B
service and maintenance expenses and retained $255,139 and $37,067,
respectively, as compensation for Class B and Class C sales commissions and
service fee advances, as well as financing costs. If either Plan is terminated
by the Fund, the Board of Directors may allow the Fund to continue payments of
the asset-based sales charge to OFDI for distributing shares before the Plan was
terminated. As of October 31, 1997, OFDI had incurred unreimbursed expenses of
$1,907,692 for Class B and $111,000 for Class C.
================================================================================
5. Bank Borrowings
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.
The Fund had no borrowings outstanding during the year ended October
31, 1997.
================================================================================
6. Acquisition of Oppenheimer Value Stock Fund
On July 25, 1997, the Fund acquired all the net assets of Oppenheimer Value
Stock Fund, pursuant to an agreement and plan of reorganization approved by the
Oppenheimer Value Stock Fund shareholders on July 21, 1997. The Fund issued
7,652,373, 2,351,076 and 150,017 shares of beneficial interest for Class A,
Class B and Class C, respectively, valued at $178,988,994, $55,109,219, and
$3,478,897, in exchange for the net assets, resulting in combined Class A net
assets of $356,598,856, Class B net assets of $74,391,341 and Class C net assets
of $8,707,171 on July 25, 1997. The net assets acquired included net unrealized
appreciation of $79,130,574. The exchange qualified as a tax-free reorganization
for federal income tax purposes.
24 Oppenheimer Disciplined Value Fund
<PAGE>
Appendix A
Corporate Industry Classifications
Aerospace/Defense Food
Air Transportation Gas Utilities
Auto Parts Distribution Gold
Automotive Health Care/Drugs
Bank Holding Companies Health Care/Supplies & Services
Banks Homebuilders/Real Estate
Beverages Hotel/Gaming
Broadcasting Industrial Services
Broker-Dealers Information Technology
Building Materials Insurance
Cable Television Leasing & Factoring
Chemicals Leisure
Commercial Finance Manufacturing
Computer Hardware Metals/Mining
Computer Software Nondurable Household Goods
Conglomerates Oil - Integrated
Consumer Finance Paper
Containers Publishing/Printing
Convenience Stores Railroads
Department Stores Restaurants
Diversified Financial Savings & Loans
Diversified Media Shipping
Drug Stores Special Purpose Financial
Drug Wholesalers Specialty Retailing
Durable Household Goods Steel
Education Supermarkets
Electric Utilities Telecommunications - Technology
Electrical Equipment Telephone - Utility
Electronics Textile/Apparel
Energy Services & Producers Tobacco
Entertainment/Film Toys
Environmental Trucking
Wireless Services
A-1
<PAGE>
Investment Advisor
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
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
Disciplined Allocation Fund
Prospectus Dated February 19, 1998
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
19, 1998 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).
(logo) OppenheimerFunds
Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the F.D.I.C. or any other agency, and
involve investment risks, including the possible loss of the principal amount
invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents
A B O U T T H E F U N D
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
A B O U T Y O U R A C C O U N T
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
<PAGE>
A B O U T T H E F U N D
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.
o Shareholder Transaction Expenses are charges you pay when you buy or
sell shares of the Fund. Please refer to "About Your Account" starting on page
__ for an explanation of how and when these charges apply.
Class A Class B Class C
Shares Shares Shares
- -------------------------------------------------------------------------
Maximum Sales Charge 5.75% None None
on Purchases (as a % of
offering price)
- -------------------------------------------------------------------------
Maximum Deferred Sales Charge None(1) 5% in the 1% if shares
(as a % of the lower of the first year, are redeemed
original offering price or declining within 12
redemption proceeds) to 1% in months of
the 6th purchase(2)
year and
eliminated
thereafter(2)
- -------------------------------------------------------------------------
Maximum Sales Charge None None None
on Reinvested Dividends
- -------------------------------------------------------------------------
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 __) in Class A shares, you may have
to pay a sales charge of up to 1% if you sell your shares within 12 calendar
months (18 months for shares purchased prior to May 1, 1997) from the end of the
calendar month during which you purchased those shares. See "How to Buy Shares -
Buying Class A Shares" below.
(2) See "How to Buy Shares - Buying Class B Shares," and "How to Buy Shares -
Buying Class C Shares" below, for more information on the contingent deferred
sales charges.
(3) There is a $10 transaction fee for redemption proceeds paid by Federal Funds
wire, but not for redemptions paid by check or ACH transfer through AccountLink.
o 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):
Class A Class B Class C
Shares Shares Shares
- ----------------------------------------------------------------------------
Management Fees 0.625% 0.625% 0.625%
- ----------------------------------------------------------------------------
12b-1 Plan Fees 0.250% 1.000% 1.000%
- ----------------------------------------------------------------------------
Other Expenses 0.235% 0.265% 0.295%
- ----------------------------------------------------------------------------
Total Fund
Operating Expenses 1.110% 1.890% 1.920%
The numbers for Class A, Class B and Class C shares in the chart above are
based on the Fund's expenses during the fiscal year ended October 31, 1997.
These amounts are shown as a percentage of the average net assets of each class
of the Fund's shares for that year.
The 12b-1 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 of 0.25% and
annual asset-based sale charges of 0.75%. These plans are described in greater
detail in "How to Buy Shares."
The actual expenses for each class of shares in future years may be more
or less than the numbers in the chart, depending on a number of factors,
including the actual amount of the Fund's assets represented by each class of
shares.
o 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 $89 $122 $182
- -------------------------------------------------------------------
Class C Shares $30 $60 $104 $224
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 $59 $102 $182
- -------------------------------------------------------------------
Class C Shares $20 $60 $104 $224
*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.
o 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.
o 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 __.
o Who Manages the Fund? The Fund's investment advisor is OppenheimerFunds,
Inc., which (including a subsidiaries) advises investment company portfolios
having over $75 billion in assets at December 31, 1997. 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 M. 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 J. Zimmer. Please
refer to "How the Fund is Managed" starting on page __ for more information
about the Manager and its fees.
o 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.
o 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.
o Will I Pay a Sales Charge to Buy Shares? The Fund has three classes of
shares. Each class of shares has the same investment portfolio, but different
expenses. Class A shares are offered with a front-end sales charge, starting at
5.75% and reduced for larger purchases. Class B and Class C shares are offered
without front-end sales charges, but may be subject to a contingent deferred
sales charge if redeemed within 6 years or 12 months, respectively, of purchase.
There is also an annual asset-based sales charge on Class B and Class C shares.
Please review "How To Buy Shares" starting on page __ for more details,
including a discussion about factors you and your financial advisor should
consider in determining which class may be appropriate for you.
o How Can I Sell My Shares? Shares can be redeemed by mail or by telephone
call to the Transfer Agent on any business day or through your dealer. Please
refer to "How To Sell Shares" on page
__. The Fund also offers exchange privileges to other Oppenheimer funds,
described in "How to Exchange Shares" on page __.
o 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 __ and __. Please remember that past
performance does not guarantee future results.
Financial Highlights
The tables 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. The information, for the
fiscal year ended October 31, 1997 and the fiscal period ended October 31, 1996,
has been audited by KPMG Peat Marwick LLP, the Fund's independent auditors,
whose report for the fiscal year ended October 31, 1997 is included in the
Statement of Additional Information. The information in the tables for the
fiscal periods prior to 1996 was audited by the Fund's previous independent
auditors.
-2-
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS CLASS A
------------------------------------------------------
YEAR ENDED OCTOBER 31, YEAR ENDED DECEMBER 31,
1997 1996(3) 1995 1994
====================================================================================================
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $16.00 $15.46 $13.44 $14.54
- ------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .51(4) .46 .60 .55
Net realized and unrealized gain (loss) 2.25(4) .49 2.59 (.86)
------ ------ ------ ------
Total income (loss) from
investment operations 2.76 .95 3.19 (.31)
- ------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.56) (.36) (.60) (.55)
Distributions from net realized gain (1.39) (.05) (.57) (.24)
------ ------ ------ ------
Total dividends and distributions
to shareholders (1.95) (.41) (1.17) (.79)
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $16.81 $16.00 $15.46 $13.44
====== ====== ====== ======
================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(5) 18.82% 6.27% 23.95% (2.11)%
================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $243,267 $233,289 $218,099 $177,904
- ------------------------------------------------------------------------------------------------
Average net assets (in thousands) $238,821 $228,203 $200,172 $187,655
- ------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 3.17% 3.52%(7) 4.00% 3.80%
Expenses 1.11% 1.11%(7) 1.17% 0.96%
- ------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 98.0% 85.4% 55.2% 115.0%
Average brokerage commission rate(8) $0.0699 $0.0636 -- --
</TABLE>
1. For the period from May 1, 1996 (inception of offering) to October 31, 1996.
2. For the period from October 2, 1995 (inception of offering) to December 31,
1995.
3. For the ten months ended October 31, 1996. The Fund changed its fiscal year
end from December 31 to October 31. On March 18, 1996, OppenheimerFunds, Inc.
became the investment advisor to the Fund.
4. Per share amounts calculated based on the average shares outstanding during
the period.
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.
2
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
1993 1992 1991 1990 1989 1988
====================================================================
<S> <C> <C> <C> <C> <C>
$13.81 $14.02 $11.94 $12.69 $11.51 $10.91
- --------------------------------------------------------------------
.48 .50 .54 .66 .76 .53
1.70 .86 2.79 (.68) 1.81 .60
------ ------ ------ ------ ------ ------
2.18 1.36 3.33 (.02) 2.57 1.13
- --------------------------------------------------------------------
(.48) (.50) (.54) (.66) (.76) (.53)
(.97) (1.07) (.71) (.07) (.63) --
------ ------ ------ ------ ------ ------
(1.45) (1.57) (1.25) (.73) (1.39) (.53)
- --------------------------------------------------------------------
$14.54 $13.81 $14.02 $11.94 $12.69 $11.51
====== ====== ====== ====== ====== ======
====================================================================
15.89% 9.90% 28.21% (0.21)% 22.61% 10.40%
====================================================================
$171,205 $109,701 $86,455 $66,382 $65,071 $54,253
- --------------------------------------------------------------------
$138,629 $ 96,016 $74,749 N/A(6) N/A(6) N/A(6)
- --------------------------------------------------------------------
3.40% 3.61% 4.02% 5.31% 5.90% 4.61%
1.02% 1.11% 1.20% 1.24% 1.20% 1.11%
- --------------------------------------------------------------------
155.2% 177.9% 122.4% 115.5% 149.2% 223.6%
-- -- -- -- -- --
</TABLE>
6. Not available.
7. Annualized.
8. 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, 1997 were $240,104,265 and $218,380,210, respectively.
9. 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.
3
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (CONTINUED) CLASS B CLASS C
--------------------- -----------------------------------
YEAR ENDED PERIOD ENDED YEAR ENDED
OCTOBER 31, DECEMBER 31, OCTOBER 31,
1997 1996(3) 1995(2) 1997 1996(1)
===============================================================================================================
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $16.16 $15.66 $15.48 $15.93 $15.71
- -----------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .40(4) .31 .07 .44(4) .30
Net realized and unrealized gain (loss) 2.27(4) .54 .70 2.19(4) .32
------ ------ ------ ------ ------
Total income (loss) from investment
operations 2.67 .85 .77 2.63 .62
- -----------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.45) (.30) (.07) (.47) (.35)
Distributions from net realized gain (1.39) (.05) (.52) (1.39) (.05)
------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (1.84) (.35) (.59) (1.86) (.40)
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $16.99 $16.16 $15.66 $16.70 $15.93
====== ====== ====== ====== ======
===========================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(5) 17.96% 5.51% 4.93% 17.93% 4.08%
===========================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $8,720 $3,919 $650 $1,473 $188
- -----------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $6,183 $2,324 $375 $ 805 $ 57
- -----------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 2.32% 2.86%(7) 0.73%(7) 2.18% 2.90%(7)
Expenses 1.89% 1.85%(7) 1.92%(7) 1.92% 1.87%(7)
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 98.0% 85.4% 55.2% 98.0% 85.4%
Average brokerage commission rate(9) $0.0699 $0.0636 -- $0.0699 $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. For the ten months ended October 31, 1996. The Fund changed its fiscal year
end from December 31 to October 31. On March 18, 1996, OppenheimerFunds, Inc.
became the investment advisor to the Fund.
4. Per share amounts calculated based on the average shares outstanding during
the period.
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. Not available.
7. Annualized.
8. 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, 1997 were $240,104,265 and $218,380,210, respectively.
9. 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.
4
<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 maturity of 6 to 14 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.
o 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.
o Portfolio Turnover. "Portfolio turnover" describes the rate at which the
Fund traded its portfolio securities during a fiscal year. For example, if a
fund sold all of its securities during the year, its portfolio turnover rate
would have been 100%. Portfolio turnover affects brokerage costs the Fund pays.
The Fund ordinarily does not engage in short-term trading to try to achieve its
objective. The Financial Highlights table above shows the Fund's portfolio
turnover rates during prior fiscal years.
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.
o 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.
o Foreign Securities 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.
o 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. o Special Risks of 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.
o Special Risks of Hedging instruments. 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.
o Special Risks of 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" below.
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.
o 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.
o 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." At times, the Manager may analyze these
investments from the perspective of the income potential of the underlying stock
and will treat them as "bond securities".
o Foreign Securities. Consistent with its investment objective and
policies, the Fund may purchase equity securities issued by foreign companies
and debt securities issued by foreign companies or issues 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.
o 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 Corporation ("Standard & Poor's")
or "Baa" by Moody's Investors Service, 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.
o 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."
o 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.
o "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.
o 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.
o 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.
o 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.
o 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.
o 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" above. 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.
o 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.
o 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.
o 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.
o 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.
o 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 holdings of illiquid securities on an ongoing basis and at
times the Fund may be required to sell some holdings to maintain adequate
liquidity. Illiquid securities include repurchase agreements maturing in more
than seven days, or certain participation interests other than those with puts
exercisable within seven days. The Manager monitors holdings of illiquid
securities on an ongoing basis to determine whether to sell any holdings to
maintain adequate liquidity.
o 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." 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.
o 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.
o 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.
o 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.
o 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.
o Derivative Investments. Derivative investments may be used by the Fund
in some cases for hedging purposes and in other cases to seek income. In the
broadest sense, exchange-traded options and futures contracts (discussed in
"Hedging," above) may be considered "derivative investments." There are special
risks in investing in derivatives, discussed in "Investment Risks" above.
Other 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:
o 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.
o 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.
o 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.
o 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. Additional
investment restrictions are listed in "Other 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 subsidiaries) currently manages investment companies, including other
Oppenheimer funds, with assets of more than $75 billion as of December 31, 1997,
and with more than 3.5 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 management services provided to the Fund by the Manager, and the
services provided by the Distributor and the Transfer Agent to shareholders,
depend on the smooth functioning of their computer systems. Many computer
software systems in use today cannot distinguish the year 2000 from the year
1900 because of the way dates are encoded and calculated. That failure could
have a negative impact on handling securities trades, pricing and account
services. The Manager, the Distributor and Transfer Agent have been actively
working on necessary changes to their computer systems to deal with the year
2000 and expect that their systems will be adapted in time for that event,
although there cannot be assurance of success.
o 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. Michael C. Strathearn, Stephen F.
Libera, Kenneth B. White and 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.
o 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 year ended October 31, 1997
was 0.625% of the average annual net assets for Class A, Class B and Class C
shares.
The Fund pays expenses related to its daily operations, such as custodian
fees, certain 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 Fund" in the Statement of Additional
Information. That section discusses how brokers and dealers are selected for the
Fund's portfolio transactions. When deciding which brokers to use, the Manager
is permitted by the Investment Advisory Agreement to consider whether brokers
have sold shares of the Fund or any other funds for which the Manager serves as
investment advisor.
o 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.
o 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.
o 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 year ended October 31, 1997,
followed by a graphical comparison of the Fund's performance to appropriate
broad-based market indices.
o Management's Discussion of Performance. During the Fund's fiscal year
ended October 31, 1997, the Fund's positive performance was affected principally
by the overall strong performance of the U.S. stock market, although the market
experienced significant volatility near the end of the fiscal year. The Manager
maintained its strategy of targeting stocks with low price-to-earnings ratios
and recent positive earnings surprises. The Fund benefited from its investments
in technology, finance and energy sectors. The Fund experienced disappointing
performance from its investment in the utilities sector. The Fund's fixed-income
investments also performed well over the past year. The Manager invested in high
quality fixed-income securities with an average portfolio maturity of 10 years
in the belief that interest rates were headed downward. The Fund's portfolio
holdings, allocations and its strategies are subject to change.
o 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, 1997. 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 and 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 and Government Master Index. Moreover, the indices
performance data do not reflect any assessment of the risk of the investments
included in the indices.
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Disciplined Allocation Fund (Class A), S&P 500 Index
and Merrill Lynch Corporate and Government Master Index
[Graph](1)
Average Annual Total Return of Class A shares of the Fund at 10/31/97(2)
1 Year 5 Years 10 Years
- ------ ------ --------
11.99% 11.78% 12.38%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Disciplined Allocation Fund (Class B), S&P 500 Index
and Merrill Lynch Corporate and Government Master Index
[Graph](1)
Average Annual Total Return of Class B shares of the Fund at 10/31/97(3)
1 Year Life of Class
- ------ -------------
12.96% 12.43%
Total returns and the ending account values in the graph above show change in
share value and include reinvestment of all dividends and capital gains
distributions. The performance information in the graph above for the S&P 500
Index and the Merrill Lynch Corporate and Government Index begins on 10/31/87
for Class A shares and on 9/30/95 for Class B shares.
(1) The Fund changed its fiscal year end from December to October.
(2) The commencement of operations of the Fund (Class A shares) was 10/31/87.
Class A returns are shown net of the current 5.75% maximum initial sales charge.
(3) Class B shares of the Fund first publicly offered on 10/2/95. The average
annual total returns are shown net of the applicable 5% and 3% contingent
deferred sales charge the 1- year period and the Life of Class. The ending
account value in the graph is net of the applicable 3% contingent deferred sales
charge. Different contingent deferred sales charges applied to redemptions of
Class B shares prior to 3/18/96.
Past performance is not predictive of future performance.
Graphs are not drawn to same scale.
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Disciplined Allocation Fund (Class C), S&P 500 Index
and Merrill Lynch Corporate and Government Master Index
[Graph]
Average Annual Total Return of Class C shares of the Fund at 10/31/97(4)
1 Year Life of Class
- ------ --------------
16.93% 14.64%
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.
The performance information in the graphs for the S&P 500 Index and the Merrill
Lynch Corporate and Government Master Index began on 4/30/96.
(4) Class C shares of the Fund were first publicly offered on 5/1/96. The
average annual total return in the graph for the 1- year period is shown net of
the applicable 1% contingent deferred sales charge.
Past performance is not predictive of future performance.
A B O U T Y O U R A C C O U N T
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.
o 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 12 months of buying them (18 months if the shares were purchased
prior to May 1, 1997), you may pay a contingent deferred sales charge. The
amount of that sales charge will vary depending on the amount you invested.
Sales charge rates are described in "Buying Class A Shares" below.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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. The
Distributor may pay additional periodic compensation from its own resources to
securities dealers or financial institutions based upon the value of shares of
the Fund owned by the dealer or financial institution for its own account or for
its customers.
How Much Must You Invest? You can open a Fund account with a minimum initial
investment of $1,000 and make additional investments at any time with as little
as $25. There are reduced minimum investments under special investment plans:
o 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.
o Under pension and profit-sharing plans, 401(k) plans, Individual
Retirement Accounts (IRAs) and through wrap fee accounts sponsored by certain
broker-dealers, 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.
o 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.
o 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.
o Buying Shares Through Your Dealer. Your dealer will place your order with
the Distributor on your behalf.
o 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.
o Payment by Federal Funds Wire. Shares may be purchased by Federal Funds
Wire. The minimum investment is $2,500. You must first call the Distributor's
Wire Department at 1-800-525-7041 to notify the Distributor of the wire, and
receive further instructions.
o 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.
o 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.
o 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 or the order is received and transmitted to the Distributor by
an entity authorized by the Fund to accept purchase or redemption orders. The
Fund has authorized the Distributor, certain broker-dealers and agents or
intermediaries designated by the Distributor or those broker-dealers to accept
orders. 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 normally your order must be transmitted 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:
Front-End
Sales Charge Front-End
as Percentage Sales Charge Commission as
of Amount as Percentage Percentage of
Amount of Purchase Invested Offering Price Offering Price
- -------------------------------------------------------------------------
Less than $25,000 5.75% 6.10% 4.75%
- -------------------------------------------------------------------------
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
- -------------------------------------------------------------------------
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
- -------------------------------------------------------------------------
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
- -------------------------------------------------------------------------
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
- -------------------------------------------------------------------------
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter" under
Federal securities laws.
o 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:
o Purchases aggregating $1 million or more;
o Purchases by a retirement plan qualified under Section 401(a) if the
retirement plan has total plan assets of $500,000 or more;
o 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,
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
o 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 calculated on a calendar
year basis. 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 purchased prior to May 1, 1997 within 18
months of the end of the calendar month of their purchase, a contingent deferred
sales charge (called the "Class A contingent deferred sales charge") may be
deducted from the redemption proceeds. A Class A contingent deferred sales
charge may be deducted from redemption proceeds of any of those shares purchased
on or after May 1, 1997 that are redeemed within 12 months of the end of the
calendar month of their purchase. That sales charge 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 12 months (18 months for shares
purchased prior to May 1, 1997) of the end of the calendar month of the purchase
of the exchanged shares, the sales charge will apply.
o 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:
o 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
Distributor will add the value at current offering price, of the shares you
previously purchased and currently own to the value of current purchases to
determine the sales charge rate that applies. The 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.
o 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.
o 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. In
order to receive a waiver of the Class A contingent deferred sales charge, you
must notify the Transfer Agent which conditions apply.
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:
o the Manager or its affiliates;
o 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;
o registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the Distributor for
that purpose;
o 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;
o 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);
o 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);
o (1) investment advisors and financial planners who have entered into an
agreement for this purpose with the Distributor and who charge an advisory,
consulting or other fee for their services and buy shares for their own accounts
or the accounts of their clients, (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 (that have entered into an agreement for this purpose with the
Distributor) who buy shares for their own accounts may also purchase shares
without sales charge but only if their accounts are linked to a master account
of their investment advisor or financial planner on the books and records of the
broker, agent or financial intermediary with which the Distributor has made such
special arrangements (each of these investors may be charged a fee by the
broker, agent or financial intermediary for purchasing shares);
o 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;
o 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;
o any unit investment trust that has entered into an appropriate agreement
with the Distributor; or
o 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 commenced by December 31, 1996.
Waivers of Initial and Contingent Deferred Sales Charges in Certain
Transactions. Class A shares issued or purchased in the following transactions
are not subject to Class A sales charges:
o shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party;
o 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;
o 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;
o shares purchased and paid for with the proceeds of shares redeemed in
the past 30 days from a mutual fund (other than a fund managed by the Manager or
any of its subsidiaries) on which an initial sales charge or contingent deferred
sales charge was paid (this waiver also applies to shares purchased by exchange
of shares of Oppenheimer Money Market Fund, Inc. that were purchased and paid
for in this manner); this waiver must be requested when the purchase order is
placed for your Fund shares, and the Distributor may require evidence of your
qualification for this waiver; or
o 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:
o to make Automatic Withdrawal Plan payments that are limited annually to
no more than 12% of the original account value;
o involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (see "Shareholder Account Rules and Policies,"
below);
o if, at the time of purchase of shares (prior to May 1, 1997), the dealer
agreed in writing to accept the dealer's portion of the commission in
installments of 1/18th of the commission per month (and no further commission
will be payable if the shares are redeemed within 18 months of purchase);
o if, at the time of purchase of shares (after May 1, 1997), the dealer
agrees in writing to accept the dealer's portion of the commission in
installments of 1/12th of the commission per month (and no further commission
will be payable if the shares are redeemed within 12 months of purchase); or
o 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;
o for distributions from Retirement Plans having 500 or more eligible
participants, except distributions due to termination of all of the Oppenheimer
funds as an investment option under the Plan; and
o for distributions from 401(k) plans sponsored by broker-dealers that
have entered into a special agreement with the Distributor allowing this waiver.
o 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.
o 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 may pay the Class B service fee and the
asset-based sales charge to the dealer quarterly in lieu of paying the sales
commission and service fee advance at the time of purchase.
The Distributor currently pays sales commissions of 0.75% of the purchase
price of Class C shares to dealers from its own resources at the time of sale.
Including the advance of the service fee, the total amount paid by the
Distributor to the dealer at the time of sale of Class C shares is 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 may pay the Class C service fee
and the asset-based sales charge to the dealer quarterly in lieu of paying the
sales commission and service fee advance at the time of purchase.
The Distributor'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. At October 31, 1997, the end of the
Class B Plan Year, the Distributor incurred unreimbursed expenses in connection
with sales of Class B shares of $227,372 (equal to 2.61% of the Fund's net
assets represented by Class B shares on that date.) At October 31, 1997, the end
of the Class C Plan Year, the Distributor incurred unreimbursed expenses in
connection with sales of Class C shares of $15,154 (equal to 1.03% of the Fund's
net assets represented by Class C shares on that date.) 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. In order to
receive a waiver of Class B or Class C contingent deferred sales charge, you
must notify the Transfer Agent which conditions apply.
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:
o 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);
o 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);
o returns of excess contributions to Retirement Plans;
o 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;
o shares redeemed involuntarily, as described in "Shareholder Account Rules
and Policies," below; or
o distributions from OppenheimerFunds prototype 401(k) plans and from
certain Massachusetts Mutual Life Insurance Company prototype 401(k) plans (1)
for hardship withdrawals; (2) under a Qualified Domestic Relations Order, as
defined in the Internal Revenue Code; (3) to meet minimum distribution
requirements as defined in the Internal Revenue Code; (4) to make "substantially
equal periodic payments" as described in Section 72(t) of the Internal Revenue
Code; (5) for separation from service; or (6) for loans to participants or
beneficiaries;
o distributions from 401(k) plans sponsored by broker-dealers that have
entered into a special agreement with the Distributor allowing this waiver.
Waivers for Shares Sold or Issued in Certain Transactions. The contingent
deferred sales charge is also waived on Class B and Class C shares sold or
issued in the following cases:
o shares sold to the Manager or its affiliates;
o 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
o 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.
o 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.
o 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.
o 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.
o 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.
o Selling Shares. You can redeem shares by telephone automatically by
calling the PhoneLink number and the Fund will send the proceeds directly to
your AccountLink bank account.
Please refer to "How to Sell Shares" below for details.
Shareholder Transactions by Fax. Requests for certain account transactions may
be sent to the Transfer Agent by fax (telecopier). Please call 1-800-525-7048
for information about which transactions are included. Transaction requests
submitted by fax are subject to the same rules and restrictions as written and
telephone requests described in this Prospectus.
OppenheimerFunds Internet Web Site. Information about the Fund, including your
account balance, daily shares prices, market and Fund portfolio information, may
be obtained by visiting the OppenheimerFunds Internet Web Site, at the following
Internet address: http://www.oppenheimerfunds.com. In 1998, the Transfer Agent
anticipates offering certain account transactions through the Internet Web Site.
To find out more information about those transactions and procedures, please
visit the Web Site.
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:
o 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.
o 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:
o Individual Retirement Accounts including rollover IRAs, for individuals
and their spouses and SIMPLE IRAs offered by employers
o 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
o SEP-IRAs (Simplified Employee Pension Plans) for small business owners
or people with income from self-employment, including SARSEP-IRAs
o Pension and Profit-Sharing Plans for self-employed persons and other
employers
o 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.
o 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.
o 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):
o You wish to redeem more than $50,000 worth of shares and receive a check
o The redemption check is not payable to all shareholders listed on the
account statement
o The redemption check is not sent to the address of record on your account
statement
o Shares are being transferred to a Fund account with a different owner or
name
o Shares are redeemed by someone other than the owners (such as an
Executor)
o 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:
o Your name
o The Fund's name
o Your Fund account number (from your account statement)
o The dollar amount or number of shares to be redeemed
o Any special payment instructions
o Any share certificates for the shares you are selling
o The signatures of all registered owners exactly as the account is
registered, and
o Any special 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:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
Send courier or Express Mail requests to:
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.
o To redeem shares through a service representative, call 1-800-852-8457
o To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address on the
account statement, or, if you have linked your Fund account to your bank account
on AccountLink, you may have the proceeds wired to that bank account.
o 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.
o 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:
o Shares of the fund selected for exchange must be available for sale in
your state of residence.
o The prospectuses of the Fund and the fund whose shares you want to buy
must offer the exchange privilege.
o You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them; after the account is open 7 days, you
can exchange shares every regular business day.
o You must meet the minimum purchase requirements for the fund you
purchase by exchange.
o 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:
o 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."
o 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:
o Shares are normally redeemed from one fund and purchased from the other
fund in the exchange transaction on the same regular business day on which the
Transfer Agent receives an exchange request that 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.
o 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.
o 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.
o 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.
o If the Transfer Agent cannot exchange all the shares you request because
of a restriction cited above, only the shares eligible for exchange will be
exchanged.
Shareholder Account Rules and Policies
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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 federal funds wire, certified check or arrange with your bank
to provide telephone or written assurance to the Transfer Agent that your
purchase payment has cleared.
o 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.
o 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.
o "Backup Withholding" of Federal income tax may be applied at the rate of
31% from taxable dividends, distributions and redemption proceeds (including
exchanges) if you fail to furnish the Fund a correct and properly 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 underreport your income to the Internal Revenue Service.
o 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.
o 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:
o 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.
o 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.
o 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.
o Reinvest Your Distributions in Another Oppenheimer Fund Account. You can
reinvest all distributions in the same class of shares of 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. So that the Fund will not have to pay taxes on the amount it
distributes to shareholders as dividends and capital gains, the Fund intends to
manage its investments so that it will qualify as a "regulated investment
company" under the Internal Revenue Code, although it reserves the right not to
qualify in a particular year.
o "Buying a Dividend." 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.
o 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.
o 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.
o 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.
-3-
<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) Oppenheimer Quest for
Value Fund, Inc., Oppenheimer Quest Growth & Income Value Fund, Oppenheimer
Quest Opportunity Value Fund, Oppenheimer Quest Small Cap Value Fund and
Oppenheimer Quest Global Value Fund, Inc. on November 24, 1995, when
OppenheimerFunds, Inc. became the investment adviser to those funds, and (ii)
Quest for Value U.S. Government Income Fund, Quest for Value Investment Quality
Income Fund, Quest for Value Global Income Fund, Quest for Value New York
Tax-Exempt Fund, Quest for Value National Tax-Exempt Fund and Quest for Value
California Tax-Exempt Fund when those funds merged into various Oppenheimer
funds on November 24, 1995. The funds listed above are referred to in this
Prospectus as the "Former Quest for Value Funds." The waivers of initial and
contingent deferred sales charges described in this Appendix apply to shares of
the Fund (i) acquired by such shareholder pursuant to an exchange of shares of
one of the Oppenheimer funds that was one of the Former Quest for Value Funds,
or (ii) purchased by such shareholder by exchange of shares of other Oppenheimer
funds that were acquired pursuant to the merger of any of the former Quest for
Value Funds into an Oppenheimer fund on November 24, 1995.
Class A Sales Charges
o Reduced Class A Initial Sales Charge Rates for Certain Former Quest
Shareholders.
o 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.
Front-End Front-End
Sales Charge as Sales Charge as Commission as
Number of Eligible a Percentage of a Percentage of Percentage
Employees or Members Offering Price Offering Price Amount Invested
- -------------------------------------------------------------------
9 or fewer 2.50% 2.56% 2.00%
- -------------------------------------------------------------------
At least 10 but
not more than 49 2.00% 2.04% 1.60%
For purchases by Qualified Retirement plans and Associations having 50 or
more eligible employees or members, there is no initial sales charge on
purchases of Class A shares, but those shares are subject to the Class A
contingent deferred sales charge described on pages __ to __ of this Prospectus.
Purchases made under this arrangement qualify for the lower of the sales
charge rate in the table based on the number of eligible employees in a
Qualified Retirement Plan or members of an Association or the sales charge rate
that applies under the Rights of Accumulation described above in the Prospectus.
In addition, purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they qualified to
purchase shares of any of the Former Quest For Value Funds by virtue of
projected contributions or investments of $1 million or more each year.
Individuals who qualify under this arrangement for reduced sales charge rates as
members of Associations, or as eligible employees in Qualified Retirement Plans
also may purchase shares for their individual or custodial accounts at these
reduced sales charge rates, upon request to the Fund's Distributor.
o 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:
o 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.
o 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.
o 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:
o 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.
o 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
o 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.
o 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.
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
o 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.
o Class A Sales Charge Waivers. Additional Class A shares of the Fund may
be purchased without a sales charge, by a person who was in one (or more) of the
categories below and acquired Class A shares prior to March 18, 1996, and still
holds Class A shares:
(1) any purchaser, provided the total initial amount invested in the Fund or any
one or more of the Former Connecticut Mutual Funds totaled $500,000 or more,
including investments made pursuant to the Combined Purchases, Statement of
Intention and Rights of Accumulation features available at the time of the
initial purchase and such investment is still held in one or more of the Former
Connecticut Mutual Funds or a Fund into which such Fund merged; (2) any
participant in a qualified plan, provided that the total initial amount invested
by the plan in the Fund or any one or more of the Former Connecticut Mutual
Funds totaled $500,000 or more; (3) Directors of the Fund or any one or more of
the Former Connecticut Mutual Funds and members of their immediate families; (4)
employee benefit plans sponsored by Connecticut Mutual Financial Services,
L.L.C. ("CMFS"), the Fund's prior distributor, and its affiliated companies; (5)
one or more members of a group of at least 1,000 persons (and persons who are
retirees from such group) engaged in a common business, profession, civic or
charitable endeavor or other activity, and the spouses and minor dependent
children of such persons, pursuant to a marketing program between CMFS and such
group; and (6) an institution acting as a fiduciary on behalf of an individual
or individuals, if such institution was directly compensated by the
individual(s) for recommending the purchase of the shares of the Fund or any one
or more of the Former Connecticut Mutual Funds, provided the institution had an
agreement with CMFS. Purchases of Class A shares made pursuant to (1) and (2)
above may be subject to the Class A CDSC of the Former Connecticut Mutual Funds
described above.
Additionally, Class A shares of the Fund may be purchased without a sales
charge by any holder of a variable annuity contract issued in New York State by
Connecticut Mutual Life Insurance Company through the Panorama Separate Account
which is beyond the applicable surrender charge period and which was used to
fund a qualified plan, if that holder exchanges the variable annuity contract
proceeds to buy Class A shares of the Fund.
Class A and Class B Contingent Deferred Sales Charge Waivers
In addition to the waivers set forth in "How To Buy Shares," above, the
contingent deferred sales charge will be waived for redemptions of Class A and
Class B shares of the Fund and exchanges of Class A or Class B shares of the
Fund into Class A or Class B shares of a Former Connecticut Mutual Fund provided
that the Class A or Class B shares of the Fund to be redeemed or exchanged were
(i) acquired prior to March 18, 1996 or (ii) were acquired by exchange from an
Oppenheimer Fund that was a Former Connecticut Mutual Fund and the shares of
such Former Connecticut Mutual Fund were purchased prior to March 18, 1996:
(1)by the estate of a deceased shareholder; (2) upon the disability of a
shareholder, as defined in Section 72(m)(7) of the Internal Revenue Code; (3)
for retirement distributions (or loans) to participants or beneficiaries from
retirement plans qualified under Sections 401(a) or 403(b)(7)of the Code, or
from IRAs, deferred compensation plans created under Section 457 of the Code, or
other employee benefit plans; (4) as tax-free returns of excess contributions to
such retirement or employee benefit plans; (5) in whole or in part, in
connection with shares sold to any state, county, or city, or any
instrumentality, department, authority, or agency thereof, that is prohibited by
applicable investment laws from paying a sales charge or commission in
connection with the purchase of shares of any registered investment management
company; (6) in connection with the redemption of shares of the Fund due to a
combination with another investment company by virtue of a merger, acquisition
or similar reorganization transaction; (7) in connection with the Fund's right
to involuntarily redeem or liquidate the Fund; (8) in connection with automatic
redemptions of Class A shares and Class B shares in certain retirement plan
accounts pursuant to an Automatic Withdrawal Plan but limited to no more than
12% of the original value annually; and (9) as involuntary redemptions of shares
by operation of law, or under procedures set forth in the Fund's Articles of
Incorporation, or as adopted by the Board of Directors of the Fund.
<PAGE>
Oppenheimer Disciplined 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
OppenheimerFunds Internet Web Site
http://www.oppenheimerfunds.com
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
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. PR0205.001.0298 Printed on recycled paper
<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 Index 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
10/31/87 through 10/31/97, in the case of the Fund's Class B, that graph will
cover the period from inception (10/2/95) through 10/31/97, and in the case of
Class C shares, that graph will cover the period from inception (5/1/96) through
10/31/97. 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."
Oppenheimer Merrill Lynch
Disciplined Corporate
Fiscal Allocation S&P 500 Government
Period Ended Fund A Index Master Index
- ------------ ---------- ------- --------------
10/31/87 $ 9,425 $10,000(1) $10,000(1)
12/31/87 $ 9,503 $ 9,874 $10,201
12/31/88 $10,493 $11,509 $10,988
12/31/89 $12,864 $15,150 $12,540
12/31/90 $12,838 $14,679 $13,606
12/31/91 $16,460 $19,141 $15,768
12/31/92 $18,088 $20,598 $16,979
12/31/93 $20,963 $22,669 $18,857
12/31/94 $20,521 $22,967 $18,208
12/31/95 $25,435 $31,588 $21,704
10/31/96(2) $27,030 $36,838 $22,180
10/31/97 $32,118 $48,663 $24,170
- ---------------
(1) Index value as of October 31, 1987
Oppenheimer Merrill Lynch
Disciplined Corporate
Fiscal Allocation S&P 500 Government
Period Ended Fund B Index Master Index
- ------------ ---------- ------- --------------
10/02/95(3) $10,000 $10,000(4) $10,000(4)
12/31/95 $10,493 $10,602 $10,463
10/31/96(1) $11,071 $12,364 $10,693
10/31/97 $12,759 $16,332 $11,652
Oppenheimer Merrill Lynch
Disciplined Corporate
Fiscal Allocation S&P 500 Government
Period Ended Fund C Index Master Index
- ------------ ---------- ------- --------------
5/01/96(5) $10,000 $10,000(6) $10,000(6)
10/31/96 $10,408 $10,908 $10,524
10/31/97 $12,274 $14,409 $11,469
- ---------------------
(3) Class B shares of the Fund were first publicly offered on 10/02/95 (4) Index
value as of 9/30/95 (5) Class C shares of the Fund were first publicly offered
on 5/01/96 (6) Index value as of 4/30/96
<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 19, 1998
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 19, 1998. It should be read together with the Prospectus which
may be obtained by writing to the Fund's Transfer Agent, OppenheimerFunds
Services, at P.O. Box 5270, Denver, Colorado 80217 or by calling the Transfer
Agent at the toll-free number shown above.
CONTENTS
Page
About the Fund
Investment Objective and Policies.............................................
Investment Policies and Strategies.........................................
Other Investment Restrictions..............................................
How the Fund is Managed.......................................................
Organization and History...................................................
Directors and Officers of the Fund.........................................
The Manager and Its Affiliates.............................................
Brokerage Policies of the Fund................................................
Performance of the Fund.......................................................
Distribution and Service Plans................................................
About Your Account
How to Buy Shares.............................................................
How to Sell Shares............................................................
How to Exchange Shares........................................................
Dividends, Capital Gains and Taxes............................................
Additional Information About the Fund.........................................
Financial Information About the Fund
Independent Auditors' Report..................................................
Financial Statements..........................................................
Appendices
Appendix A: Corporate Industry Classification..............................A-1
Appendix B: Description of Securities Ratings..............................B-1
<PAGE>
ABOUT THE FUND
Investment Objective And Policies
Investment Policies and Strategies. The investment objective 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.
o 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 Company'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.
o 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."
o| 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).
o 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.
o 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.
o High Yield Securities. The Fund may invest in high-yield/high risk
securities (commonly called junk bonds).
OppenheimerFunds, Inc. ( the "Manager") does not rely solely 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.
o 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.
o 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.
o 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").
o 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.
o 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.
o 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.
o 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.
o 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 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.
o 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.
o "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.
o 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.
o 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.
o 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.
o 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:
o 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.
o 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.
o 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.
o Equity Securities. Additional information about some of the types of
equity securities the Fund may invest in is provided below.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o Tax Aspects of Covered Calls and Hedging Instruments. The Fund intends
to qualify as a "regulated investment company" under the Internal Revenue Code
(although it reserves the right not to qualify). That qualification enables the
Fund to "pass through" its income and realized capital gains to shareholders
without 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 (unless the Fund's shares are held in a
retirement account or the shareholder is otherwise exempt from tax).
o 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.
o 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.
o 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.
o 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
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% 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% of its total
assets in the obligations of any one bank; and (b) 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.
(3)Invest more than 25% 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% 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% 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% 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% 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% 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% of its total assets, taken at market value at the time of the
investment, would be invested in such securities. However, up to 25% 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% 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 Fund is Managed
Organization and History. Oppenheimer Series Fund, Inc. (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 Company changed its name 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 (and each its series, including the
Fund) is not required to hold, and does not plan to hold, regular annual
meetings of shareholders. The Fund will hold meetings when required to do so by
the Investment Company Act or other applicable law, or when a shareholder
meeting is called by the 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 Fund. The Fund's Directors and officers and their
principal occupations and business affiliations during the past five years are
listed below. The address for 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 also trustees or directors of Oppenheimer California
Municipal Fund, Oppenheimer Capital Appreciation Fund, Oppenheimer Developing
Markets Fund, Oppenheimer Discovery Fund, Oppenheimer Enterprise Fund,
Oppenheimer Global Fund, Oppenheimer Global Growth & Income Fund, Oppenheimer
Gold & Special Minerals Fund, Oppenheimer Growth Fund, Oppenheimer International
Growth Fund, Oppenheimer International Small Company Fund, Oppenheimer Money
Market Fund, Inc., Oppenheimer Multi-Sector Income Trust, Oppenheimer
Multi-State Municipal Trust, Oppenheimer Multiple Strategies Fund, Oppenheimer
Municipal Bond Fund, Oppenheimer New York Municipal Fund, the other series in
the Oppenheimer Series Fund, Inc., Oppenheimer U.S. Government 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 and Messrs. Spiro, Donohue, Bishop, Bowen, Farrar and
Zack hold the same respective offices with the New York- based Oppenheimer funds
as with the Fund. As of February 9, 1998, the Directors and officers of the Fund
as a group owned less than 1% of the outstanding Class A, Class B, or Class C
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 (one of the
Directors of the Fund listed below, Ms. Macaskill, and one of the officers, Mr.
Donohue, are trustees of that plan) other than the shares beneficially owned
under that plan by the officers of the Fund listed above.
Leon Levy, Chairman of the Board of Directors; Age: 72
31 West 52nd Street, New York, NY 10019
General Partner of Odyssey Partners, L.P. (investment partnership) (since 1982)
and Chairman of Avatar Holdings, Inc. (real estate development).
Robert G. Galli, Director; Age: 64
19750 Beach Road, Jupiter Island, FL 33464
Formerly he held the following positions: Vice Chairman of OppenheimerFunds,
Inc. (the "Manager") (October 1995-December 1997); 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: 74
591 Breezy Hill Road, Hillsdale, NY 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: 49
President (since June 1991), Chief Executive Officer (since September 1995) and
a Director (since December 1994) of the Manager; President and director (since
June 1991) of HarbourView; Chairman and a director of SSI (since August 1994),
and SFSI (September 1995); President (since September 1995) and a director
(since October 1990) of OAC; President (since September 1995) and a director
(since November 1989) of Oppenheimer Partnership Holdings, Inc., a holding
company subsidiary of the Manager; a director of Oppenheimer Real Asset
Management, Inc. (since July 1996); President and a director (since October
1997) of OppenheimerFunds International Ltd., an offshore fund manager
subsidiary of the Manager ("OFIL") and Oppenheimer Millennium Funds plc (since
October 1997); President and a director of other Oppenheimer funds; a director
of the NASDAQ Stock Market, Inc. and of Hillsdown Holdings plc (a U.K. food
company); formerly an Executive Vice President of the Manager.
Elizabeth B. Moynihan, Director; Age: 68
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. Randall, Director; Age: 70
6 Whittaker's Mill, Williamsburg, VA 23185
A director of Dominion Resources, Inc. (electric utility holding company),
Dominion Energy, Inc. (electric power and oil & gas producer), Texan
Cogeneration Company (cogeneration company), Prime Retail, Inc. (real estate
investment trust); 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: 67
40 Park Avenue, New York, NY 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 River Bank America (real estate
manager); Trustee, Financial Accounting Foundation (FASB and GASB); formerly New
York State Comptroller and trustee, New York State and Local Retirement Fund.
Russell S. Reynolds, Jr., Director; Age: 66
8 Sound Shore Drive, Greenwich, CT 06830
Founder Chairman of Russell Reynolds Associates, Inc. (executive recruiting);
Chairman of Directorship Inc. (corporate and governance consulting); a director
of Professional Staff Limited (U.K.); a trustee of Mystic Seaport Museum,
International House and Greenwich Historical Society.
Donald W. Spiro, Vice Chairman and Director*; Age: 72
Chairman Emeritus (since August 1991) and a director (since January 1969) of the
Manager; formerly Chairman of the Manager and the Distributor.
Pauline Trigere, Director; Age: 85
498 Seventh Avenue, New York, NY 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and sale of
women's fashions).
Clayton K. Yeutter, Director; Age: 67
1325 Merrie Ridge Road, McLean, VA 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) and Texas Instruments, Inc. (electronics);
formerly (in descending chronological order) IMC Global Inc. (chemicals and
animal feed), 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.
Peter M. Antos, Vice President and Portfolio Manager; Age: 52
One Financial Plaza, 755 Main Street, Hartford, CT 06103-2603
Chartered Financial Analyst; Principal Portfolio Manager, Vice President of the
Fund and Senior Vice President of the Manager and HarbourView (since March
1996); portfolio manager of other Oppenheimer funds; previously Vice President
and Senior Portfolio Manager, Equities - Connecticut Mutual Life Insurance
Company and its subsidiary - G. R. Phelps & Co. ("G. R. Phelps") (1989- 1996).
Michael C. Strathearn, Vice President and Portfolio Manager; Age 45
One Financial Plaza, 755 Main Street, Hartford, CT 06103-2603
Chartered Financial Analyst; Vice President of the Fund, the Manager and
HarbourView (since March 1996); portfolio manager of other Oppenheimer funds;
previously a Portfolio Manager, Equities-Connecticut Mutual Life Insurance
Company (1988-1996).
Kenneth B. White, Vice President and Portfolio Manager; Age 46
One Financial Plaza, 755 Main Street, Hartford, CT 06103-2603
Chartered Financial Analyst; Vice President of the Fund, the Manager and
HarbourView (since March 1996); portfolio manager of other Oppenheimer funds;
previously a Portfolio Manager, Equities-Connecticut Mutual Life Insurance
Company (1992-1996); Senior Investment Officer, Equities-Connecticut Mutual Life
Insurance Company (1987-1992).
Stephen F. Libera, Vice President and Portfolio Manager; Age 47
One Financial Plaza, 755 Main Street, Hartford, CT 06103-2603
Chartered Financial Analyst; Vice President of the Funds, the Manager and
HarbourView (since March 1996); portfolio manager of other Oppenheimer funds;
previously a Vice President and Senior Portfolio Manager, Fixed
Income-Connecticut Mutual Life Insurance Company and its subsidiary -G.R. Phelps
(1985-1996).
Arthur J. Zimmer, Vice President and Portfolio Manager; Age 51
Senior Vice President of the Manager (since June 1997); Vice President of
Centennial (since September 1991); an officer of other Oppenheimer funds;
formerly Vice President of the Manager (October 1990 - June 1997).
George C. Bowen, Treasurer; Age: 61
6803 South Tucson Way, Englewood, CO 80112
Senior Vice President (since September 1987) and Treasurer (since March 1985) of
the Manager; Vice President (since June 1983) and Treasurer (since March 1985)
of the Distributor; Vice President (since October 1989) and Treasurer (since
April 1986) of HarbourView; Senior Vice President (since February 1992),
Treasurer (since July 1991)and a director (since December 1991) of Centennial;
President, Treasurer and a director of Centennial Capital Corporation (since
June 1989); Vice President and Treasurer (since August 1978) and Secretary
(since April 1981) of SSI; Vice President, Treasurer and Secretary of SFSI
(since November 1989); Treasurer of OAC (since June 1990); Treasurer of
Oppenheimer Partnership Holdings, Inc. (since November 1989); Vice President and
Treasurer of Oppenheimer Real Asset Management, Inc. (since July 1996); Chief
Executive Officer, Treasurer and a director of MultiSource Services, Inc., a
broker-dealer (since December 1995); an officer of other Oppenheimer funds.
Andrew J. Donohue, Secretary; Age: 47
Executive Vice President (since January 1993), General Counsel (since October
1991) and a Director (since September 1995) of the Manager; Executive Vice
President (since September 1993), and a director (since January 1992) of the
Distributor; Executive Vice President, General Counsel and a director of
HarbourView, SSI, SFSI and Oppenheimer Partnership Holdings, Inc. since
(September 1995) and MultiSource Services, Inc. (a broker-dealer) (since
December 1995); President and a director of Centennial (since September 1995);
President and a director of Oppenheimer Real Asset Management, Inc. (since July
1996); General Counsel (since May 1996) and Secretary (since April 1997) of OAC;
Vice President of OFIL and Oppenheimer Millennium Funds plc (since October
1997); an officer of other Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer; Age: 39
6803 South Tucson Way, Englewood, CO 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); an
officer of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for
the Manager.
Scott T. Farrar, Assistant Treasurer; Age: 32
6803 South Tucson Way, Englewood, CO 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); Assistant
Treasurer of Oppenheimer Millennium Funds plc (since October 1997); an officer
of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for
the Manager.
Robert G. Zack, Assistant Secretary; Age: 49
Senior Vice President (since May 1985) and Associate General Counsel (since May
1981) of the Manager, Assistant Secretary of SSI (since May 1985), and SFSI
(since November 1989); Assistant Secretary of Oppenheimer Millennium Funds plc
(since October 1997); an officer of other Oppenheimer funds.
- -------------------------------------------
*A Director who is an "interested person" of the Company as defined in the
Investment Company Act.
Remuneration of Directors. The officers of the Fund are affiliated with the
Manager. They and the Directors of the Fund who are affiliated with the Manager
(Ms. Macaskill and Mr. Spiro) receive no salary or fee from the Fund. The
remaining Directors of the Fund received the compensation shown below from the
Fund, during its fiscal year ended October 31, 1997. The compensation from all
of the New York-based Oppenheimer funds includes the Fund and is compensation
received as director, trustee or member of a committee of the Board during the
calendar year 1997.
Retirement
Benefits Total Compensation
Aggregate Accrued as From All
Compensation Part of New York-based
Name and Position From the Fund Fund Expenses Oppenheimer Funds(1)
Leon Levy $18,161 $2,244 $158,500
Chairman and Director
Benjamin Lipstein
Study Committee
Chairman(2), Audit
Committee Member
and Director $15,697 $1,939 $137,000
Elizabeth Moynihan
Study Committee Member
and Director $11,057 $1,366 $96,500
Kenneth A. Randall
Audit Committee
Chairman & Director $10,140 $1,253 $88,500
Edward V. Regan
Proxy Committee Chairman,
Audit Committee Member and
Director $10,026 $1,239 $87,500
Russell S. Reynolds, Jr.
Proxy Committee Member
and Director $3,752 $ 464 $32,750
Pauline Trigere
Director $6,703 $ 828 $58,500
Clayton K. Yeutter
Proxy Committee Member
and Director $7,505 $ 927 $65,500
(1) For the 1997 calendar year.
(2) Committee position held during a portion of the period shown.
The Fund 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.
Deferred Compensation Plan. The Board of Directors has adopted a Deferred
Compensation Plan for disinterested directors that enables directors to elect to
defer receipt of all or a portion of the annual fees they are entitled to
receive from the Fund. Under the plan, the compensation deferred by a Director
is periodically adjusted as though an equivalent amount had been invested in
shares of one or more Oppenheimer funds selected by the Director. The amount
paid to the Director under the plan will be determined based upon the
performance of the selected funds. Deferral of Director's fees under the plan
will not materially affect the Fund's assets, liabilities or net income per
share. The plan will not obligate the Fund to retain the services of any
Director or to pay any particular level of compensation to any Director.
Pursuant to an Order issued by the Securities and Exchange Commission, the Fund
may, without shareholder approval and notwithstanding its fundamental policy
restricting investment in other open-end investment companies, as described on
page 20 of the Statement of Additional Information, invest in the funds selected
by the Director under the plan for the limited purpose of determining the value
of the Director's deferred fee account.
Major Shareholders. As of February 9, 1998, 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 as follows: RPSS TR Rollover IRA for the
benefit of Barry Deutsch, 1919 19th Street, San Francisco, California 94107,
which owned 8,480.522 Class C shares (or 7.05% of the then outstanding Class C
shares) and Saydel Living Trust, Edward and Marian Saydel, Trustees under
Agreement dated March 21, 1996, 62 Chelsea Street, Bloomingdale, Illinois 60108,
which owned 6,198.719 Class C shares (or 5.15% of the then outstanding Class C
shares).
The Manager and Its 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 Mr. Spiro) serve as Directors of the
Funds.
The Manager and the Fund have a Code of Ethics. It is designed to detect
and prevent improper personal trading by certain employees, including portfolio
managers, that would compete with or take advantage of the Fund's portfolio
transactions. Compliance with the Code of Ethics is carefully monitored and
strictly enforced by the Manager.
o Portfolio Management. The Portfolio Manager of the Fund is Peter M.
Antos, who is principally responsible for the day-to-day management of the
Fund's portfolio. Mr. Antos' background is described in the Prospectus under
"Portfolio Management." Other member of the Manager's Equity Portfolio
Department, particularly Michael C. Strathearn, Kenneth B. White, Stephen F.
Libera and Arthur J. Zimmer provide the Portfolio Manager with counsel and
support in managing the Fund's portfolio.
o The Investment Advisory Agreement. 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 Investment Advisory
Agreement or by the Distributor under a Distribution Agreement (defined below)
are paid by the Fund. The Investment 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 year ended December 31, 1995, the Fund paid $1,251,666 in
management's fees paid to G.R. Phelps & Co., the Fund's investment advisor. 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. For fiscal year ended October 31, 1997, the Fund paid $1,535,343
in management fees to the Manager.
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 Investment 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 Investment 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.
o 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 year ended
December 31, 1995, the fiscal period ended October 31, 1996 and the fiscal year
ended October 31, 1997, the aggregate sales charges on sales of the Fund's Class
A shares were $559,650, $703,460 and $468,073, respectively, of which the
Distributor and an affiliated broker-dealer retained $0, $501,951 and $456,768
in those respective years. During the Fund's fiscal year ended October 31, 1997
the contingent deferred sales charges collected on the Fund's Class B shares
totaled $14,973. During the fiscal year ended October 31, 1997, sales charges
advanced to broker/dealers by the Distributor on sales of the Fund's Class B
shares totalled $175,997 of which $103,608 was paid to an affiliated
broker/dealer. During the Fund's fiscal year ended October 31, 1997 there were
no contingent deferred sales charges collected on the Fund's Class C shares.
During the fiscal year ended October 31, 1997, sales charges advanced to
broker/dealers by the Distributor on sales of the Fund's Class C shares totalled
$10,863 of which $3,393 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.
o The Transfer Agent. OppenheimerFunds Services, the Fund's transfer agent,
is responsible for maintaining the Fund's shareholder registry and shareholder
accounting records, and for shareholder servicing and administrative functions.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of the duties of
the Manager under the Investment Advisory Agreement is to arrange the portfolio
transactions for the Fund. The Investment 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 Investment
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 Investment 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 Investment 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 Investment 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 Investment
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.
During the Fund's fiscal year ended October 31, 1997, the total brokerage
commissions paid by the Fund was $385,963. Of that amount, during the same
period, $382,652 was paid to brokers as commissions in return for research
services. The total aggregate dollar amount of those transactions was
$265,602,087.
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.
o Yields
o Standardized Yield. The "standardized yield" (referred to as "yield") is
shown for a class of shares for a stated 30-day period. It is not based on
actual distributions paid by the Fund to shareholders in the 30-day period, but
is a hypothetical yield based upon the net investment income from the Fund's
portfolio investments for that period. It may therefore differ from the
"dividend yield" for the same class of shares described below. It is calculated
using the following formula set forth in rules adopted by the Securities and
Exchange Commission designed to assure uniformity in the way that all funds
calculate their yields:
a-b 6
Standardized Yield = 2 ((------ + 1) - 1)
cd
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense reimbursements).
c = the average daily number of shares of that class outstanding during
the 30-day period that were entitled to receive dividends.
d = the maximum offering price per share of 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 for a 30-day period may differ from the yield for
other periods. The SEC formula assumes that the standardized yield for a 30-day
period occurs at a constant rate for a six-month period and is annualized at the
end of the six-month period. Additionally, because each class of shares is
subject to different expenses, it is likely that the standardized yields of the
Fund's classes of shares will differ for any 30-day period.
o Dividend Yield. The Fund may quote a "dividend yield" for each class of
its shares. Dividend yield is based on the dividends paid on shares of a class
during the actual dividend period. To calculate dividend yield, the dividends of
a class declared during a stated period are added together and the sum is
multiplied by 12 (to annualize the yield) and divided by the maximum offering
price on the last day of the dividend period. The formula is shown below:
Dividend Yield = Dividends paid x 12
---------------------------------------------
Maximum Offering Price (payment date)
The maximum offering price for Class A shares includes the current maximum
initial sales charge. The maximum offering price for Class B and Class C shares
is the net asset value per share, without considering the effect of contingent
deferred sales charges. The Class A dividend yield may also be quoted without
deducting the maximum initial sales charge.
o Total Return Information
o 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 )
o 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% (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% for the sixth year
and none thereafter) is applied to the investment result for the time period
shown (unless the total return is shown at net asset value, as described below).
For Class C shares, the 1.0% contingent deferred sales charge is applied to the
investment result 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.
The average annual total returns on an investment in Class A shares of the
Fund for the one year, five year and ten year periods ended October 31, 1997
were 11.99%, 11.78% and 12.38%, respectively. The cumulative total return on
Class A shares for the ten year period ended October 31, 1997 was 221.19%. For
the fiscal year ended October 31, 1997 and the period from October 2, 1995 (the
date Class B shares were first publicly offered) through October 31, 1997, the
average annual total returns on an investment in Class B shares of the Fund were
12.96% and 12.43%, respectively. The cumulative total return on an investment in
Class B shares of the Fund for the period from October 2, 1995 through October
31, 1997 was 27.60%. For the fiscal year ended October 31, 1997 and the period
from May 1, 1996 (the date Class C shares were first publicly offered) through
October 31, 1997, the average annual total returns on an investment in Class C
shares of the Fund were 16.93% and 14.64%, respectively. The cumulative total
return on an investment in Class C shares of the Fund for the period from May 1,
1996 to October 31, 1997 was 22.74%.
o 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, 1997 were
18.82%, 13.11%, and 13.04%. The average annual total returns at net asset value
for the Fund's Class B shares for the one year period ended October 31, 1997 and
for the period from October 2, 1995 (inception of the class) through October 31,
1997 were 17.96% and 13.69%. The average annual total returns at net asset value
for the Fund's Class C shares for the one year period ended October 31,1997 and
for period May 1, 1996 (inceptions of the class) through October 31, 1997 were
17.93% and 14.64%.
The cumulative total returns at net asset value of the Fund's Class A
shares for the ten year period ended October 31, 1997 was 240.78%. For Class B
shares, the cumulative total returns at net asset value for the period from
inception through October 31, 1997 was 30.60%. For Class C shares, the
cumulative total return at net asset value from inception to October 31, 1997
was 22.74%.
Other Performance Comparisons. From time to time the Fund may publish the
ranking of its Class A, Class B or Class C shares by Lipper Analytical Services,
Inc. ("Lipper"), a widely- recognized independent mutual fund monitoring
service. Lipper monitors the performance of regulated investment companies,
including the Fund, and ranks their performance for various periods based on
categories relating to investment objectives. The Lipper performance rankings
are based on total returns that include the reinvestment of capital gains
distributions and income dividends but do not take sales charges or taxes into
consideration.
From time to time the Fund may publish the star ranking of the performance
of its Class A, Class B 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, municipal bond funds, based on risk-adjusted total investment
returns. The Fund is ranked among domestic stock funds. Investment return
measures a fund's or class's one, three, five and ten-year average annual total
returns (depending on the inception of the fund or class) in excess of 90-day
U.S. Treasury bill returns after considering the fund's sales charges and
expenses. Risk measures a fund's or class's performance below 90-day U.S.
Treasury bill returns. Risk and investment return are combined to produce star
rankings reflecting performance relative to the average fund in a fund's
category. Five stars is the "highest" ranking (top 10%), four stars is "above
average" (next 22.5%), three stars is "average" (next 35%), two stars is "below
average" (next 22.5%) and one star is "lowest" (bottom 10%). The current star
ranking is the fund's or class's 3-year ranking or its combined 3-and 5-year
ranking (weighted 60%/40%, respectively, or its combined 3-,5- and 10-year
ranking (weighted 40%, 30% and 30%, respectively), depending on the inception of
the fund or class. Rankings are subject to change monthly.
The Fund may also compare its performance to that of other funds in its
Morningstar Category. In addition to its star 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.
The total return on an investment made in Class A, Class B or Class C
shares of the Fund may also be compared with the performance for the same period
of : (1) S&P 500 Index, a broad based index of equity securities market, and (2)
Merrill Lynch Corporate and 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 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 reported
shows the effects of taxes. Other indices may provide useful comparisons. The
performance of the Fund's Class A, Class B or Class C shares may also be
compared in publications to (i) the performance of various market indices or
other investments for which reliable performance data is available, and (ii) to
averages, performance rankings or other benchmarks prepared by recognized mutual
fund statistical services.
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 or Morningstar.
From time to time, the Fund's Manager may publish rankings or ratings of
the Manager (or the Transfer Agent), by independent third-parties, on the
investor services provided by them to shareholders of the Oppenheimer funds,
other than the performance rankings of the Oppenheimer funds themselves. These
ratings or rankings of shareholder/investor services by third parties may
compare the Oppenheimer funds services to those of other mutual fund families
selected by the rating or ranking services, and may be based upon the opinions
of the rating or ranking service itself, using its own research or judgment, or
based upon surveys of investors, brokers, shareholders or others. in relation to
other equity funds.
When comparing yield, total return and investment risk of an investment in
Class A, Class B, or Class C shares of the Fund with other investments,
investors should understand that certain other investments have different risk
characteristics than an investment in shares of the 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 the 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
The Fund has adopted a Service Plan for Class A Shares and Distribution and
Service Plans for Class B shares and Class C shares 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 Fund 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 Prospectus 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.
For the fiscal period ended October 31, 1997, payments under this Class A
Plan totaled $598,217, of which $513,497 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
Prospectus. 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,
1997, total $61,677 of which $54,845 was retained by the Distributor. Payments
made under the Class C plan for the fiscal year ended October 31, 1997, totaled
$8,009, of which $6,286 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
Prospectus (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, Prospectus, 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, Martin Luther King Jr. 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 Fund'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 the
Automated Quotation System ("NASDAQ") of the Nasdaq Stock Market, Inc. for which
last sale information is regularly reported are valued at the last reported sale
price on the principal exchange for such security or NASDAQ that day (the
"Valuation Date") or, in the absence of sales that day, at the last reported
sale price preceding the Valuation Date if it is within the spread of the
closing "bid" and "asked" prices on the Valuation Date or, if not, the closing
"bid" price on the Valuation Date;
(ii) equity securities traded on a foreign securities exchange are valued
generally at the last sales price available to the pricing service approved by
the 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, if unavailable, at the mean
between "bid" and "asked" prices obtained from the principal exchange or two
active market makers in the security on the basis of reasonable inquiry;
(iii) a non-money market fund will value (x) debt instruments that had a
maturity of more than 397 days when issued, (y) debt instruments that had a
maturity of 397 days or less when issued and have a remaining maturity in excess
of 60 days, and (z) non-money market type debt instruments that had a maturity
of 397 days or less when issued and have a remaining maturity of sixty days or
less, at the mean between "bid" and "asked" prices determined by a pricing
service approved by the Fund's Board of Directors or, if unavailable, obtained
by the Manager from two active market makers in the security on the basis of
reasonable inquiry;
(iv) money market-type debt securities held by a non-money market fund that
had a maturity of less than 397 days when issued and have a remaining maturity
of 60 days or less, and debt instruments held by a money market fund that have a
remaining maturity of 397 days or less, shall be valued at cost, adjusted for
amortization of premiums and accretion of discount; and
(v) 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) and (iii) above), the security may be priced at the mean
between the "bid" and "asked" prices provided by a single active market maker
(which in certain cases may be the "bid" price if no "asked" price is available)
provided that the Manager is satisfied that the firm rendering the quotes is
reliable and that the quotes reflect the current market value.
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.
Relations by virtue of a remarriage (step-children, step-parent, etc.) are
included.
o The Oppenheimer Funds. The Oppenheimer funds are those mutual funds for
which the Distributor acts as the distributor or the sub-distributor and include
the following:
Limited Term New York Municipal Fund
Oppenheimer Bond Fund for Growth
Oppenheimer California Municipal Fund
Oppenheimer Champion Income Fund
Oppenheimer Developing Markets Fund
Oppenheimer Disciplined Allocation Fund
Oppenheimer Disciplined Value Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Equity Income Fund
Oppenheimer Florida Municipal Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer High Income Fund
Oppenheimer Insured Municipal Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer International Bond Fund
Oppenheimer International Growth Fund
Oppenheimer International Small Company Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Growth Fund
Oppenheimer LifeSpan Income Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street California Municipal Fund
Oppenheimer Main Street Income & Growth Fund
Oppenheimer MidCap Fund
Oppenheimer Municipal Bond Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer New York Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Real Asset Fund
Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer U.S. Government Trust
Panorama Series Fund Inc.
Rochester Fund Municipals
the following "Money Market Funds":
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Oppenheimer Cash Reserves
Oppenheimer Money Market Fund, Inc.
There is an initial sales charge on the purchase of Class A shares of each
of the Oppenheimer funds except Money Market Funds (under certain circumstances
described herein, redemption proceeds of Money Market Fund shares may be subject
to a CDSC).
o 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.
o Terms of Escrow That Apply to Letters of Intent.
(1)Out of the initial purchase (or subsequent purchases if necessary) made
pursuant to a Letter, shares of the Fund equal in value 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 Prospectus entitled "How to Exchange Shares," and the escrow will
be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a bank account, a
check (minimum $25) for the initial purchase must accompany the application.
Shares purchased by Asset Builder Plan payments from bank accounts are subject
to the redemption restrictions for recent purchases described in "How To Sell
Shares," in the Prospectus. Asset Builder Plans also enable shareholders of
Oppenheimer Cash Reserves to use those accounts for monthly automatic purchases
of shares of up to four other Oppenheimer funds. If you make payments from your
bank account to purchase shares of the Fund, your bank account will be
automatically debited normally four to five business days prior to the
investment dates selected in the Account Application. Neither the Distributor,
the Transfer Agent nor the Fund shall be responsible for any delays in
purchasing shares resulting from delays in ACH 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 other than
public school 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 or association has made special arrangements with the
Distributor and all members of the group or association participating in or
eligible to participate in the plan(s) purchase Class A shares of the Fund
through a single investment dealer, broker, or other financial institution
designated by the group. "Group retirement plan" also includes qualified
retirement plans and non-qualified deferred compensation plans and IRAs that
purchase Class A shares of the Fund through a single investment dealer, broker,
or other financial institution, provided that broker-dealer has made special
arrangements with the Distributor for the purpose of qualifying those plans to
purchase Class A shares of the Fund at net asset value but subject to a
contingent deferred sales charge.
In addition to the discussion in the Prospectus relating to the ability of
Retirement Plans to purchase Class A shares at net asset value in certain
circumstances, there is no initial sales charge on purchases of Class A shares
of any one or more of the Oppenheimer funds by Retirement Plans ("Plan") in the
following cases:
(i) the recordkeeping for the Plan is performed on a daily valuation basis
by Merrill Lynch Pierce Fenner & Smith, Inc. ("Merrill Lynch") and, on the date
the Plan Sponsor signs the Merrill Lynch Recordkeeping Service Agreement, the
Plan has $3 million or more in assets invested in mutual funds not advised or
managed by Merrill Lynch Asset Management, L.P. ("MLAM") that are made available
pursuant to a Service Agreement between Merrill Lynch and the mutual fund's
principal underwriter or distributor and in funds advised or managed by MLAM
(collectively, the "Applicable Investments"); or
(ii) the recordkeeping for the Plan is performed on a daily valuation
basis by an independent record keeper whose services are provided through a
contract or alliance arrangement with Merrill Lynch, and on the date the Plan
Sponsor signs the Merrill Lynch Record Keeping Service Agreement, the Plan has
$3 million or more in assets, excluding money market funds, invested in
Applicable Investments; or
(iii) the Plan has 500 or more eligible employees, as determined by the
Merrill Lynch plan conversion manager, on the date the Plan Sponsor signs the
Merrill Lynch Record Keeping Service Agreement.
For Plans whose records are maintained on a daily basis by Merrill Lynch
or an independent record keeper under a contract or alliance arrangement with
Merrill Lynch, if on the date the Plan Sponsor signs the Merrill Lynch Record
Keeping Service Agreement the Plan has less than $3 million in assets, excluding
money market funds, invested in Applicable Investments, then the Plan may only
purchase Class B shares of any one or more of the Oppenheimer funds. Otherwise,
the Plan will be permitted to purchase Class A shares of any one or more of the
Oppenheimer funds. Any such Plans that currently invest in Class B shares of the
Fund will be transferred to Class A shares of the Fund once the Plan has reached
$5 million invested in Applicable Investments.
Any redemptions from Plans whose records are maintained on a daily basis
by Merrill Lynch or an independent record keeper under a contract with Merrill
Lynch that are currently invested in Class B shares of the Fund shall not be
subject to the Class B CDSC.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the Prospectus. The
information below supplements the terms and conditions for redemptions set forth
in the Prospectus.
o 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 100. 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.
o 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.
o 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 that you
purchased subject to an initial sales charge or the Class A contingent deferred
sales charge when you redeemed them, or (ii) Class B shares that were subject to
the Class B contingent deferred sales charge when you redeemed them. This
privilege does not apply to Class C shares. The reinvestment may be made without
sales charge only in Class A shares of the Fund or any of the other Oppenheimer
funds into which shares of the Fund are exchangeable as described below, at the
net asset value next computed after the Transfer Agent receives the reinvestment
order. The shareholder must ask the Distributor for that privilege at the time
of reinvestment. Any capital gain that was realized when the shares were
redeemed is taxable, and reinvestment will not alter any capital gains tax
payable on that gain. If there has been a capital loss on the redemption, some
or all of the loss may not be tax deductible, depending on the timing and amount
of the reinvestment. Under the Internal Revenue Code, if the redemption proceeds
of Fund shares on which a sales charge was paid are reinvested in shares of the
Fund or another of the Oppenheimer funds within 90 days of payment of the sales
charge, the shareholder's basis in the shares of the Fund that were redeemed may
not include the amount of the sales charge paid. That would reduce the loss or
increase the gain recognized from the redemption. However, in that case the
sales charge would be added to the basis of the shares acquired by the
reinvestment of the redemption proceeds. The Fund may amend, suspend or cease
offering this reinvestment privilege at any time as to shares redeemed after the
date of such amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a contingent
deferred sales charge of 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 Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of the Fund
valued at $5,000 or more can authorize the Transfer Agent to redeem shares
(minimum $50) automatically on a monthly, quarterly, semi-annual or annual basis
under an Automatic Withdrawal Plan. Shares will be redeemed three business days
prior to the date requested by the shareholder for receipt of the payment.
Automatic withdrawals of up to $1,500 per month may be requested by telephone if
payments are to be made by check payable to all shareholders of record and sent
to the address of record for the account (and if the address has not been
changed within the prior 30 days). Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on this basis.
Payments are normally made by check, but shareholders having AccountLink
privileges (see "How To Buy Shares") may arrange to have Automatic Withdrawal
Plan payments transferred to the bank account designated on the OppenheimerFunds
New Account Application or signature-guaranteed instructions. 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
Prospectus under "Class B Contingent Deferred Sales Charge" or in "Class C
Contingent Deferred Sales Charge").
By requesting an Automatic Withdrawal or Exchange Plan, the shareholder
agrees to the terms and conditions applicable to such plans, as stated below as
well as the Prospectus. These provisions may be amended from time to time by the
Fund and/or the Distributor. When adopted, such amendments will automatically
apply to existing Plans.
o 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.
o 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 Prospectus, shares of a particular
class of Oppenheimer funds having more than one class of shares may be exchanged
only for shares of the same class of other Oppenheimer funds. Shares of the
Oppenheimer funds that have a single class without a class designation are
deemed "Class A" shares for this purpose. All of the Oppenheimer funds offer
Class A, B and C shares except Oppenheimer Money Market Fund, Inc., Centennial
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. A current list of funds showing which funds offer which
classes may be obtained by calling the Distributor at 1- 800-525-7048.
For accounts established on or before March 8, 1996 holding Class M shares
of Oppenheimer Bond Fund for Growth, Class M shares can be exchanged only for
Class A shares of other Oppenheimer funds. Exchanges to Class M shares of
Oppenheimer Bond Fund for Growth are permitted from Class A shares of
Oppenheimer Money Market Fund, Inc. or Oppenheimer Cash Reserves that were
acquired by exchange from Class M shares. Otherwise no exchanges of any class of
any Oppenheimer fund into Class M shares are permitted
Class A shares of Oppenheimer funds may be exchanged at net asset value for
shares of any Money Market Fund. Shares of any Money Market Fund purchased
without a sales charge may be exchanged for shares of Oppenheimer funds offered
with a sales charge upon payment of the sales charge (or, if applicable, may be
used to purchase shares of Oppenheimer funds subject to a contingent deferred
sales charge). However, shares of Oppenheimer Money Market Fund, Inc. purchased
with the redemption proceeds of shares of other mutual funds (other than funds
managed by the Manager or its subsidiaries) redeemed within the 30 days prior to
that purchase may subsequently be exchanged for shares of other Oppenheimer
funds without being subject to an initial or contingent deferred sales charge,
whichever is applicable. To qualify for that privilege, the investor or the
investor's dealer must notify the Distributor of eligibility for this privilege
at the time the shares of Oppenheimer Money Market Fund, Inc. are purchased,
and, if requested, must supply proof of entitlement to this privilege.
No contingent deferred sales charge is imposed on exchanges of shares of
either class purchased 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. 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 Prospectus 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. 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. The Bank of New York is the Custodian of the Fund's assets. The
Custodian's responsibilities include safeguarding and controlling the Fund's
portfolio securities, collecting income on the portfolio securities and handling
the delivery of such securities to and from the Fund. The previous custodian was
State Street Bank and Trust Company.
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.
<PAGE>
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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 as of October 31, 1997,
the related statement of operations for the year then ended, the statements of
changes in net assets for the year then ended and the ten months ended October
31, 1996, and the financial highlights for the year ended October 31, 1997 and
the ten months ended October 31, 1996. 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 financial highlights for the four 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 audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997 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
position of Oppenheimer Disciplined Allocation Fund as of October 31, 1997, and
the results of its operations for the year then ended, the changes in its net
assets for the year then ended and the ten months ended October 31, 1996, and
the financial highlights for the year ended October 31, 1997 and the ten months
ended October 31, 1996, in conformity with generally accepted accounting
principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Denver, Colorado
November 21, 1997
<PAGE>
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Statement of Investments October 31, 1997
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
================================================================================
Common Stocks--53.0%
- --------------------------------------------------------------------------------
Basic Materials--2.7%
- --------------------------------------------------------------------------------
Chemicals--0.6%
Du Pont (E.I.) De Nemours & Co. 25,600 $1,456,000
- -------------------------------------------------------------------------------
Metals--0.6%
Allegheny Teledyne, Inc. 48,500 1,276,156
- -------------------------------------------------------------------------------
Oregon Steel Mills, Inc. 17,600 370,700
------------
1,646,856
- -------------------------------------------------------------------------------
Paper--1.5%
Fort James Corp. 58,875 2,336,602
- -------------------------------------------------------------------------------
International Paper Co. 30,400 1,368,000
------------
3,704,602
- -------------------------------------------------------------------------------
Consumer Cyclicals--5.1%
- -------------------------------------------------------------------------------
Autos & Housing--1.1%
Goodyear Tire & Rubber Co. 33,200 2,079,150
- -------------------------------------------------------------------------------
Lear Corp.(1) 17,100 821,869
------------
2,901,019
- -------------------------------------------------------------------------------
Leisure & Entertainment--1.8%
Alaska Air Group, Inc.(1) 25,100 837,712
- -------------------------------------------------------------------------------
America West Holdings Corp., Cl. B(1) 44,900 665,081
- -------------------------------------------------------------------------------
AMR Corp.(1) 18,800 2,189,025
- -------------------------------------------------------------------------------
UAL Corp.(1) 9,300 814,912
------------
4,506,730
- -------------------------------------------------------------------------------
Retail: General--1.7%
Dayton Hudson Corp. 18,000 1,130,625
- -------------------------------------------------------------------------------
Federated Department Stores, Inc.(1) 21,200 932,800
- -------------------------------------------------------------------------------
Penney (J.C.) Co., Inc. 40,000 2,347,500
------------
4,410,925
- -------------------------------------------------------------------------------
Retail: Specialty--0.5%
Brylane, Inc.(1) 5,100 221,531
- -------------------------------------------------------------------------------
Payless ShoeSource, Inc.(1) 20,900 1,165,175
------------
1,386,706
- -------------------------------------------------------------------------------
Consumer Non-Cyclicals--4.3%
- -------------------------------------------------------------------------------
Food--2.3%
American Stores Co. 89,900 2,309,306
- -------------------------------------------------------------------------------
Kroger Co.(1) 70,100 2,287,012
10 Oppenheimer Disciplined Allocation Fund
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Market Value
Shares See Note 1
===============================================================================
Food (continued)
Safeway, Inc.(1) 23,500 $ 1,365,937
------------
5,962,255
- -------------------------------------------------------------------------------
Healthcare/Supplies & Services--1.2%
Tenet Healthcare Corp.(1) 63,395 1,937,510
- -------------------------------------------------------------------------------
WellPoint Health Networks, Inc.(1) 23,300 1,065,975
------------
3,003,485
- -------------------------------------------------------------------------------
Household Goods--0.8%
Premark International, Inc. 73,500 1,989,094
- -------------------------------------------------------------------------------
Energy--7.3%
- -------------------------------------------------------------------------------
Energy Services & Producers--3.3%
Diamond Offshore Drilling, Inc. 50,500 3,143,625
- -------------------------------------------------------------------------------
Global Marine, Inc.(1) 52,800 1,643,400
- -------------------------------------------------------------------------------
Oryx Energy Co.(1) 48,100 1,325,756
- -------------------------------------------------------------------------------
Tidewater, Inc. 35,100 2,305,631
------------
8,418,412
- -------------------------------------------------------------------------------
Oil-Integrated--4.0%
Amoco Corp. 20,300 1,861,256
- -------------------------------------------------------------------------------
Chevron Corp. 39,100 3,242,856
- -------------------------------------------------------------------------------
Exxon Corp. 18,800 1,155,025
- -------------------------------------------------------------------------------
Mobil Corp. 33,300 2,424,656
- -------------------------------------------------------------------------------
Occidental Petroleum Corp. 51,400 1,432,775
------------
10,116,568
- -------------------------------------------------------------------------------
Financial--13.0%
- -------------------------------------------------------------------------------
Banks--4.4%
BankAmerica Corp. 28,800 2,059,200
- -------------------------------------------------------------------------------
BankBoston Corp. 32,900 2,666,956
- -------------------------------------------------------------------------------
First Union Corp. 49,700 2,438,406
- -------------------------------------------------------------------------------
NationsBank Corp. 30,100 1,802,237
- -------------------------------------------------------------------------------
Wells Fargo & Co. 7,300 2,127,037
------------
11,093,836
- -------------------------------------------------------------------------------
Diversified Financial--3.1%
Crescent Real Estate Equities, Inc. 48,900 1,760,400
- -------------------------------------------------------------------------------
Money Store, Inc. (The) 18,300 519,263
- -------------------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co. 39,600 1,940,400
- -------------------------------------------------------------------------------
Salomon, Inc. 18,700 1,452,756
Travelers Group, Inc. 30,700 2,149,000
------------
7,821,819
11 Oppenheimer Disciplined Allocation Fund
<PAGE>
- -------------------------------------------------------------------------------
Statement of Investments (Continued)
- -------------------------------------------------------------------------------
Market Value
Shares See Note 1
- -------------------------------------------------------------------------------
Insurance--5.5%
AFLAC, Inc. 25,700 $ 1,307,488
- -------------------------------------------------------------------------------
Allstate Corp. 14,000 1,161,125
- -------------------------------------------------------------------------------
Chubb Corp. 30,100 1,994,125
- -------------------------------------------------------------------------------
Conseco, Inc. 67,300 2,935,963
- -------------------------------------------------------------------------------
Equitable Cos., Inc. 54,200 2,232,363
- -------------------------------------------------------------------------------
Torchmark Corp. 52,400 2,089,450
- -------------------------------------------------------------------------------
Travelers Property Casualty Corp., Cl. A 59,200 2,138,600
------------
13,859,114
- -------------------------------------------------------------------------------
Industrial--8.8%
- -------------------------------------------------------------------------------
Industrial Services--0.4%
Viad Corp. 57,600 1,051,200
- -------------------------------------------------------------------------------
Manufacturing--7.8%
Aeroquip-Vickers, Inc. 26,400 1,374,450
- -------------------------------------------------------------------------------
AGCO Corp. 51,500 1,493,500
- -------------------------------------------------------------------------------
Case Corp. 47,100 2,817,169
- -------------------------------------------------------------------------------
Deere & Co. 50,600 2,662,825
- -------------------------------------------------------------------------------
Ingersoll-Rand Co. 47,750 1,859,266
- -------------------------------------------------------------------------------
PACCAR, Inc. 56,100 2,528,006
- -------------------------------------------------------------------------------
Parker-Hannifin Corp. 33,650 1,406,991
- -------------------------------------------------------------------------------
Textron, Inc. 48,400 2,798,125
- -------------------------------------------------------------------------------
U.S. Industries, Inc. 104,200 2,800,375
------------
19,740,707
- -------------------------------------------------------------------------------
Transportation--0.6%
Burlington Northern Santa Fe Corp. 15,500 1,472,500
- -------------------------------------------------------------------------------
Technology--7.9%
- -------------------------------------------------------------------------------
Aerospace/Defense--1.9%
General Dynamics Corp. 21,700 1,761,769
- -------------------------------------------------------------------------------
Lockheed Martin Corp. 18,971 1,803,431
- -------------------------------------------------------------------------------
TRW, Inc. 21,500 1,230,875
------------
4,796,075
- -------------------------------------------------------------------------------
Computer Hardware--4.1%
CHS Electronics, Inc.(1) 14,550 355,566
- -------------------------------------------------------------------------------
Compaq Computer Corp.(1) 34,500 2,199,375
- -------------------------------------------------------------------------------
International Business Machines Corp. 20,000 1,961,250
- -------------------------------------------------------------------------------
Lexmark International Group, Inc., Cl. A(1) 10,200 311,738
- -------------------------------------------------------------------------------
Quantum Corp.(1) 46,000 1,454,750
- -------------------------------------------------------------------------------
Storage Technology Corp. (New)(1) 68,300 4,008,356
------------
10,291,035
12 Oppenheimer Disciplined Allocation Fund
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Market Value
Shares See Note 1
- -------------------------------------------------------------------------------
Computer Software/Services--0.2%
Electronic Data Systems Corp. 15,400 $ 595,788
- -------------------------------------------------------------------------------
Electronics--1.7%
National Semiconductor Corp.(1) 37,800 1,360,800
- -------------------------------------------------------------------------------
Philips Electronics NV, NY Shares 17,200 1,348,050
- -------------------------------------------------------------------------------
SCI Systems, Inc.(1) 35,100 1,544,400
------------
4,253,250
- -------------------------------------------------------------------------------
Utilities--3.9%
- -------------------------------------------------------------------------------
Electric Utilities--0.6%
FPL Group, Inc. 29,800 1,540,288
- -------------------------------------------------------------------------------
Gas Utilities--1.4%
Columbia Gas System, Inc. 48,400 3,496,900
- -------------------------------------------------------------------------------
Telephone Utilities--1.9%
Bell Atlantic Corp. 14,400 1,150,200
- -------------------------------------------------------------------------------
Frontier Corp. 30,400 657,400
- -------------------------------------------------------------------------------
U S West Communications Group 72,900 2,902,331
------------
4,709,931
------------
Total Common Stocks (Cost $116,707,828) 134,225,095
Face
Amount
===============================================================================
Asset-Backed Securities--0.8%
- -------------------------------------------------------------------------------
IROQUOIS Trust, Asset-Backed Amortizing Nts.,
Series 1997-2, Cl. A, 6.752%, 6/25/07(2) $1,000,000 1,004,844
- -------------------------------------------------------------------------------
Olympic Automobile Receivables Trust,
Receivables-Backed Nts., Series 1997-A,
Cl. A5, 6.80%, 2/15/05 1,000,000 1,021,972
------------
Total Asset-Backed Securities (Cost $1,998,258) 2,026,816
===============================================================================
Mortgage-Backed Obligations--9.1%
- -------------------------------------------------------------------------------
Chase Commercial Mortgage Securities Corp.,
Commercial Mtg. Obligations, Series 1996-1,
Cl. A2, 7.60%, 3/18/06 1,500,000 1,556,719
- -------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
Collateralized Mtg. Obligations, Gtd.
Multiclass Mtg. Participation Certificates:
Series 1987, Cl. K, 7.50%, 9/15/27 615,667 611,049
Gtd. Multiclass Mtg. Participation
Certificates: 6%, 3/1/09 792,094 785,869
Series 1337, Cl. D, 6%, 8/15/07 1,000,000 976,870
Series 1820, Cl. PL, 5.75%, 7/15/06 1,000,000 992,810
Series 1994-43, Cl. PE, 6% 12/25/19 800,000 797,000
Interest-Only Stripped Mtg.-Backed Security,
Series 1583, Cl. IC, 9.283%, 1/15/20(3) 2,000,000 320,000
Series 1849, Cl. VA, 6%, 12/15/10 815,686 806,510
13 Oppenheimer Disciplined Allocation Fund
<PAGE>
- -------------------------------------------------------------------------------
Statement of Investments (Continued)
- -------------------------------------------------------------------------------
Face Market Value
Amount See Note 1
===============================================================================
Mortgage-Backed Obligations (continued)
Federal National Mortgage Assn.:
6%, 12/1/03 $ 759,109 $ 755,406
6.50%, 3/1/26 712,727 701,973
7.50%, 1/1/08-6/1/08 865,415 889,828
Collateralized Mtg. Obligations, Gtd.
Real Estate Mtg. Investment Conduit
Pass-Through Certificates:
Trust 1992-15, Cl. KZ, 7%, 2/25/22 738,266 699,965
Trust 1993-181, Cl. C, 5.40%, 10/25/02 283,723 282,305
Trust 1993-190, Cl. Z, 5.85%, 7/25/08 315,731 314,091
Interest-Only Stripped Mtg.-Backed Security,
Trust 1993-223, Cl. PM, 7.349%, 10/25/23(3) 2,091,683 322,245
- -------------------------------------------------------------------------------
GE Capital Mortgage Services, Inc.,
Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates,
Series 1994-7, Cl. A18, 6%, 2/25/09 994,428 932,277
- -------------------------------------------------------------------------------
Government National Mortgage Assn.:
6.50%, 10/15/23-4/15/24 5,453,813 5,410,143
7%, 4/15/09-2/15/24 1,455,315 1,474,585
7.50%, 3/15/09 681,842 703,907
8%, 5/15/17 477,846 502,619
- -------------------------------------------------------------------------------
Green Tree Financial Corp., Series 1994-7,
Cl. A3, 8%, 3/15/20 384,577 387,581
- -------------------------------------------------------------------------------
Housing Securities, Inc., Series 1994-3,
Cl. A3, 7.25%, 9/25/12(2) 109,731 109,868
- -------------------------------------------------------------------------------
Norwest Asset Securities Corp., Mtg.
Pass-Through Certificates, Series 1997-14,
Cl. A3, 6.75%, 10/25/27 1,000,000 1,007,344
- -------------------------------------------------------------------------------
PNC Mortgage Securities Corp., Commercial Mtg.
Pass-Through Certificates, Series 1995-2,
Cl. A3, 6.50%, 2/25/12 1,000,000 1,004,531
- -------------------------------------------------------------------------------
Residential Accredit Loans, Inc.,
Mortgage Asset-Backed Pass-Through
Certificates, Series 1997-QS9,
Cl. A2,6.75%, 9/25/27 700,000 701,039
------------
Total Mortgage-Backed Obligations (Cost $22,613,689) 23,046,534
===============================================================================
U.S. Government Obligations--10.8%
- -------------------------------------------------------------------------------
U.S. Treasury Bonds:
7.50%, 11/15/16 7,950,000 9,090,332
8.75%, 5/15/17 8,250,000 10,603,832
- -------------------------------------------------------------------------------
U.S. Treasury Nts.:
6.50%, 8/15/05 5,085,000 5,274,101
6.75%, 6/30/99 2,500,000 2,544,533
------------
Total U.S. Government Obligations (Cost $25,130,770) 27,512,798
===============================================================================
Foreign Government Obligations--0.2%
- -------------------------------------------------------------------------------
Colombia (Republic of) Unsub. Nts.,
7.125%, 5/11/98 300,000 300,000
- -------------------------------------------------------------------------------
United Mexican States Bonds, 6.97%, 8/12/00 250,000 238,125
------------
Total Foreign Government Obligations (Cost $542,501) 538,125
14 Oppenheimer Disciplined Allocation Fund
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Face Market Value
Amount See Note 1
===============================================================================
Non-Convertible Corporate Bonds and Notes--19.4%
- -------------------------------------------------------------------------------
Basic Materials--2.2%
- -------------------------------------------------------------------------------
Chemicals--0.9%
Burmah Castrol plc, 7% Gtd. Medium-Term Nts.,
12/15/97(4) $ 500,000 $ 500,680
- -------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co., 8.50% Debs.,
2/15/03 228,000 242,810
- -------------------------------------------------------------------------------
FMC Corp., 8.75% Sr. Nts., 4/1/99 500,000 517,078
- -------------------------------------------------------------------------------
Morton International, Inc., 9.25%
Credit Sensitive Nts., 6/1/20 500,000 638,631
- -------------------------------------------------------------------------------
PPG Industries, Inc., 9% Debs., 5/1/21 250,000 306,062
------------
2,205,261
- -------------------------------------------------------------------------------
Metals--0.4%
Alcan Aluminum Ltd., 9.625% Debs., 7/15/19 850,000 916,521
- -------------------------------------------------------------------------------
Paper--0.9%
Aracruz Celulose SA, 10.375% Debs., 1/31/02 750,000 776,250
- -------------------------------------------------------------------------------
Celulosa Arauco y Constitucion SA,
7.25% Debs., 6/11/98(2) 500,000 501,250
- -------------------------------------------------------------------------------
Fort James Corp., 6.875% Sr. Nts., 9/15/07 1,000,000 1,018,200
------------
2,295,700
- -------------------------------------------------------------------------------
Consumer Cyclicals--2.4%
- -------------------------------------------------------------------------------
Autos & Housing--0.5%
Black & Decker Corp., 6.625% Nts., 11/15/00 700,000 707,768
- -------------------------------------------------------------------------------
First Industrial LP, 7.15% Bonds, 5/15/27 500,000 514,526
------------
1,222,294
- -------------------------------------------------------------------------------
Leisure & Entertainment--0.2%
Blockbuster Entertainment Corp., 6.625%
Sr. Nts., 2/15/98 500,000 500,670
- -------------------------------------------------------------------------------
Media--1.3%
Reed Elsevier, Inc., 6.625% Nts., 10/15/23(4) 400,000 383,620
- -------------------------------------------------------------------------------
TCI Communications, Inc., 6.375% Nts., 9/15/99 1,000,000 1,003,319
- -------------------------------------------------------------------------------
Tele-Communications, Inc., 7.15%
Sr. Medium-Term Nts., 2/3/98 400,000 401,209
- -------------------------------------------------------------------------------
Time Warner, Inc., 7.45% Nts., 2/1/98 700,000 702,346
- -------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 750,000 830,138
------------
3,320,632
- -------------------------------------------------------------------------------
Retail: General--0.4%
Costco Cos., Inc., 7.125% Sr. Nts., 6/15/05 400,000 407,096
- -------------------------------------------------------------------------------
Federated Department Stores, Inc.,
10% Sr. Nts., 2/15/01 350,000 386,901
- -------------------------------------------------------------------------------
Sears Roebuck & Co.,
8.39% Medium-Term Nts., 3/23/99 300,000 309,605
------------
1,103,602
15 Oppenheimer Disciplined Allocation Fund
<PAGE>
- -------------------------------------------------------------------------------
Statement of Investments (Continued)
- -------------------------------------------------------------------------------
Face Market Value
Amount See Note 1
- -------------------------------------------------------------------------------
Consumer Non-Cyclicals--1.1%
- -------------------------------------------------------------------------------
Food --0.6%
CPC International, Inc.,
6.15% Unsec. Nts., Series C, 1/15/06 $ 500,000 $494,238
- -------------------------------------------------------------------------------
Dole Food Distributing, Inc.,
6.75% Nts., 7/15/00 530,000 536,760
- -------------------------------------------------------------------------------
Great Atlantic & Pacific Tea Co.,
9.125% Debs., 1/15/98 500,000 502,897
------------
1,533,895
- -------------------------------------------------------------------------------
Healthcare/Supplies & Services--0.3%
Tenet Healthcare Corp.:
8% Sr. Nts., 1/15/05 250,000 252,812
8.625% Sr. Unsec. Nts., 12/1/03 500,000 532,183
------------
784,995
- -------------------------------------------------------------------------------
Household Goods--0.2%
Kimberly-Clark Corp., 7.875% Debs., 2/1/23 290,000 312,592
- -------------------------------------------------------------------------------
Procter & Gamble Co., 9.36% Debs.,
Series A, 1/1/21 250,000 316,840
------------
629,432
- -------------------------------------------------------------------------------
Energy--3.4%
- -------------------------------------------------------------------------------
Energy Services & Producers--2.2%
Chesapeake Energy Corp., 7.875% Sr. Nts.,
Series B, 3/15/04 750,000 723,750
- -------------------------------------------------------------------------------
Coastal Corp., 8.125% Sr. Nts., 9/15/02 500,000 535,868
- -------------------------------------------------------------------------------
Columbia Gas System, Inc., 6.80% Nts.,
Series C, 11/28/05 500,000 506,816
- -------------------------------------------------------------------------------
Falcon Drilling Co., Inc., 9.75% Sr. Nts.,
Series B, 1/15/01 500,000 522,500
- -------------------------------------------------------------------------------
Ferrellgas LP/Ferrellgas Finance Corp.,
10% Sr. Nts., Series A, 8/1/01 500,000 530,000
- -------------------------------------------------------------------------------
Louisiana Land & Exploration Co.,
7.65% Debs., 12/1/23 915,000 978,064
- -------------------------------------------------------------------------------
Petroliam Nasional Berhad,
6.875% Nts., 7/1/03(4) 500,000 486,411
- -------------------------------------------------------------------------------
TransCanada PipeLines Ltd.,
9.875% Debs., 1/1/21 500,000 652,045
- -------------------------------------------------------------------------------
Williams Holdings of Delaware, Inc.,
6.25% Sr. Unsec. Debs., 2/1/06 650,000 635,578
------------
5,571,032
- -------------------------------------------------------------------------------
Oil-Integrated--1.2%
Gulf Canada Resources Ltd.:
8.25% Sr. Nts., 3/15/17 500,000 542,210
9% Debs., 8/15/99 250,000 261,871
- -------------------------------------------------------------------------------
Norcen Energy Resources Ltd.,
6.80% Debs., 7/2/02 1,000,000 1,018,996
- -------------------------------------------------------------------------------
Petroleum Geo-Services ASA,
7.50% Nts., 3/31/07 750,000 789,153
- -------------------------------------------------------------------------------
Phillips Petroleum Co.,
7.53% Pass-Through Certificates,
Series 1994-A1, 9/27/98 397,293 400,507
------------
3,012,737
16 Oppenheimer Disciplined Allocation Fund
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Face Market Value
Amount See Note 1
- -------------------------------------------------------------------------------
Financial--6.7%
- -------------------------------------------------------------------------------
Banks--1.2%
Chase Manhattan Corp. (New),
10.125% Sub. Nts., 11/1/00 $ 250,000 $ 277,290
- -------------------------------------------------------------------------------
Citicorp, 5.625% Sr. Nts., 2/15/01 550,000 543,616
- -------------------------------------------------------------------------------
First Fidelity Bancorp,
8.50% Sub. Capital Nts., 4/1/98 500,000 504,733
- -------------------------------------------------------------------------------
Fleet Mtg./Norstar Group, Inc.,
9.90% Sub. Nts., 6/15/01 250,000 278,877
- -------------------------------------------------------------------------------
Mellon Financial Bank Corp.,
6.50% Gtd. Sr. Nts., 12/1/97 400,000 400,211
- -------------------------------------------------------------------------------
People's Bank of Bridgeport
(Connecticut), 7.20% Sub. Nts., 12/1/06 1,000,000 1,014,528
------------
3,019,255
- -------------------------------------------------------------------------------
Diversified Financial--4.3%
American General Finance Corp.,
8.50% Sr. Nts., 8/15/98 500,000 510,110
- -------------------------------------------------------------------------------
American General Institutional
Capital, 8.125% Bonds, Series B, 3/15/46(4) 500,000 537,636
- -------------------------------------------------------------------------------
Capital One Financial Corp.,
6.83% Sr. Nts., 5/17/99 500,000 504,908
- -------------------------------------------------------------------------------
Capital One Funding Corp.,
7.25% Nts., 12/1/03 440,000 443,089
- -------------------------------------------------------------------------------
Chelsea GCA Realty Partner, Inc.,
7.75% Gtd. Unsec. Unsub. Nts., 1/26/01 1,000,000 1,026,941
- -------------------------------------------------------------------------------
Commercial Credit Co.,
5.55% Unsec. Nts., 2/15/01 1,000,000 981,806
- -------------------------------------------------------------------------------
Countrywide Home Loans, Inc.:
6.05% Gtd. Medium-Term Nts.,
Series D, 3/1/01 400,000 397,732
6.085% Gtd. Medium-Term Nts.,
Series B, 7/14/99 500,000 500,105
- -------------------------------------------------------------------------------
Fleet Mtg. Group, Inc., 6.50% Nts., 9/15/99 250,000 252,060
- -------------------------------------------------------------------------------
Ford Motor Credit Co.,
6.25% Unsub. Nts., 2/26/98 500,000 502,125
- -------------------------------------------------------------------------------
General Motors Acceptance Corp.,
5.65% Medium-Term Nts., 12/15/97 1,000,000 999,877
- -------------------------------------------------------------------------------
Household Finance Corp. Ltd.,
6% Gtd. Sr. Nts., 6/30/98 250,000 250,468
- -------------------------------------------------------------------------------
Household International BV,
6% Gtd. Sr. Nts., 3/15/99 500,000 499,762
- -------------------------------------------------------------------------------
Merrill Lynch & Co., Inc.:
6% Nts., 3/1/01 500,000 498,567
6.50% Nts., 4/1/01 500,000 505,928
- -------------------------------------------------------------------------------
Norsk Hydro AS, 8.75% Bonds, 10/23/01 500,000 542,188
- -------------------------------------------------------------------------------
PHH Corp., 6.50% Nts., 2/1/00 350,000 353,537
- -------------------------------------------------------------------------------
Salomon, Inc., 8.69% Sr. Medium-Term Nts.,
Series D, 3/1/99 1,000,000 1,033,883
- -------------------------------------------------------------------------------
Sears Roebuck Acceptance Corp.,
5.99% Medium-Term Nts.,
Series 1, 12/26/00 500,000 498,193
------------
10,838,915
- -------------------------------------------------------------------------------
Insurance --1.2%
Conseco Financing Trust III,
8.796% Bonds, 4/1/27 750,000 818,002
- -------------------------------------------------------------------------------
Equitable Life Assurance Society
(U.S.A.), 6.95% Surplus Nts., 12/1/05(4) 500,000 509,382
17 Oppenheimer Disciplined Allocation Fund
<PAGE>
- -------------------------------------------------------------------------------
Statement of Investments (Continued)
- -------------------------------------------------------------------------------
Face Market Value
Amount See Note 1
- -------------------------------------------------------------------------------
Insurance (continued)
GenAmerica Capital I,
8.525% Gtd. Bonds, 6/30/27(4) $ 750,000 $ 788,103
- -------------------------------------------------------------------------------
Life Re Capital Trust I,
8.72% Gtd. Bonds, 6/15/27(4) 500,000 528,696
- -------------------------------------------------------------------------------
SunAmerica, Inc., 9% Sr. Nts., 1/15/99 450,000 463,982
------------
3,108,165
- -------------------------------------------------------------------------------
Industrial--2.1%
- -------------------------------------------------------------------------------
Industrial Materials--0.3%
American Standard, Inc.,
10.875% Sr. Nts., 5/15/99(2) 740,000 786,250
- -------------------------------------------------------------------------------
Industrial Services--0.9%
Raytheon Co., 6.45% Nts., 8/15/02 500,000 506,274
- -------------------------------------------------------------------------------
Sun Co., Inc., 7.95% Debs., 12/15/01 1,000,000 1,058,115
- -------------------------------------------------------------------------------
USI American Holdings, Inc.,
7.25% Gtd. Sr. Nts.,12/1/06 750,000 736,182
------------
2,300,571
- -------------------------------------------------------------------------------
Manufacturing--0.2%
Mark IV Industries, Inc.,
8.75% Sub. Nts., 4/1/03(2) 400,000 419,000
- -------------------------------------------------------------------------------
Transportation--0.7%
Federal Express Corp., 6.25% Nts., 4/15/98 750,000 750,928
- -------------------------------------------------------------------------------
Union Pacific Corp.:
7% Nts., 6/15/00 500,000 509,343
7.60% Nts., 5/1/05 500,000 527,390
------------
1,787,661
- -------------------------------------------------------------------------------
Technology--0.2%
- -------------------------------------------------------------------------------
Telecommunications/Technology--0.2%
U S West Capital Funding, Inc.,
6.85% Gtd. Nts., 1/15/02 500,000 508,187
- -------------------------------------------------------------------------------
Utilities--1.3%
- -------------------------------------------------------------------------------
Electric Utilities--0.3%
Consumers Energy Co.,
8.75% First Mtg. Nts., 2/15/98 500,000 503,267
- -------------------------------------------------------------------------------
El Paso Electric Co.,
7.25% First Mtg. Nts., Series A, 2/1/99(2) 250,000 252,500
------------
755,767
- -------------------------------------------------------------------------------
Gas Utilities--0.7%
Northern Illinois Gas Co.,
6.45% First Mtg. Bonds, 8/1/01 500,000 506,249
- -------------------------------------------------------------------------------
Southern California Gas Co.,
6.38% Medium-Term Nts., 10/29/01 500,000 502,350
- -------------------------------------------------------------------------------
Tennessee Gas Pipeline Co.,
7.50% Bonds, 4/1/17 750,000 789,224
------------
1,797,823
- -------------------------------------------------------------------------------
Telephone Utilities--0.3%
GTE Corp., 8.85% Debs., 3/1/98 750,000 756,599
------------
Total Non-Convertible Corporate
Bonds and Notes (Cost $48,564,894) 49,174,964
18 Oppenheimer Disciplined Allocation Fund
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Face Market Value
Amount See Note 1
===============================================================================
Repurchase Agreements--1.7%
- -------------------------------------------------------------------------------
Repurchase agreement with Zion First
National Bank, 5.68%, dated 10/31/97,
to be repurchased at $4,228,000 on 11/3/97,
collateralized by U.S. Treasury Nts.,
5.125%-6%, 2/28/98-11/15/98, with a value of
$4,319,129 (Cost $4,226,000) $ 4,226,000 $ 4,226,000
- -------------------------------------------------------------------------------
Total Investments, at Value
(Cost $219,783,940) 95.0% 240,750,332
- -------------------------------------------------------------------------------
Other Assets Net of Liabilities 5.0 12,710,809
--------- ------------
Net Assets 100.0% $253,461,141
========= ============
1. Non-income producing security.
2. Identifies issues considered to be illiquid or restricted--See Note 5 of
Notes to Financial Statements.
3. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows.
4. 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 $3,734,528 or 1.47% of the Fund's net
assets, at October 31, 1997.
See accompanying Notes to Financial Statements.
19 Oppenheimer Disciplined Allocation Fund
<PAGE>
- -------------------------------------------------------------------------------
Statement of Assets and Liabilities October 31, 1997
- -------------------------------------------------------------------------------
===============================================================================
Assets
Investments, at value (cost $219,783,941)
- --see accompanying statement $240,750,332
- -------------------------------------------------------------------------------
Cash 63,951
- -------------------------------------------------------------------------------
Receivables:
Investments sold 12,320,677
Interest, dividends and principal paydowns 1,933,973
Shares of capital stock sold 179,849
- -------------------------------------------------------------------------------
Other 4,372
------------
Total assets 255,253,154
===============================================================================
Liabilities
Payables and other liabilities:
Investments purchased 1,450,222
Directors' fees--Note 1 96,499
Shareholder reports 72,310
Distribution and service plan fees 56,607
Shares of capital stock redeemed 46,882
Transfer and shareholder servicing agent fees 34,291
Other 35,202
------------
Total liabilities 1,792,013
===============================================================================
Net Assets $253,461,141
============
===============================================================================
Composition of Net Assets
Par value of shares of capital stock $ 15,071
- -------------------------------------------------------------------------------
Additional paid-in capital 204,529,161
- -------------------------------------------------------------------------------
Undistributed net investment income 828,581
- -------------------------------------------------------------------------------
Accumulated net realized gain on
investment transactions 27,121,937
- -------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 20,966,391
------------
Net assets $253,461,141
============
20 Oppenheimer Disciplined Allocation Fund
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
===============================================================================
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share
(based on net assets of $243,267,192 and 14,469,482
shares of capital stock outstanding) $16.81
Maximum offering price per share (net asset value
plus sales charge of 5.75% of offering price) $17.84
- -------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price
per share (based on net assets of $8,720,474 and
513,404 shares of capital stock outstanding) $16.99
- -------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price
per share (based on net assets of $1,473,475 and
88,237 shares of capital stock outstanding) $16.70
See accompanying Notes to Financial Statements.
21 Oppenheimer Disciplined Allocation Fund
<PAGE>
- -------------------------------------------------------------------------------
Statement of Operations For the Year Ended October 31, 1997
- -------------------------------------------------------------------------------
===============================================================================
Investment Income
Interest $ 8,554,080
- -------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $1,130) 1,968,214
------------
Total income 10,522,294
===============================================================================
Expenses
Management fees--Note 4 1,535,343
- -------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 598,217
Class B 61,677
Class C 8,009
- -------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 259,378
- -------------------------------------------------------------------------------
Shareholder reports 149,749
- -------------------------------------------------------------------------------
Directors' fees and expenses--Note 1 86,965
- -------------------------------------------------------------------------------
Legal and auditing fees 35,130
- -------------------------------------------------------------------------------
Accounting service fees--Note 4 15,000
- -------------------------------------------------------------------------------
Custodian fees and expenses 14,387
- -------------------------------------------------------------------------------
Insurance expenses 8,230
- -------------------------------------------------------------------------------
Registration and filing fees:
Class A 1,135
Class B 1,361
Class C 368
- -------------------------------------------------------------------------------
Other 17,532
------------
Total expenses 2,792,481
===============================================================================
Net Investment Income 7,729,813
===============================================================================
Realized and Unrealized Gain
Net realized gain on investments 27,308,175
- -------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation on investments 7,070,415
------------
Net realized and unrealized gain 34,378,590
===============================================================================
Net Increase in Net Assets Resulting from Operations $ 42,108,403
============
See accompanying Notes to Financial Statements.
22 Oppenheimer Disciplined Allocation Fund
<PAGE>
- -------------------------------------------------------------------------------
Statements of Changes in Net Assets
- -------------------------------------------------------------------------------
Year Ended October 31,
1997 1996
===============================================================================
Operations
Net investment income $ 7,729,813 $ 6,742,111
- -------------------------------------------------------------------------------
Net realized gain 27,308,175 20,224,060
- -------------------------------------------------------------------------------
Net change in unrealized
appreciation or depreciation 7,070,415 (12,786,272)
------------- ------------
Net increase in net assets
resulting from operations 42,108,403 14,179,899
===============================================================================
Dividends and Distributions to Shareholders
Dividends from net investment income:
Class A (8,280,055) (5,234,654)
Class B (168,085) (50,540)
Class C (21,190) (1,461)
- -------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (19,860,930) (786,458)
Class B (389,052) (8,614)
Class C (21,246) (45)
===============================================================================
Capital Stock Transactions
Net increase (decrease) in net assets
resulting from capital stock
transactions--Note 2:
Class A (2,888,598) 7,182,619
Class B 4,390,846 3,182,132
Class C 1,194,708 184,182
===============================================================================
Net Assets
Total increase 16,064,801 18,647,060
- -------------------------------------------------------------------------------
Beginning of period 237,396,340 218,749,280
------------ ------------
End of period (including undistributed
net investment income of $828,581
and $1,524,191, respectively) $253,461,141 $237,396,340
============ ============
See accompanying Notes to Financial Statements.
23 Oppenheimer Disciplined Allocation Fund
<PAGE>
- -------------------------------------------------------------------------------
Financial Highlights
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------------
Year Ended October 31, Year Ended December 31,
1997 1996(3) 1995 1994
=================================================================================================================
<S> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $16.00 $15.46 $13.44 $14.54
- -----------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .51(4) .46 .60 .55
Net realized and unrealized gain (loss) 2.25(4) .49 2.59 (.86)
-------- -------- -------- --------
Total income (loss) from investment
operations 2.76 .95 3.19 (.31)
- -----------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.56) (.36) (.60) (.55)
Distributions from net realized gain (1.39) (.05) (.57) (.24)
-------- -------- -------- --------
Total dividends and distributions
to shareholders (1.95) (.41) (1.17) (.79)
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $16.81 $16.00 $15.46 $13.44
======== ======== ======== ========
=================================================================================================================
Total Return, at Net Asset Value(5) 18.82% 6.27% 23.95% (2.11)%
=================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $243,267 $233,289 $218,099 $177,904
- -----------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $238,821 $228,203 $200,172 $187,655
- -----------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 3.17% 3.52%(6) 4.00% 3.80%
Expenses 1.11% 1.11%(6) 1.17% 0.96%
- -----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 98.0% 85.4% 55.2% 115.0%
Average brokerage commission rate(8) $0.0699 $0.0636 -- --
</TABLE>
1. For the period from May 1, 1996 (inception of offering) to October 31, 1996.
2. For the period from October 2, 1995 (inception of offering) to December 31,
1995.
3. For the ten months ended October 31, 1996. The Fund changed its fiscal year
end from December 31 to October 31. On March 18, 1996, OppenheimerFunds, Inc.
became the investment advisor to the Fund.
4. Per share amounts calculated based on the average shares outstanding during
the period.
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.
24 Oppenheimer Disciplined Allocation Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B Class C
- --------------------------- ---------------------------------------------- ------------------------
Period Ended
Year Ended October 31, December 31, Year Ended October 31,
1993 1992 1997 1996(3) 1995(2) 1997 1996(1)
===========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
$13.81 $14.02 $16.16 $15.66 $15.48 $15.93 $15.71
- -----------------------------------------------------------------------------------------------------------
.48 .50 .40(4) .31 .07 .44(4) .30
1.70 .86 2.27(4) .54 .70 2.19(4) .32
-------- -------- -------- -------- -------- -------- --------
2.18 1.36 2.67 .85 .77 2.63 .62
- -----------------------------------------------------------------------------------------------------------
(.48) (.50) (.45) (.30) (.07) (.47) (.35)
(.97) (1.07) (1.39) (.05) (.52) (1.39) (.05)
-------- -------- -------- -------- -------- -------- --------
(1.45) (1.57) (1.84) (.35) (.59) (1.86) (.40)
- -----------------------------------------------------------------------------------------------------------
$14.54 $13.81 $16.99 $16.16 $15.66 $16.70 $15.93
======== ======== ======== ======== ======== ======== ========
===========================================================================================================
15.89% 9.90% 17.96% 5.51% 4.93% 17.93% 4.08%
===========================================================================================================
$171,205 $109,701 $8,720 $3,919 $650 $1,473 $188
- -----------------------------------------------------------------------------------------------------------
$138,629 $96,016 $6,183 $2,324 $375 $805 $57
- -----------------------------------------------------------------------------------------------------------
3.40% 3.61% 2.32% 2.86%(6) 0.73%(6) 2.18% 2.90%(6)
1.02% 1.11% 1.89% 1.85%(6) 1.92%(6) 1.92% 1.87%(6)
- -----------------------------------------------------------------------------------------------------------
155.2% 177.9% 98.0% 85.4% 55.2% 98.0% 85.4%
-- -- $0.0699 $0.0636 -- $0.0699 $0.0636
</TABLE>
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, 1997 were $240,104,265 and $218,380,210, 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. See accompanying Notes to Financial Statements.
25 Oppenheimer Disciplined Allocation Fund
<PAGE>
- -------------------------------------------------------------------------------
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.
The Fund's investment objective is to seek maximum total investment return
(current income and capital appreciation in the value of its shares) principally
by allocating its assets among stocks, corporate bonds, U.S. government
securities, and money market instruments according to changing market
conditions. The Fund's investment advisor is OppenheimerFunds, Inc. (the
Manager). The Fund offers Class A, Class B and Class C shares. Class A shares
are sold with a front-end sales charge. Class B and Class C shares may be
subject to a contingent deferred sales charge. All classes of shares have
identical rights to earnings, assets and voting privileges, except that each
class has its own distribution and/or service plan, expenses directly
attributable to that class and exclusive voting rights with respect to matters
affecting that class. Class B shares will automatically convert to Class A
shares six years after the date of purchase. The following is a summary of
significant accounting policies consistently followed by the Fund.
- -------------------------------------------------------------------------------
Investment Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Directors. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of 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.
26 Oppenheimer Disciplined Allocation Fund
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
===============================================================================
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 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 year ended
October 31, 1997, a provision of $76,220 was made for the Fund's projected
benefit obligations and payments of $4,525 were made to retired directors,
resulting in an accumulated liability of $94,115.
- -------------------------------------------------------------------------------
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 its ultimate characterization for federal
income tax purposes. Also, due to timing of dividend distributions, the fiscal
year in which amounts are distributed may differ from the fiscal year in which
the income or realized gain was recorded by the Fund.
The Fund adjusts the classification of distributions to shareholders
to reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended October 31, 1997, amounts have been reclassified to reflect an
increase in undistributed net investment income of $43,907. Accumulated net
realized gain on investments was decreased by the same amount.
27 Oppenheimer Disciplined Allocation Fund
<PAGE>
- -------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- -------------------------------------------------------------------------------
===============================================================================
1. Significant Accounting Policies (continued)
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.
===============================================================================
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>
Year Ended October 31, 1997 Period Ended October 31, 1996(1)
------------------------------- -------------------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------
Class A:
<S> <C> <C> <C> <C>
Sold 1,295,002 $ 20,645,750 2,232,163 $ 34,798,022
Dividends and distributions reinvested 1,821,876 27,715,425 380,285 5,902,477
Redeemed (3,224,574) (51,249,773) (2,143,354) (33,517,880)
------------ ------------ ------------ ------------
Net increase (decrease) (107,696) $ (2,888,598) 469,094 $ 7,182,619
============ ============ ============ ============
- ----------------------------------------------------------------------------------------------------------------
Class B:
Sold 279,134 $ 4,555,544 222,321 $ 3,523,228
Dividends and distributions reinvested 35,724 551,096 3,640 57,138
Redeemed (43,911) (715,794) (25,008) (398,234)
------------ ------------ ------------ ------------
Net increase 270,947 $ 4,390,846 200,953 $ 3,182,132
============ ============ ============ ============
- ----------------------------------------------------------------------------------------------------------------
Class C:
Sold 80,502 $ 1,266,698 11,772 $ 183,684
Dividends and distributions reinvested 2,629 40,489 95 1,489
Redeemed (6,697) (112,479) (64) (991)
------------ ------------ ------------ ------------
Net increase 76,434 $ 1,194,708 11,803 $ 184,182
============ ============ ============ ============
</TABLE>
1. 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.
28 Oppenheimer Disciplined Allocation Fund
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
===============================================================================
3. Unrealized Gains and Losses on Investments
At October 31, 1997, net unrealized appreciation on investments of $20,966,392
was composed of gross appreciation of $22,877,757, and gross depreciation of
$1,911,365.
===============================================================================
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 average annual net assets in excess of $400 million. The Manager acts
as the accounting agent for the Fund at an annual fee of $15,000, plus
out-of-pocket costs and expenses reasonably incurred.
For the year ended October 31, 1997, commissions (sales charges paid
by investors) on sales of Class A shares totaled $468,073, of which $456,768 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 $175,997 and $10,863, respectively, of which $103,608 and
$3,393, respectively, were paid to an affiliated broker/dealer for Class B and
Class C. During the year ended October 31, 1997, OFDI received contingent
deferred sales charges of $14,973 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 shareholder accounts that hold Class A shares. Reimbursement
is made quarterly at an annual rate that may not exceed 0.25% of the average
annual net assets of Class A shares of the Fund. OFDI uses the service fee to
reimburse brokers, dealers, banks and other financial institutions quarterly for
providing personal service and maintenance of accounts of their customers that
hold Class A shares. During the year ended October 31, 1997, OFDI paid $513,497
to an affiliated broker/dealer as reimbursement for Class A personal service and
maintenance expenses.
29 Oppenheimer Disciplined Allocation Fund
<PAGE>
- -------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- -------------------------------------------------------------------------------
===============================================================================
4. Management Fees and Other Transactions with Affiliates (continued)
The Fund has adopted Distribution and Service Plans for Class B and Class C
shares to compensate OFDI for its 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 for its
services rendered in distributing Class B and Class C shares. OFDI also receives
a service fee of 0.25% per year to compensate dealers for providing personal
services for accounts that hold Class B and Class C shares. Each fee is 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 year ended October 31, 1997,
OFDI paid $3,250 to an affiliated broker/dealer as compensation for Class B
personal service and maintenance expenses and retained $54,845 and $6,286,
respectively, as compensation for Class B and Class C sales commissions and
service fee advances, as well as financing costs. If either Plan is terminated
by the Fund, the Board of Directors may allow the Fund to continue payments of
the asset-based sales charge to OFDI for distributing shares before the Plan was
terminated. As of October 31, 1997, OFDI had incurred unreimbursed expenses of
$227,372 for Class B and $15,154 for Class C.
===============================================================================
5. Illiquid and Restricted Securities
At October 31, 1997, investments in securities included issues that are illiquid
or restricted. Restricted securities are often purchased in private placement
transactions, are not registered under the Securities Act of 1933, may have
contractual restrictions on resale, and are valued under methods approved by the
Board of Directors as reflecting fair value. A security may be considered
illiquid if it lacks a readily available market or if its valuation has not
changed for a certain period of time. The Fund intends to invest no more than
10% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limit. The aggregate value of illiquid or restricted securities
subject to this limitation at October 31, 1997 was $3,073,712, which represents
1.21% of the Fund's net assets.
30 Oppenheimer Disciplined Allocation Fund
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
===============================================================================
6. Bank Borrowings
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.
The Fund had no borrowings outstanding during the year ended October
31, 1997.
31 Oppenheimer Disciplined Allocation Fund
<PAGE>
Appendix A
Corporate Industry Classifications
Aerospace/Defense Food
Air Transportation Gas Utilities
Auto Parts Distribution Gold
Automotive Health Care/Drugs
Bank Holding Companies Health Care/Supplies & Services
Banks Homebuilders/Real Estate
Beverages Hotel/Gaming
Broadcasting Industrial Services
Broker-Dealers Information Technology
Building Materials Insurance
Cable Television Leasing & Factoring
Chemicals Leisure
Commercial Finance Manufacturing
Computer Hardware Metals/Mining
Computer Software Nondurable Household Goods
Conglomerates Oil - Integrated
Consumer Finance Paper
Containers Publishing/Printing
Convenience Stores Railroads
Department Stores Restaurants
Diversified Financial Savings & Loans
Diversified Media Shipping
Drug Stores Special Purpose Financial
Drug Wholesalers Specialty Retailing
Durable Household Goods Steel
Education Supermarkets
Electric Utilities Telecommunications - Technology
Electrical Equipment Telephone - Utility
Electronics Textile/Apparel
Energy Services & Producers Tobacco
Entertainment/Film Toys
Environmental Trucking
Wireless Services
A-1
<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.
B-2
<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
The Bank of New York
One Wall Street
New York, New York 10015
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 Funds
Prospectus Dated February 19, 1998
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 19, 1998 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 NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents
A B O U T T H E F U N D S
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
A B O U T Y O U R A C C O U N T
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>
A B O U T T H E F U N D S
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.
o 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.
Class A Class B Class C
Shares Shares Shares
- --------------------------------------------------------------------------------
Maximum Sales Charge on Purchases 5.75% None None
(as a % of offering price)
- --------------------------------------------------------------------------------
Maximum Deferred Sales Charge None(1) 5% in the 1% if shares
(as a % of the lower of the original first year, are redeemed
offering price or redemption proceeds) declining to within 12
1% in the months of
6th year and purchase(2)
eliminated
thereafter(2)
- --------------------------------------------------------------------------------
Maximum Sales Charge on None None None
Reinvested Dividends
- --------------------------------------------------------------------------------
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 __) in Class A shares, you may have to pay a sales charge of up to 1% if
you sell your shares within 12 calendar months (18 months for shares purchased
prior to May 1, 1997) from the end of the calendar month during which you
purchased those shares. See "How to Buy Shares -- Buying Class A Shares" below.
(2) See "How to Buy Shares -- Buying Class B Shares," and "How to Buy Shares --
Buying Class C Shares" below for more information on the contingent deferred
sales charges.
(3) There is a $10 transaction fee for redemption proceeds paid by Federal Funds
wire, but not for redemptions paid by check or ACH transfer through AccountLink.
o 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
- -------------------------------------------------------------------------------
LifeSpan Growth Fund 0.85% 0.85% 0.85%
- -------------------------------------------------------------------------------
LifeSpan Balanced Fund 0.85% 0.85% 0.85%
- -------------------------------------------------------------------------------
LifeSpan Income Fund 0.75% 0.75% 0.75%
- -------------------------------------------------------------------------------
12b-1 Plan Fees
- -------------------------------------------------------------------------------
LifeSpan Growth Fund 0.25% 1.00% 1.00%
- -------------------------------------------------------------------------------
LifeSpan Balanced Fund 0.25% 1.00% 1.00%
- -------------------------------------------------------------------------------
LifeSpan Income Fund 0.25% 1.00% 1.00%
- -------------------------------------------------------------------------------
Other Expenses
- -------------------------------------------------------------------------------
LifeSpan Growth Fund 0.40% 0.42% 0.44%
- -------------------------------------------------------------------------------
LifeSpan Balanced Fund 0.32% 0.33% 0.31%
- -------------------------------------------------------------------------------
LifeSpan Income Fund 0.45% 0.43% 0.45%
- -------------------------------------------------------------------------------
Total Fund Operating Expenses
- ------------------------------------------------------------------------------
Growth Fund 1.50% 2.27% 2.29%
- -------------------------------------------------------------------------------
Balanced Fund 1.42% 2.18% 2.16%
- -------------------------------------------------------------------------------
Income Fund 1.45% 2.18% 2.20%
The numbers for the Class A, Class B and Class C shares in the chart above
are based on each Fund's expenses during the fiscal year ended October 31, 1997.
These amounts are shown as a percentage of the average net assets of each class
of each Fund's shares for that period.
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."
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.
o 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
- -------------------------------------------------------------------------------
LifeSpan Growth Fund $72 $102 $135 $226
- -----------------------------------------------------------------------------
LifeSpan Balanced Fund $71 $100 $131 $218
- -----------------------------------------------------------------------------
LifeSpan Income Fund $71 $101 $132 $221
- -----------------------------------------------------------------------------
1 year 3 years 5 years 10 years*
- ------------------------------------------------------------------------------
Class B Shares
- ------------------------------------------------------------------------------
LifeSpan Growth Fund $73 $101 $142 $223
- ------------------------------------------------------------------------------
LifeSpan Balanced Fund $72 $ 98 $137 $214
- ------------------------------------------------------------------------------
LifeSpan Income Fund $72 $ 98 $137 $216
- ------------------------------------------------------------------------------
1 year 3 years 5 years 10 years*
- ------------------------------------------------------------------------------
Class C Shares
- ------------------------------------------------------------------------------
LifeSpan Growth Fund $33 $ 72 $123 $263
- ------------------------------------------------------------------------------
LifeSpan Balanced Fund $32 $ 68 $116 $249
- ------------------------------------------------------------------------------
LifeSpan Income Fund $32 $ 69 $118 $253
If you did not redeem your investment, it would incur the following
expenses:
1 year 3 years 5 years 10 years*
- ------------------------------------------------------------------------------
Class A Shares
- ------------------------------------------------------------------------------
LifeSpan Growth Fund $72 $102 $135 $226
- ------------------------------------------------------------------------------
LifeSpan Balanced Fund $71 $100 $131 $218
- ------------------------------------------------------------------------------
LifeSpan Income Fund $71 $101 $132 $221
- ------------------------------------------------------------------------------
1 year 3 years 5 years 10 years*
- ------------------------------------------------------------------------------
Class B Shares
- ------------------------------------------------------------------------------
LifeSpan Growth Fund $23 $71 $122 $223
- ------------------------------------------------------------------------------
LifeSpan Balanced Fund $22 $68 $117 $214
- ------------------------------------------------------------------------------
LifeSpan Income Fund $22 $68 $117 $216
- ------------------------------------------------------------------------------
1 year 3 years 5 years 10 years*
- ------------------------------------------------------------------------------
Class C Shares
- ------------------------------------------------------------------------------
LifeSpan Growth Fund $23 $72 $123 $263
- ------------------------------------------------------------------------------
LifeSpan Balanced Fund $22 $68 $116 $249
- ------------------------------------------------------------------------------
LifeSpan Income Fund $22 $69 $118 $253
*In the examples 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 examplew 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 a 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.
o 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.
o 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 __.
o Who Manages the Funds? The Funds' investment advisor is
OppenheimerFunds, Inc., which (including subsidiaries) advises investment
company portfolios having over $75 billion in assets at December 31, 1997. 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 Subadvisers 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
Subadvisers and their fees.
o 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.
LifeSpan Growth Fund, a stock fund, is expected to be more volatile than
LifeSpan Balanced Fund, an income and growth fund, which in turn is generally
expected to be more volatile than LifeSpan 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.
o 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.
o 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.
o 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 __.
o 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. Each Fund's performance can also be
compared to broad market indices, which we have done on pages __. 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. The information for the
Funds' fiscal year ended October 31, 1997 and fiscal period ended October 31,
1996 has been audited by KPMG Peat Marwick LLP, the Funds' independent auditors,
whose report for the fiscal year ended October 31, 1997 is included in the
Statement of Additional Information. The information in the tables for the
fiscal periods prior to 1996 was audited by the Funds' previous independent
auditors.
-3-
<PAGE>
<TABLE>
<CAPTION>
LIFESPAN GROWTH FUND CLASS A
FINANCIAL HIGHLIGHTS ----------------------------------------
PERIOD ENDED
YEAR ENDED OCTOBER 31, DECEMBER 31,
1997 1996(3) 1995(4)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $12.78 $11.39 $10.00
- -----------------------------------------------------------------------------------
Income from investment operations:
Net investment income .24 .18 .16
Net realized and unrealized gain 1.35 1.34 1.63
------ ------ -----
Total income from investment
operations 1.59 1.52 1.79
- -----------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.08) (.09) (.17)
Distributions from net realized gain (.62) (.04) (.23)
------ ----- ------
Total dividends and distributions
to shareholders (.70) (.13) (.40)
- -----------------------------------------------------------------------------------
Net asset value, end of period $13.67 $12.78 $11.39
====== ====== ======
- -----------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 12.96% 13.37% 18.02%
- -----------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $53,318 $43,980 $34,368
- -----------------------------------------------------------------------------------
Average net assets (in thousands) $49,213 $39,576 $29,046
- -----------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.91% 1.81%(6) 2.32%(6)
Expenses 1.50%(7) 1.61%(6) 1.55%(6)
- -----------------------------------------------------------------------------------
Portfolio turnover rate(8) 66.0% 64.2% 71.8%
Average brokerage commission rate(9) $0.0069 $0.0059 --
</TABLE>
1. For the period from May 1, 1996 (inception of offering) to October 31, 1996.
2. For the period from October 2, 1995 (inception of offering) to December 31,
1995.
3. For the ten months ended October 31, 1996. The Fund changed its fiscal year
end from December 31 to October 31. On March 18, 1996, OppenheimerFunds, Inc.
became the investment advisor to the Fund.
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.
8
<PAGE>
<TABLE>
<CAPTION>
CLASS B CLASS C
- ----------------------------------------- ---------------
PERIOD ENDED
YEAR ENDED OCTOBER 31, DECEMBER 31, YEAR ENDED OCTOBER 31,
1997 1996(3) 1995(2) 1997 1996(1)
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
$12.81 $11.47 $11.14 $12.74 $12.49
- ---------------------------------------------------------------------
.14 .08 .03 .14 .11
1.35 1.36 .56 1.34 .27
------ ------ ------ ------ ------
1.49 1.44 .59 1.48 .38
- ---------------------------------------------------------------------
(.06) (.06) (.03) (.07) (.09)
(.62) (.04) (.23) (.62) (.04)
------ ------ ------ ------ ------
(.68) (.10) (.26) (.69) (.13)
- ---------------------------------------------------------------------
$13.62 $12.81 $11.47 $13.53 $12.74
====== ====== ====== ====== ======
- ---------------------------------------------------------------------
12.07% 12.58% 5.34% 12.05% 3.04%
- ---------------------------------------------------------------------
$5,391 $2,405 $561 $1,209 $141
- ---------------------------------------------------------------------
$3,925 $1,475 $230 $722 $54
- ---------------------------------------------------------------------
1.14% 1.11%(6) 1.70%(6) 1.11% 1.32%(6)
2.27%(7) 2.37%(6) 2.30%(6) 2.29%(7) 2.43%(6)
- ---------------------------------------------------------------------
66.0% 64.2% 71.8% 66.0% 64.2%
$0.0069 $0.0059 -- $0.0069 $0.0059
</TABLE>
6. Annualized.
7. The expense ratio reflects the effect of expenses paid indirectly by the
Fund.
8. 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, 1997 were $39,384,627 and $31,934,908, respectively.
9. 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. Generally, non-U.S. commissions are lower than U.S.
commissions when expressed as cents per share but higher when expressed as a
percentage of transactions because of the lower per-share prices of many
non-U.S. securities.
9
<PAGE>
<TABLE>
<CAPTION>
LIFESPAN BALANCED FUND CLASS A
FINANCIAL HIGHLIGHTS ---------------------------------------
PERIOD ENDED
YEAR ENDED OCTOBER 31, DECEMBER 31,
1997 1996(3) 1995(4)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $11.90 $11.05 $10.00
- ----------------------------------------------------------------------------------
Income from investment operations:
Net investment income .37 .29 .24
Net realized and unrealized gain 1.08 .81 1.29
------ ------ ------
Total income from investment
operations 1.45 1.10 1.53
- ----------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.37) (.22) (.25)
Distributions from net realized gain (.32) (.03) (.23)
------ ------ ------
Total dividends and distributions
to shareholders (.69) (.25) (.48)
- ----------------------------------------------------------------------------------
Net asset value, end of period $12.66 $11.90 $11.05
====== ====== ======
- ----------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 12.66% 10.04% 15.33%
- ----------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $62,262 $52,104 $41,861
- ----------------------------------------------------------------------------------
Average net assets (in thousands) $57,769 $47,116 $37,417
- ----------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 3.08% 3.15%(6) 3.47%(6)
Expenses 1.42%(7) 1.56%(6) 1.55%(6)
- ----------------------------------------------------------------------------------
Portfolio turnover rate(8) 59.7% 61.0% 76.3%
Average brokerage commission rate(9) $0.0067 $0.0078 --
</TABLE>
1. For the period from May 1, 1996 (inception of offering) to October 31, 1996.
2. For the period from October 2, 1995 (inception of offering) to December 31,
1995.
3. For the ten months ended October 31, 1996. The Fund changed its fiscal year
end from December 31 to October 31. On March 18, 1996, OppenheimerFunds, Inc.
became the investment advisor to the Fund.
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.
10
<PAGE>
<TABLE>
<CAPTION>
CLASS B CLASS C
- ----------------------------------------- ----------------------
PERIOD ENDED
YEAR ENDED OCTOBER 31, DECEMBER 31, YEAR ENDED OCTOBER 31,
1997 1996(3) 1995(2) 1997 1996(1)
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
$11.98 $11.16 $10.95 $11.88 $11.74
- ----------------------------------------------------------------------
.27 .20 .05 .28 .13
1.08 .82 .45 1.07 .24
------ ------ ------ ------ ------
1.35 1.02 .50 1.35 .37
- ----------------------------------------------------------------------
(.29) (.17) (.06) (.29) (.20)
(.32) (.03) (.23) (.32) (.03)
----- ----- ------ ------ ------
(.61) (.20) (.29) (.61) (.23)
- ----------------------------------------------------------------------
$12.72 $11.98 $11.16 $12.62 $11.88
====== ====== ======
- ----------------------------------------------------------------------
11.70% 9.22% 4.49% 11.73% 3.21%
- ----------------------------------------------------------------------
$4,762 $1,893 $441 $683 $828
- ----------------------------------------------------------------------
$3,504 $1,225 $247 $879 $551
- ----------------------------------------------------------------------
2.31% 2.41%(6) 3.01%(6) 2.37% 2.53%(6)
2.18%(7) 2.32%(6) 2.30%(6) 2.16%(7) 2.27%(6)
- ----------------------------------------------------------------------
59.7% 61.0% 76.3% 59.7% 61.0%
$0.0067 $0.0078 -- $0.0067 $0.0078
</TABLE>
6. Annualized.
7. The expense ratio reflects the effect of expenses paid indirectly by the
Fund.
8. 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, 1997 were $42,186,840 and $34,319,496, respectively.
9. 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. Generally, non-U.S. commissions are lower than U.S.
commissions when expressed as cents per share but higher when expressed as a
percentage of transactions because of the lower per-share prices of many
non-U.S. securities.
11
<PAGE>
<TABLE>
<CAPTION>
LIFESPAN INCOME FUND CLASS A
FINANCIAL HIGHLIGHTS ---------------------------------------
PERIOD ENDED
YEAR ENDED OCTOBER 31, DECEMBER 31,
1997 1996(3) 1995(4)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.65 $10.70 $10.00
- ----------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .59 .48 .37
Net realized and unrealized gain (loss) .56 (.02) .73
------ ------ ------
Total income from investment
operations 1.15 .46 1.10
- ----------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.59) (.48) (.36)
Distributions from net realized gain (.15) (.03) (.04)
------ ------ ------
Total dividends and distributions
to shareholders (.74) (.51) (.40)
- ----------------------------------------------------------------------------------
Net asset value, end of period $11.06 $10.65 $10.70
------ ------ ------
------ ------ ------
- ----------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 11.30% 4.45% 11.22%
- ----------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $29,206 $26,328 $24,619
- ----------------------------------------------------------------------------------
Average net assets (in thousands) $27,678 $25,463 $22,128
- ----------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.49% 5.43%(6) 5.35%(6)
Expenses 1.45%(7) 1.56%(6) 1.50%(6)
- ----------------------------------------------------------------------------------
Portfolio turnover rate(8) 39.6% 75.3% 45.8%
Average brokerage commission rate(9) $0.0681 $0.0694 --
</TABLE>
1. For the period from May 1, 1996 (inception of offering) to October 31, 1996.
2. For the period from October 2, 1995 (inception of offering) to December 31,
1995.
3. For the ten months ended October 31, 1996. The Fund changed its fiscal year
end from December 31 to October 31. On March 18, 1996, OppenheimerFunds, Inc.
became the investment advisor to the Fund.
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.
12
<PAGE>
<TABLE>
<CAPTION>
CLASS B CLASS C
- -------------------------------------- ----------------------
PERIOD ENDED
YEAR ENDED OCTOBER 31, DECEMBER 31, YEAR ENDED OCTOBER 31,
1997 1996(3) 1995(2) 1997 1996(1)
- -------------------------------------------------------------------
<S> <C> <C> <C> <C>
$10.69 $10.74 $10.45 $10.66 $10.53
- ----------------------------------------------------------------
.51 .41 .12 .55 .25
.57 (.02) .32 .58 .16
- ------ ------ ------ ------ -----
1.08 .39 .44 1.13 .41
- ----------------------------------------------------------------
(.51) (.41) (.11) (.54) (.25)
(.15) (.03) (.04) (.15) (.03)
- ------ ------ ------
(.66) (.44) (.15) (.69) (.28)
- ----------------------------------------------------------------
$11.11 $10.69 $10.74 $11.10 $10.66
====== ====== ====== ====== ======
- ----------------------------------------------------------------
10.51% 3.69% 4.30% 11.03% 3.96%
- ----------------------------------------------------------------
$816 $456 $192 $32 $1
- ----------------------------------------------------------------
$677 $350 $107 $20 $1
- ----------------------------------------------------------------
4.69% 4.93%(6) 5.23%(6) 4.64% 4.68%(6)
2.18%(7) 2.31%(6) 2.25%(6) 2.20%(7) 2.25%(6)
- -----------------------------------------------------------------------------------------------------------------------------------
39.6% 75.3% 45.8% 39.6% 75.3%
$0.0681 $0.0694 -- $0.0681 $0.0694
</TABLE>
6. Annualized.
7. The expense ratio reflects the effect of expenses paid indirectly by the
Fund.
8. 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, 1997 were $12,166,241 and $10,297,628, respectively.
9. 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.
13
<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.
o 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.
Asset Classes and Components
<TABLE>
<CAPTION>
LifeSpan LifeSpan LifeSpan
Growth Fund Balanced Fund Income Fund
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Normal Normal Normal
Allocation Range Allocation Range Allocation Range
- -------------------------------------------------------------------------------------------
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 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.
o 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:
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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 Corporation ("Standard and
Poor's")or Ba or lower by Moody's Investors Service, Inc. ("Moody's") 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.
o 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.
o 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 indicates 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.
o Portfolio Turnover. "Portfolio turnover" describes the rate at which a
Fund traded its portfolio securities during a fiscal year. For example, if a
Fund sold all of its securities during the year, its portfolio turnover rate
would be 100%. Portfolio turnover affects brokerage costs a Fund pays.
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 LifeSpan 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.
o 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.
o 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.
o 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.
o Special Risks of Hedging Instruments. 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.
o Special Risks of Derivative Investments. Each Fund may invest in
different kinds of derivative investments, as described below, which entail
special risks. The company issuing the instrument may fail to pay the amount due
on the maturity of the instrument. Also, the underlying investment or security
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" below.
o Foreign Securities 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.
o Emerging Market Investments Risks. 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.
o 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 associated with investing
in lower-grade securities, discussed in "Investment Risks," above.
As of October 31, 1997, each Fund's portfolio included fixed income
securities in the following rating categories of Standard & Poor's 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):
o LifeSpan Growth Fund: AAA, 0.00%; AA+, 0.12%; AA, 0.07%; AA-, 0.15%; A+,
0.26%; A, 0.43%; A-, 0.33%; BBB+, 0.42%; BBB, 0.80%; BBB-, 0.55%; BB+, 0.61%;
BB, 0.31%; BB-, 1.07%; B+, 2.11%; B, 2.54%; B-, 1.84%; CCC+, 0.21%; CCC, 0.24%;
CCC-, 0.00%; CC, 0.12%; C, 0.00%; D, 0.00%, not rated, 0.52%.
o LifeSpan Balanced Fund : AAA, 0.00%; AA+, 0.27%; AA, 0.20%; AA-, 0.46%;
A+, 0.99%; A, 1.64%; A-, 1.21%; BBB+, 0.87%; BBB, 1.54%;BBB-, 1.46%; BB+, 1.36%;
BB, 0.52%; BB-, 1.62%; B+, 3.66%; B, 3.96%; B-, 2.94%; CCC+, 0.33%; CCC, 0.40%;
CCC-, 0.09%; CC, 0.00%; C, 0.16%; D, 0.00%, not rated, 0.62%.
o LifeSpan Income Fund: AAA, 0.00%; AA+, 0.74%; AA, 0.60%; AA-, 1.39%; A+,
2.93%; A, 4.75%; A-, 3.77%; BBB+, 1.75%; BBB, 4.30%; BBB-, 3.99%; BB+, 2.52%;
BB, 0.53%; BB-, 1.95%; B+, 3.47%; B, 4.60%; B-, 3.22%; CCC+, 0.37%; CCC, 0.34%;
CCC-, 0.00%; CC, 0.00%; C, 0.18%; D, 0.00%, not rated, 0.90%.
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.
o 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
associated with investing in emerging markets, discussed in "Investment Risks,"
above.
o 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.
o 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.
o 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."
o 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 and 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.
o 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.
o "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.
o 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.
o 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, a 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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. Illiquid securities include repurchase
agreements maturing in more than seven days or certain participation interests
other than those with puts exercisable within seven days. The Manager monitors
holdings of illiquid securities on an ongoing basis and at times a Fund may be
required to sell some holdings to maintain adequate liquidity.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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:
o 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.
o 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.
o 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.
o 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 a 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. Additional
investment restrictions are listed in "Other Investment Restrictions" in the
Statement of Additional Information.
How the Funds are Managed
Organization and History. Each of the Funds is a 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 Board of Directors of the Company has determined that (i) it is in the
best interest of shareholders of Oppenheimer LifeSpan Growth Fund that the Fund
reorganize with and into Oppenheimer Disciplined Value Fund, a series of the
Company, (ii) it is in the best interest of shareholders of Oppenheimer LifeSpan
Balanced Fund that the Fund reorganize with and into Oppenheimer Disciplined
Allocation Fund, a series of the Company, and (iii) it is in the best interest
of shareholders of Oppenheimer LifeSpan Income Fund that the Fund reorganize
with and into the Oppenheimer Bond Fund series of Oppenheimer Integrity Funds.
The Board unanimously approved the terms of an Agreement and Plan of
Reorganization to be entered into between each reorganizing fund (the
"Reorganization Plan") and the transactions contemplated (the transactions are
referred to as the "Reorganization"). The Board further determined that the
Reorganization should be submitted to the Funds' shareholders for approval, and
recommended that shareholders approve the Reorganization.
Pursuant to the Reorganization Plan (i) substantially all of the assets of
each Fund would be exchanged for Class A, Class B and Class C shares of the
respective acquiring fund, (ii) the Class A, Class B and Class C shares of the
acquiring funds would be distributed to the shareholders of the respective Fund
and, (iii) the outstanding shares of each Fund would be canceled. It is expected
that the Reorganization will be tax-free, pursuant to Section 368(a)(1) of the
Internal Revenue Code of 1986, as amended ,and each Fund will request an opinion
of tax counsel to that effect.
A meeting of the shareholders of the Funds is expected to be held to vote
on the Reorganization. Approval of the Reorganization requires the affirmative
vote of a majority of the outstanding shares of each Fund (the term "majority"
is defined in the Investment Company Act as a special majority. It is also
explained in the Statement of Additional Information). There is no assurance
that a Fund's shareholders will approve the Reorganization with respect to that
Fund. Details about the proposed Reorganization of each Fund will be contained
in a proxy statement and other soliciting materials which will be sent to each
Fund's shareholders of record on a date to be determined.
The Manager, the Subadvisers 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 a separate
Investment Advisory Agreement for each Fund which state the Manager's
responsibilities. The Investment Advisory 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.
o The Manager. The Manager has operated as an investment adviser since
1959. The Manager (including subsidiaries) currently manages investment
companies, including other Oppenheimer funds, with assets of more than $75
billion as of December 31, 1997, and with more than 3.5 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 management services provided to the Funds by the Manager, and the
services provided by the Distributor and the Transfer Agent to shareholders,
depend on the smooth functioning of their computer systems. Many computer
software systems in use today cannot distinguish the year 2000 from the year
1900 because of the way dates are encoded and calculated. That failure could
have a negative impact on handling securities trades, pricing and account
services. The Manager, the Distributor and Transfer Agent have been actively
working on necessary changes to their computer systems to deal with the year
2000 and expect that their systems will be adapted in time for that event,
although there cannot be assurance of success.
The Subadvisers. The Manager has engaged the following three Subadvisers
to provide day-to-day portfolio management for certain components of the Funds:
o 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, 1997, Babson-Stewart had approximately $4.5 billion in assets under
management.
o 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, 1997, BEA Associates,
together with its global affiliate, had over $128 billion in assets under
management.
o Pilgrim Baxter & Associates, Ltd. ("Pilgrim Baxter"), 825 Duportail
Road, 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, 1997,
Pilgrim Baxter had over $16 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.
o 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.
Component Portfolio Manager/Business Experience (Last 5 Years)
- -------------------------------------------------------------------
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 Funds 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: Executive 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)
o 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. The management fees for fiscal year ended October 31, 1997 for each
LifeSpan Growth Fund, LifeSpan Balanced Fund and LifeSpan Income Fund were
o.85%, 0.85% and 0.75%, respectively, of the average annual net assets for each
class of shares that were offered.
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, certain 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.
o 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.
o 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.
o 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 have the Funds Performed? Below is a discussion by the Manager of the
performance of each Fund during its fiscal year ended October 31, 1997, followed
by a graphical comparison of the Fund's performance to appropriate broad-based
market index or indices.
o Management's Discussion of Performance.
o Oppenheimer LifeSpan Growth Fund. During the fiscal year ended October
31, 1997, the Fund's positive performance was primarily affected by the economic
growth in the stock markets. In particular, the Fund realized gains on its stock
holding in the financial and technology sectors. The Fund's investments in
foreign securities also performed well, due in large part to a reduction of the
Fund's exposure to the difficulties in Southeast Asia. The Fund's investments in
high-yield securities also performed well, especially in strong growth sectors
such as telecommunications. The Fund's government/corporate bond investments
benefited from the controlled, non-inflationary growth in the U.S.
o Oppenheimer LifeSpan Balanced Fund. During fiscal year ended October 31,
1997, the stock market performed strongly. The Fund benefited from the stock
market due primarily to the Manager's allocation of approximately 65% of the
Fund's assets in equity securities. In particular, the Fund's investments in
financial and technology stocks contributed significantly to the Fund's positive
performance, followed by small cap and international stocks. The Fund's returns
were also helped by a bond market rally later in the year.
o Oppenheimer LifeSpan Income Fund. During fiscal year ended October 31,
1997, the Fund performed well despite volatility in the short-term bond market.
The Fund's positive performance was helped in large part by the non-inflationary
growth environment in the U.S. The Fund's Growth/Income component performed the
strongest, benefiting from overall strong stock market returns.
Each Fund's portfolio holdings, allocations and strategies are subject to
change.
o Comparing the Funds' 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 each of the Funds held until October 31, 1997. In the case of Class A
shares, performance is measured from the inception of each Fund. In the case of
Class B shares, performance is measured from the inception of that class of each
Fund on October 2, 1995. In the case of Class C shares, performance is measured
from the inception of that class of each Fund on May 1, 1996.
LifeSpan Balanced 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 measurement of the performance of the U.S. equity securities market and
Lehman Brothers Government/Corporate Bond Index, an index which includes the
government and corporate bond indices, including U.S. government treasury and
agency securities, corporate and Yankee bonds. LifeSpan Income Fund's
performance is compared to the performance of the Lehman Brothers Intermediate
Government/Corporate Bond Index, which includes such bonds with 1- 10 year
maturity. LifeSpan Growth Fund's performance is compared to the performance of
the Wilshire 5000 Index, an index which measures the performance of all U.S.
headquartered equity securities with readily available price data.
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, each Fund's performance reflects the
effect of the Fund business and operating expenses. While index comparisons may
be useful to provide a benchmark for a Fund's performance, it must be noted that
each Fund's investments are not limited to the securities in any one index.
Moreover, the indices performance data does not reflect any assessment of the
risk of the investments included in the indices.
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer LifeSpan Growth Fund and Wilshire 5000 Index
[Graph](1)
Average Annual Total Return of Class A Shares of the Fund at 10/31/97(2)
1 Year Life of Class
- -------- -------------
6.46% 15.20%
Total returns and the ending account values in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance in the graph for the Wilshire 5000 Index began 4/30/95 for Class
A shares.
(1) The Fund changed its fiscal year end from December to October. (2) The
commencement of operations of the Fund (Class A shares) was 05/1/95. The average
annual total returns and the ending account value in the graph reflect
reinvestment of all dividends and capital gains distributions and are shown net
of the applicable 5.75% maximum initial sales charge.
Past performance is not predictive of future performance.
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer LifeSpan Growth Fund and Wilshire 5000 Index
[Graph](1)
Average Annual Total Return of Class B Shares of the Fund at 10/31/97(3)
1 Year Life of Class
- -------- -------------
7.07% 13.40%
Total returns and the ending account values in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance in the graph for the Wilshire 5000 Index began 9/30/95 for Class
B shares.
(1) The Fund changed its fiscal year end from December to October. (3) Class B
shares of the Fund were first publicly offered on 10/2/95. The average annual
total returns are shown net of the applicable 5% and 3% contingent deferred
sales charges, respectively, for the 1-year period and the Life of Class. The
ending account value in the graph is net of the applicable 3% contingent
deferred sales charge. Different contingent deferred sales charges applied to
redemptions of Class B shares prior to 3/18/96.
Past performance is not predictive of future performance.
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer LifeSpan Growth Fund and Wilshire 5000 Index
[Graph]
Average Annual Total Return of Class C Shares of the Fund at 10/31/97(4)
1 Year Life of Class
- -------- -------------
11.05% 10.06%
Total returns and the ending account values in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance in the graph for the Wilshire 5000 Index began 4/30/96 for Class
C shares.
(4) Class C shares of the Fund were first publicly offered on 5/1/96. The
average annual total return for the 1-year period is shown net of the applicable
1% contingent deferred sales charge.
Past performance is not predictive of future performance.
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer LifeSpan Balanced Fund, Lehman Brothers
Government/Corporate Bond Index and the S&P 500 Index
[Graph](1)
Average Annual Total Return of Class A Shares of the Fund at 10/31/97(2)
1 Year Life of Class
- -------- -------------
6.18% 12.68%
Total returns and the ending account values in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance in the graph for the Lehman Brothers Government/Corporate Bond
Index and the S&P 500 Index began 4/30/95 for Class A shares.
(1) The Fund changed its fiscal year end from December to October. (2) The
commencment of operations of the Fund (Class A shares) was 05/1/95. The average
annual total returns and the ending account value in the graph reflect
reinvestment of all dividends and capital gains distributions and are shown net
of the applicable 5.75% maximum initial sales charge.
Past performance is not predictive of future performance.
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer LifeSpan Balanced Fund, Lehman Brothers
Government/Corporate Bond Index and the S&P 500 Index
[Graph](1)
Average Annual Total Return of Class B Shares of the Fund at 10/31/97(3)
1 Year Life of Class
- -------- -------------
6.70% 11.09%
Total returns and the ending account values in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance in the graphs for the Lehman Brothers Government/Corporate Bond
Index and the S&P 500 Index began 9/30/95 for Class B shares.
(1) The Fund changed its fiscal year end from December to October.
(3) Class B shares of the Fund were first publicly offered on 10/2/95. The
average annual total returns are shown net of the applicable 5% and 3%
contingent deferred sales charges, respectively, for the 1-year period and the
Life of Class. The ending account value in the graph is net of the applicable 3%
contingent deferred sales charge. Different contingent deferred sales charges
applied to redemptions of Class B shares prior to 3/18/96.
Past performance is not predictive of future performance.
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer LifeSpan Balanced Fund, Lehman Brothers
Government/Corporate Bond Index and the S&P 500 Index
[Graph]
Average Annual Total Return of Class C Shares of the Fund at 10/31/97(4)
1 Year Life of Class
- -------- -------------
10.73% 9.96%
Total returns and the ending account values in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance in the graph for the Lehman Brothers Government/Corporate Bond
Index and the S&P 500 Index began 4/30/96 for Class C shares.
(4) Class C shares of the Fund were first publicly offered on 5/1/96. The
average annual total return for the 1-year period is shown net of the applicable
1% contingent deferred sales charge. Past performance is not predictive of
future performance.
Class A Shares
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](1)
Average Annual Total Return of Class A Shares of the Fund at 10/31/97(2)
1 Year Life of Class
- ------ -------------
4.90% 8.22%
Total returns and the ending account values in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance in the graph for the Lehman Brothers Intermediate
Government/Corporate Bond Index began
4/30/95 for Class A shares.
(1) The Fund changed its fiscal year end from December to October. (2) The
commencement of operations date of the Fund (Class A shares) was 05/1/95. The
average annual total returns and the ending account value in the graph reflect
reinvestment of all dividends and capital gains distributions and are shown net
of the applicable 5.75% maximum initial sales charge.
Past performance is not predictive of future performance.
Class B Shares
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](1)
Average Annual Total Return of Class B Shares of the Fund at 10/31/97(3)
1 Year Life of Class
- ------ -------------
5.51% 7.62%
Total returns and the ending account values in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance in the graph for the Lehman Brothers Intermediate
Government/Corporate Bond Index began
9/30/95 for Class B shares.
(1) The Fund changed its fiscal year end from December to October. (3) Class B
shares of the Fund were first publicly offered on 10/2/95. The average annual
total returns are shown net of the applicable 5% and 3% contingent deferred
sales charges, respectively, for the 1-year period and the Life of Class. The
ending account value in the graph is net of the applicable 3% contingent
deferred sales charge. Different contingent deferred sales charges applied to
redemptions of Class B shares prior to 3/18/96.
Past performance is not predictive of future performance.
Class C Shares
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]
Average Annual Total Return of Class C Shares of the Fund at 10/31/97(4)
1 Year Life of Class
- ------ --------------
10.03% 10.04%
Total returns and the ending account values in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance in the graph for the Lehman Brothers Intermediate
Government/Corporate Bond Index began
4/30/96 for Class C shares.
(4) Class C shares of the Fund were first publicly offered on 5/1/96. The
average annual total return for the 1-year period is shown net of the applicable
1% contingent deferred sales charge.
Past performance is not predictive of future performance.
A B O U T Y O U R A C C O U N T
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.
o 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 12 months of buying them (18 months if shares were purchased prior
to May 1, 1997), you may pay a contingent deferred sales charge. The amount of
that sales charge will vary depending on the amount you invested. Sales charge
rates are described in "Buying Class A Shares" below.
o 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.
o 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.
o 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.
o 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.
For investors who invest $1 million or more, in most cases Class A shares
will be the most advantageous choice, no matter how long you intend to hold your
shares. For that reason, the Distributor normally will not accept purchase
orders of $500,000 or more of Class B shares or $1 million or more of Class C
shares from a single investor.
o Investing for the Longer Term. If you are investing 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.
o 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.
o 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. The
Distributor may pay additional periodic compensation from its own resources to
securities dealers or financial institutions based upon the value of shares of a
Fund owned by the dealer or financial institution for its own account or for its
customers.
How Much Must You Invest? You can open a Fund account with a minimum initial
investment of $1,000 and make additional investments at any time with as little
as $25. There are reduced minimum investments under special investment plans:
o 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.
o Under pension and profit-sharing plans, 401(k) plans, Individual
Retirement Accounts (IRAs) and through wrap fee accounts sponsored by certain
broker-dealers, 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.
o 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.
o 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.
o Buying Shares Through Your Dealer. Your dealer will place your order with
the Distributor on your behalf.
o 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.
o Payments by Federal Fund Wires. Shares may be purchased by Federal Funds
Wire. The minimum investment is $2,500. You must first call the Distributor's
Wire Department at 1-800-525-7041 to notify the Distributor of the wire and
receive further instructions.
o 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.
o 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.
o 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 or the order is received and transmitted to the Distributor by
an entity authorized by a Fund to accept purchases or redemption orders. Each
Fund has authorized the Distributor, certain broker-dealers and agents or
intermediaries designated by the Distributor. In most cases, to enable you to
receive that day's offering price, the Distributor or its authorized entity 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 normally
your order must be transmitted 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:
Front-End Sales Front-End Sales
Charge as Charge as Commission as
Percentage of Percentage of Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
- ------------------------------------------------------------------------
Less than $25,000 5.75% 6.10% 4.75%
- ------------------------------------------------------------------------
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
- -------------------------------------------------------------------------
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
- ------------------------------------------------------------------------
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
- ------------------------------------------------------------------------
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
- ------------------------------------------------------------------------
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter" under
Federal securities laws.
o 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:
o Purchases aggregating $1 million or more;
o 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,
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;
o 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; or
o Purchases by a retirement plan qualified under Section 401(a) or 401(k)
if the retirement plan has total plan assets of $500,000 or more.
The Distributor pays dealers of record commissions on those purchases in
an amount equal to (i) 1.0% for non-Retirement Plan accounts, and (ii) for
Retirement Plan accounts, 1.0% of the first $2.5 million, plus 0.50% of the next
$2.5 million, plus 0.25% of purchases over $5 million calculated on a calendar
year basis. That commission will be paid only on those purchases that were not
previously subject to 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 purchased prior to May 1, 1997 within 18
months of the end of the calendar month of their purchase, a contingent deferred
sales charge (called the "Class A contingent deferred sales charge") may be
deducted from the redemption proceeds. A Class A contingent deferred sales
charge may be deducted from the redemptions proceeds of any of those shares
purchased on or after May 1, 1997 that are redeemed within 12 months of the end
of the calendar month of their purchase. That sales charge 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 12 calendar months (18 months
for shares purchases prior to May 1, 1997) of the end of the calendar month of
the purchase of the exchanged shares, the sales charge will apply.
o 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:
o 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 Distributor will add the value , at current
offering price, of the shares you previously purchased and currently own to the
value of current purchases to determine the sales charge rate that applies. The
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.
o 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.
o 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:
o the Manager or its affiliates;
o 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;
o registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the Distributor for
that purpose;
o 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;
o 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);
o 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);
o (1) investment advisors and financial planners who have entered into an
agreement for this purpose with the Distributor and who charge an advisory,
consulting or other fee for their services and buy shares for their own accounts
or the accounts of their clients, (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 have entered into an agreement for this purpose with the
Distributor) who buy shares for their own accounts may also purchase shares
without sales charge but only if their accounts are linked to a master account
of their investment advisor or financial planner on the books and records of the
broker, agent or financial intermediary with which the Distributor has made
special arrangements (each of these investors may be charged a fee by the
broker, agent or financial intermediary for purchasing shares).
o 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;
o 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;
o any unit investment trust that has entered into an appropriate agreement
with the Distributor; or
o 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 commenced by December 31, 1996.
Waivers of Initial and Contingent Deferred Sales Charges in Certain
Transactions. Class A shares issued or purchased in the following transactions
are not subject to Class A sales charges:
o shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which a Fund is a party;
o 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;
o 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;
o shares purchased and paid for with the proceeds of shares redeemed in
the prior 30 days from a mutual fund (other than a fund managed by the Manager
or any of its subsidiaries) on which an initial sales charge or contingent
deferred sales charge was paid (this waiver also applies to shares purchased by
exchange of shares of Oppenheimer Money Market Fund, Inc. that were purchased
and paid for in this manner); this waiver must be requested when the purchase
order is placed for your Fund shares, and the Distributor may require evidence
of your qualification for this waiver; or
o 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:
o to make Automatic Withdrawal Plan payments that are limited annually to
no more than 12% of the original account value;
o involuntary redemptions of shares by operation of law or involuntary
redemption of small accounts (see "Shareholder Account Rules and Policies,"
below);
o if, at the time a purchase of shares (prior to May 1, 1997) the dealer
agreed in writing to accept the dealer's portion of the sales commission in
installments of 1/18th of the commission per month (and no further commission
will be payable if the shares are redeemed within 18 months of purchase);
o if at the time of purchase of shares (if purchased during the period May
1, 1997 through December 31, 1997) the dealer agrees in writing to accept the
dealer's portion of the sales commission in installments of 1/12th of the
commission per month (and no further commission will be payable if the shares
are redeemed within 12 months of purchase);
o 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;
o for distributions from Retirement Plans having 500 or more eligible
participants, except distributions due to termination of all of the Oppenheimer
funds as an investment option under the Plan; and
o for distribution from 401(k) plans sponsored by broker-dealers that have
entered into a special agreement with the Distributor allowing this waiver.
Service Plan for Class A Shares. 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.
o 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 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 may pay the Class B service fee and the
asset-based sales charge to the dealer quarterly in lieu of paying the sales
commission and service fee advance at the time of purchase.
The Distributor currently pays sales commissions of 0.75% of the purchase
price of Class C shares to dealers from its own resources at the time of sale.
Including the advance of the service fee, the total amount paid by the
Distributor to the dealer at the time of sale of Class C shares is 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 may pay the Class C
service fee and asset-based sales charge to the dealer quarterly in lieu of
paying the sales commission and service fee advance at the time of purchase. The
Distributor 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.
At October 31, 1997 the end of the Class B and Class C Plans year, the
Distributor had the following unreimbursed expenses in connection with the sales
of Class B and Class C shares:
Class B % of Class B Class C % of Class C
Expenses Net Assets Expenses Net Assets
- -------------------------------------------------------------------
LifeSpan
Growth Fund $131,807 2.44% $12,680 1.05%
- -------------------------------------------------------------------
LifeSpan
Income Fund $ 8,787 1.08% -0- -0-
- -------------------------------------------------------------------
LifeSpan
Balanced Fund $135,290 2.84% $14,197 2.08%
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. In order to
receive a waiver of Class B or Class C contingent deferred sales charge, you
must notify the Transfer Agent which conditions applies.
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:
o 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);
o 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);
o returns of excess contributions to Retirement Plans;
o 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;
o shares redeemed involuntarily, as described in "Shareholder Account Rules
and Policies" below;
o distributions from OppenheimerFunds prototype 401(k) plans and from
certain Massachusetts Mutual Life Insurance Company prototype 401(k) plans (1)
for hardship withdrawals; (2) under a Qualified Domestic Relations Order, as
defined in the Internal Revenue Code; (3) to meet minimum distribution
requirements as defined in the Internal Revenue Code; (4) to make "substantially
equal periodic payments" as described in Section 72(t) of the Internal Revenue
Code; (5) for separation from service; or (6) for loans to participants or
beneficiaries; or
o distributions from 401(k) plans sponsored by broker-dealers that have
entered into a special agreement with the Distributor allowing this waiver.
Waivers for Shares Sold or Issued in Certain Transactions. The contingent
deferred sales charge is also waived on Class B and Class C shares sold or
issued in the following cases:
o shares sold to the Manager or its affiliates;
o 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
o 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 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.
o 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.
o 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.
o 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 account, to pay for these
purchases.
o 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.
o 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.
Shareholder Transactions by Fax. Requests for certain account transactions may
be sent to the Transfer Agent by fax (telecopier). Please call 1-800-525-7048
for information about which transactions are included. Transaction requests
submitted by fax are subject to the same rules and restrictions as written and
telephone requests described in this Prospectus.
OppenheimerFunds Internet Web Site. Information about a Fund, including your
account balance, daily share prices, market and Fund portfolio information, may
be obtained by visiting the OppenheimerFunds Internet Web Site, at the following
Internet address: http://www.oppenheimerfunds.com. In 1998, the Transfer Agent
anticipates offering certain account transactions through the Internet Web Site.
To find out more information about those transactions and procedures, please
visit the Web Site.
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:
o 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.
o 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:
o Individual Retirement Accounts including rollover IRAs, for individuals
and their spouses and SIMPLE IRAs offered by employers
o 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
o SEP-IRAs (Simplified Employee Pension Plans) for small business owners
or people with income from self-employment, including SARSEP-IRAs
o Pension and Profit-Sharing Plans for self-employed persons and other
employers
o 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.
o 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.
o 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):
o You wish to redeem more than $50,000 worth of shares and receive a check
o The redemption check is not payable to all shareholders listed on the
account statement
o The redemption check is not sent to the address of record on your account
statement
o Shares are being transferred to a Fund account with a different owner or
name
o Shares are redeemed by someone other than the owners (such as an
Executor)
o 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:
o Your name
o Your Fund's name
o Your Fund account number (from your account statement)
o The dollar amount or number of shares to be redeemed
o Any special payment instructions
o Any share certificates for the shares you are selling
o The signatures of all registered owners exactly as the account is
registered, and
o Any special 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:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
Send courier or Express Mail requests to:
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.
o To redeem shares through a service representative, call 1-800-852-8457
o To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address on the
account statement, or, if you have linked your Fund account to your bank account
on AccountLink, you may have the proceeds wired to that bank account.
o 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.
o 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:
o Shares of the fund selected for exchange must be available for sale in
your state of residence.
o The prospectuses of your Fund and the fund whose shares you want to buy
must offer the exchange privilege.
o You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them; after the account is open 7 days, you
can exchange shares every regular business day.
o You must meet the minimum purchase requirements for the fund you purchase
by exchange.
o 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:
o 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."
o 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:
o Shares are normally redeemed from one fund and purchased from the other
fund in the exchange transaction on the same regular business day on which the
Transfer Agent receives an exchange request that 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.
o 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.
o 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.
o 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.
o If the Transfer Agent cannot exchange all the shares you request because
of a restriction cited above, only the shares eligible for exchange will be
exchanged.
Shareholder Account Rules and Policies
o 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.
o 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.
o 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.
o 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.
o 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.
o 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 or improperly.
o 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.
o 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 federal funds wire, certified check or arrange with your bank
to provide telephone or written assurance to the Transfer Agent that your
purchase payment has cleared.
o 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.
o 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.
o "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 correct and properly certified Social
Security or Employer Identification Number and any other certification required
by the Internal Revenue Service when you sign your application, or if you
underreport your income to the Internal Revenue Service.
o 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.
o 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 dividends 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
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 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:
o 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.
o 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.
o 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.
o Reinvest Your Distributions in Another Oppenheimer Fund Account. You can
reinvest all distributions in the same class of shares of 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 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. So that each Fund will
not have to pay taxes on the amount it distributes to shareholders as dividends
and capital gains, each Fund intends to manage its investments so that it will
qualify as a "regulated investment company" under the Internal Revenue Code,
although it reserves the right not to qualify in a particular year.
o "Buying a Dividend." 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.
o 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.
o 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.
o 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.
-4-
<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.
A-1
<PAGE>
APPENDIX B
Special Sales Charge Arrangements
I. Special Sales Charge Arrangements for Shareholders of a 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 a Fund described elsewhere in this Prospectus are modified
as described below for those shareholders of (i) Oppenheimer Quest Value Fund,
Inc., Oppenheimer Quest Growth & Income Value Fund, Oppenheimer Quest
Opportunity Value Fund, Oppenheimer Quest Small Cap Value Fund and Oppenheimer
Quest Global Value Fund, Inc. on November 24, 1995, when OppenheimerFunds, Inc.
became the investment adviser to those funds, and (ii) Quest for Value U.S.
Government Income Fund, Quest for Value Investment Quality Income Fund, Quest
for Value Global Income Fund, Quest for Value New York Tax-Exempt Fund, Quest
for Value National Tax-Exempt Fund and Quest for Value California Tax-Exempt
Fund when those funds merged into various Oppenheimer funds on November 24,
1995. The funds listed above are referred to in this Prospectus as the "Former
Quest for Value Funds." The waivers of initial and contingent deferred sales
charges described in this Appendix apply to shares of a Fund (i) acquired by
such shareholder pursuant to an exchange of shares of one of the Oppenheimer
funds that was one of the Former Quest for Value Funds, or (ii) purchased by
such shareholder by exchange of shares of other Oppenheimer funds that were
acquired pursuant to the merger of any of the former Quest for Value Funds into
an Oppenheimer fund on November 24, 1995.
Class A Sales Charges
o Reduced Class A Initial Sales Charge Rates for Certain Former Quest
Shareholders.
o 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.
Front-End Front-End
Sales Charge as Sales Charge as Commission
Number of Eligible a Percentage of a Percentage of as Percentage
Employees or Members Offering Price Amount Invested of Offering Price
- -------------------------------------------------------------------------------
9 or fewer 2.50% 2.56% 2.00%
- -------------------------------------------------------------------------------
At least 10 but
not more than 49 2.00% 2.04% 1.60%
For purchases by Qualified Retirement plans and Associations having 50 or
more eligible employees or members, there is no initial sales charge on
purchases of Class A shares, but those shares are subject to the Class A
contingent deferred sales charge described on pages __ to __ of this Prospectus.
Purchases made under this arrangement qualify for the lower of the sales
charge rate in the table based on the number of eligible employees in a
Qualified Retirement Plan or members of an Association or the sales charge rate
that applies under the Rights of Accumulation described above in the Prospectus.
In addition, purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they qualified to
purchase shares of any of the Former Quest For Value Funds by virtue of
projected contributions or investments of $1 million or more each year.
Individuals who qualify under this arrangement for reduced sales charge rates as
members of Associations, or as eligible employees in Qualified Retirement Plans
also may purchase shares for their individual or custodial accounts at these
reduced sales charge rates, upon request to the Fund's Distributor.
o 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:
o Shareholders of a 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.
o Shareholders of a Fund who acquired shares of any Former Quest for Value
Fund by merger of any of the portfolios of the Unified Funds.
o 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:
o 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.
o 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.
A Funds' 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
o 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 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 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.
o 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 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 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 a Fund described in this section
if within 90 days after that redemption, the proceeds are invested in the same
Class of shares in a Fund or another Oppenheimer fund.
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
a 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
o Class A Contingent Deferred Sales Charge. Certain shareholders of a Fund
and the other Former Connecticut Mutual Funds are entitled to continue to make
additional purchases of Class A shares at net asset value without a Class A
initial sales charge, but subject to the Class A contingent deferred sales
charge that was in effect prior to March 18, 1996 (the "prior Class A CDSC").
Under the prior Class A CDSC, if any of those shares are redeemed within one
year of purchase, they will be assessed a 1% contingent deferred sales charge on
an amount equal to the current market value or the original purchase price of
the shares sold, whichever is smaller (in such redemptions, any shares not
subject to the prior Class A CDSC will be redeemed first).
Those shareholders who are eligible for the prior Class A CDSC are: (1)
persons whose purchases of Class A shares of a Fund and other Former Connecticut
Mutual Funds were $500,000 prior to March 18, 1996, as a result of direct
purchases or purchases pursuant to a Funds' policies on Combined Purchases or
Rights of Accumulation, who still hold those shares in a 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 a 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 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.
o 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 a 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 a Fund or any one or more of the Former Connecticut Mutual Funds
totaled $500,000 or more; (3) Directors of a 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"), a Funds' 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 a Fund or any one
or more of the Former Connecticut Mutual Funds, provided the institution had an
agreement with CMFS. Purchases of Class A shares made pursuant to (1) and (2)
above may be subject to the Class A CDSC of the Former Connecticut Mutual Funds
described above.
Additionally, Class A shares of a Fund may be purchased without a sales
charge by any holder of a variable annuity contract issued in New York State by
Connecticut Mutual Life Insurance Company through the Panorama Separate Account
which is beyond the applicable surrender charge period and which was used to
fund a qualified plan, if that holder exchanges the variable annuity contract
proceeds to buy Class A shares of a 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 a 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 a 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 Companys Articles of
Incorporation, or as adopted by the Board of Directors of the Funds.
B-1
<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
OppenheimerFunds Internet Web Site
http://www.oppenheimerfunds.com
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
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. PR0000.305.0298 Printed on recycled paper
<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 10/31/97, in the case of the Fund's Class B, that graph will
cover the period from inception (10/2/95) through 10/31/97, and in the case of
Class C shares, that graph will cover the period from the inception of the class
(5/1/96) through 10/31/97. 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 Government/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 Bond Index
- ------------- --------------- -------------------
5/1/95(1) $ 9,425 $10,000
12/31/95 $10,482 $10,914
10/31/96 $10,949 $11,280
10/31/97 $12,185 $12,125
Lehman Brothers
Oppenheimer Intermediate
Fiscal LifeSpan Income Government/Corporate
Period Ended Fund Class B Bond Index
- ------------- --------------- -------------------
10/02/95(2) $10,000 $10,000
12/31/95 $10,430 $10,352
10/31/96 $10,814 $10,699
10/31/97 $11,651 $11,501
- ----------------
(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 Bond Index
- ------------- --------------- -------------------
05/01/96(3) $10,000 $10,000
10/31/96 $10,396 $10,459
10/31/97 $11,543 $11,243
- ----------------
(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 10/31/97, in the case of the Fund's Class B, that graph will
cover the period from inception (10/2/95) through 10/31/97, and in the case of
Class C shares, that graph will cover the period from the inception of the class
(5/1/96) through 10/31/97. 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."
Oppenheimer S&P Lehman Brothers
Fiscal LifeSpan Balanced 500 Corporate/Government
Period Ended Fund Class A Index Index
- ------------- ------------------ ------ --------------------
5/1/95(1) $ 9,425 $10,000 $10,000
12/31/95 $10,870 $12,176 $11,202
10/31/96 $11,962 $14,200 $11,446
10/31/97 $13,476 $18,758 $12,455
Oppenheimer S&P Lehman Brothers
Fiscal LifeSpan Balanced 500 Corporate/Government
Period Ended Fund Class B Index Bond Index
- ------------ ----------------- ------ --------------------
10/02/95(2) $10,000 $10,000 $10,000
12/31/95 $10,450 $10,602 $10,466
10/31/96 $11,413 $12,364 $10,694
10/31/97 $12,447 $16,332 $11,637
- ----------------
(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.
<PAGE>
Oppenheimer S&P Lehman Brothers
Fiscal LifeSpan Balanced 500 Corporate/Government
Period Ended Fund Class C Index Bond Index
- ------------- ----------------- ------ ------------------
05/01/96(3) $10,000 $10,000 $10,000
10/31/96 $10,321 $10,908 $10,535
10/31/97 $11,532 $14,409 $11,464
- ----------
(3) Class C shares of the Fund were first publicly offered on 5/01/96.
<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 10/31/97, in the case of the Fund's Class B, that graph will
cover the period from inception (10/2/95) through 10/31/97, and in the case of
Class C shares, that graph will cover the period from the inception of the class
(5/1/96) through 10/31/97. 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 $12,028
10/31/96 $12,611 $13,605
10/31/97 $14,246 $17,604
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 $10,432
10/31/96 $11,859 $15,267
10/31/97 $12,990
Oppenheimer
Fiscal LifeSpan Growth Wilshire 5000
Period Ended Fund Class C Index
- ------------- --------------- -------------------
5/01/96(3) $10,000 $10,000
10/31/96 $10,304 $10,517
10/31/97 $11,546 $13,608
- ----------------
(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
Statement of Additional Information dated February 19, 1998
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 19, 1998. 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 Objectives and Policies............................................
Investment Policies and Strategies.........................................
Other Investment Restrictions..............................................
How the Funds are Managed.....................................................
Organization and History...................................................
Directors and Officers of the Funds........................................
The Manager and Its Affiliates.............................................
Brokerage Policies of the Funds...............................................
Performance of the Funds......................................................
Distribution and Service Plans................................................
About Your Account
How to Buy Shares.............................................................
How to Sell Shares............................................................
How to Exchange Shares........................................................
Dividends, Capital Gains and Taxes............................................
Additional Information About the Funds........................................
Financial Information About the Funds
Independent Auditors' Report..................................................
Financial Statements..........................................................
Appendix: 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.
o 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."
o 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).
o 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.
o 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.
o High Yield Securities. Each Fund may invest in high-yield/high risk
securities (commonly called junk bonds). OppenheimerFunds, Inc. (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.
o 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.
o 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.
o 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").
o 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.
o 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.
o 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.
o 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.
o 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.
o "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.
o 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.
o 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.
o 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.
o 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:
o 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.
o 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.
o 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.
o Equity Securities. Additional information about some of the types of
equity securities each Fund may invest in is provided below.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o 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.
o Tax Aspects of Covered Calls and Hedging Instruments. Each Fund intends
to qualify as a "regulated investment company" under the Internal Revenue Code
(although each reserves the right not to qualify). 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 (unless the Fund's shares are held in a
retirement account or shareholder is otherwise exempt from tax).
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.
o 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.
o 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
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.
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. Oppenheimer Series Fund, Inc. (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 Company (and each of its series, including
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 Funds' Directors and officers and
their principal occupations and business affiliations during the past five years
are listed below. The address for 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 also trustees or directors of Oppenheimer California
Municipal Fund, Oppenheimer Capital Appreciation Fund, Oppenheimer Developing
Markets Fund, Oppenheimer Discovery Fund, Oppenheimer Enterprise Fund,
Oppenheimer Global Fund, Oppenheimer Global Growth & Income Fund, Oppenheimer
Gold & Special Minerals Fund, Oppenheimer Growth Fund, Oppenheimer International
Growth Fund, Oppenheimer International Small Company Fund, Oppenheimer Money
Market Fund, Inc., Oppenheimer Multi-Sector Income Trust, Oppenheimer
Multi-State Municipal Trust, Oppenheimer Multiple Strategies Fund, Oppenheimer
Municipal Bond Fund, Oppenheimer New York Municipal Fund, the other series in
the Oppenheimer Series Fund, Inc., Oppenheimer U.S. Government 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 and Messrs. Spiro, Donohue, Bishop, Bowen, Farrar and
Zack hold the same respective offices with the New York- based Oppenheimer funds
as with the Funds. As of February 9, 1998, the Directors and officers of each
Fund as a group owned less than 1% of the outstanding Class A, Class B, or Class
C shares of each Fund. That statement does not include ownership of shares held
of record by an employee benefit plan for employees of the Manager (one of the
Directors of the Funds listed below, Ms. Macaskill, and one of the officers, Mr.
Donohue, are trustees of that plan) other than the shares beneficially owned
under that plan by the officers of the funds listed above.
Leon Levy, Chairman of the Board of Directors; Age: 72
31 West 52nd Street, New York, NY 10019
General Partner of Odyssey Partners, L.P. (investment partnership) (since 1982)
and Chairman of Avatar Holdings, Inc. (real estate development).
Robert G. Galli, Director; Age: 64
19750 Beach Road, Jupiter Island, FL 33464
Formerly he held the following positions: Vice Chairman of OppenheimerFunds,
Inc. (the "Manager") (October 1995-December 1997); 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: 74
591 Breezy Hill Road, Hillsdale, NY 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: 49
President (since June 1991), Chief Executive Officer (since September 1995) and
a Director (since December 1994) of the Manager; President and director (since
June 1991) of HarbourView; Chairman and a director of SSI (since August 1994),
and SFSI (September 1995); President (since September 1995) and a director
(since October 1990) of OAC; President (since September 1995) and a director
(since November 1989) of Oppenheimer Partnership Holdings, Inc., a holding
company subsidiary of the Manager; a director of Oppenheimer Real Asset
Management, Inc. (since July 1996); President and a director (since October
1997) of OppenheimerFunds International Ltd., an offshore fund manager
subsidiary of the Manager ("OFIL") and Oppenheimer Millennium Funds plc (since
October 1997); President and a director of other Oppenheimer funds; a director
of the NASDAQ Stock Market, Inc. and of Hillsdown Holdings plc (a U.K. food
company); formerly an Executive Vice President of the Manager.
Elizabeth B. Moynihan, Director; Age: 68
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. Randall, Director; Age: 70
6 Whittaker's Mill, Williamsburg, VA 23185
A director of Dominion Resources, Inc. (electric utility holding company),
Dominion Energy, Inc. (electric power and oil & gas producer), Texan
Cogeneration Company (cogeneration company), Prime Retail, Inc. (real estate
investment trust); 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: 67
40 Park Avenue, New York, NY 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 River Bank America (real estate
manager); Trustee, Financial Accounting Foundation (FASB and GASB); formerly New
York State Comptroller and trustee, New York State and Local Retirement Fund.
Russell S. Reynolds, Jr., Director; Age: 66
8 Sound Shore Drive, Greenwich, CT 06830
Founder Chairman of Russell Reynolds Associates, Inc. (executive recruiting);
Chairman of Directorship Inc. (corporate and governance consulting); a director
of Professional Staff Limited (U.K.); a trustee of Mystic Seaport Museum,
International House and Greenwich Historical Society.
Donald W. Spiro, Vice Chairman and Director*; Age: 72
Chairman Emeritus (since August 1991) and a director (since January 1969) of the
Manager; formerly Chairman of the Manager and the Distributor.
Pauline Trigere, Director; Age: 85
498 Seventh Avenue, New York, NY 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and sale of
women's fashions).
Clayton K. Yeutter, Director; Age: 67
1325 Merrie Ridge Road, McLean, VA 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) and Texas Instruments, Inc. (electronics);
formerly (in descending chronological order) IMC Global Inc. (chemicals and
animal feed), 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.
Peter M. Antos, Vice President and Portfolio Manager; Age: 52
One Financial Plaza, 755 Main Street, Hartford, CT 06103-2603
Chartered Financial Analyst; Principal Portfolio Manager, Vice President of the
Fund and Senior Vice President of the Manager and HarbourView (since March
1996); portfolio manager of other Oppenheimer funds; previously Vice President
and Senior Portfolio Manager, Equities - Connecticut Mutual Life Insurance
Company and its subsidiary - G. R. Phelps & Co. ("G. R. Phelps") (1989- 1996).
Michael C. Strathearn, Vice President and Portfolio Manager; Age: 45
One Financial Plaza, 755 Main Street, Hartford, CT 06103-2603
Chartered Financial Analyst; Vice President of the Funds, the Manager and
HarbourView (since March 1996); portfolio manager of other Oppenheimer funds;
previously a Portfolio Manager, Equities-Connecticut Mutual Life Insurance
Company (1988-1996).
Kenneth B. White, Vice President and Portfolio Manager; Age: 46
One Financial Plaza, 755 Main Street, Hartford, CT 06103-2603
Chartered Financial Analyst; Vice President of the Funds, the Manager and
HarbourView (since March 1996); portfolio manager of other Oppenheimer funds;
previously a Portfolio Manager, Equities-Connecticut Mutual Life Insurance
Company (1992-1996); Senior Investment Officer, Equities-Connecticut Mutual Life
Insurance Company (1987-1992).
Stephen F. Libera, Vice President and Portfolio Manager; Age: 47
One Financial Plaza, 755 Main Street, Hartford, CT 06103-2603
Chartered Financial Analyst; Vice President of the Funds, the Manager and
HarbourView (since March 1996); portfolio manager of other Oppenheimer funds;
previously a Vice President and Senior Portfolio Manager, Fixed
Income-Connecticut Mutual Life Insurance Company and its subsidiary -G.R. Phelps
(1985-1996).
George C. Bowen, Treasurer; Age: 61
6803 South Tucson Way, Englewood, CO 80112
Senior Vice President (since September 1987) and Treasurer (since March 1985) of
the Manager; Vice President (since June 1983) and Treasurer (since March 1985)
of the Distributor; Vice President (since October 1989) and Treasurer (since
April 1986) of HarbourView; Senior Vice President (since February 1992),
Treasurer (since July 1991)and a director (since December 1991) of Centennial;
President, Treasurer and a director of Centennial Capital Corporation (since
June 1989); Vice President and Treasurer (since August 1978) and Secretary
(since April 1981) of SSI; Vice President, Treasurer and Secretary of SFSI
(since November 1989); Treasurer of OAC (since June 1990); Treasurer of
Oppenheimer Partnership Holdings, Inc. (since November 1989); Vice President and
Treasurer of Oppenheimer Real Asset Management, Inc. (since July 1996); Chief
Executive Officer, Treasurer and a director of MultiSource Services, Inc., a
broker-dealer (since December 1995); an officer of other Oppenheimer funds.
Andrew J. Donohue, Secretary; Age: 47
Executive Vice President (since January 1993), General Counsel (since October
1991) and a Director (since September 1995) of the Manager; Executive Vice
President (since September 1993), and a director (since January 1992) of the
Distributor; Executive Vice President, General Counsel and a director of
HarbourView, SSI, SFSI and Oppenheimer Partnership Holdings, Inc. since
(September 1995) and MultiSource Services, Inc. (a broker-dealer) (since
December 1995); President and a director of Centennial (since September 1995);
President and a director of Oppenheimer Real Asset Management, Inc. (since July
1996); General Counsel (since May 1996) and Secretary (since April 1997) of OAC;
Vice President of OFIL and Oppenheimer Millennium Funds plc (since October
1997); an officer of other Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer; Age: 39
6803 South Tucson Way, Englewood, CO 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); an
officer of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for
the Manager.
Scott T. Farrar, Assistant Treasurer; Age: 32
6803 South Tucson Way, Englewood, CO 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); Assistant
Treasurer of Oppenheimer Millennium Funds plc (since October 1997); an officer
of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for
the Manager.
Robert G. Zack, Assistant Secretary; Age: 49
Senior Vice President (since May 1985) and Associate General Counsel (since May
1981) of the Manager, Assistant Secretary of SSI (since May 1985), and SFSI
(since November 1989); Assistant Secretary of Oppenheimer Millennium Funds plc
(since October 1997); an officer of other Oppenheimer funds.
- -------------------------------------------
*A Director who is an "interested person" of the Company as defined in the
Investment Company Act.
o Remuneration of Directors. The officers of the Funds are affiliated with
the Manager. They and the Directors of the Funds who are affiliated with the
Manager (Ms. Macaskill and Mr. Spiro) receive no salary or fee from the Funds.
The remaining Directors of the Funds received the compensation shown below from
the Funds, during its fiscal year ended October 31, 1997. The compensation from
all of the New York-based Oppenheimer funds includes the Funds and is
compensation received as director, trustee or member of a committee of the Board
during the calendar year 1997.
Compensation Received from each Fund
LifeSpan LifeSpan LifeSpan
Growth Balanced Income
Fund Fund Fund
Leon Levy $6673 $6123 $7369
Chairman and Director
Benjamin Lipstein $5768 $5292 $6370
Study Committee
Chairman, Audit Committee
Member and Director(2)
Elizabeth B. Moynihan $4063 $3728 $4487
Study Committee Member
and Director
Kenneth A. Randall $3726 $3419 $4115
Audit Committee Chairman
and Director
Edward V. Regan $3684 $3380 $4068
Proxy Committee Chairman,
Audit Committee Member
and Director
Russell S. Reynolds, Jr. $1379 $1265 $1523
Proxy Committee Member
and Director
Pauline Trigere $2463 $2260 $2720
Director
Clayton K. Yeutter $2758 $2530 $3045
Proxy Committee
Member and Director
Retirement Benefits Accrued as Part of Fund Expenses
LifeSpan LifeSpan LifeSpan
Growth Balanced Income
Fund Fund Fund
Leon Levy $795 $38 $202
Chairman and Director
Benjamin Lipstein $688 $33 $175
Study Committee
Chairman, Audit Committee
Member and Director(2)
Elizabeth B. Moynihan $484 $23 $123
Study Committee Member
and Director
Kenneth A. Randall $444 $21 $113
Audit Committee Chairman
and Director
Edward V. Regan $439 $21 $112
Proxy Committee Chairman,
Audit Committee Member
and Director
Russell S. Reynolds, Jr. $164 $ 8 $42
Proxy Committee Member
and Director
Pauline Trigere $294 $14 $75
Director
Clayton K. Yeutter $329 $16 $84
Proxy Committee
Member and Director
Total Compensation from all New York-based Oppenheimer Funds (1)
Leon Levy $158,500
Chairman and Director
Benjamin Lipstein $137,000
Study Committee
Chairman, Audit Committee
Member and Director(2)
Elizabeth B. Moynihan $96,500
Study Committee Member
and Director
Kenneth A. Randall $88,500
Audit Committee Chairman
and Director
Edward V. Regan $87,500
Proxy Committee Chairman,
Audit Committee Member
and Director
Russell S. Reynolds, Jr. $32,750
Proxy Committee Member
and Director
Pauline Trigere $58,500
Director
Clayton K. Yeutter $65,500
Proxy Committee
Member and Director
- -----------------
(1) For the 1997 calendar year.
(2) Committee position held during a portion of the period shown.
Each of the Funds 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.
o Deferred Compensation Plan. The Board of Directors has adopted a Deferred
Compensation Plan for disinterested directors that enables directors to elect to
defer receipt of all or a portion of the annual fees they are entitled to
receive from each of the Funds. Under the plan, the compensation deferred by a
Director is periodically adjusted as though an equivalent amount had been
invested in shares of one or more Oppenheimer funds selected by the Director.
The amount paid to the Director under the plan will be determined based upon the
performance of the selected funds. Deferral of Director's fees under the plan
will not materially affect each Fund's assets, liabilities or net income per
share. The plan will not obligate each Fund to retain the services of any
Director or to pay any particular level of compensation to any Director.
Pursuant to an Order issued by the Securities and Exchange Commission, a Fund
may, without shareholder approval and notwithstanding its fundamental policy
restricting investment in other open-end investment companies, as described on
page 22 of the Statement of Additional Information, invest in the funds selected
by the Director under the plan for the limited purpose of determining the value
of the Director's deferred fee account.
o Major Shareholders. As of February 9, 1998, 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 as follows:
o LifeSpan Income Fund: (i) Mass Mutual Life Insurance Company, 1295 State
Street, Springfield, Massachusetts 01111, which owned 2,401,213.639 Class A
shares (or 88.69% of the then outstanding Class A shares); (ii) RPSS TR Rollover
IRA for the benefit of Kathy R. Simkins, 314 West 1700 South, Orem, Utah 84058,
which owned 11, 730.256 Class B shares (or 15.25% of the then outstanding Class
B shares); (iii) RPSS TR Rollover IRA for the benefit of Frances L. Barnes,
Harriman Hill Road, Raymond, New Hampshire 03077 which owned 5,577.754 Class B
shares (or 7.25% of the then outstanding Class B shares); (iv) David E. & Gail
Tilton Joint Revocable Trust, 34 Wawayanda Road, Warwick, New York 10990 which
owned 5,281.934 Class B shares (or 6.86% of the then outstanding Class B
shares); (v) Filla Irrevocable Trust for the benefit of Elizabeth Lynn Filla,
405 Bethany Court, Valley Park, Missouri 63088, which owned 1000.918 Class C
shares (or 17.41% of the then outstanding Class C shares); (vi) Norman I.
Bobczynski, 189 Leeward Avenue, Pismo Beach, California 93449, who owned 898.065
Class C shares (or 15.62% of the then outstanding Class C shares); (vii) Gary R.
Close and Sammie A. Closer, JTWRS, 1295 Hetrick Avenue, Arroyo Grande,
California 93420, who owned 781.637 Class C shares (or 13.60% of the then
outstanding Class C shares); (viii) Laura M. Simmons, 718 North Greece Road,
Rochester, New York 14626 who owned 722.026 Class C shares (or 12.56% of the
then outstanding Class C shares); (ix) RPSS TR Paula Rosenstein SEP IRA for the
benefit of Paula Rosenstein, 4756 Biona Drive, San Diego, California 92116,
which owned 624.149 Class C shares (or 10.86% of the then outstanding Class C
shares); (x) Phillip and Ruth Shapiro, 102 Claybrook Drive, Silver Spring,
Maryland 20902 who owned 495.797 Class C shares (or 8.62% of the then
outstanding Class C shares); and (xi) RPSS TR Rollover IRA for the benefit of
Robin R. Prafke, PO Box 88, New Auburn, Minnesota 55366, which owned 442.726
Class C shares (or 7.70% of the then outstanding Class C shares).
o LifeSpan Balanced Fund: (i) Mass Mutual Life Insurance Company, 1295
State Street, Springfield, Massachusetts 01111, which owned 3,994,015.346 Class
A shares (or 6.89% of the then outstanding Class A shares); (ii) William R.
Trimmer M.D. Ltd. Profit Sharing Plan , 890 Mill Street, Reno, Nevada 89502
which owned 42,532.925 Class B shares (or 10.06% of the then outstanding Class B
shares); (iii) Margaret B. Woodworth Trust, 2404 Loring Street, San Diego,
California 92109, which owned 24,512.862 Class B shares (or 5.80% of the then
outstanding Class B shares); (iv) RPSS TR Rollover IRA for the benefit of
Clayton C. Clammer, 5928 Los Alamos Street, Buena Park, California 90620, which
owned 11, 203.186 Class C shares (or 15.38% of the then outstanding Class C
shares); (v) RPSS TR Rollover IRA for the benefit of Joanne Dickinson, 1071 Wade
Lane, Oakmont, Pennsylvania 15139, which owned 8,253.868 Class C shares (or
11.33% of the then outstanding Class C shares); and (vi) Merrill Lynch Pierce
Fenner & Smith Inc. for the benefit of its customers, 4800 Deer Lake Drive,
East, 32246, which owned 4,259.082 of Class C shares (or 5.84% of the then
outstanding Class C shares).
o LifeSpan Growth Fund: (I) Mass Mutual Life Insurance Company, 1295 State
Street, Springfield, Massachusetts 01111, which owned 2,986,502.938 Class A
shares (or 70.85% of the then outstanding Class A shares); (ii) Frank R. Casey
Trust, 1866 West Tweed Road, Inverness, Illinois 60067, which owned 35,013.975
Class B shares (or 7.64% of the then outstanding Class B shares); (iii) Merrill
Lynch Pierce Fenner & Smith Inc. for the benefit of its customers, 4800 Deer
Lake Drive, East, 32246, which owned 22,025.936 of Class C shares (or 18.54% of
the then outstanding Class C shares); and (iv) Donaldson Lufkin Jenrette
Securities Corporation, PO Box 2052, Jersey City, New Jersey 07303, which owned
8,246.579 Class C shares (or 6.94% of the then outstanding Class C shares). .
The Manager and its 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 Mr. Spiro) 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.
o Portfolio Management. The Portfolio Manager of the Fund is Peter M.
Antos, who is principally responsible for the day-to-day management of the
Fund's portfolio. Mr. Antos' background is described in the Prospectus under
"Portfolio Management." Other member of the Manager's Fixed Income Portfolio
Department, particularly Michael C. Strathearn, Kenneth B. White and Stephen F.
Libera, provide the Portfolio Manager with counsel and support in managing the
Fund's portfolio.
o 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 Investment Advisory
Agreement or by the Distributor under a Distribution Agreement (defined below)
are paid by the relevant Fund. The Investment 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.
o LifeSpan Growth Fund. 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. prior to March 18, 1996. For the fiscal year
ended October 31, 1997 the Fund paid $457,316 to the Manager.
o LifeSpan Balanced Fund. 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. prior to March 18, 1996. For the fiscal
year ended October 31, 1997, the Fund paid $527,770 to the Manager.
o LifeSpan Income Fund. 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. prior to March 18, 1996. For the fiscal year
ended October 31, 1997, the Fund paid $212,649 to the Manager.
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 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 Investment 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 Investment 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.
o The Investment Subadvisory Agreements. 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 December 31, 1997, Babson-Stewart had
approximately $4.5 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 approximately $128 billion in assets under management as of
December 31, 1997.
Pilgrim, 825 Duportail Road, 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 December 31, 1997, Pilgrim had over $16 billion in
assets under management.
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.
o 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.
o LifeSpan Growth Fund. During LifeSpan Growth Fund's fiscal period from
May 1, 1995 through December 31, 1995, the fiscal period ended October 31, 1996
and the fiscal year ended October 31, 1997, the aggregate sales charges on sales
of the Fund's Class A shares were $151,750, $103,757 and $137,511, respectively,
of which the Distributor and an affiliate broker-dealer retained $0, $69,069 and
$111,486 in those respective years. During the Fund's fiscal period ended
October 31, 1997, $2,500 in contingent deferred sales charges were collected on
the Fund's Class B shares. During the fiscal year ended October 31, 1997, sales
charges advanced to broker/dealers by the Distributor on sales of the Fund's
Class B shares totaled$102,107 of which $64,131 was paid to an affiliated
broker/dealer. During the Fund's fiscal year ended October 31, 1997 there were
no contingent deferred sales charges collected on the Fund's Class C shares.
During the fiscal year ended October 31, 1997, sales charges advanced to
broker/dealers by the Distributor on sales of the Fund's Class C shares totaled
$9,869, all of which the Distributor retained.
o LifeSpan Balanced Fund. During LifeSpan Balanced Fund's fiscal period
from May 1, 1995 through December 31, 1995, fiscal period ended October 31, 1996
and the fiscal year ended October 31, 1997, the aggregate sales charges on sales
of the Fund's Class A shares were $123,711, $84,043 and $100,461, respectively,
of which the Distributor and an affiliate broker-dealer retained $0, $67,555 and
$67,205 in those respective years. During the Fund's fiscal year ended October
31, 1997 there were no contingent deferred sales charges collected on the Fund's
Class B shares. During the fiscal year ended October 31, 1997, sales charges
advanced to broker/dealers by the Distributor on sales of the Fund's Class B
shares totaled $114,889 of which $67,463 was paid to an affiliated
broker/dealer. During the Fund's fiscal year ended October 31, 1997 there were
no contingent deferred sales charges collected on the Fund's Class C shares.
During the fiscal year ended October 31, 1997, sales charges advanced to
broker/dealers by the Distributor on sales of the Fund's Class C shares totaled
$5,414, all of which the Distributor retained.
o LifeSpan Income Fund. During LifeSpan Income Fund's fiscal period from
May 1, 1995 through December 31, 1995, fiscal period ended October 31, 1996 and
fiscal year ended October 31, 1997, the aggregate sales charges on sales of the
Fund's Class A shares were $75,262, $29,128 and $19,537, respectively, of which
the Distributor and an affiliate broker-dealer retained $0, $21,324 and $13,796
in those respective years. During the Fund's fiscal year ended October 31, 1997,
$5,923 contingent deferred sales charges were collected on the Fund's Class B
shares. During the fiscal year ended October 31, 1997, sales charges advanced to
broker/dealers by the Distributor on sales of the Fund's Class B shares totaled
$14,373 of which $11,515 was paid to an affiliated broker/dealer. During the
Fund's fiscal year ended October 31, 1997 there were no contingent deferred
sales charges collected on the Fund's Class C shares. During the fiscal year
ended October 31, 1997, there were no sales charges advanced to broker/dealers
by the Distributor on sales of the Fund's Class C shares.
o 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 Investment Advisory Agreement is to arrange the portfolio
transactions for each Fund. Each Investment 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
Investment 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 Investment 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 Investment
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 Investment 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 Investment
Advisory Agreement or the Distribution Plans described below) annually reviews
information furnished by the Manager as to the commissions paid to brokers
furnishing such services so that the Board may ascertain whether the amount of
such commissions was reasonably related to the value or benefit of such
services.
During the fiscal year ended October 31,1997, the Funds paid the following
brokerage commissions:
o LifeSpan Growth Fund. The Fund paid total commissions of $86,105 of
which, during the same period, $47,945 was paid to brokers as commission in
return for research services. The total aggregate dollar amount of those
transactions was $25,802,538.
o LifeSpan Balanced Fund. The Fund paid total commissions of $76,371 of
which, during the same period, $43,638 was paid to brokers as commission in
return for research services. The total aggregate dollar amount of those
transactions was $23,646,780.
o LifeSpan Income Fund. The Fund paid total commissions of $6,349 of which,
during the same period, $6,340 was paid to brokers as commission in return for
research services. The total aggregate dollar amount of those transactions was
$3,430,340.
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 class of shares of a
Fund for the 1, 5 and 10-year periods (or the life of the class, if less) as of
the most recently ended calendar quarter prior to the publication of the
advertisement. This enables an investor to compare a Fund's performance to the
performance of other funds for the same periods. However, a number of factors
should be considered before using such information as a basis for comparison
with other investments. An investment in a Fund is not insured; its yields and
total returns and share prices are not guaranteed and normally will fluctuate on
a daily basis. When redeemed, an investor's shares may be worth more or less
than their original cost. Yields and total returns for any given past period are
not a prediction or representation by 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 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.
o Yields
o Standardized Yield. The "standardized yield" (referred to as "yield") is
shown for a class of shares for a stated 30-day period. It is not based on
actual distributions paid by 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 for that period. It may therefore differ from the
"dividend yield" for the same class of shares described below. It is calculated
using the following formula set forth in rules adopted by the Securities and
Exchange Commission designed to assure uniformity in the way that all funds
calculate their yields:
a-b 6
Standardized Yield = 2 ((------ + 1) - 1)
cd
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense reimbursements).
c = the average daily number of shares of that class outstanding during
the 30-day period that were entitled to receive dividends.
d = the maximum offering price per share of 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 for a 30-day period may differ from the yield for
other periods. The SEC formula assumes that the standardized yield for a 30-day
period occurs at a constant rate for a six-month period and is annualized at the
end of the six-month period. Additionally, because each class of shares is
subject to different expenses, it is likely that the standardized yields of a
Fund's classes of shares will differ for any 30-day period.
o Dividend Yield. A Fund may quote a "dividend yield" for each class of
its shares. Dividend yield is based on the dividends paid on shares of a class
during the actual dividend period. To calculate dividend yield, the dividends of
a class declared during a stated period are added together and the sum is
multiplied by 12 (to annualize the yield) and divided by the maximum offering
price on the last day of the dividend period. The formula is shown below:
Dividend Yield = Dividends paid x 12
---------------------------------------------
Maximum Offering Price (payment date)
The maximum offering price for Class A shares includes the current maximum
initial sales charge. The maximum offering price for Class B and Class C shares
is the net asset value per share, without considering the effect of contingent
deferred sales charges. The Class A dividend yield may also be quoted without
deducting the maximum initial sales charge.
o Total Return Information
o 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 )
o 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%
(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% for the sixth year and none
thereafter) is applied to the investment result for the time period shown
(unless the total return is shown at net asset value, as described below). For
Class C shares, the 1.0% contingent deferred sales charge is applied to the
investment result 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.
o 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, 1997 and
for the period from May 1, 1995 (commencement of operations) to October 31, 1997
were 6.46% and 15.20%, respectively. The cumulative total return on Class A
shares for the period from inception through October 31, 1997 was 42.45%.
The average annual total returns on Class B shares for the one- year
period ended October 31, 1997 and for the period October 2, 1995 (inception of
the class) through October 31, 1997 were 7.07% and 13.40%, respectively. The
cumulative total return on Class B shares for the period from inception through
October 31, 1997 was 29.91%.
The average annual total returns on Class C shares for the one- year
period ended October 31, 1997 and for the period May 1, 1996 (inception of the
class) through October 31, 1997 were 11.05% and 10.06%, respectively. The
cumulative total return on Class C shares for the period from inception to
October 31, 1997 was 15.46%.
o 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, 1997 and for the period from May 1, 1995 (commencement of operations) to
October 31, 1997 were 6.18% and 12.68%, respectively. The cumulative total
return on Class A shares for the period from inception through October 31, 1997
was 34.76%.
The average annual total return on Class B shares for the one- year period
ended October 31, 1997 and for the period October 2, 1995 (inception of the
class) through October 31, 1997 were 6.70% and 11.09%, respectively. The
cumulative total return on Class B shares for the period from inception through
October 31, 1997 was 24.47%.
The average annual total return on Class C shares for the one- year period
ended October 31, 1997 and for the period October 2, 1995 (inception of the
class) through October 31, 1997 were 10.73% and 9.96%, respectively. The
cumulative total return on Class C shares for the period from inception to
October 31, 1997 was 15.31%.
o 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, 1997
and for the period from May 1, 1995 (commencement of operations) to October 31,
1997 were 4.90% and 8.22%, respectively. The cumulative total return on Class A
shares for the period from inception through October 31, 1997 was 21.85%.
The average annual total return on Class B shares for the one-year period
ended October 31, 1997 and for the period October 2, 1995 (inception of the
class) through October 31, 1997 were 5.51% and 7.62%, respectively. The
cumulative total return on Class B shares for the period from inception through
October 31, 1997 was 16.51%.
The average annual total return on Class C shares for the one-year period
ended October 31, 1997 and for the period May 1, 1996 (inception of the class)
through October 31, 1997 were 10.04% and 10.04%, respectively. The cumulative
total return on Class C shares for the period from inception to October 31, 1997
was 15.43%.
o 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.
o LifeSpan Growth Fund. The average annual total returns at net asset
value on an investment in Class A shares of the Fund for the one year period
ended October 31, 1997 and for the period from May 1, 1995 (commencement of
operations) to October 31, 1997 were 12.96% and 17.97%, respectively. The
cumulative total return at net asset value on Class A shares for the period from
inception through October 31, 1997 was 51.14%.
The average annual total returns at net asset value on Class B shares for
the one- year period ended October 31, 1997 and for the period October 2, 1995
(inception of the class) through October 31, 1997 were 12.07% and 14.65%,
respectively. The cumulative total return at net asset value on Class B shares
for the period from inception through October 31, 1997 was 32.91%.
The average annual total returns at net asset value on Class C shares for
the one- year period ended October 31, 1997 and for the period May 1, 1996
(inception of the class) through October 31, 1997 were 12.05% and 10.06%,
respectively. The cumulative total return at net asset value on Class C shares
for the period from inception to October 31, 1997 was 15.46%.
o LifeSpan Balanced Fund. The average annual total returns at net asset
value on an investment in Class A shares of the Fund for the one- year period
ended October 31, 1997 and for the period from May 1, 1995 (commencement of
operations) to October 31, 1997 were 12.66% and 15.38%, respectively. The
cumulative total return at net asset value on Class A shares for the period from
inception through October 31, 1997 was 42.99%.
The average annual total return at net asset value on Class B shares for
the one- year period ended October 31, 1997 and for the period October 2, 1995
(inception of the class) through October 31, 1997 were 11.70% and 12.37%,
respectively. The cumulative total return at net asset value on Class B shares
for the period from inception through October 31, 1997 was 27.47%.
The average annual total return at net asset value on Class C shares for
the one- year period ended October 31, 1997 and for the period October 2, 1995
(inception of the class) through October 31, 1997 were 11.73% and 9.96%,
respectively. The cumulative total return at net asset value on Class C shares
for the period from inception to October 31, 1997 was 15.31%.
o LifeSpan Income Fund. The average annual total returns at net asset
value on an investment in Class A shares of the Fund for the one- year period
ended October 31, 1997 and for the period from May 1, 1995 (commencement of
operations) to October 31, 1997 were 11.30% and 10.82%, respectively. The
cumulative total return at net asset value on Class A shares for the period from
inception through October 31, 1997 was 29.28%.
The average annual total return at net asset value on Class B shares for
the one-year period ended October 31, 1997 and for the period October 2, 1995
(inception of the class) through October 31, 1997 were 10.51% and 8.94%,
respectively. The cumulative total return at net asset value on Class B shares
for the period from inception through October 31, 1997 was 19.51%.
The average annual total return at net asset value on Class C shares for
the one-year period ended October 31, 1997 and for the period May 1, 1996
(inception of the class) through October 31, 1997 was 11.04% and 10.04%,
respectively. The cumulative total return at net asset value on Class C shares
for the period from inception to October 31, 1997 was 15.43%.
Other Performance Comparisons. From time to time a Fund may publish the ranking
of its Class A, Class B, or Class C shares by Lipper Analytical Services, Inc.
("Lipper"), a widely-recognized independent mutual fund monitoring service.
Lipper monitors the performance of regulated investment companies, including the
Funds, and ranks their performance for various periods based on categories
relating to investment objectives. The Lipper performance rankings are based on
total returns that include the reinvestment of capital gains distributions and
income dividends but do not take sales charges or taxes into consideration.
From time to time a Fund 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, municipal bond funds, based on risk-adjusted total investment
returns. The Funds are ranked among the domestic stock funds. Investment return
measures a fund's or class's one, three, five and ten-year average annual total
returns (depending on the inception of the fund or class) in excess of 90-day
U.S. Treasury bill returns after considering the fund's sales charges and
expenses. Risk measures a fund's or class's performance below 90-day U.S.
Treasury bill returns. Risk and investment return are combined to produce star
rankings reflecting performance relative to the average fund in a fund's
category. Five stars is the "highest" ranking (top 10%), 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.
The total return on an investment in each Fund's Class A, Class B and
Class C shares may be compared with the performance for the same period of the
following indices: LifeSpan Growth Fund compared to Wilshire 5000 Index;
LifeSpan Balanced Fund compared to both S&P 500 Index and Lehman
Brothers/Government/Corporate Bond Index; and LifeSpan Income Fund compared to
Lehman Brothers Intermediate Government/Corporate Bond Index. Each of these
indices is described in the Prospectus.
Other indices may provide useful comparisons. The performance of a Fund's
Class A, Class B or Class C shares may also be compared in publications to (i)
the performance of various market indices or other investments for which
reliable performance data is available, and (ii) to averages, performance
rankings or other benchmarks prepared by recognized mutual fund statistical
services.
From time to time a 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 or Morningstar.
From time to time, a Fund's Manager may publish rankings or ratings of the
Manager (or the Transfer Agent), by independent third-parties, on the investor
services provided by them to shareholders of the Oppenheimer funds, other than
the performance rankings of the Oppenheimer funds themselves. These ratings or
rankings of shareholder/investor services by third parties may compare the
Oppenheimer funds services to those of other mutual fund families selected by
the rating or ranking services, and may be based upon the opinions of the rating
or ranking service itself, using its own research or judgment, or based upon
surveys of investors, brokers, shareholders or others.
When comparing yield, total return and investment risk of an investment in
Class A, Class B or Class C 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 each Class B shares and Class C shares of the 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. Payments under each Class A Plan for fiscal year
ended October 31,1997 were as follows:
o LifeSpan Growth Fund - Class A Plan - payments totaled $123,431 of which
$117,788 was paid to and affiliate of the Distributor.
o LifeSpan Balanced Fund - Class A Plan - payments totaled $145,068 of
which $141,239 was paid to an affiliate of the Distributor.
o LifeSpan Income Fund - Class A Plan - payments totaled $69,406 of which
$68,271 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. Payments under each Class B Plan and Class C Plan
for fiscal year ended October 31, 1997 were as follows:
o LifeSpan Growth Fund - Class B Plan - payments totaled $39,156, of which
$34,240 was retained by the Distributor.
o LifeSpan Balanced Fund - Class B Plan -payments totaled $34,948, of which
$25,286 was retained by the Distributor.
o LifeSpan Income Fund - Class B Plan - payments totaled $6,756, of which
$5,749 was retained by the Distributor.
o LifeSpan Growth Fund- Class C Plan - payments totaled $7,192, of which
$6,064 was retained by the Distributor.
o LifeSpan Balanced Fund - Class C Plan -payments totaled $8,787, of which
$5,576 was retained by the Distributor.
o LifeSpan Income Fund - Class C Plan - payments totaled $199, 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, Martin Luther King,
Jr. 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 Fund'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 the
Automated Quotation System ("NASDAQ") of the Nasdaq Stock Market, Inc. for which
last sale information is regularly reported are valued at the last reported sale
price on the principal exchange for such security or NASDAQ that day (the
"Valuation Date") or, in the absence of sales that day, at the last reported
sale price preceding the Valuation Date if it is within the spread of the
closing "bid" and "asked" prices on the Valuation Date or, if not, the closing
"bid" price on the Valuation Date;
(ii) equity securities traded on a foreign securities exchange are valued
generally at the last sales price available to the pricing service approved by
the 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, if unavailable, at the mean
between "bid" and "asked" prices obtained from the principal exchange or two
active market makers in the security on the basis of reasonable inquiry;
(iii) a non-money market fund will value (x) debt instruments that had a
maturity of more than 397 days when issued, (y) debt instruments that had a
maturity of 397 days or less when issued and have a remaining maturity in excess
of 60 days, and (z) non-money market type debt instruments that had a maturity
of 397 days or less when issued and have a remaining maturity of sixty days or
less, at the mean between "bid" and "asked" prices determined by a pricing
service approved by the Fund's Board of Directors or, if unavailable, obtained
by the Manager from two active market makers in the security on the basis of
reasonable inquiry;
(iv) money market-type debt securities held by a non-money market fund
that had a maturity of less than 397 days when issued and have a remaining
maturity of 60 days or less, and debt instruments held by a money market fund
that have a remaining maturity of 397 days or less, shall be valued at cost,
adjusted for amortization of premiums and accretion of discount; and
(v) 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) and (iii) above), the security may be priced at the mean
between the "bid" and "asked" prices provided by a
single active market maker (which in certain cases may be the "bid" price if no
"asked" price is available) provided that the Manager is satisfied that the firm
rendering the quotes is reliable and that the quotes reflect the current market
value.
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 or mortgage-backed 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 ("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. Relation by virtue of a remarriage (step-children,
step-parents, etc.) are included.
o The Oppenheimer Funds. The Oppenheimer funds are those mutual funds for
which the Distributor acts as the distributor or the sub-Distributor and include
the following:
Limited Term New York Municipal Fund
Oppenheimer Bond Fund for Growth
Oppenheimer California Municipal Fund
Oppenheimer Champion Income Fund
Oppenheimer Developing Markets Fund
Oppenheimer Disciplined Allocation Fund
Oppenheimer Disciplined Value Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Equity Income Fund
Oppenheimer Florida Municipal Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer High Income Fund
Oppenheimer Insured Municipal Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer International Bond Fund
Oppenheimer International Growth Fund
Oppenheimer International Small Company Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Growth Fund
Oppenheimer LifeSpan Income Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street California Municipal Fund
Oppenheimer Main Street Income & Growth Fund
Oppenheimer MidCap Fund
Oppenheimer Municipal Bond Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer New York Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Real Asset Fund
Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer U.S. Government Trust
Panorama Series Fund Inc.
Rochester Fund Municipals
the following "Money Market Funds":
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Oppenheimer Cash Reserves
Oppenheimer Money Market Fund, Inc.
There is an initial sales charge on the purchase of Class A shares of each
of the Oppenheimer funds except Money Market Funds (under certain circumstances
described herein, redemption proceeds of Money Market Fund shares may be subject
to a CDSC).
o 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.
o Terms of Escrow That Apply to Letters of Intent.
(1)Out of the initial purchase (or subsequent purchases if necessary) made
pursuant to a Letter, shares of 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. If you make payments from your
bank account to purchase shares of a 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 a Fund shall be responsible for any delays in purchasing
resulting from delays in ACH transmission.
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 plan" means any qualified or non-qualified
retirement plan (including 457 plans, SEPs, SARSEPs, 403(b) plans other than
public school 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 or association has made special arrangements with the
Distributor and all members of the group or association participating in or
eligible to participate in the plan(s) purchase Class A shares of a Fund through
a single investment dealer, broker, or other financial institution designated by
the group. "Group retirement plan" also includes qualified retirement plans and
non-qualified deferred compensation plans and IRAs that purchase Class A shares
of a Fund through a single investment dealer, broker, or other financial
institution, provided that broker-dealer has made special arrangements with the
Distributor for the purpose of qualifying those plans to purchase Class A shares
of a Fund at net asset value but subject to a contingent deferred sales charge.
In addition to the discussion in the Prospectus relating to the ability of
Retirement Plans to purchase Class A shares at net asset value in certain
circumstances, there is no initial sales charge on purchases of Class A shares
of any one or more of the Oppenheimer funds by Retirement Plans ("Plan") in the
following cases:
(i) the recordkeeping for the Plan is performed on a daily valuation basis
by Merrill Lynch Pierce Fenner & Smith, Inc. ("Merrill Lynch") and, on the date
the Plan Sponsor signs the Merrill Lynch Recordkeeping Service Agreement, the
Plan has $3 million or more in assets invested in mutual funds not advised or
managed by Merrill Lynch Asset Management, L.P. ("MLAM") that are made available
pursuant to a Service Agreement between Merrill Lynch and the mutual fund's
principal underwriter or distributor and in funds advised or managed by MLAM
(collectively, the "Applicable Investments"); or
(ii) the recordkeeping for the Plan is performed on a daily valuation
basis by an independent record keeper whose services are provided through a
contract or alliance arrangement with Merrill Lynch, and on the date the Plan
Sponsor signs the Merrill Lynch Record Keeping Service Agreement, the Plan has
$3 million or more in assets, excluding money market funds, invested in
Applicable Investments; or
(iii) the Plan has 500 or more eligible employees, as determined by the
Merrill Lynch plan conversion manager, on the date the Plan Sponsor signs the
Merrill Lynch Record Keeping Service Agreement.
For Plans whose records are maintained on a daily basis by Merrill Lynch
or an independent record keeper under a contract or alliance arrangement with
Merrill Lynch, if on the date the Plan Sponsor signs the Merrill Lynch Record
Keeping Service Agreement the Plan has less than $3 million in assets, excluding
money market funds, invested in Applicable Investments, then the Plan may only
purchase Class B shares of any one or more of the Oppenheimer funds. Otherwise,
the Plan will be permitted to purchase Class A shares of any one or more of the
Oppenheimer funds. Any such Plans that currently invest in Class B shares of the
Fund will be transferred to Class A shares of the Fund once the Plan has reached
$5 million invested in Applicable Investments.
Any redemptions from Plans whose records are maintained on a daily basis
by Merrill Lynch or an independent record keeper under a contract with Merrill
Lynch that are currently invested in Class B shares of the Fund shall not be
subject to the Class B CDSC.
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.
o 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 100. 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.
o 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.
o 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.
o 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. 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 this check or payment will
be reduced accordingly. 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 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.
o 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.
o 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 Oppenheimer funds that have
a single class without a class designation are deemed "Class A" shares for this
purpose. All of the Oppenheimer funds offer Class A, B and C shares except
Oppenheimer Money Market Fund, Inc., Centennial Money Market Trust, Centennial
Tax Exempt Trust, Centennial Government Trust, Centennial New York Tax Exempt
Trust, Centennial California Tax Exempt Trust and Centennial America Fund, L.P.,
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. Exchanges to Class M shares of
Oppenheimer Bond Fund for Growth are permitted from Class A shares of
Oppenheimer Money Market Fund, Inc. or Oppenheimer Cash Reserves that were
acquired by exchange from Class M shares. Otherwise no exchanges of any class of
any Oppenheimer fund into Class M shares are permitted.
Class A shares of Oppenheimer funds may be exchanged at net asset value for
shares of any Money Market Fund. Shares of any Money Market Fund purchased
without a sales charge may be exchanged for shares of Oppenheimer funds offered
with a sales charge upon payment of the sales charge (or, if applicable, may be
used to purchase shares of Oppenheimer funds subject to a contingent deferred
sales charge). However, shares of Oppenheimer Money Market Fund, Inc. purchased
with the redemption proceeds of shares of other mutual funds (other than funds
managed by the Manager or its subsidiaries) redeemed within the 30 days prior to
that purchase may subsequently be exchanged for shares of other Oppenheimer
funds without being subject to an initial or contingent deferred sales charge,
whichever is applicable. To qualify for that privilege, the investor or the
investor's dealer must notify the Distributor of eligibility for this privilege
at the time the shares of Oppenheimer Money Market Fund, Inc. are purchased,
and, if requested, must supply proof of entitlement to this privilege.
No contingent deferred sales charge is imposed on exchanges of shares of
either class purchased subject to a contingent deferred sales charge. However,
when Class A shares acquired by exchange of Class A shares of other Oppenheimer
funds purchased subject to a Class A contingent deferred sales charge are
redeemed within 12 months (18 months for shares purchased prior to May 1, 1997)
of the end of the calendar month of the initial purchase of the exchanged Class
a shares, the Class A contingent deferred sales charge is imposed on the
redeemed shares (see "Class A contingent Deferred Sales Charge" in the
Prospectus). The Class B contingent deferred sales charge is imposed on Class B
shares acquired by exchange if they are redeemed within 6 years of the initial
purchase of the exchanged Class B shares. The Class C contingent deferred sales
charge is imposed on Class C shares acquired by exchange if they are redeemed
within 12 months of the initial purchase of the exchanged Class C shares. 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.
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. 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. The Bank of New York 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. State Street Bank and
Trust Company was the previous Custodian.
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.
<PAGE>
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, 1997, the related
statement of operations for the year then ended, the statements of changes in
net assets for the year then ended and the ten-month period ended October 31,
1996, and the financial highlights for the year ended October 31, 1997 and the
ten-month period ended October 31, 1996. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights for the
period from May 1, 1995 (commencement of operations) to December 31, 1995 were
audited by 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, 1997 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,
1997, the results of their operations for the year then ended, the changes in
their net assets for the year then ended and the ten-month period ended October
31, 1996, and the financial highlights for the year ended October 31, 1997 and
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, 1997
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS OCTOBER 31, 1997
Oppenheimer LifeSpan Income Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSET-BACKED SECURITIES - 2.0%
- -----------------------------------------------------------------------------------------------------------------------------
Dayton Hudson Credit Card Master Trust, Asset Backed Certificates, Series
1997-1, Cl. A, 6.25%, 8/25/05 $ 125,000 $ 124,945
- -----------------------------------------------------------------------------------------------------------------------------
IROQUOIS Trust, Asset-Backed Amortizing Nts., Series
1997-2, Cl. A, 6.752%, 6/25/07 (1) 175,000 175,848
- -----------------------------------------------------------------------------------------------------------------------------
Olympic Automobile Receivables Trust:
Receivables-Backed Nts., Series 1997-A, Cl. A5, 6.80%, 2/15/05 150,000 153,296
Series 1996-A, Cl. A4, 5.85%, 7/15/01 145,000 144,796
---------------
Total Asset-Backed Securities (Cost $593,509) 598,885
- -----------------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS - 10.1%
- -----------------------------------------------------------------------------------------------------------------------------
Countrywide Funding Corp., Mtg. Pass-Through Certificates,
Series 1994-10, Cl. A3, 6%, 5/25/09 250,000 247,813
- -----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg.
Participation Certificates:
5.50%, 5/1/98 8,327 8,250
Series 1711, Cl. EA, 7%, 3/15/24 200,000 204,750
Gtd. Multiclass Mtg. Participation Certificates:
6%, 3/1/09 308,916 306,489
Series 1574, Cl. PD, 5.55%, 3/15/13 75,000 74,812
Series 1843, Cl. VB, 7%, 4/15/03 85,000 87,496
Series 1849, Cl. VA, 6%, 12/15/10 244,705 241,953
Interest-Only Stripped Mtg.-Backed Security:
Series 1583, Cl. IC, 9.283%, 1/15/20 (2) 500,000 80,000
Series 1661, Cl. PK, 5.965%, 11/15/06 (2) 874,957 74,098
- -----------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6%, 12/1/03 233,155 232,017
6.50%, 4/1/26 187,449 184,621
7%, 4/1/00 115,282 116,387
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Trust 1993-181, Cl. C, 5.40%,
10/25/02 226,979 225,844
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Trust 1993-190, Cl. Z, 5.85%,
7/25/08 189,438 188,455
Medium-Term Nts., 6.56%, 11/13/01 125,000 125,313
Trust 1994-13, Cl. B, 6.50%, 2/25/09 200,000 199,812
- -----------------------------------------------------------------------------------------------------------------------------
GE Capital Mortgage Services, Inc., Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Series 1994-7, C1. A18, 6%, 2/25/09 198,885 186,455
- -----------------------------------------------------------------------------------------------------------------------------
PNC Mortgage Securities Corp., Commercial Mtg. Pass-Through
Certificates, Series 1995-2, Cl. A3, 6.50%, 2/25/12 74,000 74,335
- -----------------------------------------------------------------------------------------------------------------------------
Residential Accredit Loans, Inc., Mortgage Asset-Backed Pass-Through
Certificates, Series 1997-QS9, Cl. A2, 6.75%, 9/25/27 175,000 175,260
---------------
Total Mortgage-Backed Obligations (Cost $2,987,639) 3,034,160
</TABLE>
5 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS - 14.2%
- -----------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 7.50%, 11/15/16 $ 1,795,000 $ 2,052,471
- -----------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
6.50%, 8/15/05 650,000 674,172
6.75%, 6/30/99 380,000 386,769
7.50%, 11/15/01 1,100,000 1,168,407
---------------
Total U.S. Government Obligations (Cost $4,121,898) 4,281,819
- -----------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES - 42.3%
- -----------------------------------------------------------------------------------------------------------------------------
BASIC INDUSTRY - 5.0%
- -----------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 2.2%
Burmah Castrol plc, 7% Gtd. Medium-Term Nts., 12/15/97 (3) 145,000 145,197
- -----------------------------------------------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co., 8.50% Debs., 2/15/03 150,000 159,743
- -----------------------------------------------------------------------------------------------------------------------------
Harris Chemical North America, Inc., 10.25% Gtd.
Sr. Sec. Disc. Nts., 7/15/01 50,000 52,250
- -----------------------------------------------------------------------------------------------------------------------------
Laroche Industries, Inc., 9.50% Sr. Sub. Nts., 9/15/07 (3) 50,000 50,250
- -----------------------------------------------------------------------------------------------------------------------------
Morton International, Inc., 9.25% Credit Sensitive Nts., 6/1/20 85,000 108,567
- -----------------------------------------------------------------------------------------------------------------------------
PPG Industries, Inc., 9% Debs., 5/1/21 85,000 104,061
- -----------------------------------------------------------------------------------------------------------------------------
Texas Petrochemical Corp., 11.125% Sr.
Sub. Nts., Series B, 7/1/06 50,000 55,250
---------------
675,318
- -----------------------------------------------------------------------------------------------------------------------------
METALS/MINING - 0.8%
Alcan Aluminum Ltd., 9.625% Debs., 7/15/19 165,000 177,913
- -----------------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 2/1/03 50,000 53,875
---------------
231,788
- -----------------------------------------------------------------------------------------------------------------------------
PAPER - 1.2%
Celulosa Arauco y Constitucion SA, 7.25% Debs., 6/11/98 (1) 145,000 145,362
- -----------------------------------------------------------------------------------------------------------------------------
Gaylord Container Corp., 12.75% Sr. Sub. Disc. Debs., 5/15/05 50,000 54,500
- -----------------------------------------------------------------------------------------------------------------------------
Malette, Inc., 12.25% Sr. Sec. Nts., 7/15/04 (1) 50,000 56,875
- -----------------------------------------------------------------------------------------------------------------------------
Stone Container Corp., 9.875% Sr. Nts., 2/1/01 100,000 102,250
---------------
358,987
- -----------------------------------------------------------------------------------------------------------------------------
STEEL - 0.8%
Gulf States Steel, Inc. (Alabama), 13.50% First Mtg. Nts.,
Series B, 4/15/03 50,000 51,500
- -----------------------------------------------------------------------------------------------------------------------------
NS Group, Inc., 13.50% Gtd. Sr. Sec. Nts., 7/15/03 45,000 51,637
- -----------------------------------------------------------------------------------------------------------------------------
Republic Engineered Steels, Inc., 9.875% First Mtg. Nts., 12/15/01 25,000 24,250
- -----------------------------------------------------------------------------------------------------------------------------
WCI Steel, Inc., 10% Sr. Nts., Series B, 12/1/04 50,000 52,375
- -----------------------------------------------------------------------------------------------------------------------------
Weirton Steel Corp., 10.75% Sr. Nts., 6/1/05 50,000 52,875
---------------
232,637
- -----------------------------------------------------------------------------------------------------------------------------
CONSUMER RELATED - 5.6%
- -----------------------------------------------------------------------------------------------------------------------------
CONSUMER PRODUCTS - 1.3%
Black & Decker Corp., 6.625% Nts., 11/15/00 145,000 146,609
- -----------------------------------------------------------------------------------------------------------------------------
Dyersburg Corp., 9.75% Sr. Sub. Nts., 9/1/07 (3) 50,000 51,250
- -----------------------------------------------------------------------------------------------------------------------------
IHF Holdings, Inc., 0%/15% Sr. Sub. Disc.
Nts., Series B, 11/15/04 (4) 50,000 43,000
- -----------------------------------------------------------------------------------------------------------------------------
Kimberly-Clark Corp., 7.875% Debs., 2/1/23 85,000 91,622
- -----------------------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 9.375% Sr. Nts., 4/1/01 50,000 51,875
---------------
384,356
</TABLE>
6 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FOOD/BEVERAGES/TOBACCO - 0.7%
AmeriServe Food Distribution, Inc., 8.875% Sr. Nts., 10/15/06 (3) $ 50,000 $ 50,125
- -----------------------------------------------------------------------------------------------------------------------------
Dole Food Co., 6.75% Nts., 7/15/00 150,000 151,913
---------------
202,038
- -----------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 1.2%
Columbia/HCA Healthcare Corp., 6.875% Nts., 7/15/01 160,000 160,161
- -----------------------------------------------------------------------------------------------------------------------------
Integrated Health Services, Inc., 9.50% Sr. Sub. Nts., 9/15/07 (3) 50,000 51,875
- -----------------------------------------------------------------------------------------------------------------------------
Mariner Health Group, Inc., 9.50% Sr. Sub. Nts., Series B, 4/1/06 (1) 50,000 52,000
- -----------------------------------------------------------------------------------------------------------------------------
Paracelsus Healthcare Corp., 10% Sr. Sub. Unsec. Nts., 8/15/06 50,000 52,250
- -----------------------------------------------------------------------------------------------------------------------------
Signature Brands, Inc., 13% Sr. Sub. Nts., 8/15/02 (1) 50,000 53,187
---------------
369,473
- -----------------------------------------------------------------------------------------------------------------------------
HOTEL/GAMING - 2.2%
Casino America, Inc., 12.50% Sr. Nts., 8/1/03 50,000 53,500
- -----------------------------------------------------------------------------------------------------------------------------
Casino Magic of Louisiana Corp., 13% First Mtg. Nts., 8/15/03 100,000 95,500
- -----------------------------------------------------------------------------------------------------------------------------
GB Property Funding Corp., 10.875% First Mtg. Nts., 1/15/04 50,000 43,750
- -----------------------------------------------------------------------------------------------------------------------------
Hilton Hotels Corp., 7.375% Nts., 6/1/02 75,000 76,991
- -----------------------------------------------------------------------------------------------------------------------------
HMH Properties, Inc., 8.875% Sr. Nts., 7/15/07 (3) 50,000 51,250
- -----------------------------------------------------------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 (3) 50,000 51,250
- -----------------------------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority, 13.50% Sr. Sec. Nts., Series B, 11/15/02 25,000 32,125
- -----------------------------------------------------------------------------------------------------------------------------
Players International, Inc., 10.875% Sr. Nts., 4/15/05 50,000 53,625
- -----------------------------------------------------------------------------------------------------------------------------
Prime Hospitality Corp., 9.25% First Mtg. Bonds, 1/15/06 50,000 52,250
- -----------------------------------------------------------------------------------------------------------------------------
Rio Hotel & Casino, Inc., 10.625% Sr. Sub. Nts., 7/15/05 100,000 108,500
- -----------------------------------------------------------------------------------------------------------------------------
Santa Fe Hotel, Inc., 11% Gtd. First Mtg. Nts., 12/15/00 45,000 38,475
---------------
657,216
- -----------------------------------------------------------------------------------------------------------------------------
LEISURE - 0.2%
Bally Total Fitness Holdings, 9.875% Sr. Sub. Nts., 10/15/07 (3) 50,000 49,250
- -----------------------------------------------------------------------------------------------------------------------------
ENERGY - 3.1%
- -----------------------------------------------------------------------------------------------------------------------------
Coastal Corp.:
8.125% Sr. Nts., 9/15/02 85,000 91,098
8.75% Sr. Nts., 5/15/99 55,000 57,104
- -----------------------------------------------------------------------------------------------------------------------------
Falcon Drilling Co., Inc., 9.75% Sr. Nts., Series B, 1/15/01 70,000 73,150
- -----------------------------------------------------------------------------------------------------------------------------
Forcenergy, Inc., 8.50% Sr. Sub. Nts., 2/15/07 50,000 50,000
- -----------------------------------------------------------------------------------------------------------------------------
Gulf Canada Resources Ltd.:
8.25% Sr. Nts., 3/15/17 75,000 81,331
9% Debs., 8/15/99 75,000 78,561
- -----------------------------------------------------------------------------------------------------------------------------
HS Resources, Inc., 9.25% Sr. Sub. Nts., 11/15/06 50,000 51,500
- -----------------------------------------------------------------------------------------------------------------------------
Louisiana Land & Exploration Co., 7.65% Debs., 12/1/23 100,000 106,892
- -----------------------------------------------------------------------------------------------------------------------------
Mesa Operating Co., 0%/11.625% Gtd. Sr. Sub. Disc. Nts., 7/1/06 (4) 75,000 60,375
- -----------------------------------------------------------------------------------------------------------------------------
Petroleum Geo-Services ASA, 7.50% Nts., 3/31/07 75,000 78,915
- -----------------------------------------------------------------------------------------------------------------------------
Standard Oil/British Petroleum Co. plc, 9% Debs., 6/1/19 85,000 88,692
- -----------------------------------------------------------------------------------------------------------------------------
Transamerican Energy Corp., 11.50% Sr. Nts., 6/15/02 (3) 25,000 25,750
- -----------------------------------------------------------------------------------------------------------------------------
Williams Holdings of Delaware, Inc., 6.25% Sr. Unsec. Debs., 2/1/06 100,000 97,781
---------------
941,149
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES - 10.7%
- -----------------------------------------------------------------------------------------------------------------------------
BANKS & THRIFTS - 2.7%
Barnett Banks, Inc., 8.50% Sub. Exchangeable Nts., 3/1/99 60,000 61,898
- -----------------------------------------------------------------------------------------------------------------------------
Chase Manhattan Corp. (New), 6.625% Sr. Nts., 1/15/98 55,000 55,093
</TABLE>
7 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BANKS & THRIFTS (CONTINUED)
Citicorp, 5.625% Sr. Nts., 2/15/01 $ 90,000 $ 88,955
- -----------------------------------------------------------------------------------------------------------------------------
First Fidelity Bancorporation, 8.50% Sub. Capital Nts., 4/1/98 55,000 55,521
- -----------------------------------------------------------------------------------------------------------------------------
First Union Corp., 6.75% Sr. Nts., 1/15/98 55,000 55,106
- -----------------------------------------------------------------------------------------------------------------------------
Fleet Mtg./Norstar Group, Inc., 9.90% Sub. Nts., 6/15/01 145,000 161,749
- -----------------------------------------------------------------------------------------------------------------------------
Integra Financial Corp., 6.50% Sub. Nts., 4/15/00 145,000 146,437
- -----------------------------------------------------------------------------------------------------------------------------
Mellon Financial Bank Corp., 6.50% Gtd. Sr. Nts., 12/1/97 185,000 185,098
---------------
809,857
- -----------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 6.2%
American General Finance Corp., 8.50% Sr. Nts., 8/15/98 60,000 61,213
- -----------------------------------------------------------------------------------------------------------------------------
American General Institutional Capital, 8.125% Bonds, Series B,
3/15/46 (3) 75,000 80,645
- -----------------------------------------------------------------------------------------------------------------------------
Beneficial Corp., 9.125% Debs., 2/15/98 145,000 146,302
- -----------------------------------------------------------------------------------------------------------------------------
Capital One Financial Corp., 6.83% Sr. Nts., 5/17/99 75,000 75,736
- -----------------------------------------------------------------------------------------------------------------------------
Capital One Funding Corp., 7.25% Nts., 12/1/03 50,000 50,351
- -----------------------------------------------------------------------------------------------------------------------------
Chelsea GCA Realty Partner, Inc., 7.75% Gtd. Unsec. Unsub.
Nts., 1/26/01 60,000 61,616
- -----------------------------------------------------------------------------------------------------------------------------
Commercial Credit Co., 5.55% Unsec. Nts., 2/15/01 145,000 142,362
- -----------------------------------------------------------------------------------------------------------------------------
Countrywide Home Loans, Inc.:
6.05% Gtd. Medium-Term Nts., Series D, 3/1/01 90,000 89,490
6.085% Gtd. Medium-Term Nts., Series B, 7/14/99 60,000 60,013
- -----------------------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 6.25% Unsub. Nts., 2/26/98 145,000 145,616
- -----------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp.:
5.625% Nts., 2/15/01 175,000 172,302
5.65% Medium-Term Nts., 12/15/97 300,000 299,963
- -----------------------------------------------------------------------------------------------------------------------------
Golden West Financial Corp., 8.625% Sub. Nts., 8/30/98 55,000 56,212
- -----------------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 6.50% Nts., 4/1/01 150,000 151,778
- -----------------------------------------------------------------------------------------------------------------------------
MCII Holdings (USA), Inc., 0%/15% Sec. Nts., 11/15/02 (4) 50,000 41,688
- -----------------------------------------------------------------------------------------------------------------------------
Olympic Financial Ltd., Units (each unit consists of $1,000
principal amount of 11.50% sr. nts., 3/15/07 and one (5) 50,000 51,500
warrant to purchase 6.84 shares of common stock)
- -----------------------------------------------------------------------------------------------------------------------------
Salomon, Inc., 8.69% Sr. Medium-Term Nts., Series D, 3/1/99 160,000 165,421
---------------
1,852,208
- -----------------------------------------------------------------------------------------------------------------------------
INSURANCE - 1.8%
- -----------------------------------------------------------------------------------------------------------------------------
Cigna Corp., 7.90% Nts., 12/14/98 150,000 152,879
- -----------------------------------------------------------------------------------------------------------------------------
Conseco Financing Trust III, 8.796% Bonds, 4/1/27 100,000 109,067
- -----------------------------------------------------------------------------------------------------------------------------
SunAmerica, Inc., 9% Sr. Nts., 1/15/99 120,000 123,728
- -----------------------------------------------------------------------------------------------------------------------------
Travelers Property Casualty Corp., 6.75% Nts., 4/15/01 145,000 147,469
---------------
533,143
- -----------------------------------------------------------------------------------------------------------------------------
HOUSING RELATED - 0.4%
- -----------------------------------------------------------------------------------------------------------------------------
BUILDING MATERIALS - 0.2%
American Standard, Inc., 10.875% Sr. Nts., 5/15/99 (1) 70,000 74,375
- -----------------------------------------------------------------------------------------------------------------------------
HOMEBUILDERS/REAL ESTATE - 0.2%
First Industrial LP, 7.15% Bonds, 5/15/27 75,000 77,179
- -----------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 1.1%
- -----------------------------------------------------------------------------------------------------------------------------
AEROSPACE - 0.1%
GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98 25,000 25,500
</TABLE>
8 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL GOODS - 1.0%
- -----------------------------------------------------------------------------------------------------------------------------
Day International Group, Inc., 11.125% Sr. Sub. Nts., Series B, 6/1/05 (1) $ 50,000 $ 53,750
- -----------------------------------------------------------------------------------------------------------------------------
Interlake Corp., 12.125% Sr. Sub. Debs., 3/1/02 50,000 52,125
- -----------------------------------------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., 6/1/05 50,000 54,875
- -----------------------------------------------------------------------------------------------------------------------------
Jordan Industries, Inc., 10.375% Sr. Nts., 8/1/07 50,000 50,500
- -----------------------------------------------------------------------------------------------------------------------------
Mark IV Industries, Inc., 8.75% Sub. Nts., 4/1/03 (1) 40,000 41,900
- -----------------------------------------------------------------------------------------------------------------------------
Specialty Equipment Co., 11.375% Sr. Sub. Nts., 12/1/03 50,000 54,375
---------------
307,525
- -----------------------------------------------------------------------------------------------------------------------------
MEDIA - 4.2%
- -----------------------------------------------------------------------------------------------------------------------------
BROADCASTING - 0.4%
Allbritton Communications Co., 9.75% Sr. Sub. Debs.,
Series B, 11/30/07 50,000 50,250
- -----------------------------------------------------------------------------------------------------------------------------
Fox Kids Worldwide, Inc., 0%/10.25% Sr. Disc. Nts., 11/1/07 (3)(4) 50,000 28,875
- -----------------------------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., 10% Sr. Sub. Nts., 9/30/05 50,000 52,625
---------------
131,750
- -----------------------------------------------------------------------------------------------------------------------------
CABLE TELEVISION - 2.3%
Adelphia Communications Corp., 10.50% Sr. Nts., 7/15/04 (3) 50,000 52,250
- -----------------------------------------------------------------------------------------------------------------------------
Australis Media Ltd., 1.75%/15.75% Gtd. Sr. Sec. Disc. Nts., 5/15/03 (6) 75,664 55,235
- -----------------------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp., 9.875% Sr. Sub. Debs., 2/15/13 50,000 53,375
- -----------------------------------------------------------------------------------------------------------------------------
Comcast Corp., 9.375% Sr. Sub. Debs., 5/15/05 50,000 53,500
- -----------------------------------------------------------------------------------------------------------------------------
EchoStar Communications Corp., 0%/12.875% Sr. Disc. Nts., 6/1/04 (4) 50,000 44,500
- -----------------------------------------------------------------------------------------------------------------------------
Falcon Holdings Group LP, 11% Sr. Sub. Nts., 9/15/03 (7) 65,347 66,890
- -----------------------------------------------------------------------------------------------------------------------------
James Cable Partners LP, 10.75% Sr. Nts., 8/15/04 (3) 50,000 52,375
- -----------------------------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., 8.875% Sr. Nts., 7/15/07 50,000 49,625
- -----------------------------------------------------------------------------------------------------------------------------
TCI Satellite Entertainment, Inc., 10.875% Sr. Sub. Nts., 2/15/07 (3) 50,000 51,750
- -----------------------------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 125,000 138,356
- -----------------------------------------------------------------------------------------------------------------------------
United International Holdings, Inc., Zero Coupon Sr.
Sec. Disc. Nts., Series B, 14%, 11/15/99 (8) 100,000 82,500
---------------
700,356
- -----------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED MEDIA - 0.7%
Fox/Liberty Networks LLC, 8.875% Sr. Nts., 8/15/07 (3) 25,000 25,000
- -----------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co., 8.625% Sr. Sub. Nts., 9/15/07 (3) 50,000 50,500
- -----------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc., 7.45% Nts., 2/1/98 145,000 145,486
---------------
220,986
- -----------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT/FILM - 0.8%
American Skiing Corp., 12% Sr. Sub. Nts., Series B, 7/15/06 (1) 75,000 83,625
- -----------------------------------------------------------------------------------------------------------------------------
Blockbuster Entertainment Corp., 6.625% Sr. Nts., 2/15/98 145,000 145,194
---------------
228,819
- -----------------------------------------------------------------------------------------------------------------------------
OTHER - 1.1%
- -----------------------------------------------------------------------------------------------------------------------------
SERVICES - 1.1%
Employee Solutions, Inc., 10% Sr. Nts., 10/15/04 (1) 50,000 49,250
- -----------------------------------------------------------------------------------------------------------------------------
Maxim Group, Inc. (The), 9.25% Sr. Nts., 10/15/07 (3) 50,000 48,750
- -----------------------------------------------------------------------------------------------------------------------------
Shop Vac Corp., 10.625% Sr. Nts., 9/1/03 75,000 81,563
- -----------------------------------------------------------------------------------------------------------------------------
Sun Co., Inc., 7.95% Debs., 12/15/01 75,000 79,359
- -----------------------------------------------------------------------------------------------------------------------------
USI American Holdings, Inc., 7.25% Gtd. Sr. Nts., 12/1/06 80,000 78,526
---------------
337,448
</TABLE>
9 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
RETAIL - 2.7%
- -----------------------------------------------------------------------------------------------------------------------------
DEPARTMENT STORES - 1.8%
Costco Cos., Inc., 7.125% Sr. Nts., 6/15/05 $ 120,000 $ 122,129
- -----------------------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc., 10% Sr. Nts., 2/15/01 60,000 66,326
- -----------------------------------------------------------------------------------------------------------------------------
Parisian, Inc., 9.875% Sr. Sub. Nts., 7/15/03 (1) 50,000 52,500
- -----------------------------------------------------------------------------------------------------------------------------
Sears Roebuck & Co., 8.39% Medium-Term Nts., 3/23/99 290,000 299,285
---------------
540,240
- -----------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAILING - 0.1%
K Mart Corp., 7.75% Debs., 10/1/12 50,000 47,250
- -----------------------------------------------------------------------------------------------------------------------------
SUPERMARKETS - 0.8%
Dairy Mart Convenience Stores, Inc., 10.25% Sr. Sub. Nts., 3/15/04 50,000 49,250
- -----------------------------------------------------------------------------------------------------------------------------
Great Atlantic & Pacific Tea Co., 9.125% Debs., 1/15/98 145,000 145,840
- -----------------------------------------------------------------------------------------------------------------------------
Jitney-Jungle Stores of America, Inc., 12% Gtd. Sr. Nts., 3/1/06 50,000 56,250
---------------
251,340
- -----------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 4.1%
- -----------------------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY - 2.5%
DecisionOne Corp., 9.75% Sr. Sub. Nts., 8/1/07 50,000 51,750
- -----------------------------------------------------------------------------------------------------------------------------
Digital Equipment Corp., 7% Nts., 11/15/97 215,000 215,068
- -----------------------------------------------------------------------------------------------------------------------------
DII Group, Inc., 8.50% Sr. Sub. Nts., 9/15/07 (3) 50,000 49,563
- -----------------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc., 12% Cv. Sr. Sub. Nts., 2/15/01 (1) 25,000 20,875
- -----------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc., 0%/14%
Sr. Disc. Nts., Series B, 6/1/06 (4) 50,000 33,500
- -----------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 0%/9.75% Sr. Disc. Nts., 8/15/04 (4) 100,000 84,750
- -----------------------------------------------------------------------------------------------------------------------------
Plantronics, Inc., 10% Sr. Nts., 1/15/01 (1) 75,000 78,000
- -----------------------------------------------------------------------------------------------------------------------------
Price Communications Cellular Holdings, Inc.,
0%/13.50% Sr. Disc. Nts., 8/1/07 (1)(4) 75,000 42,750
- -----------------------------------------------------------------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum Finance Corp., 11% Sr. Nts.,
8/15/06 50,000 55,375
- -----------------------------------------------------------------------------------------------------------------------------
Unisys Corp., 12% Sr. Nts., Series B, 4/15/03 50,000 56,250
- -----------------------------------------------------------------------------------------------------------------------------
Western Wireless Corp., 10.50% Sr. Sub. Nts., 2/1/07 50,000 53,875
---------------
741,756
- -----------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS/TECHNOLOGY - 1.6%
American Communications Services, Inc., 0%/13% Sr. Disc. Nts.,
11/1/05 (4) 75,000 52,875
- -----------------------------------------------------------------------------------------------------------------------------
Brooks Fiber Properties, Inc., 0%/11.875% Sr. Disc. Nts., 11/1/06 (4) 75,000 59,156
- -----------------------------------------------------------------------------------------------------------------------------
Centennial Cellular Corp., 10.125% Sr. Nts., 5/15/05 25,000 26,625
- -----------------------------------------------------------------------------------------------------------------------------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc. Debs., 11/15/07 (4) 75,000 58,125
- -----------------------------------------------------------------------------------------------------------------------------
Diamond Cable Communications plc, 0%/10.75% Sr. Disc. Nts., 2/15/07 (4) 50,000 32,250
- -----------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 0%/11.25% Sr. Disc. Nts., 7/15/07 (4) 50,000 33,250
- -----------------------------------------------------------------------------------------------------------------------------
International CableTel, Inc., 0%/11.50%
Sr. Deferred Coupon Nts., Series B, 2/1/06 (4) 100,000 73,500
- -----------------------------------------------------------------------------------------------------------------------------
IXC Communications, Inc., 12.50% Sr. Nts., Series B, 10/1/05 50,000 57,000
- -----------------------------------------------------------------------------------------------------------------------------
McLeodUSA, Inc., 0%/10.50% Sr. Disc. Nts., 3/1/07 (4) 50,000 34,750
- -----------------------------------------------------------------------------------------------------------------------------
Teleport Communications Group, Inc.:
0%/11.125% Sr. Disc. Nts., 7/1/07 (4) 25,000 19,719
9.875% Sr. Nts., 7/1/06 25,000 27,438
---------------
474,688
</TABLE>
10 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 1.9%
- -----------------------------------------------------------------------------------------------------------------------------
RAILROADS - 1.1%
CSX Corp., 7.05% Debs., 5/1/02 $ 85,000 $ 86,993
- -----------------------------------------------------------------------------------------------------------------------------
Norfolk Southern Corp., 7.35% Nts., 5/15/07 75,000 78,755
- -----------------------------------------------------------------------------------------------------------------------------
Union Pacific Corp., 7% Nts., 6/15/00 150,000 152,803
---------------
318,551
- -----------------------------------------------------------------------------------------------------------------------------
SHIPPING - 0.8%
Federal Express Corp., 6.25% Nts., 4/15/98 240,000 240,297
- -----------------------------------------------------------------------------------------------------------------------------
UTILITIES - 2.4%
- -----------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 0.9%
Consumers Energy Co., 8.75% First Mtg. Nts., 2/15/98 145,000 145,947
- -----------------------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 7.25% First Mtg. Nts., Series A, 2/1/99 (1) 75,000 75,750
- -----------------------------------------------------------------------------------------------------------------------------
Panda Global Energy Co., 12.50% Sr. Nts., 4/15/04 (1) 50,000 48,250
---------------
269,947
- -----------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES - 1.1%
Northern Illinois Gas Co., 6.45% First Mtg. Bonds, 8/1/01 220,000 222,749
- -----------------------------------------------------------------------------------------------------------------------------
Tennessee Gas Pipeline Co., 7.50% Bonds, 4/1/17 100,000 105,230
---------------
327,979
- -----------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES - 0.4%
GTE Corp., 8.85% Debs., 3/1/98 60,000 60,528
- -----------------------------------------------------------------------------------------------------------------------------
Peoples Telephone Co., Inc., 12.25% Sr. Nts., 7/15/02 50,000 52,125
---------------
112,653
---------------
Total Corporate Bonds and Notes (Cost $12,488,086) 12,726,059
SHARES
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
COMMON STOCKS - 23.6%
- -----------------------------------------------------------------------------------------------------------------------------
BASIC INDUSTRY - 2.9%
- -----------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 1.3%
Dexter Corp. 4,300 168,775
- -----------------------------------------------------------------------------------------------------------------------------
Ethyl Corp. 13,300 114,712
- -----------------------------------------------------------------------------------------------------------------------------
IMC Global, Inc. 3,149 106,082
---------------
389,569
- -----------------------------------------------------------------------------------------------------------------------------
PAPER - 0.4%
Unisource Worldwide, Inc. 6,900 112,556
- -----------------------------------------------------------------------------------------------------------------------------
STEEL - 1.2%
Carpenter Technology Corp. 3,200 154,800
- -----------------------------------------------------------------------------------------------------------------------------
Oregon Steel Mills, Inc. 4,500 94,781
- -----------------------------------------------------------------------------------------------------------------------------
UNR Industries, Inc. 23,000 117,875
---------------
367,456
- -----------------------------------------------------------------------------------------------------------------------------
CONSUMER RELATED - 0.8%
- -----------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 0.5%
Glaxo Wellcome plc, Sponsored ADR 3,800 162,687
- -----------------------------------------------------------------------------------------------------------------------------
RESTAURANTS - 0.3%
Piccadilly Cafeterias, Inc. 6,900 102,637
</TABLE>
11 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
MARKET VALUE
SHARES SEE NOTE 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
ENERGY - 3.4%
- -----------------------------------------------------------------------------------------------------------------------------
Amoco Corp. 1,400 $ 128,362
- -----------------------------------------------------------------------------------------------------------------------------
Atlantic Richfield Co. 2,400 197,550
- -----------------------------------------------------------------------------------------------------------------------------
Chevron Corp. 2,300 190,756
- -----------------------------------------------------------------------------------------------------------------------------
Exxon Corp. 3,000 184,312
- -----------------------------------------------------------------------------------------------------------------------------
Mobil Corp. 2,400 174,750
- -----------------------------------------------------------------------------------------------------------------------------
Occidental Petroleum Corp. 4,700 131,012
---------------
1,006,742
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES - 4.8%
- -----------------------------------------------------------------------------------------------------------------------------
BANKS & THRIFTS - 2.1%
BankAmerica Corp. 1,000 71,500
- -----------------------------------------------------------------------------------------------------------------------------
BankBoston Corp. 2,000 162,125
- -----------------------------------------------------------------------------------------------------------------------------
First Union Corp. 2,700 132,469
- -----------------------------------------------------------------------------------------------------------------------------
NationsBank Corp. 1,900 113,762
- -----------------------------------------------------------------------------------------------------------------------------
Wells Fargo & Co. 500 145,687
---------------
625,543
- -----------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL -2.3%
- -----------------------------------------------------------------------------------------------------------------------------
Camden Property Trust 4,800 144,000
- -----------------------------------------------------------------------------------------------------------------------------
Capstone Capital Corp. 5,900 139,387
- -----------------------------------------------------------------------------------------------------------------------------
Crescent Real Estate Equities, Inc. 4,200 151,200
- -----------------------------------------------------------------------------------------------------------------------------
Health & Retirement Properties Trust 6,800 127,500
- -----------------------------------------------------------------------------------------------------------------------------
Meditrust Corp., Paired Stock 3,100 132,525
---------------
694,612
- -----------------------------------------------------------------------------------------------------------------------------
INSURANCE - 0.4%
HSB Group, Inc. 2,500 130,469
- -----------------------------------------------------------------------------------------------------------------------------
Housing Related - 0.9%
- -----------------------------------------------------------------------------------------------------------------------------
Homebuilders/Real Estate - 0.9%
Cornerstone Properties, Inc. 8,300 153,031
- -----------------------------------------------------------------------------------------------------------------------------
Tower Realty Trust, Inc. (9) 5,000 126,250
---------------
279,281
- -----------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 2.2%
- -----------------------------------------------------------------------------------------------------------------------------
AEROSPACE - 1.5%
General Dynamics Corp. 2,300 186,731
- -----------------------------------------------------------------------------------------------------------------------------
Lockheed Martin Corp. 1,200 114,075
- -----------------------------------------------------------------------------------------------------------------------------
TRW, Inc. 2,400 137,400
---------------
438,206
- -----------------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS - 0.7%
PACCAR, Inc. 5,000 225,312
- -----------------------------------------------------------------------------------------------------------------------------
RETAIL - 1.2%
- -----------------------------------------------------------------------------------------------------------------------------
DEPARTMENT STORES - 0.4%
Penney (J.C.) Co., Inc. 2,100 123,244
- -----------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAILING - 0.8%
Brown Group, Inc. 6,500 98,313
- -----------------------------------------------------------------------------------------------------------------------------
New England Business Service, Inc. 5,000 145,625
---------------
243,938
</TABLE>
12 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
MARKET VALUE
SHARES SEE NOTE 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 0.0%
- -----------------------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY - 0.0%
Nextel Communications, Inc., Cl. A (9) 154 $ 4,043
- -----------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 0.7%
- -----------------------------------------------------------------------------------------------------------------------------
RAILROADS - 0.7%
GATX Corp. 3,100 200,144
- -----------------------------------------------------------------------------------------------------------------------------
UTILITIES - 6.7%
- -----------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 2.4%
Duke Energy Corp. 3,704 178,718
- -----------------------------------------------------------------------------------------------------------------------------
FPL Group, Inc. 3,000 155,063
- -----------------------------------------------------------------------------------------------------------------------------
Illinova Corp. 4,000 89,000
- -----------------------------------------------------------------------------------------------------------------------------
Kansas City Power & Light Co. 5,000 146,563
- -----------------------------------------------------------------------------------------------------------------------------
Western Resources, Inc. 3,900 145,275
---------------
714,619
- -----------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES - 2.2%
El Paso Natural Gas Co. 3,800 227,763
- -----------------------------------------------------------------------------------------------------------------------------
MCN Energy Group, Inc. 3,700 128,113
- -----------------------------------------------------------------------------------------------------------------------------
National Fuel Gas Co. 3,700 163,263
- -----------------------------------------------------------------------------------------------------------------------------
Questar Corp. 3,300 127,463
---------------
646,602
- -----------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES - 2.1%
- -----------------------------------------------------------------------------------------------------------------------------
Ameritech Corp. 2,100 136,500
- -----------------------------------------------------------------------------------------------------------------------------
Bell Atlantic Corp. 2,473 197,531
- -----------------------------------------------------------------------------------------------------------------------------
Frontier Corp. 5,700 123,263
- -----------------------------------------------------------------------------------------------------------------------------
U S West Communications Group 4,200 167,213
---------------
624,507
---------------
Total Common Stocks (Cost $5,534,380) 7,092,167
- -----------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS - 0.6%
- -----------------------------------------------------------------------------------------------------------------------------
Case Corp., $4.50 Cum. Cv., Series A, Non-Vtg. (Cost $115,000) 1,200 174,000
UNITS
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES - 0.0%
- -----------------------------------------------------------------------------------------------------------------------------
Australis Media Ltd. Wts., Exp. 5/00 (1) 75 --
- -----------------------------------------------------------------------------------------------------------------------------
Dairy Mart Convenience Stores, Inc. Wts., Exp. 12/01 (1) 333 333
- -----------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc. Wts., Exp. 6/00 (1) 50 3,500
- -----------------------------------------------------------------------------------------------------------------------------
Price Communications Corp. Wts., 8/07 258 3
- -----------------------------------------------------------------------------------------------------------------------------
Signature Brands, Inc. Wts., Exp. 12/49 (1) 50 750
---------------
Total Rights, Warrants and Certificates (Cost $470) 4,586
</TABLE>
13 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENTS - 6.3%
- -----------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Zion First National Bank, 5.68%,
dated 10/31/97, to be repurchased at $1,883,891 on 11/3/97,
collateralized by U.S. Treasury Nts., 7.25%, 8/15/04, with a
value of $1,923,955 (Cost $1,883,000) $ 1,883,000 $ 1,883,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $27,723,982) 99.1% 29,794,676
- -----------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.9 259,607
-------------- ---------------
NET ASSETS 100.0% $ 30,054,283
-------------- ---------------
-------------- ---------------
</TABLE>
1. Identifies issues considered to be illiquid or restricted - See Note 5
of Notes to Financial Statements.
2. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans.
These securities typically decline in price as interest rates decline. Most
other fixed income securities increase in price when interest rates decline.
The principal amount of the underlying pool represents the notional amount on
which current interest is calculated. The price of these securities is
typically more sensitive to changes in prepayment rates than traditional
mortgage-backed securities (for example, GNMA pass-throughs). Interest rates
disclosed represent current yields based upon the current cost basis and
estimated timing and amount of future cash flows.
3. 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 $965,905 or 3.21% of
the Fund's net assets as of October 31, 1997.
4. Denotes a step bond: a zero coupon bond that converts to a fixed or
variable interest rate at a designated future date.
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 an increasing rate security.
7. Interest or dividend is paid in kind.
8. For zero coupon bonds, the interest rate shown is the effective yield on
the date of purchase.
9. Non-income producing security.
See accompanying Notes to Financial Statements.
14 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS OCTOBER 31, 1997
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 57.7%
- -----------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 2.7%
- -----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 1.0%
Ciba Specialty Chemicals AG (1) 1,200 $ 118,162
- -----------------------------------------------------------------------------------------------------------------------------------
Dexter Corp. 5,000 196,250
- -----------------------------------------------------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co. 2,100 119,437
- -----------------------------------------------------------------------------------------------------------------------------------
Ethyl Corp. 15,900 137,137
- -----------------------------------------------------------------------------------------------------------------------------------
Fuji Photo Film Co. 1,000 36,252
- -----------------------------------------------------------------------------------------------------------------------------------
IMC Global, Inc. 2,834 95,470
---------------
702,708
- -----------------------------------------------------------------------------------------------------------------------------------
METALS - 0.8%
Allegheny Teledyne, Inc. 4,000 105,250
- -----------------------------------------------------------------------------------------------------------------------------------
Carpenter Technology Corp. 3,700 178,987
- -----------------------------------------------------------------------------------------------------------------------------------
Oregon Steel Mills, Inc. 7,400 155,862
- -----------------------------------------------------------------------------------------------------------------------------------
UNR Industries, Inc. 25,000 128,125
---------------
568,224
- -----------------------------------------------------------------------------------------------------------------------------------
PAPER - 0.9%
Fletcher Challenge Forest 80,000 77,345
- -----------------------------------------------------------------------------------------------------------------------------------
Fort James Corp. 4,675 185,539
- -----------------------------------------------------------------------------------------------------------------------------------
International Paper Co. 2,900 130,500
- -----------------------------------------------------------------------------------------------------------------------------------
Kimberly-Clark de Mexico, SA 16,000 69,582
- -----------------------------------------------------------------------------------------------------------------------------------
Unisource Worldwide, Inc. 8,100 132,131
---------------
595,097
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 7.1%
- -----------------------------------------------------------------------------------------------------------------------------------
AUTOS & HOUSING - 1.1%
Bridgestone Corp. 3,000 64,854
- -----------------------------------------------------------------------------------------------------------------------------------
Cornerstone Properties, Inc. 9,900 182,531
- -----------------------------------------------------------------------------------------------------------------------------------
Goodyear Tire & Rubber Co. 2,600 162,825
- -----------------------------------------------------------------------------------------------------------------------------------
Groupe SEB SA 700 79,823
- -----------------------------------------------------------------------------------------------------------------------------------
Lear Corp. (1) 1,400 67,287
- -----------------------------------------------------------------------------------------------------------------------------------
Rinnai Corp. 3,000 48,890
- -----------------------------------------------------------------------------------------------------------------------------------
Tower Realty Trust, Inc. (1) 6,000 151,500
---------------
757,710
- -----------------------------------------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 1.7%
Alaska Air Group, Inc. (1) 2,200 73,425
- -----------------------------------------------------------------------------------------------------------------------------------
America West Holdings Corp., Cl. B (1) 4,100 60,731
- -----------------------------------------------------------------------------------------------------------------------------------
AMR Corp. (1) 1,700 197,944
- -----------------------------------------------------------------------------------------------------------------------------------
CDL Hotels International Ltd. 290,000 83,479
- -----------------------------------------------------------------------------------------------------------------------------------
Granada Group plc 9,000 124,057
- -----------------------------------------------------------------------------------------------------------------------------------
Landry's Seafood Restaurants, Inc. (1) 2,500 70,000
- -----------------------------------------------------------------------------------------------------------------------------------
Piccadilly Cafeterias, Inc. 7,900 117,512
- -----------------------------------------------------------------------------------------------------------------------------------
Regal Cinemas, Inc. (1) 5,800 133,400
- -----------------------------------------------------------------------------------------------------------------------------------
UAL Corp. (1) 900 78,862
- -----------------------------------------------------------------------------------------------------------------------------------
Vistana, Inc. (1) 10,100 231,037
---------------
1,170,447
- -----------------------------------------------------------------------------------------------------------------------------------
MEDIA - 0.9%
Applied Graphics Technologies, Inc. (1) 4,200 224,700
- -----------------------------------------------------------------------------------------------------------------------------------
Benpres Holdings Corp., Sponsored GDR (1) 5,000 23,125
</TABLE>
15 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MEDIA (CONTINUED)
Reed International plc 9,000 $ 88,968
- -----------------------------------------------------------------------------------------------------------------------------------
Reuters Holdings plc 8,000 86,729
- -----------------------------------------------------------------------------------------------------------------------------------
Television Broadcasts Ltd. 26,000 72,320
- -----------------------------------------------------------------------------------------------------------------------------------
Wolters Kluwer NV 900 110,557
---------------
606,399
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL: GENERAL - 1.6%
adidas AG 900 131,249
- -----------------------------------------------------------------------------------------------------------------------------------
Dayton Hudson Corp. 1,500 94,219
- -----------------------------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc. (1) 1,600 70,400
- -----------------------------------------------------------------------------------------------------------------------------------
Marks & Spencer plc 13,000 131,888
- -----------------------------------------------------------------------------------------------------------------------------------
North Face, Inc. (The) (1) 5,100 120,487
- -----------------------------------------------------------------------------------------------------------------------------------
Penney (J.C.) Co., Inc. 5,700 334,519
- -----------------------------------------------------------------------------------------------------------------------------------
Wolverine World Wide, Inc. 7,975 175,450
---------------
1,058,212
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 1.8%
Argos plc 10,000 105,896
- -----------------------------------------------------------------------------------------------------------------------------------
Brown Group, Inc. 8,300 125,537
- -----------------------------------------------------------------------------------------------------------------------------------
Brylane, Inc. (1) 400 17,375
- -----------------------------------------------------------------------------------------------------------------------------------
Dickson Concepts International Ltd. 42,000 90,472
- -----------------------------------------------------------------------------------------------------------------------------------
Eagle Hardware & Garden, Inc. (1) 7,100 120,700
- -----------------------------------------------------------------------------------------------------------------------------------
Guitar Center, Inc. (1) 4,300 93,525
- -----------------------------------------------------------------------------------------------------------------------------------
Hennes & Mauritz AB, B Shares 2,700 110,573
- -----------------------------------------------------------------------------------------------------------------------------------
Koninklijke Ahold NV 3,600 92,192
- -----------------------------------------------------------------------------------------------------------------------------------
New England Business Service, Inc. 5,800 168,925
- -----------------------------------------------------------------------------------------------------------------------------------
Payless ShoeSource, Inc. (1) 1,500 83,625
- -----------------------------------------------------------------------------------------------------------------------------------
Shimamura Co. Ltd. 2,000 54,045
- -----------------------------------------------------------------------------------------------------------------------------------
Stage Stores, Inc. (1) 4,300 156,950
---------------
1,219,815
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 7.9%
- -----------------------------------------------------------------------------------------------------------------------------------
BEVERAGES - 0.4%
Embotelladora Andina SA, Series A, Sponsored ADR 3,200 76,800
- -----------------------------------------------------------------------------------------------------------------------------------
Embotelladora Andina SA, Series B, Sponsored ADR 3,200 65,600
- -----------------------------------------------------------------------------------------------------------------------------------
Quilmes Industrial Quinsa SA, Sponsored ADR 3,750 46,406
- -----------------------------------------------------------------------------------------------------------------------------------
Scottish & Newcastle plc 6,000 67,361
---------------
256,167
- -----------------------------------------------------------------------------------------------------------------------------------
FOOD - 1.7%
American Stores Co. 5,400 138,712
- -----------------------------------------------------------------------------------------------------------------------------------
Carrefour Supermarche SA 190 98,962
- -----------------------------------------------------------------------------------------------------------------------------------
Colruyt SA 250 134,126
- -----------------------------------------------------------------------------------------------------------------------------------
Jeronimo Martins & Filho, SA 1,400 91,218
- -----------------------------------------------------------------------------------------------------------------------------------
JP Foodservice, Inc. (1) 4,000 127,750
- -----------------------------------------------------------------------------------------------------------------------------------
Kroger Co. (1) 5,300 172,912
- -----------------------------------------------------------------------------------------------------------------------------------
Morningstar Group, Inc. (1) 3,500 149,625
- -----------------------------------------------------------------------------------------------------------------------------------
Safeway, Inc. (1) 2,000 116,250
- -----------------------------------------------------------------------------------------------------------------------------------
William Morrison Supermarkets plc 40,000 132,140
---------------
1,161,695
</TABLE>
16 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE/DRUGS - 2.3%
Dura Pharmaceuticals, Inc. (1) 3,500 $ 169,312
- -----------------------------------------------------------------------------------------------------------------------------------
Gedeon Richter (2) 1,000 92,066
- -----------------------------------------------------------------------------------------------------------------------------------
Glaxo Wellcome plc, Sponsored ADR 4,300 184,094
- -----------------------------------------------------------------------------------------------------------------------------------
Incyte Pharmaceuticals, Inc. (1) 1,200 96,600
- -----------------------------------------------------------------------------------------------------------------------------------
Medicis Pharmaceutical Corp., Cl. A (1) 4,250 204,531
- -----------------------------------------------------------------------------------------------------------------------------------
Novartis AG 100 157,048
- -----------------------------------------------------------------------------------------------------------------------------------
Novo-Nordisk AS, B Shares 1,000 108,382
- -----------------------------------------------------------------------------------------------------------------------------------
Roche Holding AG 12 105,744
- -----------------------------------------------------------------------------------------------------------------------------------
Schering AG 1,000 98,190
- -----------------------------------------------------------------------------------------------------------------------------------
SKW Trostberg AG 3,000 103,710
- -----------------------------------------------------------------------------------------------------------------------------------
Takeda Chemical Industries Ltd. 5,000 136,360
- -----------------------------------------------------------------------------------------------------------------------------------
Zeneca Group plc 4,000 126,170
---------------
1,582,207
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 2.7%
Acuson Corp. (1) 5,800 108,750
- -----------------------------------------------------------------------------------------------------------------------------------
Alternative Living Services, Inc. (1) 4,000 98,000
- -----------------------------------------------------------------------------------------------------------------------------------
Concentra Managed Care, Inc. (1) 1,000 32,625
- -----------------------------------------------------------------------------------------------------------------------------------
FPA Medical Management, Inc. (1) 4,800 115,800
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare Financial Partners, Inc. (1) 700 24,150
- -----------------------------------------------------------------------------------------------------------------------------------
Luxottica Group SpA, Sponsored ADR 1,500 95,812
- -----------------------------------------------------------------------------------------------------------------------------------
National Surgery Centers, Inc. (1) 8,800 220,000
- -----------------------------------------------------------------------------------------------------------------------------------
Pediatrix Medical Group, Inc. (1) 4,700 198,575
- -----------------------------------------------------------------------------------------------------------------------------------
Renal Treatment Centers, Inc. (1) 3,400 112,837
- -----------------------------------------------------------------------------------------------------------------------------------
Rural/Metro Corp. (1) 6,200 215,450
- -----------------------------------------------------------------------------------------------------------------------------------
SmithKline Beecham plc 16,894 160,062
- -----------------------------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp. (1) 4,635 141,657
- -----------------------------------------------------------------------------------------------------------------------------------
Total Renal Care Holdings, Inc. (1) 6,166 189,990
- -----------------------------------------------------------------------------------------------------------------------------------
WellPoint Health Networks, Inc. (1) 1,800 82,350
---------------
1,796,058
- -----------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD GOODS - 0.8%
Blyth Industries, Inc. (1) 4,050 100,744
- -----------------------------------------------------------------------------------------------------------------------------------
L'OREAL 350 123,793
- -----------------------------------------------------------------------------------------------------------------------------------
Premark International, Inc. 5,600 151,550
- -----------------------------------------------------------------------------------------------------------------------------------
Reckitt & Colman plc 9,000 138,017
---------------
514,104
- -----------------------------------------------------------------------------------------------------------------------------------
ENERGY - 5.3%
- -----------------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 1.4%
Diamond Offshore Drilling, Inc. 4,600 286,350
- -----------------------------------------------------------------------------------------------------------------------------------
Global Marine, Inc. (1) 4,300 133,838
- -----------------------------------------------------------------------------------------------------------------------------------
Oryx Energy Co. (1) 4,300 118,519
- -----------------------------------------------------------------------------------------------------------------------------------
Pool Energy Services Co. (1) 2,700 91,631
- -----------------------------------------------------------------------------------------------------------------------------------
Tidewater, Inc. 3,000 197,063
- -----------------------------------------------------------------------------------------------------------------------------------
Varco International, Inc. (1) 2,200 134,063
---------------
961,464
- -----------------------------------------------------------------------------------------------------------------------------------
OIL-INTEGRATED - 3.9%
Amoco Corp. 3,100 284,231
- -----------------------------------------------------------------------------------------------------------------------------------
Atlantic Richfield Co. 3,000 246,938
</TABLE>
17 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OIL-INTEGRATED (CONTINUED)
Chevron Corp. 5,900 $ 489,331
- -----------------------------------------------------------------------------------------------------------------------------------
Cliffs Drilling Co. (1) 1,100 79,956
- -----------------------------------------------------------------------------------------------------------------------------------
Exxon Corp. 5,500 337,906
- -----------------------------------------------------------------------------------------------------------------------------------
Mobil Corp. 5,000 364,063
- -----------------------------------------------------------------------------------------------------------------------------------
Occidental Petroleum Corp. 9,800 273,175
- -----------------------------------------------------------------------------------------------------------------------------------
Patterson Energy, Inc. (1) 2,400 134,400
v-----------------------------------------------------------------------------------------------------------------------------------
Quinenco SA, ADR (1) 2,700 39,488
- -----------------------------------------------------------------------------------------------------------------------------------
Shell Transport & Trading Co. plc 14,000 99,189
- -----------------------------------------------------------------------------------------------------------------------------------
Total SA, B Shares 1,641 181,734
- -----------------------------------------------------------------------------------------------------------------------------------
UTI Energy Corp. (1) 2,200 98,175
---------------
2,628,586
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL - 9.2%
- -----------------------------------------------------------------------------------------------------------------------------------
BANKS - 3.8%
Banco Popular Espanol SA 1,600 94,202
- -----------------------------------------------------------------------------------------------------------------------------------
Bank of Tokyo-Mitsubishi Ltd. 6,000 78,324
- -----------------------------------------------------------------------------------------------------------------------------------
BankAmerica Corp. 4,200 300,300
- -----------------------------------------------------------------------------------------------------------------------------------
BankBoston Corp. 4,800 389,100
- -----------------------------------------------------------------------------------------------------------------------------------
Bayerische Vereinsbank AG 1,850 107,379
- -----------------------------------------------------------------------------------------------------------------------------------
Credit Suisse Group 700 98,880
- -----------------------------------------------------------------------------------------------------------------------------------
Credito Italiano (1) 48,000 128,225
- -----------------------------------------------------------------------------------------------------------------------------------
First Union Corp. 7,400 363,063
- -----------------------------------------------------------------------------------------------------------------------------------
Halifax plc (1) 9,000 102,098
- -----------------------------------------------------------------------------------------------------------------------------------
Lloyds TSB Group plc 17,000 212,380
- -----------------------------------------------------------------------------------------------------------------------------------
Mitsubishi Trust & Banking Corp. 8,000 98,445
- -----------------------------------------------------------------------------------------------------------------------------------
NationsBank Corp. 4,400 263,450
- -----------------------------------------------------------------------------------------------------------------------------------
Wells Fargo & Co. 1,200 349,650
---------------
2,585,496
- -----------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 3.6%
Amresco, Inc. (1) 7,300 229,038
- -----------------------------------------------------------------------------------------------------------------------------------
Camden Property Trust 5,400 162,000
- -----------------------------------------------------------------------------------------------------------------------------------
Capstone Capital Corp. 6,700 158,287
- -----------------------------------------------------------------------------------------------------------------------------------
Cattles plc 12,000 75,259
- -----------------------------------------------------------------------------------------------------------------------------------
Crescent Real Estate Equities, Inc. 9,200 331,200
- -----------------------------------------------------------------------------------------------------------------------------------
Haw Par Brothers International Ltd. 41,000 66,464
- -----------------------------------------------------------------------------------------------------------------------------------
Health & Retirement Properties Trust 7,800 146,250
- -----------------------------------------------------------------------------------------------------------------------------------
ING Groep NV 2,552 107,170
- -----------------------------------------------------------------------------------------------------------------------------------
Lend Lease Corp. Ltd. 3,600 73,487
- -----------------------------------------------------------------------------------------------------------------------------------
Meditrust Corp., Paired Stock 3,900 166,725
- -----------------------------------------------------------------------------------------------------------------------------------
Money Store, Inc. (The) 1,700 48,238
- -----------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co. 3,300 161,700
- -----------------------------------------------------------------------------------------------------------------------------------
Nichiei Co. Ltd. 1,300 142,679
- -----------------------------------------------------------------------------------------------------------------------------------
Perlis Plantations Berhad 28,000 50,985
- -----------------------------------------------------------------------------------------------------------------------------------
Salomon, Inc. 1,600 124,300
- -----------------------------------------------------------------------------------------------------------------------------------
Sirrom Capital Corp. 2,400 120,900
- -----------------------------------------------------------------------------------------------------------------------------------
Southcorp Holdings Ltd. 14,000 46,813
- -----------------------------------------------------------------------------------------------------------------------------------
Swire Pacific Ltd., Cl. B 87,000 92,296
</TABLE>
18 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DIVERSIFIED FINANCIAL (CONTINUED)
Travelers Group, Inc. 2,600 $ 182,000
---------------
2,485,791
- -----------------------------------------------------------------------------------------------------------------------------------
INSURANCE - 1.8%
AFLAC, Inc. 1,500 76,313
- -----------------------------------------------------------------------------------------------------------------------------------
Allstate Corp. 1,200 99,525
- -----------------------------------------------------------------------------------------------------------------------------------
Chubb Corp. 2,500 165,625
- -----------------------------------------------------------------------------------------------------------------------------------
Conseco, Inc. 5,300 231,213
- -----------------------------------------------------------------------------------------------------------------------------------
Equitable Cos., Inc. 4,500 185,344
- -----------------------------------------------------------------------------------------------------------------------------------
HSB Group, Inc. 2,700 140,906
- -----------------------------------------------------------------------------------------------------------------------------------
Pre-Paid Legal Services, Inc. (1) 1,500 45,375
- -----------------------------------------------------------------------------------------------------------------------------------
Torchmark Corp. 3,900 155,513
- -----------------------------------------------------------------------------------------------------------------------------------
Travelers Property Casualty Corp., Cl. A 3,600 130,050
---------------
1,229,864
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 8.3%
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.6%
ABB AG 65 84,951
- -----------------------------------------------------------------------------------------------------------------------------------
Johnson Electric Holdings Ltd. 42,000 114,652
- -----------------------------------------------------------------------------------------------------------------------------------
Power Technologies, Inc. (1) 3,400 104,975
- -----------------------------------------------------------------------------------------------------------------------------------
Siebe plc 5,000 96,003
---------------
400,581
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 3.3%
Adecco SA 300 95,604
- -----------------------------------------------------------------------------------------------------------------------------------
American Disposal Services, Inc. (1) 5,000 176,250
- -----------------------------------------------------------------------------------------------------------------------------------
Caribiner International, Inc. (1) 2,800 125,475
- -----------------------------------------------------------------------------------------------------------------------------------
Central Parking Corp. 1,500 81,938
- -----------------------------------------------------------------------------------------------------------------------------------
Computer Horizons Corp. (1) 6,550 198,956
- -----------------------------------------------------------------------------------------------------------------------------------
Computer Task Group, Inc. 7,800 220,350
- -----------------------------------------------------------------------------------------------------------------------------------
Corestaff, Inc. (1) 5,900 146,025
- -----------------------------------------------------------------------------------------------------------------------------------
Eastern Environmental Services, Inc. (1) 6,300 160,650
- -----------------------------------------------------------------------------------------------------------------------------------
Guilbert SA 625 81,437
- -----------------------------------------------------------------------------------------------------------------------------------
Hays plc 13,000 152,598
- -----------------------------------------------------------------------------------------------------------------------------------
Helix Technology Corp. 2,500 112,500
- -----------------------------------------------------------------------------------------------------------------------------------
Kurita Water Industries Ltd. 5,000 88,135
- -----------------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co. (1) 3,800 128,725
- -----------------------------------------------------------------------------------------------------------------------------------
SpeedFam International, Inc. (1) 1,300 48,263
- -----------------------------------------------------------------------------------------------------------------------------------
Tetra Tech, Inc. (1) 5,600 146,300
- -----------------------------------------------------------------------------------------------------------------------------------
Transaction Systems Architects, Inc., Cl. A (1) 4,700 183,888
- -----------------------------------------------------------------------------------------------------------------------------------
Viad Corp. 4,700 85,775
---------------
2,232,869
- -----------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 3.6%
Aeroquip-Vickers, Inc. 2,000 104,125
- -----------------------------------------------------------------------------------------------------------------------------------
AGCO Corp. 4,000 116,000
- -----------------------------------------------------------------------------------------------------------------------------------
Canon Sales Co., Inc. 300 5,463
- -----------------------------------------------------------------------------------------------------------------------------------
Case Corp. 3,700 221,306
- -----------------------------------------------------------------------------------------------------------------------------------
Deere & Co. 4,300 226,288
- -----------------------------------------------------------------------------------------------------------------------------------
Halter Marine Group, Inc. (1) 1,800 94,163
- -----------------------------------------------------------------------------------------------------------------------------------
Ingersoll-Rand Co. 4,200 163,538
</TABLE>
19 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING (CONTINUED)
Mannesmann AG 250 $ 106,034
- -----------------------------------------------------------------------------------------------------------------------------------
NSK Ltd. 7,000 29,101
- -----------------------------------------------------------------------------------------------------------------------------------
PACCAR, Inc. 9,000 405,563
- -----------------------------------------------------------------------------------------------------------------------------------
Parker-Hannifin Corp. 2,600 108,713
- -----------------------------------------------------------------------------------------------------------------------------------
Ricoh Co. Ltd. 11,000 141,764
- -----------------------------------------------------------------------------------------------------------------------------------
SMC Corp. 500 43,236
- -----------------------------------------------------------------------------------------------------------------------------------
Smiths Industries plc 5,000 72,107
- -----------------------------------------------------------------------------------------------------------------------------------
Societe BIC SA 1,400 95,594
- -----------------------------------------------------------------------------------------------------------------------------------
Textron, Inc. 4,200 242,813
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Industries, Inc. 8,550 229,781
---------------
2,405,589
- -----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 0.8%
Brambles Industries Ltd. 4,100 78,578
- -----------------------------------------------------------------------------------------------------------------------------------
Burlington Northern Santa Fe Corp. 1,300 123,500
- -----------------------------------------------------------------------------------------------------------------------------------
GATX Corp. 3,600 232,425
- -----------------------------------------------------------------------------------------------------------------------------------
Gulfmark Offshore, Inc. (1) 500 18,188
- -----------------------------------------------------------------------------------------------------------------------------------
MotivePower Industries, Inc. (1) 2,100 55,913
---------------
508,604
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 11.8%
- -----------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 1.3%
General Dynamics Corp. 3,900 316,631
- -----------------------------------------------------------------------------------------------------------------------------------
Lockheed Martin Corp. 2,600 247,163
- -----------------------------------------------------------------------------------------------------------------------------------
REMEC, Inc. (1) 2,700 68,513
- -----------------------------------------------------------------------------------------------------------------------------------
TRW, Inc. 4,600 263,350
---------------
895,657
- -----------------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE - 2.0%
Apex PC Solutions, Inc. (1) 3,000 77,250
- -----------------------------------------------------------------------------------------------------------------------------------
CFM Technologies, Inc. (1) 1,700 31,025
- -----------------------------------------------------------------------------------------------------------------------------------
CHS Electronics, Inc. (1) 1,050 25,659
- -----------------------------------------------------------------------------------------------------------------------------------
Compaq Computer Corp. (1) 2,800 178,500
- -----------------------------------------------------------------------------------------------------------------------------------
Digital Lightwave, Inc. (1) 1,600 29,200
- -----------------------------------------------------------------------------------------------------------------------------------
Insight Enterprises, Inc. (1) 4,650 181,931
- -----------------------------------------------------------------------------------------------------------------------------------
International Business Machines Corp. 1,700 166,706
- -----------------------------------------------------------------------------------------------------------------------------------
Level One Communications, Inc. (1) 900 40,500
- -----------------------------------------------------------------------------------------------------------------------------------
Lexmark International Group, Inc., Cl. A (1) 800 24,450
- -----------------------------------------------------------------------------------------------------------------------------------
Network Appliance, Inc. (1) 3,200 160,800
- -----------------------------------------------------------------------------------------------------------------------------------
Quantum Corp. (1) 3,900 123,338
- -----------------------------------------------------------------------------------------------------------------------------------
Semtech Corp. (1) 1,500 69,844
- -----------------------------------------------------------------------------------------------------------------------------------
Storage Technology Corp. (New) (1) 4,500 264,094
---------------
1,373,297
- -----------------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 2.8%
BEA Systems, Inc. (1) 7,500 101,250
- -----------------------------------------------------------------------------------------------------------------------------------
Electronic Data Systems Corp. 1,200 46,425
- -----------------------------------------------------------------------------------------------------------------------------------
HNC Software, Inc. (1) 2,600 96,200
- -----------------------------------------------------------------------------------------------------------------------------------
JDA Software Group, Inc. (1) 3,400 106,250
- -----------------------------------------------------------------------------------------------------------------------------------
Pegasystems, Inc. (1) 5,300 96,725
- -----------------------------------------------------------------------------------------------------------------------------------
Remedy Corp. (1) 3,000 141,000
</TABLE>
20 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER SOFTWARE/SERVICES (CONTINUED)
SAP AG, Preference 500 $ 149,464
- -----------------------------------------------------------------------------------------------------------------------------------
Sapient Corp. (1) 2,500 133,125
- -----------------------------------------------------------------------------------------------------------------------------------
Security Dynamics Technologies, Inc. (1) 4,000 135,500
- -----------------------------------------------------------------------------------------------------------------------------------
Summit Design, Inc. (1) 1,400 20,300
- -----------------------------------------------------------------------------------------------------------------------------------
Sykes Enterprises, Inc. (1) 5,800 144,275
- -----------------------------------------------------------------------------------------------------------------------------------
Technology Solutions Co. (1) 6,350 200,025
- -----------------------------------------------------------------------------------------------------------------------------------
Veritas Software Corp. (1) 3,500 145,688
- -----------------------------------------------------------------------------------------------------------------------------------
Viasoft, Inc. (1) 2,700 110,700
- -----------------------------------------------------------------------------------------------------------------------------------
Visio Corp. (1) 3,100 115,281
- -----------------------------------------------------------------------------------------------------------------------------------
Wind River Systems (1) 3,200 122,800
---------------
1,865,008
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS - 3.2%
ATMI, Inc. (1) 3,300 88,688
- -----------------------------------------------------------------------------------------------------------------------------------
Bowthorpe plc 11,000 72,492
- -----------------------------------------------------------------------------------------------------------------------------------
Electro Scientific Industries, Inc. (1) 2,300 111,550
- -----------------------------------------------------------------------------------------------------------------------------------
Electrocomponents plc 15,000 116,335
- -----------------------------------------------------------------------------------------------------------------------------------
Getronics NV 3,000 99,087
- -----------------------------------------------------------------------------------------------------------------------------------
Hirose Electric Co. 2,000 130,540
- -----------------------------------------------------------------------------------------------------------------------------------
Keyence Corp. 660 98,778
- -----------------------------------------------------------------------------------------------------------------------------------
Matsushita Electric Industrial Co. 4,000 67,182
- -----------------------------------------------------------------------------------------------------------------------------------
National Semiconductor Corp. (1) 3,000 108,000
- -----------------------------------------------------------------------------------------------------------------------------------
Omron Corp. 4,000 67,847
- -----------------------------------------------------------------------------------------------------------------------------------
Philips Electronics NV 1,300 101,818
- -----------------------------------------------------------------------------------------------------------------------------------
Philips Electronics NV, NY Shares 1,400 109,725
- -----------------------------------------------------------------------------------------------------------------------------------
Samsung Electronics Ltd., Sponsored GDR (2) 2,400 24,444
- -----------------------------------------------------------------------------------------------------------------------------------
Samsung Electronics Ltd., Sponsored GDR (1)(2) 38 793
- -----------------------------------------------------------------------------------------------------------------------------------
Sawtek, Inc. (1) 2,200 74,800
- -----------------------------------------------------------------------------------------------------------------------------------
SCI Systems, Inc. (1) 2,400 105,600
- -----------------------------------------------------------------------------------------------------------------------------------
Sony Corp. 1,900 157,820
- -----------------------------------------------------------------------------------------------------------------------------------
TDK Corp. 1,000 82,980
- -----------------------------------------------------------------------------------------------------------------------------------
Vitesse Semiconductor Corp. (1) 3,650 158,319
- -----------------------------------------------------------------------------------------------------------------------------------
VTech Holdings Ltd. 50,000 97,678
- -----------------------------------------------------------------------------------------------------------------------------------
Waters Corp. (1) 5,900 259,600
---------------
2,134,076
- -----------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY - 2.5%
Boston Communications Group, Inc. (1) 2,000 29,500
- -----------------------------------------------------------------------------------------------------------------------------------
British Sky Broadcasting Group plc 9,500 67,386
- -----------------------------------------------------------------------------------------------------------------------------------
Comverse Technology, Inc. (1) 4,700 193,875
- -----------------------------------------------------------------------------------------------------------------------------------
DSP Communications, Inc. (1) 8,800 162,800
- -----------------------------------------------------------------------------------------------------------------------------------
Ericsson LM, B Shares 3,520 155,206
- -----------------------------------------------------------------------------------------------------------------------------------
Inter-Tel, Inc. 3,400 84,681
- -----------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., Cl. A (1) 309 8,111
- -----------------------------------------------------------------------------------------------------------------------------------
Nippon Telegraph & Telephone Corp. 14 118,733
- -----------------------------------------------------------------------------------------------------------------------------------
P-COM, Inc. (1) 6,800 136,850
- -----------------------------------------------------------------------------------------------------------------------------------
Pacific Gateway Exchange, Inc. (1) 3,400 130,050
- -----------------------------------------------------------------------------------------------------------------------------------
SK Telecommunications Co. Ltd., ADR 6,600 36,300
- -----------------------------------------------------------------------------------------------------------------------------------
Tekelec (1) 3,400 142,375
</TABLE>
21 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS-TECHNOLOGY (CONTINUED)
Telecom Italia Mobile SpA 30,000 $ 111,469
- -----------------------------------------------------------------------------------------------------------------------------------
Uniphase Corp. (1) 2,100 140,963
- -----------------------------------------------------------------------------------------------------------------------------------
Vodafone Group plc 28,000 153,889
---------------
1,672,188
- -----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 5.4%
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 1.6%
Duke Energy Corp. 4,449 214,664
- -----------------------------------------------------------------------------------------------------------------------------------
FPL Group, Inc. 5,800 299,788
- -----------------------------------------------------------------------------------------------------------------------------------
Illinova Corp. 4,500 100,125
- -----------------------------------------------------------------------------------------------------------------------------------
Kansas City Power & Light Co. 5,700 167,081
- -----------------------------------------------------------------------------------------------------------------------------------
Veba AG 2,000 112,715
- -----------------------------------------------------------------------------------------------------------------------------------
Western Resources, Inc. 4,600 171,350
---------------
1,065,723
- -----------------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES - 1.8%
Columbia Gas System, Inc. 4,900 354,025
- -----------------------------------------------------------------------------------------------------------------------------------
El Paso Natural Gas Co. 4,600 275,713
- -----------------------------------------------------------------------------------------------------------------------------------
MCN Energy Group, Inc. 4,400 152,350
- -----------------------------------------------------------------------------------------------------------------------------------
National Fuel Gas Co. 4,600 202,975
- -----------------------------------------------------------------------------------------------------------------------------------
Questar Corp. 4,200 162,225
- -----------------------------------------------------------------------------------------------------------------------------------
RWE AG, Preference 2,500 92,162
---------------
1,239,450
- -----------------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES - 2.0%
Ameritech Corp. 2,500 162,500
- -----------------------------------------------------------------------------------------------------------------------------------
Bell Atlantic Corp. 4,280 341,865
- -----------------------------------------------------------------------------------------------------------------------------------
Frontier Corp. 9,500 205,438
- -----------------------------------------------------------------------------------------------------------------------------------
Tel-Save Holdings, Inc. (1) 6,400 137,600
- -----------------------------------------------------------------------------------------------------------------------------------
Telefonica de Espana 3,500 95,236
- -----------------------------------------------------------------------------------------------------------------------------------
U S West Communications Group 11,200 445,900
---------------
1,388,539
---------------
Total Common Stocks (Cost $32,198,814) 39,061,625
SHARES
- -----------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS - 0.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Case Corp., $4.50 Cum. Cv., Series A, Non-Vtg. (Cost $114,800) 1,200 174,000
UNITS
- -----------------------------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES - 0.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Australis Media Ltd. Wts., Exp. 5/00 (3) 150 --
- -----------------------------------------------------------------------------------------------------------------------------------
Dairy Mart Convenience Stores, Inc. Wts., Exp. 12/01 (3) 666 667
- -----------------------------------------------------------------------------------------------------------------------------------
Haw Par Brothers International Ltd. Wts., Exp. 7/01 3,000 992
- -----------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc. Wts., Exp. 6/00 (3) 100 7,000
- -----------------------------------------------------------------------------------------------------------------------------------
Mccaw International Ltd. Wts., Exp. 4/07 (3) 100 250
- -----------------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc.:
Conditional Wts., Exp. 12/97 (3) 500 313
Wts., Exp. 12/97 (3) 500 6,500
- -----------------------------------------------------------------------------------------------------------------------------------
Price Communications Corp. Wts., 8/07 516 5
</TABLE>
22 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
UNITS SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
Signature Brands, Inc. Wts., Exp. 12/49 (3) 100 $ 1,500
---------------
Total Rights, Warrants and Certificates (Cost $10,124) 17,227
FACE
AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES - 0.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Dayton Hudson Credit Card Master Trust, Asset Backed Certificates, Series
1997-1, Cl. A, 6.25%, 8/25/05 $ 125,000 124,945
- -----------------------------------------------------------------------------------------------------------------------------------
IROQUOIS Trust, Asset-Backed Amortizing Nts., Series 1997-2, Cl. A,
6.752%, 6/25/07 (3) 175,000 175,848
- -----------------------------------------------------------------------------------------------------------------------------------
Olympic Automobile Receivables Trust:
Receivables-Backed Nts., Series 1997-A, Cl. A5, 6.80%, 2/15/05 150,000 153,296
Series 1996-A, Cl. A4, 5.85%, 7/15/01 110,000 109,845
---------------
Total Asset-Backed Securities (Cost $558,742) 563,934
- -----------------------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS - 3.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Countrywide Funding Corp., Mtg. Pass-Through Certificates,
Series 1994-10, Cl. A3, 6%, 5/25/09 250,000 247,813
- -----------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation
Certificates:
5.50%, 6/1/98 7,400 7,331
Series 1711, Cl. EA, 7%, 3/15/24 200,000 204,750
Gtd. Multiclass Mtg. Participation Certificates:
6%, 3/1/09 178,221 176,820
Series 1574, Cl. PD, 5.55%, 3/15/13 100,000 99,750
Series 1843, Cl. VB, 7%, 4/15/03 65,000 66,909
Series 1849, Cl. VA, 6%, 12/15/10 179,450 177,432
Interest-Only Stripped Mtg.-Backed Security:
Series 1542, Cl. QC, 8.675%, 10/15/20 (4) 400,000 89,203
Series 1583, Cl. IC, 9.283%, 1/15/20 (4) 750,000 120,000
Series 1661, Cl. PK, 5.965%, 11/15/06 (4) 874,957 74,098
- -----------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6%, 12/1/03 165,377 164,571
6.50%, 4/1/26 140,587 138,466
7%, 4/1/00 76,854 77,591
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Trust 1993-181, Cl. C, 5.40%,
10/25/02 177,327 176,441
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Trust 1993-190, Cl. Z, 5.85%,
7/25/08 151,551 150,764
Medium-Term Nts., 6.56%, 11/13/01 100,000 100,250
Trust 1994-13, Cl. B, 6.50%, 2/25/09 150,000 149,859
</TABLE>
23 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MORTGAGE-BACKED OBLIGATIONS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
GE Capital Mortgage Services, Inc., Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Series 1994-7, Cl. A18, 6%, 2/25/09 $ 149,164 $ 139,841
- -----------------------------------------------------------------------------------------------------------------------------------
PNC Mortgage Securities Corp., Commercial Mtg. Pass-Through
Certificates, Series 1995-2, Cl. A3, 6.50%, 2/25/12 125,000 125,566
- -----------------------------------------------------------------------------------------------------------------------------------
Residential Accredit Loans, Inc., Mortgage Asset-Backed Pass-Through
Certificates, Series 1997-QS9, Cl. A2, 6.75%, 9/25/27 175,000 175,260
---------------
Total Mortgage-Backed Obligations (Cost $2,624,050) 2,662,715
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 6.6%
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 7.50%, 11/15/16 1,550,000 1,772,329
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
6.50%, 8/15/05 965,000 1,000,887
6.75%, 6/30/99 720,000 732,825
7.50%, 11/15/01 900,000 955,969
---------------
Total U.S. Government Obligations (Cost $4,308,612) 4,462,010
- -----------------------------------------------------------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES - 24.1%
- -----------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 3.0%
- -----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 1.4%
Burmah Castrol plc, 7% Gtd. Medium-Term Nts., 12/15/97 (2) 110,000 110,150
- -----------------------------------------------------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co., 8.50% Debs., 2/15/03 120,000 127,795
- -----------------------------------------------------------------------------------------------------------------------------------
Harris Chemical North America, Inc., 10.25% Gtd. Sr. Sec. Disc. Nts.,
7/15/01 100,000 104,500
- -----------------------------------------------------------------------------------------------------------------------------------
Laroche Industries, Inc., 9.50% Sr. Sub. Nts., 9/15/07 (2) 125,000 125,625
- -----------------------------------------------------------------------------------------------------------------------------------
Morton International, Inc., 9.25% Credit Sensitive Nts., 6/1/20 65,000 83,022
- -----------------------------------------------------------------------------------------------------------------------------------
NL Industries, Inc., 0%/13% Sr. Sec. Disc. Nts., 10/15/05 (5) 100,000 98,000
- -----------------------------------------------------------------------------------------------------------------------------------
PPG Industries, Inc., 9% Debs., 5/1/21 65,000 79,576
- -----------------------------------------------------------------------------------------------------------------------------------
Sterling Chemical Holdings, Inc., 0%/13.50% Sr. Disc. Nts., 8/15/08 (5) 125,000 91,250
- -----------------------------------------------------------------------------------------------------------------------------------
Texas Petrochemical Corp., 11.125% Sr. Sub. Nts., Series B, 7/1/06 125,000 138,125
---------------
958,043
- -----------------------------------------------------------------------------------------------------------------------------------
METALS - 1.0%
Alcan Aluminum Ltd., 9.625% Debs., 7/15/19 125,000 134,783
- -----------------------------------------------------------------------------------------------------------------------------------
Gulf States Steel, Inc. (Alabama), 13.50% First Mtg. Nts., Series B,
4/15/03 100,000 103,000
- -----------------------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 2/1/03 100,000 107,750
- -----------------------------------------------------------------------------------------------------------------------------------
NS Group, Inc., 13.50% Gtd. Sr. Sec. Nts., 7/15/03 75,000 86,062
- -----------------------------------------------------------------------------------------------------------------------------------
Republic Engineered Steels, Inc., 9.875% First Mtg. Nts., 12/15/01 50,000 48,500
- -----------------------------------------------------------------------------------------------------------------------------------
WCI Steel, Inc., 10% Sr. Nts., Series B, 12/1/04 100,000 104,750
- -----------------------------------------------------------------------------------------------------------------------------------
Weirton Steel Corp., 10.75% Sr. Nts., 6/1/05 100,000 105,750
---------------
690,595
- -----------------------------------------------------------------------------------------------------------------------------------
PAPER - 0.6%
Celulosa Arauco y Constitucion SA, 7.25% Debs., 6/11/98 (3) 110,000 110,275
- -----------------------------------------------------------------------------------------------------------------------------------
Gaylord Container Corp., 12.75% Sr. Sub. Disc. Debs., 5/15/05 100,000 109,000
- -----------------------------------------------------------------------------------------------------------------------------------
Malette, Inc., 12.25% Sr. Sec. Nts., 7/15/04 (3) 100,000 113,750
</TABLE>
24 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PAPER (CONTINUED)
Stone Container Corp., 9.875% Sr. Nts., 2/1/01 $ 50,000 $ 51,125
---------------
384,150
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 6.3%
- -----------------------------------------------------------------------------------------------------------------------------------
AUTOS & HOUSING - 0.6%
Black & Decker Corp., 6.625% Nts., 11/15/00 110,000 111,221
- -----------------------------------------------------------------------------------------------------------------------------------
First Industrial LP, 7.15% Bonds, 5/15/27 60,000 61,743
- -----------------------------------------------------------------------------------------------------------------------------------
IHF Holdings, Inc., 0%/15% Sr. Sub. Disc. Nts., Series B, 11/15/04 (5) 125,000 107,500
- -----------------------------------------------------------------------------------------------------------------------------------
Signature Brands, Inc., 13% Sr. Sub. Nts., 8/15/02 (3) 100,000 106,375
---------------
386,839
- -----------------------------------------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 2.4%
American Skiing Corp., 12% Sr. Sub. Nts., Series B, 7/15/06 (3) 125,000 139,375
- -----------------------------------------------------------------------------------------------------------------------------------
Bally Total Fitness Holdings Corp., 9.875% Sr. Sub. Nts., 10/15/07 (2) 125,000 123,125
- -----------------------------------------------------------------------------------------------------------------------------------
Blockbuster Entertainment Corp., 6.625% Sr. Nts., 2/15/98 110,000 110,147
- -----------------------------------------------------------------------------------------------------------------------------------
Casino America, Inc., 12.50% Sr. Nts., 8/1/03 125,000 133,750
- -----------------------------------------------------------------------------------------------------------------------------------
Casino Magic of Louisiana Corp., 13% First Mtg. Nts., 8/15/03 250,000 238,750
- -----------------------------------------------------------------------------------------------------------------------------------
GB Property Funding Corp., 10.875% First Mtg. Nts., 1/15/04 100,000 87,500
- -----------------------------------------------------------------------------------------------------------------------------------
Hilton Hotels Corp., 7.375% Nts., 6/1/02 50,000 51,327
- -----------------------------------------------------------------------------------------------------------------------------------
HMH Properties, Inc., 8.875% Sr. Nts., 7/15/07 (2) 125,000 128,125
- -----------------------------------------------------------------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 (2) 125,000 128,125
- -----------------------------------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority (Connecticut), 13.50% Sr. Sec. Nts.,
Series B, 11/15/02 50,000 64,250
- -----------------------------------------------------------------------------------------------------------------------------------
Players International, Inc., 10.875% Sr. Nts., 4/15/05 125,000 134,062
- -----------------------------------------------------------------------------------------------------------------------------------
Prime Hospitality Corp., 9.25% First Mtg. Bonds, 1/15/06 125,000 130,625
- -----------------------------------------------------------------------------------------------------------------------------------
Rio Hotel & Casino, Inc., 10.625% Sr. Sub. Nts., 7/15/05 100,000 108,500
- -----------------------------------------------------------------------------------------------------------------------------------
Santa Fe Hotel, Inc., 11% Gtd. First Mtg. Nts., 12/15/00 91,000 77,805
---------------
1,655,466
- -----------------------------------------------------------------------------------------------------------------------------------
MEDIA - 2.5%
Adelphia Communications Corp., 10.50% Sr. Nts., 7/15/04 (2) 125,000 130,625
- -----------------------------------------------------------------------------------------------------------------------------------
Allbritton Communications Co., 9.75% Sr. Sub. Debs., Series B,
11/30/07 100,000 100,500
- -----------------------------------------------------------------------------------------------------------------------------------
Australis Media Ltd., 1.75%/15.75% Gtd. Sr. Sec. Disc. Nts., 5/15/03 (6) 151,328 110,469
- -----------------------------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp., 9.875% Sr. Sub. Debs., 2/15/13 75,000 80,062
- -----------------------------------------------------------------------------------------------------------------------------------
Comcast Corp., 9.375% Sr. Sub. Debs., 5/15/05 100,000 107,000
- -----------------------------------------------------------------------------------------------------------------------------------
EchoStar Satellite Broadcasting Corp., 0%/13.125% Sr. Sec. Disc. Nts., 3/15/04 (5) 100,000 79,500
- -----------------------------------------------------------------------------------------------------------------------------------
Fox Kids Worldwide, Inc., 0%/10.25% Sr. Disc. Nts., 11/1/07 (2)(5) 125,000 72,187
- -----------------------------------------------------------------------------------------------------------------------------------
Fox/Liberty Networks LLC, 8.875% Sr. Nts., 8/15/07 (2) 50,000 50,000
- -----------------------------------------------------------------------------------------------------------------------------------
James Cable Partners LP, 10.75% Sr. Nts., 8/15/04 (2) 125,000 130,937
- -----------------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co., 8.625% Sr. Sub. Nts., 9/15/07 (2) 125,000 126,250
- -----------------------------------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., 8.875% Sr. Nts., 7/15/07 125,000 124,062
- -----------------------------------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., 10% Sr. Sub. Nts., 9/30/05 100,000 105,250
- -----------------------------------------------------------------------------------------------------------------------------------
TCI Satellite Entertainment, Inc., 10.875% Sr. Sub. Nts., 2/15/07 (2) 75,000 77,625
- -----------------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc., 7.45% Nts., 2/1/98 110,000 110,369
- -----------------------------------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 125,000 138,356
</TABLE>
25 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MEDIA (CONTINUED)
United International Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts.:
Series B, 14%, 11/15/99 (7) $ 100,000 $ 82,500
12.376%, 11/15/99 (7) 50,000 41,250
---------------
1,666,942
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL: GENERAL - 0.7%
Costco Cos., Inc., 7.125% Sr. Nts., 6/15/05 90,000 91,597
- -----------------------------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc., 10% Sr. Nts., 2/15/01 40,000 44,217
- -----------------------------------------------------------------------------------------------------------------------------------
Parisian, Inc., 9.875% Sr. Sub. Nts., 7/15/03 (3) 100,000 105,000
- -----------------------------------------------------------------------------------------------------------------------------------
Sears Roebuck & Co., 8.39% Medium-Term Nts., 3/23/99 220,000 227,044
---------------
467,858
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 0.1%
K Mart Corp., 7.75% Debs., 10/1/12 100,000 94,500
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 2.3%
- -----------------------------------------------------------------------------------------------------------------------------------
FOOD - 0.9%
AmeriServe Food Distribution, Inc., 8.875% Sr. Nts., 10/15/06 (2) 125,000 125,313
- -----------------------------------------------------------------------------------------------------------------------------------
Dairy Mart Convenience Stores, Inc., 10.25% Sr. Sub. Nts., 3/15/04 100,000 98,500
- -----------------------------------------------------------------------------------------------------------------------------------
Dole Food Distributing, Inc., 6.75% Nts., 7/15/00 120,000 121,531
- -----------------------------------------------------------------------------------------------------------------------------------
Great Atlantic & Pacific Tea Co., 9.125% Debs., 1/15/98 115,000 115,666
- -----------------------------------------------------------------------------------------------------------------------------------
Jitney-Jungle Stores of America, Inc., 12% Gtd. Sr. Nts., 3/1/06 150,000 168,750
---------------
629,760
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/DRUGS - 0.2%
Integrated Health Services, Inc., 9.50% Sr. Sub. Nts., 9/15/07 (2) 100,000 103,750
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 0.8%
Columbia/HCA Healthcare Corp., 6.875% Nts., 7/15/01 120,000 120,121
- -----------------------------------------------------------------------------------------------------------------------------------
Dade International, Inc., 11.125% Sr. Sub. Nts., 5/1/06 125,000 139,688
- -----------------------------------------------------------------------------------------------------------------------------------
Mariner Health Group, Inc., 9.50% Sr. Sub. Nts., Series B, 4/1/06 (3) 125,000 130,000
- -----------------------------------------------------------------------------------------------------------------------------------
Paracelsus Healthcare Corp., 10% Sr. Sub. Unsec. Nts., 8/15/06 100,000 104,500
- -----------------------------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp., 8% Sr. Nts., 1/15/05 75,000 75,844
---------------
570,153
- -----------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD GOODS - 0.4%
Dyersburg Corp., 9.75% Sr. Sub. Nts., 9/1/07 (2) 100,000 102,500
- -----------------------------------------------------------------------------------------------------------------------------------
Kimberly-Clark Corp., 7.875% Debs., 2/1/23 65,000 70,064
- -----------------------------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 9.375% Sr. Nts., 4/1/01 100,000 103,750
---------------
276,314
- -----------------------------------------------------------------------------------------------------------------------------------
ENERGY - 1.5%
- -----------------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 0.9%
Coastal Corp.:
8.125% Sr. Nts., 9/15/02 65,000 69,663
8.75% Sr. Nts., 5/15/99 35,000 36,339
- -----------------------------------------------------------------------------------------------------------------------------------
Falcon Drilling Co., Inc., 9.75% Sr. Nts., Series B, 1/15/01 55,000 57,475
- -----------------------------------------------------------------------------------------------------------------------------------
Forcenergy, Inc., 8.50% Sr. Sub. Nts., 2/15/07 125,000 125,000
- -----------------------------------------------------------------------------------------------------------------------------------
Louisiana Land & Exploration Co., 7.65% Debs., 12/1/23 75,000 80,169
- -----------------------------------------------------------------------------------------------------------------------------------
Mesa Operating Co., 0%/11.625% Gtd. Sr. Sub. Disc. Nts., 7/1/06 (5) 150,000 120,750
- -----------------------------------------------------------------------------------------------------------------------------------
Transamerican Energy Corp., 11.50% Sr. Nts., 6/15/02 (2) 75,000 77,250
- -----------------------------------------------------------------------------------------------------------------------------------
Williams Holdings of Delaware, Inc., 6.25% Sr. Unsec. Debs., 2/1/06 75,000 73,336
---------------
639,982
</TABLE>
26 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OIL-INTEGRATED - 0.6%
Gulf Canada Resources Ltd.:
8.25% Sr. Nts., 3/15/17 $ 75,000 $ 81,332
9% Debs., 8/15/99 75,000 78,561
- -----------------------------------------------------------------------------------------------------------------------------------
HS Resources, Inc., 9.25% Sr. Sub. Nts., 11/15/06 125,000 128,750
- -----------------------------------------------------------------------------------------------------------------------------------
Petroleum Geo-Services ASA, 7.50% Nts., 3/31/07 75,000 78,915
- -----------------------------------------------------------------------------------------------------------------------------------
Standard Oil/British Petroleum Co. plc, 9% Debs., 6/1/19 65,000 67,824
---------------
435,382
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL - 3.7%
- -----------------------------------------------------------------------------------------------------------------------------------
BANKS - 0.8%
Chase Manhattan Corp. (New), 6.625% Sr. Nts., 1/15/98 35,000 35,059
- -----------------------------------------------------------------------------------------------------------------------------------
Citicorp, 5.625% Sr. Nts., 2/15/01 65,000 64,245
- -----------------------------------------------------------------------------------------------------------------------------------
First Fidelity Bancorp, 8.50% Sub. Capital Nts., 4/1/98 35,000 35,331
- -----------------------------------------------------------------------------------------------------------------------------------
First Union Corp., 6.75% Sr. Nts., 1/15/98 35,000 35,067
- -----------------------------------------------------------------------------------------------------------------------------------
Fleet Mtg./Norstar Group, Inc., 9.90% Sub. Nts., 6/15/01 110,000 122,706
- -----------------------------------------------------------------------------------------------------------------------------------
Integra Financial Corp., 6.50% Sub. Nts., 4/15/00 110,000 111,090
- -----------------------------------------------------------------------------------------------------------------------------------
Mellon Financial Bank Corp., 6.50% Gtd. Sr. Nts., 12/1/97 145,000 145,076
---------------
548,574
- -----------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 2.2%
American General Finance Corp., 8.50% Sr. Nts., 8/15/98 45,000 45,910
- -----------------------------------------------------------------------------------------------------------------------------------
American General Institutional Capital, 8.125% Bonds, Series B,
3/15/46 (2) 75,000 80,645
- -----------------------------------------------------------------------------------------------------------------------------------
Beneficial Corp., 9.125% Debs., 2/15/98 110,000 110,987
- -----------------------------------------------------------------------------------------------------------------------------------
Capital One Financial Corp., 6.83% Sr. Nts., 5/17/99 50,000 50,491
- -----------------------------------------------------------------------------------------------------------------------------------
Capital One Funding Corp., 7.25% Nts., 12/1/03 40,000 40,281
- -----------------------------------------------------------------------------------------------------------------------------------
Chelsea GCA Realty Partner, Inc., 7.75% Gtd. Unsec. Unsub.
Nts., 1/26/01 50,000 51,347
- -----------------------------------------------------------------------------------------------------------------------------------
Commercial Credit Co., 5.55% Unsec. Nts., 2/15/01 110,000 107,999
- -----------------------------------------------------------------------------------------------------------------------------------
Countrywide Home Loans, Inc.:
6.05% Gtd. Medium-Term Nts., Series D, 3/1/01 65,000 64,632
6.085% Gtd. Medium-Term Nts., Series B, 7/14/99 45,000 45,009
- -----------------------------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 6.25% Unsub. Nts., 2/26/98 110,000 110,468
- -----------------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp.:
5.625% Nts., 2/15/01 125,000 123,073
5.65% Medium-Term Nts., 12/15/97 200,000 199,975
- -----------------------------------------------------------------------------------------------------------------------------------
Golden West Financial Corp., 8.625% Sub. Nts., 8/30/98 35,000 35,771
- -----------------------------------------------------------------------------------------------------------------------------------
MCII Holdings (USA), Inc., 0%/15% Sec. Nts., 11/15/02 (5) 125,000 104,219
- -----------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 6.50% Nts., 4/1/01 100,000 101,186
- -----------------------------------------------------------------------------------------------------------------------------------
Olympic Financial Ltd., Units (each unit consists of $1,000 principal
amount of 11.50% sr. nts., 3/15/07 and one warrant to purchase 6.84 shares
of common stock) (8) 125,000 128,750
- -----------------------------------------------------------------------------------------------------------------------------------
Salomon, Inc., 8.69% Sr. Medium-Term Nts., Series D, 3/1/99 125,000 129,235
---------------
1,529,978
- -----------------------------------------------------------------------------------------------------------------------------------
INSURANCE - 0.7%
Cigna Corp., 7.90% Nts., 12/14/98 120,000 122,303
- -----------------------------------------------------------------------------------------------------------------------------------
Conseco Financing Trust III, 8.796% Bonds, 4/1/27 100,000 109,067
- -----------------------------------------------------------------------------------------------------------------------------------
SunAmerica, Inc., 9% Sr. Nts., 1/15/99 125,000 128,884
</TABLE>
27 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INSURANCE (CONTINUED)
Travelers Property Casualty Corp., 6.75% Nts., 4/15/01 $ 110,000 $ 111,873
---------------
472,127
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 2.7%
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL MATERIALS - 0.2%
American Standard, Inc., 10.875% Sr. Nts., 5/15/99 (3) 100,000 106,250
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 0.9%
Beverly Enterprises, Inc., 9% Gtd. Sr. Nts., 2/15/06 100,000 103,500
- -----------------------------------------------------------------------------------------------------------------------------------
Employee Solutions, Inc., 10% Sr. Nts., 10/15/04 (3) 125,000 123,125
- -----------------------------------------------------------------------------------------------------------------------------------
Shop Vac Corp., 10.625% Sr. Nts., 9/1/03 125,000 135,938
- -----------------------------------------------------------------------------------------------------------------------------------
Sun Co., Inc., 7.95% Debs., 12/15/01 125,000 132,264
- -----------------------------------------------------------------------------------------------------------------------------------
USI American Holdings, Inc., 7.25% Gtd. Sr. Nts., 12/1/06 80,000 78,526
---------------
573,353
- -----------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 1.0%
Day International Group, Inc., 11.125% Sr. Sub. Nts., Series B, 6/1/05 (3) 100,000 107,500
- -----------------------------------------------------------------------------------------------------------------------------------
Interlake Corp., 12.125% Sr. Sub. Debs., 3/1/02 100,000 104,250
- -----------------------------------------------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., 6/1/05 100,000 109,750
- -----------------------------------------------------------------------------------------------------------------------------------
Jordan Industries, Inc., 10.375% Sr. Nts., 8/1/07 125,000 126,250
- -----------------------------------------------------------------------------------------------------------------------------------
Mark IV Industries, Inc., 8.75% Sub. Nts., 4/1/03 (3) 30,000 31,425
- -----------------------------------------------------------------------------------------------------------------------------------
Specialty Equipment Co., 11.375% Sr. Sub. Nts., 12/1/03 100,000 108,750
- -----------------------------------------------------------------------------------------------------------------------------------
Titan Wheel International, Inc., 8.75% Sr. Sub. Nts., 4/1/07 100,000 104,000
---------------
691,925
- -----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 0.6%
CSX Corp., 7.05% Debs., 5/1/02 70,000 71,641
- -----------------------------------------------------------------------------------------------------------------------------------
Federal Express Corp., 6.25% Nts., 4/15/98 165,000 165,204
- -----------------------------------------------------------------------------------------------------------------------------------
Norfolk Southern Corp., 7.35% Nts., 5/15/07 75,000 78,755
- -----------------------------------------------------------------------------------------------------------------------------------
Union Pacific Corp., 7% Nts., 6/15/00 105,000 106,962
---------------
422,562
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 3.6%
- -----------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 0.2%
GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98 100,000 102,000
- -----------------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE - 0.2%
Digital Equipment Corp., 7% Nts., 11/15/97 159,000 159,051
- -----------------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 0.5%
DecisionOne Corp., 9.75% Sr. Sub. Nts., 8/1/07 75,000 77,625
- -----------------------------------------------------------------------------------------------------------------------------------
DII Group, Inc., 8.50% Sr. Sub. Nts., 9/15/07 (2) 125,000 123,906
- -----------------------------------------------------------------------------------------------------------------------------------
Unisys Corp., 12% Sr. Nts., Series B, 4/15/03 100,000 112,500
---------------
314,031
- -----------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY - 2.7%
American Communications Services, Inc., 0%/13% Sr. Disc.
Nts., 11/1/05 (5) 125,000 88,125
- -----------------------------------------------------------------------------------------------------------------------------------
Brooks Fiber Properties, Inc., 0%/11.875% Sr. Disc. Nts., 11/1/06 (5) 125,000 98,594
- -----------------------------------------------------------------------------------------------------------------------------------
Centennial Cellular Corp., 10.125% Sr. Nts., 5/15/05 75,000 79,875
- -----------------------------------------------------------------------------------------------------------------------------------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc. Debs., 11/15/07 (5) 125,000 96,875
- -----------------------------------------------------------------------------------------------------------------------------------
Diamond Cable Communications plc, 0%/10.75% Sr. Disc. Nts., 2/15/07 (5) 125,000 80,625
- -----------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 0%/11.25% Sr. Disc. Nts., 7/15/07 (5) 125,000 83,125
- -----------------------------------------------------------------------------------------------------------------------------------
International CableTel, Inc., 0%/11.50% Sr. Deferred Coupon Nts., Series
B, 2/1/06 (5) 250,000 183,750
</TABLE>
28 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS-TECHNOLOGY (CONTINUED)
IXC Communications, Inc., 12.50% Sr. Nts., Series B, 10/1/05 $ 125,000 $ 142,500
- -----------------------------------------------------------------------------------------------------------------------------------
McCaw International Ltd., 0%/13% Sr. Disc. Nts., 4/15/07 (5) 100,000 61,500
- -----------------------------------------------------------------------------------------------------------------------------------
McLeodUSA, Inc., 0%/10.50% Sr. Disc. Nts., 3/1/07 (5) 100,000 69,500
- -----------------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc., 0%/14% Sr. Disc. Nts., Series B,
6/1/06 (5) 125,000 83,750
- -----------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 0%/9.75% Sr. Disc. Nts., 8/15/04 (5) 200,000 169,500
- -----------------------------------------------------------------------------------------------------------------------------------
Price Communications Cellular Holdings, Inc., 0%/13.50% Sr. Disc. Nts.,
8/1/07 (3)(5) 150,000 85,500
- -----------------------------------------------------------------------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum Finance Corp., 11% Sr. Nts.,
8/15/06 100,000 110,750
- -----------------------------------------------------------------------------------------------------------------------------------
Teleport Communications Group, Inc.:
0%/11.125% Sr. Disc. Nts., 7/1/07 (5) 50,000 39,438
9.875% Sr. Nts., 7/1/06 50,000 54,875
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. West Capital Funding, Inc., 6.85% Gtd. Nts., 1/15/02 175,000 177,865
- -----------------------------------------------------------------------------------------------------------------------------------
Western Wireless Corp., 10.50% Sr. Sub. Nts., 2/1/07 100,000 107,750
---------------
1,813,897
- -----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 1.0%
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 0.4%
Consumers Energy Co., 8.75% First Mtg. Nts., 2/15/98 110,000 110,719
- -----------------------------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 7.25% First Mtg. Nts., Series A, 2/1/99 (3) 50,000 50,500
- -----------------------------------------------------------------------------------------------------------------------------------
Panda Global Energy Co., 12.50% Sr. Nts., 4/15/04 (3) 125,000 120,625
---------------
281,844
- -----------------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES - 0.5%
AES Corp., 8.50% Sr. Sub. Nts., 11/1/07 (2) 50,000 49,375
- -----------------------------------------------------------------------------------------------------------------------------------
Northern Illinois Gas Co., 6.45% First Mtg. Bonds, 8/1/01 180,000 182,249
- -----------------------------------------------------------------------------------------------------------------------------------
Tennessee Gas Pipeline Co., 7.50% Bonds, 4/1/17 75,000 78,922
---------------
310,546
- -----------------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES - 0.1%
GTE Corp., 8.85% Debs., 3/1/98 45,000 45,396
---------------
Total Non-Convertible Corporate Bonds and Notes (Cost $15,857,137) 16,331,268
- -----------------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE CORPORATE BONDS AND NOTES - 0.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Barnett Banks, Inc., 8.50% Sub. Exchangeable Nts., 3/1/99 40,000 41,265
- -----------------------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc., 12% Cv. Sr. Sub. Nts., 2/15/01 (3) 100,000 83,500
---------------
Total Convertible Corporate Bonds and Notes (Cost $133,413) 124,765
- -----------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 5.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Zion First National Bank, 5.68%,
dated 10/31/97, to be repurchased at $3,396,607 on 11/3/97,
collateralized by U.S. Treasury Nts., 7.25%, 8/15/04, with a
value of $3,468,840 (Cost $3,395,000) 3,395,000 3,395,000
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $59,200,693) 98.6% 66,792,544
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.4 914,212
--------------- ---------------
NET ASSETS 100.0% $ 67,706,756
--------------- ---------------
--------------- ---------------
</TABLE>
29 Oppenheimer LifeSpan Funds
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
- --------------------------------------------------------------------------------
1. Non-income producing security.
2. 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 $1,982,816 or 2.93% of the Fund's
net assets as of October 31, 1997.
3. Identifies issues considered to be illiquid or restricted - See Note 5 of
Notes to Financial Statements.
4. 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.
5. Denotes a step bond: a zero coupon bond that converts to a fixed or
variable interest rate at a designated future date.
6. Represents the current interest rate for an increasing rate security.
7. For zero coupon bonds, the interest rate shown is the effective yield on
the date of purchase.
8. Units may be comprised of several components, such as debt and equity
and/or warrants to purchase equity at some point in the future. For units
which represent debt securities, face amount disclosed represents total
underlying principal.
See accompanying Notes to Financial Statements.
30 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS OCTOBER 31, 1997
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS - 72.8%
- ------------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 3.5%
- ------------------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 1.3%
Ciba Specialty Chemicals AG (1) 1,200 $ 118,162
- ------------------------------------------------------------------------------------------------------------------------------------
Dexter Corp. 5,500 215,875
- ------------------------------------------------------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co. 2,300 130,812
- ------------------------------------------------------------------------------------------------------------------------------------
Ethyl Corp. 18,000 155,250
- ------------------------------------------------------------------------------------------------------------------------------------
Fuji Photo Film Co. 2,000 72,504
- ------------------------------------------------------------------------------------------------------------------------------------
IMC Global, Inc. 3,149 106,082
------------
798,685
- ------------------------------------------------------------------------------------------------------------------------------------
METALS - 1.1%
Allegheny Teledyne, Inc. 4,100 107,881
- ------------------------------------------------------------------------------------------------------------------------------------
Carpenter Technology Corp. 4,100 198,337
- ------------------------------------------------------------------------------------------------------------------------------------
Oregon Steel Mills, Inc. 8,800 185,350
- ------------------------------------------------------------------------------------------------------------------------------------
UNR Industries, Inc. 27,300 139,912
------------
631,480
- ------------------------------------------------------------------------------------------------------------------------------------
PAPER - 1.1%
Fletcher Challenge Forest 85,000 82,180
- ------------------------------------------------------------------------------------------------------------------------------------
Fort James Corp. 5,225 207,367
- ------------------------------------------------------------------------------------------------------------------------------------
International Paper Co. 3,100 139,500
- ------------------------------------------------------------------------------------------------------------------------------------
Kimberly-Clark de Mexico, SA 17,000 73,931
- ------------------------------------------------------------------------------------------------------------------------------------
Unisource Worldwide, Inc. 9,300 151,706
------------
654,684
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 9.0%
- ------------------------------------------------------------------------------------------------------------------------------------
AUTOS & HOUSING - 1.5%
Bridgestone Corp. 4,000 86,472
- ------------------------------------------------------------------------------------------------------------------------------------
Cornerstone Properties, Inc. 11,400 210,187
- ------------------------------------------------------------------------------------------------------------------------------------
Goodyear Tire & Rubber Co. 3,000 187,875
- ------------------------------------------------------------------------------------------------------------------------------------
Groupe SEB SA 900 102,630
- ------------------------------------------------------------------------------------------------------------------------------------
Lear Corp. (1) 1,500 72,094
- ------------------------------------------------------------------------------------------------------------------------------------
Rinnai Corp. 5,000 81,483
- ------------------------------------------------------------------------------------------------------------------------------------
Tower Realty Trust, Inc. (1) 6,800 171,700
------------
912,441
- ------------------------------------------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 2.2%
Alaska Air Group, Inc. (1) 2,300 76,762
- ------------------------------------------------------------------------------------------------------------------------------------
America West Holdings Corp., Cl. B (1) 4,500 66,656
- ------------------------------------------------------------------------------------------------------------------------------------
AMR Corp. (1) 1,900 221,231
- ------------------------------------------------------------------------------------------------------------------------------------
CDL Hotels International Ltd. 330,000 94,993
- ------------------------------------------------------------------------------------------------------------------------------------
Granada Group plc 10,000 137,841
- ------------------------------------------------------------------------------------------------------------------------------------
Landry's Seafood Restaurants, Inc. (1) 2,800 78,400
- ------------------------------------------------------------------------------------------------------------------------------------
Piccadilly Cafeterias, Inc. 8,700 129,412
- ------------------------------------------------------------------------------------------------------------------------------------
Regal Cinemas, Inc. (1) 6,775 155,825
- ------------------------------------------------------------------------------------------------------------------------------------
UAL Corp. (1) 1,000 87,625
- ------------------------------------------------------------------------------------------------------------------------------------
Vistana, Inc. (1) 11,600 265,350
------------
1,314,095
- ------------------------------------------------------------------------------------------------------------------------------------
MEDIA - 1.1%
Applied Graphics Technologies, Inc. (1) 4,800 256,800
</TABLE>
31 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MEDIA (CONTINUED)
Benpres Holdings Corp., Sponsored GDR (1) 5,000 $ 23,125
- ------------------------------------------------------------------------------------------------------------------------------------
Reed International plc 10,000 98,853
- ------------------------------------------------------------------------------------------------------------------------------------
Reuters Holdings plc 9,000 97,571
- ------------------------------------------------------------------------------------------------------------------------------------
Television Broadcasts Ltd. 28,000 77,883
- ------------------------------------------------------------------------------------------------------------------------------------
Wolters Kluwer NV 1,000 122,841
------------
677,073
- ------------------------------------------------------------------------------------------------------------------------------------
RETAIL: GENERAL - 2.0%
adidas AG 1,000 145,833
- ------------------------------------------------------------------------------------------------------------------------------------
Dayton Hudson Corp. 1,600 100,500
- ------------------------------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc. (1) 1,600 70,400
- ------------------------------------------------------------------------------------------------------------------------------------
Marks & Spencer plc 15,000 152,179
- ------------------------------------------------------------------------------------------------------------------------------------
North Face, Inc. (The) (1) 5,900 139,387
- ------------------------------------------------------------------------------------------------------------------------------------
Penney (J.C.) Co., Inc. 6,400 375,600
- ------------------------------------------------------------------------------------------------------------------------------------
Wolverine World Wide, Inc. 9,100 200,200
------------
1,184,099
- ------------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 2.2%
Argos plc 11,400 120,722
- ------------------------------------------------------------------------------------------------------------------------------------
Brown Group, Inc. 9,300 140,662
- ------------------------------------------------------------------------------------------------------------------------------------
Brylane, Inc. (1) 500 21,719
- ------------------------------------------------------------------------------------------------------------------------------------
Dickson Concepts International Ltd. 42,000 90,472
- ------------------------------------------------------------------------------------------------------------------------------------
Eagle Hardware & Garden, Inc. (1) 8,100 137,700
- ------------------------------------------------------------------------------------------------------------------------------------
Guitar Center, Inc. (1) 5,000 108,750
- ------------------------------------------------------------------------------------------------------------------------------------
Hennes & Mauritz AB, B Shares 2,550 104,430
- ------------------------------------------------------------------------------------------------------------------------------------
Koninklijke Ahold NV 3,600 92,192
- ------------------------------------------------------------------------------------------------------------------------------------
New England Business Service, Inc. 6,600 192,225
- ------------------------------------------------------------------------------------------------------------------------------------
Payless ShoeSource, Inc. (1) 1,500 83,625
- ------------------------------------------------------------------------------------------------------------------------------------
Shimamura Co. Ltd. 2,000 54,045
- ------------------------------------------------------------------------------------------------------------------------------------
Stage Stores, Inc. (1) 4,900 178,850
------------
1,325,392
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 9.8%
- ------------------------------------------------------------------------------------------------------------------------------------
BEVERAGES - 0.5%
Embotelladora Andina SA, Series A, Sponsored ADR 3,400 81,600
- ------------------------------------------------------------------------------------------------------------------------------------
Embotelladora Andina SA, Series B, Sponsored ADR 3,400 69,700
- ------------------------------------------------------------------------------------------------------------------------------------
Quilmes Industrial Quinsa SA, Sponsored ADR 4,000 49,500
- ------------------------------------------------------------------------------------------------------------------------------------
Scottish & Newcastle plc 7,000 78,588
------------
279,388
- ------------------------------------------------------------------------------------------------------------------------------------
FOOD - 2.0%
American Stores Co. 5,700 146,419
- ------------------------------------------------------------------------------------------------------------------------------------
Carrefour Supermarche SA 225 117,192
- ------------------------------------------------------------------------------------------------------------------------------------
Colruyt SA 250 134,126
- ------------------------------------------------------------------------------------------------------------------------------------
Jeronimo Martins & Filho, SA 1,600 104,249
- ------------------------------------------------------------------------------------------------------------------------------------
JP Foodservice, Inc. (1) 4,600 146,912
- ------------------------------------------------------------------------------------------------------------------------------------
Kroger Co. (1) 5,200 169,650
- ------------------------------------------------------------------------------------------------------------------------------------
Morningstar Group, Inc. (1) 4,000 171,000
- ------------------------------------------------------------------------------------------------------------------------------------
Safeway, Inc. (1) 2,200 127,875
- ------------------------------------------------------------------------------------------------------------------------------------
William Morrison Supermarkets plc 31,000 102,408
------------
1,219,831
</TABLE>
32 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
HEALTHCARE/DRUGS - 3.0%
Dura Pharmaceuticals, Inc. (1) 4,100 $ 198,337
- ------------------------------------------------------------------------------------------------------------------------------------
Gedeon Richter (2) 1,000 92,066
- ------------------------------------------------------------------------------------------------------------------------------------
Glaxo Wellcome plc, Sponsored ADR 4,800 205,500
- ------------------------------------------------------------------------------------------------------------------------------------
Incyte Pharmaceuticals, Inc. (1) 1,400 112,700
- ------------------------------------------------------------------------------------------------------------------------------------
Medicis Pharmaceutical Corp., Cl. A (1) 5,000 240,625
- ------------------------------------------------------------------------------------------------------------------------------------
Novartis AG 105 164,901
- ------------------------------------------------------------------------------------------------------------------------------------
Novo-Nordisk AS, B Shares 1,200 130,059
- ------------------------------------------------------------------------------------------------------------------------------------
Roche Holding AG 15 132,180
- ------------------------------------------------------------------------------------------------------------------------------------
Schering AG 1,075 105,554
- ------------------------------------------------------------------------------------------------------------------------------------
SKW Trostberg AG 3,750 129,637
- ------------------------------------------------------------------------------------------------------------------------------------
Takeda Chemical Industries Ltd. 5,000 136,360
- ------------------------------------------------------------------------------------------------------------------------------------
Zeneca Group plc 4,250 134,056
------------
1,781,975
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 3.4%
Acuson Corp. (1) 6,700 125,625
- ------------------------------------------------------------------------------------------------------------------------------------
Alternative Living Services, Inc. (1) 4,500 110,250
- ------------------------------------------------------------------------------------------------------------------------------------
Concentra Managed Care, Inc. (1) 1,200 39,150
- ------------------------------------------------------------------------------------------------------------------------------------
FPA Medical Management, Inc. (1) 5,600 135,100
- ------------------------------------------------------------------------------------------------------------------------------------
Healthcare Financial Partners, Inc. (1) 800 27,600
- ------------------------------------------------------------------------------------------------------------------------------------
Luxottica Group SpA, Sponsored ADR 2,000 127,750
- ------------------------------------------------------------------------------------------------------------------------------------
National Surgery Centers, Inc. (1) 10,000 250,000
- ------------------------------------------------------------------------------------------------------------------------------------
Pediatrix Medical Group, Inc. (1) 5,500 232,375
- ------------------------------------------------------------------------------------------------------------------------------------
Renal Treatment Centers, Inc. (1) 3,900 129,431
- ------------------------------------------------------------------------------------------------------------------------------------
Rural/Metro Corp. (1) 7,100 246,725
- ------------------------------------------------------------------------------------------------------------------------------------
SmithKline Beecham plc 17,724 167,926
- ------------------------------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp. (1) 5,210 159,231
- ------------------------------------------------------------------------------------------------------------------------------------
Total Renal Care Holdings, Inc. (1) 7,166 220,802
- ------------------------------------------------------------------------------------------------------------------------------------
WellPoint Health Networks, Inc. (1) 2,000 91,500
------------
2,063,465
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD GOODS - 0.9%
Blyth Industries, Inc. (1) 4,700 116,912
- ------------------------------------------------------------------------------------------------------------------------------------
L'OREAL 375 132,635
- ------------------------------------------------------------------------------------------------------------------------------------
Premark International, Inc. 5,800 156,962
- ------------------------------------------------------------------------------------------------------------------------------------
Reckitt & Colman plc 10,000 153,353
------------
559,862
- ------------------------------------------------------------------------------------------------------------------------------------
ENERGY - 6.5%
- ------------------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 1.7%
Diamond Offshore Drilling, Inc. 4,400 273,900
- ------------------------------------------------------------------------------------------------------------------------------------
Global Marine, Inc. (1) 4,800 149,400
- ------------------------------------------------------------------------------------------------------------------------------------
Oryx Energy Co. (1) 4,400 121,275
- ------------------------------------------------------------------------------------------------------------------------------------
Pool Energy Services Co. (1) 3,100 105,206
- ------------------------------------------------------------------------------------------------------------------------------------
Tidewater, Inc. 3,200 210,200
- ------------------------------------------------------------------------------------------------------------------------------------
Varco International, Inc. (1) 2,600 158,437
------------
1,018,418
- ------------------------------------------------------------------------------------------------------------------------------------
OIL-INTEGRATED - 4.8%
Amoco Corp. 3,600 330,075
- ------------------------------------------------------------------------------------------------------------------------------------
Atlantic Richfield Co. 3,400 279,862
</TABLE>
33 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OIL-INTEGRATED (CONTINUED)
Chevron Corp. 6,300 $ 522,506
- ------------------------------------------------------------------------------------------------------------------------------------
Cliffs Drilling Co. (1) 1,300 94,494
- ------------------------------------------------------------------------------------------------------------------------------------
Exxon Corp. 6,000 368,625
- ------------------------------------------------------------------------------------------------------------------------------------
Mobil Corp. 5,200 378,625
- ------------------------------------------------------------------------------------------------------------------------------------
Occidental Petroleum Corp. 10,800 301,050
- ------------------------------------------------------------------------------------------------------------------------------------
Patterson Energy, Inc. (1) 2,800 156,800
- ------------------------------------------------------------------------------------------------------------------------------------
Quinenco SA, ADR (1) 3,000 43,875
- ------------------------------------------------------------------------------------------------------------------------------------
Shell Transport & Trading Co. plc 16,000 113,359
- ------------------------------------------------------------------------------------------------------------------------------------
Total SA, B Shares 1,641 181,734
- ------------------------------------------------------------------------------------------------------------------------------------
UTI Energy Corp. (1) 2,500 111,562
------------
2,882,567
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL - 11.6%
- ------------------------------------------------------------------------------------------------------------------------------------
BANKS - 4.8%
Banco Popular Espanol SA 1,720 101,267
- ------------------------------------------------------------------------------------------------------------------------------------
Bank of Tokyo-Mitsubishi Ltd. 6,000 78,324
- ------------------------------------------------------------------------------------------------------------------------------------
BankAmerica Corp. 5,400 386,100
- ------------------------------------------------------------------------------------------------------------------------------------
BankBoston Corp. 5,400 437,737
- ------------------------------------------------------------------------------------------------------------------------------------
Bayerische Vereinsbank AG 2,000 116,085
- ------------------------------------------------------------------------------------------------------------------------------------
Credit Suisse Group 750 105,943
- ------------------------------------------------------------------------------------------------------------------------------------
Credito Italiano (1) 48,000 128,225
- ------------------------------------------------------------------------------------------------------------------------------------
First Union Corp. 8,400 412,125
- ------------------------------------------------------------------------------------------------------------------------------------
Halifax plc (1) 10,000 113,442
- ------------------------------------------------------------------------------------------------------------------------------------
Lloyds TSB Group plc 19,000 237,365
- ------------------------------------------------------------------------------------------------------------------------------------
Mitsubishi Trust & Banking Corp. 8,000 98,445
- ------------------------------------------------------------------------------------------------------------------------------------
NationsBank Corp. 4,700 281,412
- ------------------------------------------------------------------------------------------------------------------------------------
Wells Fargo & Co. 1,300 378,787
------------
2,875,257
- ------------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 4.6%
Amresco, Inc. (1) 8,400 263,550
- ------------------------------------------------------------------------------------------------------------------------------------
Camden Property Trust 6,100 183,000
- ------------------------------------------------------------------------------------------------------------------------------------
Capstone Capital Corp. 7,500 177,187
- ------------------------------------------------------------------------------------------------------------------------------------
Cattles plc 13,000 81,531
- ------------------------------------------------------------------------------------------------------------------------------------
Crescent Real Estate Equities, Inc. 10,100 363,600
- ------------------------------------------------------------------------------------------------------------------------------------
Haw Par Brothers International Ltd. 46,000 74,570
- ------------------------------------------------------------------------------------------------------------------------------------
Health & Retirement Properties Trust 8,200 153,750
- ------------------------------------------------------------------------------------------------------------------------------------
ING Groep NV 2,752 115,569
- ------------------------------------------------------------------------------------------------------------------------------------
Lend Lease Corp. Ltd. 4,000 81,652
- ------------------------------------------------------------------------------------------------------------------------------------
Meditrust Corp., Paired Stock 4,100 175,275
- ------------------------------------------------------------------------------------------------------------------------------------
Money Store, Inc. (The) 2,000 56,750
- ------------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co. 3,500 171,500
- ------------------------------------------------------------------------------------------------------------------------------------
Nichiei Co. Ltd. 1,000 109,753
- ------------------------------------------------------------------------------------------------------------------------------------
Perlis Plantations Berhad 32,500 59,179
- ------------------------------------------------------------------------------------------------------------------------------------
Salomon, Inc. 1,900 147,606
- ------------------------------------------------------------------------------------------------------------------------------------
Sirrom Capital Corp. 2,800 141,050
- ------------------------------------------------------------------------------------------------------------------------------------
Southcorp Holdings Ltd. 16,000 53,500
- ------------------------------------------------------------------------------------------------------------------------------------
Swire Pacific Ltd., Cl. B 100,000 106,087
</TABLE>
34 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DIVERSIFIED FINANCIAL (CONTINUED)
Travelers Group, Inc. 2,900 $ 203,000
------------
2,718,109
- ------------------------------------------------------------------------------------------------------------------------------------
INSURANCE - 2.2%
AFLAC, Inc. 1,400 71,225
- ------------------------------------------------------------------------------------------------------------------------------------
Allstate Corp. 1,300 107,819
- ------------------------------------------------------------------------------------------------------------------------------------
Chubb Corp. 2,700 178,875
- ------------------------------------------------------------------------------------------------------------------------------------
Conseco, Inc. 5,700 248,662
- ------------------------------------------------------------------------------------------------------------------------------------
Equitable Cos., Inc. 4,900 201,819
- ------------------------------------------------------------------------------------------------------------------------------------
HSB Group, Inc. 3,000 156,562
- ------------------------------------------------------------------------------------------------------------------------------------
Pre-Paid Legal Services, Inc. (1) 1,800 54,450
- ------------------------------------------------------------------------------------------------------------------------------------
Torchmark Corp. 4,200 167,475
- ------------------------------------------------------------------------------------------------------------------------------------
Travelers Property Casualty Corp., Cl. A 3,900 140,888
------------
1,327,775
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 10.2%
- ------------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.7%
ABB AG 70 91,486
- ------------------------------------------------------------------------------------------------------------------------------------
Johnson Electric Holdings Ltd. 42,000 114,652
- ------------------------------------------------------------------------------------------------------------------------------------
Power Technologies, Inc. (1) 3,900 120,413
- ------------------------------------------------------------------------------------------------------------------------------------
Siebe plc 5,000 96,003
------------
422,554
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 4.2%
Adecco SA 300 95,604
- ------------------------------------------------------------------------------------------------------------------------------------
American Disposal Services, Inc. (1) 5,700 200,925
- ------------------------------------------------------------------------------------------------------------------------------------
Caribiner International, Inc. (1) 3,200 143,400
- ------------------------------------------------------------------------------------------------------------------------------------
Central Parking Corp. 1,800 98,325
- ------------------------------------------------------------------------------------------------------------------------------------
Computer Horizons Corp. (1) 7,500 227,813
- ------------------------------------------------------------------------------------------------------------------------------------
Computer Task Group, Inc. 9,000 254,250
- ------------------------------------------------------------------------------------------------------------------------------------
Corestaff, Inc. (1) 6,800 168,300
- ------------------------------------------------------------------------------------------------------------------------------------
Eastern Environmental Services, Inc. (1) 7,300 186,150
- ------------------------------------------------------------------------------------------------------------------------------------
Guilbert SA 625 81,437
- ------------------------------------------------------------------------------------------------------------------------------------
Hays plc 14,000 164,336
- ------------------------------------------------------------------------------------------------------------------------------------
Helix Technology Corp. 2,800 126,000
- ------------------------------------------------------------------------------------------------------------------------------------
Kurita Water Industries Ltd. 6,000 105,762
- ------------------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co. (1) 4,100 138,888
- ------------------------------------------------------------------------------------------------------------------------------------
SpeedFam International, Inc. (1) 1,500 55,688
- ------------------------------------------------------------------------------------------------------------------------------------
Tetra Tech, Inc. (1) 6,425 167,853
- ------------------------------------------------------------------------------------------------------------------------------------
Transaction Systems Architects, Inc., Cl. A (1) 5,400 211,275
- ------------------------------------------------------------------------------------------------------------------------------------
Viad Corp. 5,000 91,250
------------
2,517,256
- ------------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 4.4%
Aeroquip-Vickers, Inc. 2,500 130,156
- ------------------------------------------------------------------------------------------------------------------------------------
AGCO Corp. 3,900 113,100
- ------------------------------------------------------------------------------------------------------------------------------------
Canon Sales Co., Inc. 300 5,463
- ------------------------------------------------------------------------------------------------------------------------------------
Case Corp. 3,900 233,269
- ------------------------------------------------------------------------------------------------------------------------------------
Deere & Co. 4,400 231,550
- ------------------------------------------------------------------------------------------------------------------------------------
Halter Marine Group, Inc. (1) 2,100 109,856
- ------------------------------------------------------------------------------------------------------------------------------------
Ingersoll-Rand Co. 4,200 163,538
</TABLE>
35 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MANUFACTURING (CONTINUED)
Mannesmann AG 350 $ 148,447
- ------------------------------------------------------------------------------------------------------------------------------------
NSK Ltd. 8,000 33,259
- ------------------------------------------------------------------------------------------------------------------------------------
PACCAR, Inc. 10,700 482,169
- ------------------------------------------------------------------------------------------------------------------------------------
Parker-Hannifin Corp. 2,900 121,256
- ------------------------------------------------------------------------------------------------------------------------------------
Ricoh Co. Ltd. 10,000 128,877
- ------------------------------------------------------------------------------------------------------------------------------------
SMC Corp. 500 43,236
- ------------------------------------------------------------------------------------------------------------------------------------
Smiths Industries plc 6,000 86,528
- ------------------------------------------------------------------------------------------------------------------------------------
Societe BIC SA 1,600 109,251
- ------------------------------------------------------------------------------------------------------------------------------------
Textron, Inc. 4,600 265,938
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Industries, Inc. 9,300 249,938
------------
2,655,831
- ------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 0.9%
Brambles Industries Ltd. 4,600 88,161
- ------------------------------------------------------------------------------------------------------------------------------------
Burlington Northern Santa Fe Corp. 1,300 123,500
- ------------------------------------------------------------------------------------------------------------------------------------
GATX Corp. 4,100 264,706
- ------------------------------------------------------------------------------------------------------------------------------------
Gulfmark Offshore, Inc. (1) 500 18,188
- ------------------------------------------------------------------------------------------------------------------------------------
MotivePower Industries, Inc. (1) 2,400 63,900
------------
558,455
- ------------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 15.1%
- ------------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 1.6%
General Dynamics Corp. 4,100 332,869
- ------------------------------------------------------------------------------------------------------------------------------------
Lockheed Martin Corp. 2,700 256,669
- ------------------------------------------------------------------------------------------------------------------------------------
REMEC, Inc. (1) 3,100 78,663
- ------------------------------------------------------------------------------------------------------------------------------------
TRW, Inc. 5,000 286,250
------------
954,451
- ------------------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE - 2.6%
Apex PC Solutions, Inc. (1) 3,400 87,550
- ------------------------------------------------------------------------------------------------------------------------------------
CFM Technologies, Inc. (1) 2,000 36,500
- ------------------------------------------------------------------------------------------------------------------------------------
CHS Electronics, Inc. (1) 1,200 29,325
- ------------------------------------------------------------------------------------------------------------------------------------
Compaq Computer Corp. (1) 3,100 197,625
- ------------------------------------------------------------------------------------------------------------------------------------
Digital Lightwave, Inc. (1) 1,900 34,675
- ------------------------------------------------------------------------------------------------------------------------------------
Insight Enterprises, Inc. (1) 5,400 211,275
- ------------------------------------------------------------------------------------------------------------------------------------
International Business Machines Corp. 1,900 186,319
- ------------------------------------------------------------------------------------------------------------------------------------
Level One Communications, Inc. (1) 1,100 49,500
- ------------------------------------------------------------------------------------------------------------------------------------
Lexmark International Group, Inc., Cl. A (1) 900 27,506
- ------------------------------------------------------------------------------------------------------------------------------------
Network Appliance, Inc. (1) 3,600 180,900
- ------------------------------------------------------------------------------------------------------------------------------------
Quantum Corp. (1) 4,400 139,150
- ------------------------------------------------------------------------------------------------------------------------------------
Semtech Corp. (1) 1,700 79,156
- ------------------------------------------------------------------------------------------------------------------------------------
Storage Technology Corp. (New) (1) 4,800 281,700
------------
1,541,181
- ------------------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 3.6%
BEA Systems, Inc. (1) 8,600 116,100
- ------------------------------------------------------------------------------------------------------------------------------------
Electronic Data Systems Corp. 1,400 54,163
- ------------------------------------------------------------------------------------------------------------------------------------
HNC Software, Inc. (1) 3,000 111,000
- ------------------------------------------------------------------------------------------------------------------------------------
JDA Software Group, Inc. (1) 3,900 121,875
- ------------------------------------------------------------------------------------------------------------------------------------
Pegasystems, Inc. (1) 6,000 109,500
- ------------------------------------------------------------------------------------------------------------------------------------
Remedy Corp. (1) 3,400 159,800
</TABLE>
36 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMPUTER SOFTWARE/SERVICES (CONTINUED)
SAP AG, Preference 700 $ 209,249
- ------------------------------------------------------------------------------------------------------------------------------------
Sapient Corp. (1) 2,800 149,100
- ------------------------------------------------------------------------------------------------------------------------------------
Security Dynamics Technologies, Inc. (1) 4,500 152,438
- ------------------------------------------------------------------------------------------------------------------------------------
Summit Design, Inc. (1) 1,600 23,200
- ------------------------------------------------------------------------------------------------------------------------------------
Sykes Enterprises, Inc. (1) 6,750 167,906
- ------------------------------------------------------------------------------------------------------------------------------------
Technology Solutions Co. (1) 7,250 228,375
- ------------------------------------------------------------------------------------------------------------------------------------
Veritas Software Corp. (1) 3,950 164,419
- ------------------------------------------------------------------------------------------------------------------------------------
Viasoft, Inc. (1) 3,100 127,100
- ------------------------------------------------------------------------------------------------------------------------------------
Visio Corp. (1) 3,600 133,875
- ------------------------------------------------------------------------------------------------------------------------------------
Wind River Systems (1) 3,700 141,988
------------
2,170,088
- ------------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS - 4.1%
ATMI, Inc. (1) 3,800 102,125
- ------------------------------------------------------------------------------------------------------------------------------------
Bowthorpe plc 12,000 79,083
- ------------------------------------------------------------------------------------------------------------------------------------
Electro Scientific Industries, Inc. (1) 2,600 126,100
- ------------------------------------------------------------------------------------------------------------------------------------
Electrocomponents plc 15,000 116,335
- ------------------------------------------------------------------------------------------------------------------------------------
Getronics NV 4,000 132,116
- ------------------------------------------------------------------------------------------------------------------------------------
Hirose Electric Co. 2,000 130,540
- ------------------------------------------------------------------------------------------------------------------------------------
Keyence Corp. 660 98,778
- ------------------------------------------------------------------------------------------------------------------------------------
Matsushita Electric Industrial Co. 5,000 83,978
- ------------------------------------------------------------------------------------------------------------------------------------
National Semiconductor Corp. (1) 3,200 115,200
- ------------------------------------------------------------------------------------------------------------------------------------
Omron Corp. 7,000 118,733
- ------------------------------------------------------------------------------------------------------------------------------------
Philips Electronics NV 2,000 156,643
- ------------------------------------------------------------------------------------------------------------------------------------
Philips Electronics NV, NY Shares 1,600 125,400
- ------------------------------------------------------------------------------------------------------------------------------------
Samsung Electronics Ltd., Sponsored GDR (2) 2,700 27,500
- ------------------------------------------------------------------------------------------------------------------------------------
Samsung Electronics Ltd., Sponsored GDR (1)(2) 44 919
- ------------------------------------------------------------------------------------------------------------------------------------
Sawtek, Inc. (1) 2,500 85,000
- ------------------------------------------------------------------------------------------------------------------------------------
SCI Systems, Inc. (1) 3,000 132,000
- ------------------------------------------------------------------------------------------------------------------------------------
Sony Corp. 2,100 174,432
- ------------------------------------------------------------------------------------------------------------------------------------
TDK Corp. 1,000 82,980
- ------------------------------------------------------------------------------------------------------------------------------------
Vitesse Semiconductor Corp. (1) 4,250 184,344
- ------------------------------------------------------------------------------------------------------------------------------------
VTech Holdings Ltd. 60,000 117,213
- ------------------------------------------------------------------------------------------------------------------------------------
Waters Corp. (1) 6,700 294,800
------------
2,484,219
- ------------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY - 3.2%
Boston Communications Group, Inc. (1) 2,300 33,925
- ------------------------------------------------------------------------------------------------------------------------------------
British Sky Broadcasting Group plc 11,500 81,573
- ------------------------------------------------------------------------------------------------------------------------------------
Comverse Technology, Inc. (1) 5,500 226,875
- ------------------------------------------------------------------------------------------------------------------------------------
DSP Communications, Inc. (1) 10,000 185,000
- ------------------------------------------------------------------------------------------------------------------------------------
Ericsson LM, B Shares 3,720 164,025
- ------------------------------------------------------------------------------------------------------------------------------------
Inter-Tel, Inc. 3,900 97,134
- ------------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., Cl. A (1) 154 4,043
- ------------------------------------------------------------------------------------------------------------------------------------
Nippon Telegraph & Telephone Corp. 17 144,176
- ------------------------------------------------------------------------------------------------------------------------------------
P-COM, Inc. (1) 7,800 156,975
- ------------------------------------------------------------------------------------------------------------------------------------
Pacific Gateway Exchange, Inc. (1) 3,900 149,175
- ------------------------------------------------------------------------------------------------------------------------------------
SK Telecommunications Co. Ltd., ADR 7,300 40,150
- ------------------------------------------------------------------------------------------------------------------------------------
Tekelec (1) 3,800 159,125
</TABLE>
37 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TELECOMMUNICATIONS-TECHNOLOGY (CONTINUED)
Telecom Italia Mobile SpA 35,000 $ 130,048
- ------------------------------------------------------------------------------------------------------------------------------------
Uniphase Corp. (1) 2,400 161,100
- ------------------------------------------------------------------------------------------------------------------------------------
Vodafone Group plc 29,000 159,385
------------
1,892,709
- ------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 7.1%
- ------------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 2.1%
Duke Energy Corp. 4,961 239,368
- ------------------------------------------------------------------------------------------------------------------------------------
FPL Group, Inc. 6,300 325,631
- ------------------------------------------------------------------------------------------------------------------------------------
Illinova Corp. 5,300 117,925
- ------------------------------------------------------------------------------------------------------------------------------------
Kansas City Power & Light Co. 6,700 196,394
- ------------------------------------------------------------------------------------------------------------------------------------
Veba AG 3,000 169,073
- ------------------------------------------------------------------------------------------------------------------------------------
Western Resources, Inc. 5,000 186,250
------------
1,234,641
- ------------------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES - 2.3%
Columbia Gas System, Inc. 5,500 397,375
- ------------------------------------------------------------------------------------------------------------------------------------
El Paso Natural Gas Co. 5,400 323,663
- ------------------------------------------------------------------------------------------------------------------------------------
MCN Energy Group, Inc. 5,200 180,050
- ------------------------------------------------------------------------------------------------------------------------------------
National Fuel Gas Co. 4,800 211,800
- ------------------------------------------------------------------------------------------------------------------------------------
Questar Corp. 4,500 173,813
- ------------------------------------------------------------------------------------------------------------------------------------
RWE AG, Preference 2,500 92,162
------------
1,378,863
- ------------------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES - 2.7%
Ameritech Corp. 3,000 195,000
- ------------------------------------------------------------------------------------------------------------------------------------
Bell Atlantic Corp. 5,264 420,462
- ------------------------------------------------------------------------------------------------------------------------------------
Frontier Corp. 10,700 231,388
- ------------------------------------------------------------------------------------------------------------------------------------
Tel-Save Holdings, Inc. (1) 7,300 156,950
- ------------------------------------------------------------------------------------------------------------------------------------
Telefonica de Espana 3,500 95,236
- ------------------------------------------------------------------------------------------------------------------------------------
U S West Communications Group 12,300 489,694
------------
1,588,730
------------
Total Common Stocks (Cost $36,155,153) 43,623,574
- ------------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS - 0.3%
- ------------------------------------------------------------------------------------------------------------------------------------
Case Corp., $4.50 Cum. Cv., Series A, Non-Vtg. (Cost $114,800) 1,200 174,000
<CAPTION>
UNITS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES - 0.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Australis Media Ltd. Wts., Exp. 10/01 (3) 100 1
- ------------------------------------------------------------------------------------------------------------------------------------
Dairy Mart Convenience Stores, Inc. Wts., Exp. 12/01 (3) 333 333
- ------------------------------------------------------------------------------------------------------------------------------------
Haw Par Brothers International Ltd. Wts., Exp. 7/01 3,300 1,091
- ------------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc. Wts., Exp. 6/00 (3) 50 3,500
- ------------------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc.:
Conditional Wts., Exp. 12/97 (3) 500 313
Wts., Exp. 12/97 (3) 500 6,500
- ------------------------------------------------------------------------------------------------------------------------------------
Price Communications Corp. Wts., 8/07 344 3
</TABLE>
38 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
UNITS SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
Signature Brands, Inc. Wts., Exp. 12/49 (3) 50 $ 750
------------
Total Rights, Warrants and Certificates (Cost $9,834) 12,491
<CAPTION>
FACE
AMOUNT
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSET-BACKED SECURITIES - 0.2%
- ------------------------------------------------------------------------------------------------------------------------------------
IROQUOIS Trust, Asset-Backed Amortizing Nts.,
Series 1997-2, Cl. A, 6.752%, 6/25/07 (3) $ 50,000 50,242
- ------------------------------------------------------------------------------------------------------------------------------------
Olympic Automobile Receivables Trust, Receivables-Backed Nts.,
Series 1997-A, Cl. A5, 6.80%, 2/15/05 50,000 51,099
- ------------------------------------------------------------------------------------------------------------------------------------
Olympic Automobile Receivables Trust, Series 1996-A, Cl. A4, 5.85%, 7/15/01 15,000 14,979
------------
Total Asset-Backed Securities (Cost $114,813) 116,320
- ------------------------------------------------------------------------------------------------------------------------------------
Mortgage-Backed Obligations - 2.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Countrywide Funding Corp., Mtg. Pass-Through Certificates,
Series 1994-10, Cl. A3, 6%, 5/25/09 100,000 99,125
- ------------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation
Certificates, Series 1711, Cl. EA, 7%, 3/15/24 100,000 102,375
Gtd. Multiclass Mtg. Participation Certificates:
6%, 3/1/09 24,554 24,362
Series 1574, Cl. PD, 5.55%, 3/15/13 100,000 99,750
Series 1843, Cl. VB, 7%, 4/15/03 20,000 20,587
Series 1849, Cl. VA, 6%, 12/15/10 24,470 24,195
Interest-Only Stripped Mtg.-Backed Security:
Series 1542, Cl. QC, 8.675%, 10/15/20 (4) 400,000 89,203
Series 1583, Cl. IC, 9.283%, 1/15/20 (4) 250,000 40,000
- ------------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6%, 12/1/03 46,088 45,864
6.50%, 4/1/26 46,862 46,155
7%, 4/1/00 76,854 77,591
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Trust 1993-181, Cl. C, 5.40%,
10/25/02 70,930 70,576
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Trust 1993-190, Cl. Z, 5.85%,
7/25/08 50,458 50,197
Medium-Term Nts., 6.56%, 11/13/01 100,000 100,250
Trust 1994-13, Cl. B, 6.50%, 2/25/09 100,000 99,906
- ------------------------------------------------------------------------------------------------------------------------------------
GE Capital Mortgage Services, Inc., Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Series 1994-7, Cl. A18, 6%, 2/25/09 99,442 93,228
- ------------------------------------------------------------------------------------------------------------------------------------
PNC Mortgage Securities Corp., Commercial Mtg. Pass-Through Certificates,
Series 1995-2, Cl. A3, 6.50%, 2/25/12 50,000 50,227
</TABLE>
39 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MORTGAGE-BACKED OBLIGATIONS (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
Residential Accredit Loans, Inc., Mortgage Asset-Backed Pass-Through
Certificates, Series 1997-QS9, Cl. A2, 6.75%, 9/25/27 $ 50,000 $ 50,074
------------
Total Mortgage-Backed Obligations (Cost $1,165,842) 1,183,665
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 3.1%
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 7.50%, 11/15/16 1,070,000 1,223,479
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
6.50%, 8/15/05 450,000 466,734
7.50%, 11/15/01 175,000 185,883
------------
Total U.S. Government Obligations (Cost $1,776,050) 1,876,096
- ------------------------------------------------------------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES - 12.6%
- ------------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 1.6%
- ------------------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 0.8%
Burmah Castrol plc, 7% Gtd. Medium-Term Nts., 12/15/97 (2) 20,000 20,027
- ------------------------------------------------------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co., 8.50% Debs., 2/15/03 40,000 42,598
- ------------------------------------------------------------------------------------------------------------------------------------
Harris Chemical North America, Inc., 10.25% Gtd. Sr. Sec. Disc. Nts., 7/15/01 50,000 52,250
- ------------------------------------------------------------------------------------------------------------------------------------
Laroche Industries, Inc., 9.50% Sr. Sub. Nts., 9/15/07 (2) 75,000 75,375
- ------------------------------------------------------------------------------------------------------------------------------------
Morton International, Inc., 9.25% Credit Sensitive Nts., 6/1/20 20,000 25,545
- ------------------------------------------------------------------------------------------------------------------------------------
NL Industries, Inc., 0%/13% Sr. Sec. Disc. Nts., 10/15/05 (5) 100,000 98,000
- ------------------------------------------------------------------------------------------------------------------------------------
PPG Industries, Inc., 9% Debs., 5/1/21 20,000 24,485
- ------------------------------------------------------------------------------------------------------------------------------------
Sterling Chemical Holdings, Inc., 0%/13.50% Sr. Disc. Nts., 8/15/08 (5) 75,000 54,750
- ------------------------------------------------------------------------------------------------------------------------------------
Texas Petrochemical Corp., 11.125% Sr. Sub. Nts., Series B, 7/1/06 75,000 82,875
------------
475,905
- ------------------------------------------------------------------------------------------------------------------------------------
METALS - 0.5%
Alcan Aluminum Ltd., 9.625% Debs., 7/15/19 50,000 53,913
- ------------------------------------------------------------------------------------------------------------------------------------
Gulf States Steel, Inc. (Alabama), 13.50% First Mtg. Nts., Series B,
4/15/03 50,000 51,500
- ------------------------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 10.875% Sr. Nts., 10/15/06 50,000 54,750
- ------------------------------------------------------------------------------------------------------------------------------------
NS Group, Inc., 13.50% Gtd. Sr. Sec. Nts., 7/15/03 20,000 22,950
- ------------------------------------------------------------------------------------------------------------------------------------
Republic Engineered Steels, Inc., 9.875% First Mtg. Nts., 12/15/01 25,000 24,250
- ------------------------------------------------------------------------------------------------------------------------------------
WCI Steel, Inc., 10% Sr. Nts., Series B, 12/1/04 50,000 52,375
- ------------------------------------------------------------------------------------------------------------------------------------
Weirton Steel Corp., 10.75% Sr. Nts., 6/1/05 50,000 52,875
------------
312,613
- ------------------------------------------------------------------------------------------------------------------------------------
PAPER - 0.3%
Celulosa Arauco y Constitucion SA, 7.25% Debs., 6/11/98 (3) 20,000 20,050
- ------------------------------------------------------------------------------------------------------------------------------------
Gaylord Container Corp., 12.75% Sr. Sub. Disc. Debs., 5/15/05 50,000 54,500
- ------------------------------------------------------------------------------------------------------------------------------------
Malette, Inc., 12.25% Sr. Sec. Nts., 7/15/04 (3) 50,000 56,875
- ------------------------------------------------------------------------------------------------------------------------------------
Stone Container Corp., 9.875% Sr. Nts., 2/1/01 50,000 51,125
------------
182,550
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 3.7%
- ------------------------------------------------------------------------------------------------------------------------------------
AUTOS & HOUSING - 0.3%
Black & Decker Corp., 6.625% Nts., 11/15/00 20,000 20,222
</TABLE>
40 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AUTOS & HOUSING (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
First Industrial LP, 7.15% Bonds, 5/15/27 $ 50,000 $ 51,453
- ------------------------------------------------------------------------------------------------------------------------------------
IHF Holdings, Inc., 0%/15% Sr. Sub. Disc. Nts., Series B, 11/15/04 (5) 75,000 64,500
- ------------------------------------------------------------------------------------------------------------------------------------
Signature Brands, Inc., 13% Sr. Sub. Nts., 8/15/02 (3) 50,000 53,187
------------
189,362
- ------------------------------------------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 1.3%
American Skiing Corp., 12% Sr. Sub. Nts., Series B, 7/15/06 (3) 75,000 83,625
- ------------------------------------------------------------------------------------------------------------------------------------
Bally Total Fitness Holdings Corp., 9.875% Sr. Sub. Nts., 10/15/07 (2) 75,000 73,875
- ------------------------------------------------------------------------------------------------------------------------------------
Blockbuster Entertainment Corp., 6.625% Sr. Nts., 2/15/98 20,000 20,027
- ------------------------------------------------------------------------------------------------------------------------------------
Casino America, Inc., 12.50% Sr. Nts., 8/1/03 75,000 80,250
- ------------------------------------------------------------------------------------------------------------------------------------
Casino Magic of Louisiana Corp., 13% First Mtg. Nts., 8/15/03 75,000 71,625
- ------------------------------------------------------------------------------------------------------------------------------------
GB Property Funding Corp., 10.875% First Mtg. Nts., 1/15/04 50,000 43,750
- ------------------------------------------------------------------------------------------------------------------------------------
Hilton Hotels Corp., 7.375% Nts., 6/1/02 50,000 51,327
- ------------------------------------------------------------------------------------------------------------------------------------
HMH Properties, Inc., 8.875% Sr. Nts., 7/15/07 (2) 50,000 51,250
- ------------------------------------------------------------------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 (2) 75,000 76,875
- ------------------------------------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority (Connecticut), 13.50% Sr. Sec. Nts.,
Series B, 11/15/02 25,000 32,125
- ------------------------------------------------------------------------------------------------------------------------------------
Players International, Inc., 10.875% Sr. Nts., 4/15/05 75,000 80,437
- ------------------------------------------------------------------------------------------------------------------------------------
Prime Hospitality Corp., 9.25% First Mtg. Bonds, 1/15/06 75,000 78,375
- ------------------------------------------------------------------------------------------------------------------------------------
Santa Fe Hotel, Inc., 11% Gtd. First Mtg. Nts., 12/15/00 45,000 38,475
------------
782,016
- ------------------------------------------------------------------------------------------------------------------------------------
MEDIA - 1.7%
Adelphia Communications Corp., 10.50% Sr. Nts., 7/15/04 (2) 75,000 78,375
- ------------------------------------------------------------------------------------------------------------------------------------
Allbritton Communications Co., 9.75% Sr. Sub. Debs., Series B,
11/30/97 50,000 50,250
- ------------------------------------------------------------------------------------------------------------------------------------
Australis Holdings PTY Ltd., 0%/15% Sr. Sec. Disc. Nts., 11/1/02 (5) 100,000 70,500
- ------------------------------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp., 9.875% Sr. Sub. Debs., 2/15/13 50,000 53,375
- ------------------------------------------------------------------------------------------------------------------------------------
Comcast Corp., 9.375% Sr. Sub. Debs., 5/15/05 50,000 53,500
- ------------------------------------------------------------------------------------------------------------------------------------
EchoStar Satellite Broadcasting Corp., 0%/13.125%
Sr. Sec. Disc. Nts., 3/15/04 (5) 50,000 39,750
- ------------------------------------------------------------------------------------------------------------------------------------
Falcon Holdings Group LP, 11% Sr. Sub. Nts., 9/15/03 (6) 61,941 63,403
- ------------------------------------------------------------------------------------------------------------------------------------
Fox Kids Worldwide, Inc., 0%/10.25% Sr. Disc. Nts., 11/1/07 (2)(5) 75,000 43,312
- ------------------------------------------------------------------------------------------------------------------------------------
Fox/Liberty Networks LLC, 8.875% Sr. Nts., 8/15/07 (2) 25,000 25,000
- ------------------------------------------------------------------------------------------------------------------------------------
James Cable Partners LP, 10.75% Sr. Nts., 8/15/04 (2) 75,000 78,562
- ------------------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co., 8.625% Sr. Sub. Nts., 9/15/07 (2) 75,000 75,750
- ------------------------------------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., 8.875% Sr. Nts., 7/15/07 75,000 74,437
- ------------------------------------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., 10% Sr. Sub. Nts., 9/30/05 50,000 52,625
- ------------------------------------------------------------------------------------------------------------------------------------
TCI Satellite Entertainment, Inc., 10.875% Sr. Sub. Nts., 2/15/07 (2) 100,000 103,500
- ------------------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc., 7.45% Nts., 2/1/98 20,000 20,067
- ------------------------------------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 50,000 55,343
- ------------------------------------------------------------------------------------------------------------------------------------
United International Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts.,
Series B, 14%, 11/15/99 (7) 100,000 82,500
------------
1,020,249
- ------------------------------------------------------------------------------------------------------------------------------------
RETAIL: GENERAL - 0.3%
Costco Cos., Inc., 7.125% Sr. Nts., 6/15/05 60,000 61,064
- ------------------------------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc., 10% Sr. Nts., 2/15/01 10,000 11,054
- ------------------------------------------------------------------------------------------------------------------------------------
Parisian, Inc., 9.875% Sr. Sub. Nts., 7/15/03 (3) 50,000 52,500
</TABLE>
41 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RETAIL: GENERAL (CONTINUED)
Sears Roebuck & Co., 8.39% Medium-Term Nts., 3/23/99 $ 40,000 $ 41,281
------------
165,899
- ------------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 0.1%
K Mart Corp., 7.75% Debs., 10/1/12 50,000 47,250
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 1.3%
- ------------------------------------------------------------------------------------------------------------------------------------
FOOD - 0.5%
AmeriServe Food Distribution, Inc., 8.875% Sr. Nts., 10/15/06 (2) 75,000 75,187
- ------------------------------------------------------------------------------------------------------------------------------------
Dairy Mart Convenience Stores, Inc., 10.25% Sr. Sub. Nts., 3/15/04 50,000 49,250
- ------------------------------------------------------------------------------------------------------------------------------------
Dole Food Distributing, Inc., 6.75% Nts., 7/15/00 40,000 40,510
- ------------------------------------------------------------------------------------------------------------------------------------
Fresh Del Monte Produce NV, 10% Sr. Nts., Series B, 5/1/03 43,000 45,580
- ------------------------------------------------------------------------------------------------------------------------------------
Great Atlantic & Pacific Tea Co., 9.125% Debs., 1/15/98 15,000 15,087
- ------------------------------------------------------------------------------------------------------------------------------------
Jitney-Jungle Stores of America, Inc., 12% Gtd. Sr. Nts., 3/1/06 50,000 56,250
------------
281,864
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/DRUGS - 0.1%
Integrated Health Services, Inc., 9.50% Sr. Sub. Nts., 9/15/07 (2) 50,000 51,875
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 0.5%
Columbia/HCA Healthcare Corp., 6.875% Nts., 7/15/01 45,000 45,045
- ------------------------------------------------------------------------------------------------------------------------------------
Dade International, Inc., 11.125% Sr. Sub. Nts., 5/1/06 75,000 83,812
- ------------------------------------------------------------------------------------------------------------------------------------
Mariner Health Group, Inc., 9.50% Sr. Sub. Nts., Series B, 4/1/06 (3) 75,000 78,000
- ------------------------------------------------------------------------------------------------------------------------------------
Paracelsus Healthcare Corp., 10% Sr. Sub. Unsec. Nts., 8/15/06 50,000 52,250
- ------------------------------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp., 8% Sr. Nts., 1/15/05 50,000 50,562
------------
309,669
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD GOODS - 0.2%
Dyersburg Corp., 9.75% Sr. Sub. Nts., 9/1/07 (2) 50,000 51,250
- ------------------------------------------------------------------------------------------------------------------------------------
Kimberly-Clark Corp., 7.875% Debs., 2/1/23 20,000 21,558
- ------------------------------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 9.375% Sr. Nts., 4/1/01 50,000 51,875
------------
124,683
- ------------------------------------------------------------------------------------------------------------------------------------
ENERGY - 0.9%
- ------------------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 0.5%
Coastal Corp., 8.125% Sr. Nts., 9/15/02 20,000 21,435
- ------------------------------------------------------------------------------------------------------------------------------------
Falcon Drilling Co., Inc., 9.75% Sr. Nts., Series B, 1/15/01 25,000 26,125
- ------------------------------------------------------------------------------------------------------------------------------------
Forcenergy, Inc., 8.50% Sr. Sub. Nts., 2/15/07 75,000 75,000
- ------------------------------------------------------------------------------------------------------------------------------------
Louisiana Land & Exploration Co., 7.65% Debs., 12/1/23 20,000 21,378
- ------------------------------------------------------------------------------------------------------------------------------------
Mesa Operating Co., 0%/11.625% Gtd. Sr. Sub. Disc. Nts., 7/1/06 (5) 75,000 60,375
- ------------------------------------------------------------------------------------------------------------------------------------
Transamerican Energy Corp., 11.50% Sr. Nts., 6/15/02 (2) 50,000 51,500
- ------------------------------------------------------------------------------------------------------------------------------------
Williams Holdings of Delaware, Inc., 6.25% Sr. Unsec. Debs., 2/1/06 25,000 24,445
------------
280,258
- ------------------------------------------------------------------------------------------------------------------------------------
OIL-INTEGRATED - 0.4%
Gulf Canada Resources Ltd., 8.25% Sr. Nts., 3/15/17 50,000 54,221
- ------------------------------------------------------------------------------------------------------------------------------------
HS Resources, Inc., 9.25% Sr. Sub. Nts., 11/15/06 75,000 77,250
- ------------------------------------------------------------------------------------------------------------------------------------
Norcen Energy Resources Ltd., 6.80% Debs., 7/2/02 50,000 50,950
- ------------------------------------------------------------------------------------------------------------------------------------
Petroleum Geo-Services ASA, 7.50% Nts., 3/31/07 50,000 52,610
- ------------------------------------------------------------------------------------------------------------------------------------
Standard Oil/British Petroleum Co. plc, 9% Debs., 6/1/19 20,000 20,869
------------
255,900
</TABLE>
42 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FINANCIAL - 1.2%
- ------------------------------------------------------------------------------------------------------------------------------------
BANKS - 0.1%
Citicorp, 5.625% Sr. Nts., 2/15/01 $ 20,000 $ 19,768
- ------------------------------------------------------------------------------------------------------------------------------------
Fleet Mtg./Norstar Group, Inc., 9.90% Sub. Nts., 6/15/01 20,000 22,310
- ------------------------------------------------------------------------------------------------------------------------------------
Integra Financial Corp., 6.50% Sub. Nts., 4/15/00 20,000 20,198
- ------------------------------------------------------------------------------------------------------------------------------------
Mellon Financial Bank Corp., 6.50% Gtd. Sr. Nts., 12/1/97 30,000 30,016
------------
92,292
- ------------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 0.8%
American General Institutional Capital, 8.125% Bonds, Series B,
3/15/46 (2) 50,000 53,764
- ------------------------------------------------------------------------------------------------------------------------------------
Beneficial Corp., 9.125% Debs., 2/15/98 20,000 20,180
- ------------------------------------------------------------------------------------------------------------------------------------
Capital One Financial Corp., 6.83% Sr. Nts., 5/17/99 10,000 10,098
- ------------------------------------------------------------------------------------------------------------------------------------
Capital One Funding Corp., 7.25% Nts., 12/1/03 40,000 40,281
- ------------------------------------------------------------------------------------------------------------------------------------
Chelsea GCA Realty Partner, Inc., 7.75% Gtd. Unsec. Unsub.
Nts., 1/26/01 40,000 41,078
- ------------------------------------------------------------------------------------------------------------------------------------
Commercial Credit Co., 5.55% Unsec. Nts., 2/15/01 20,000 19,636
- ------------------------------------------------------------------------------------------------------------------------------------
Countrywide Home Loans, Inc., 6.05% Gtd. Medium-Term Nts., Series D, 3/1/01 20,000 19,887
- ------------------------------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 6.25% Unsub. Nts., 2/26/98 20,000 20,085
- ------------------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 5.625% Nts., 2/15/01 50,000 49,229
- ------------------------------------------------------------------------------------------------------------------------------------
MCII Holdings (USA), Inc., 0%/15% Sec. Nts., 11/15/02 (5) 75,000 62,531
- ------------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 6.50% Nts., 4/1/01 20,000 20,237
- ------------------------------------------------------------------------------------------------------------------------------------
Olympic Financial Ltd., Units (each unit consists of
$1,000 principal amount of 11.50% sr. nts., 3/15/07
and one warrant to purchase 6.84 shares of common stock) (8) 75,000 77,250
- ------------------------------------------------------------------------------------------------------------------------------------
Salomon, Inc., 8.69% Sr. Medium-Term Nts., Series D, 3/1/99 50,000 51,694
------------
485,950
- ------------------------------------------------------------------------------------------------------------------------------------
INSURANCE - 0.3%
Cigna Corp., 7.90% Nts., 12/14/98 40,000 40,768
- ------------------------------------------------------------------------------------------------------------------------------------
Conseco Financing Trust III, 8.796% Bonds, 4/1/27 50,000 54,533
- ------------------------------------------------------------------------------------------------------------------------------------
SunAmerica, Inc., 9% Sr. Nts., 1/15/99 50,000 51,554
- ------------------------------------------------------------------------------------------------------------------------------------
Travelers Property Casualty Corp., 6.75% Nts., 4/15/01 20,000 20,341
------------
167,196
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 1.3%
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL MATERIALS - 0.1%
American Standard, Inc., 10.875% Sr. Nts., 5/15/99 (3) 60,000 63,750
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 0.3%
Shop Vac Corp., 10.625% Sr. Nts., 9/1/03 75,000 81,563
- ------------------------------------------------------------------------------------------------------------------------------------
Sun Co., Inc., 7.95% Debs., 12/15/01 50,000 52,906
- ------------------------------------------------------------------------------------------------------------------------------------
USI American Holdings, Inc., 7.25% Gtd. Sr. Nts., 12/1/06 50,000 49,079
------------
183,548
- ------------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 0.6%
Day International Group, Inc., 11.125% Sr. Sub. Nts., Series B, 6/1/05 (3) 50,000 53,750
- ------------------------------------------------------------------------------------------------------------------------------------
Interlake Corp., 12.125% Sr. Sub. Debs., 3/1/02 50,000 52,125
- ------------------------------------------------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., 6/1/05 50,000 54,875
- ------------------------------------------------------------------------------------------------------------------------------------
Jordan Industries, Inc., 10.375% Sr. Nts., 8/1/07 75,000 75,750
- ------------------------------------------------------------------------------------------------------------------------------------
Mark IV Industries, Inc., 8.75% Sub. Nts., 4/1/03 (3) 10,000 10,475
- ------------------------------------------------------------------------------------------------------------------------------------
Specialty Equipment Co., 11.375% Sr. Sub. Nts., 12/1/03 50,000 54,375
</TABLE>
43 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MANUFACTURING (CONTINUED)
Titan Wheel International, Inc., 8.75% Sr. Sub. Nts., 4/1/07 $ 50,000 $ 52,000
------------
353,350
- ------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 0.3%
CSX Corp., 7.05% Debs., 5/1/02 75,000 76,758
- ------------------------------------------------------------------------------------------------------------------------------------
Federal Express Corp., 6.25% Nts., 4/15/98 20,000 20,025
- ------------------------------------------------------------------------------------------------------------------------------------
Norfolk Southern Corp., 7.35% Nts., 5/15/07 50,000 52,503
- ------------------------------------------------------------------------------------------------------------------------------------
Union Pacific Corp., 7% Nts., 6/15/00 20,000 20,374
------------
169,660
- ------------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 2.2%
- ------------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 0.1%
GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98 50,000 51,000
- ------------------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE - 0.1%
Digital Equipment Corp., 7% Nts., 11/15/97 45,000 45,014
- ------------------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 0.3%
Celestica International, Inc., 10.50% Gtd. Sr. Sub. Nts., 12/31/06 75,000 81,000
- ------------------------------------------------------------------------------------------------------------------------------------
DII Group, Inc., 8.50% Sr. Sub. Nts., 9/15/07 (2) 75,000 74,344
- ------------------------------------------------------------------------------------------------------------------------------------
Unisys Corp., 12% Sr. Nts., Series B, 4/15/03 50,000 56,250
------------
211,594
- ------------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY - 1.7%
American Communications Services, Inc., 0%/13% Sr. Disc. Nts., 11/1/05 (5) 100,000 70,500
- ------------------------------------------------------------------------------------------------------------------------------------
Brooks Fiber Properties, Inc., 0%/11.875% Sr. Disc. Nts., 11/1/06 (5) 50,000 39,438
- ------------------------------------------------------------------------------------------------------------------------------------
Centennial Cellular Corp., 10.125% Sr. Nts., 5/15/05 50,000 53,250
- ------------------------------------------------------------------------------------------------------------------------------------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc. Debs., 11/15/07 (5) 50,000 38,750
- ------------------------------------------------------------------------------------------------------------------------------------
Diamond Cable Communications plc, 0%/10.75% Sr. Disc. Nts., 2/15/07 (5) 75,000 48,375
- ------------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 0%/11.25% Sr. Disc. Nts., 7/15/07 (5) 75,000 49,875
- ------------------------------------------------------------------------------------------------------------------------------------
International CableTel, Inc., 0%/11.50% Sr. Deferred Coupon Nts.,
Series B, 2/1/06 (5) 150,000 110,250
- ------------------------------------------------------------------------------------------------------------------------------------
IXC Communications, Inc., 12.50% Sr. Nts., Series B, 10/1/05 75,000 85,500
- ------------------------------------------------------------------------------------------------------------------------------------
McLeodUSA, Inc., 0%/10.50% Sr. Disc. Nts., 3/1/07 (5) 50,000 34,750
- ------------------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc., 0%/14% Sr. Disc. Nts.,
Series B, 6/1/06 (5) 75,000 50,250
- ------------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 0%/9.75% Sr. Disc. Nts., 8/15/04 (5) 100,000 84,750
- ------------------------------------------------------------------------------------------------------------------------------------
Price Communications Cellular Holdings, Inc., 0%/13.50%
Sr. Disc. Nts., 8/1/07 (3)(5) 100,000 57,000
- ------------------------------------------------------------------------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum Finance Corp., 11% Sr. Nts., 8/15/06 75,000 83,063
- ------------------------------------------------------------------------------------------------------------------------------------
Teleport Communications Group, Inc.:
0%/11.125% Sr. Disc. Nts., 7/1/07 (5) 50,000 39,438
9.875% Sr. Nts., 7/1/06 50,000 54,875
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. West Capital Funding, Inc., 6.85% Gtd. Nts., 1/15/02 75,000 76,228
- ------------------------------------------------------------------------------------------------------------------------------------
Western Wireless Corp., 10.50% Sr. Sub. Nts., 2/1/07 50,000 53,875
------------
1,030,167
- ------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 0.4%
- ------------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 0.2%
Consumers Energy Co., 8.75% First Mtg. Nts., 2/15/98 20,000 20,131
- ------------------------------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 7.25% First Mtg. Nts., Series A, 2/1/99 (3) 10,000 10,100
</TABLE>
44 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ELECTRIC UTILITIES (CONTINUED)
Panda Global Energy Co., 12.50% Sr. Nts., 4/15/04 (3) $ 75,000 $ 72,375
------------
102,606
- ------------------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES - 0.2%
Northern Illinois Gas Co., 6.45% First Mtg. Bonds, 8/1/01 70,000 70,875
- ------------------------------------------------------------------------------------------------------------------------------------
Tennessee Gas Pipeline Co., 7.50% Bonds, 4/1/17 50,000 52,615
------------
123,490
------------
Total Non-Convertible Corporate Bonds and Notes (Cost $7,276,470) 7,559,710
- ------------------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE CORPORATE BONDS AND NOTES - 0.1%
- ------------------------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc., 12% Cv. Sr. Sub. Nts., 2/15/01 (Cost $45,421) (3) 50,000 41,750
- ------------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 7.8%
- ------------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Zion First National Bank, 5.68%,
dated 10/31/97, to be repurchased at $4,675,212 on 11/3/97,
collateralized by U.S. Treasury Nts., 7.25%, 8/15/04, with a
value of $4,774,636 (Cost $4,673,000) 4,673,000 4,673,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $51,331,382) 98.9% 59,260,606
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.1 658,188
------------ ------------
NET ASSETS 100.0% $ 59,918,794
------------ ------------
------------ ------------
</TABLE>
1. Non-income producing security.
2. 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 $1,180,306 or 1.97% of the Fund's
net assets as of October 31, 1997.
3. Identifies issues considered to be illiquid or restricted - See Note 5 of
Notes to Financial Statements.
4. 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.
5. Denotes a step bond: a zero coupon bond that converts to a fixed or
variable interest rate at a designated future date.
6. Interest or dividend is paid in kind.
7. For zero coupon bonds, the interest rate shown is the effective yield on
the date of purchase.
8. Units may be comprised of several components, such as debt and equity
and/or warrants to purchase equity at some point in the future. For units
which represent debt securities, face amount disclosed represents total
underlying principal.
See accompanying Notes to Financial Statements.
45 Oppenheimer LifeSpan Funds
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES OCTOBER 31, 1997
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER
LIFESPAN LIFESPAN LIFESPAN
INCOME BALANCED GROWTH
FUND FUND FUND
-----------------------------------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (cost *) - see accompanying statements $29,794,676 $66,792,544 $59,260,606
Cash 353,691 552,070 474,933
Receivables:
Dividends, interest and principal paydowns 419,993 534,812 288,273
Shares of capital stock sold 24,155 9,723 17,266
Investments sold -- 510,982 510,408
Other 1,639 1,812 1,731
-----------------------------------------
Total assets 30,594,154 68,401,943 60,553,217
-----------------------------------------
LIABILITIES:
Payables and other liabilities:
Investments purchased 433,257 594,944 538,459
Shareholder reports 21,296 18,494 8,631
Shares of capital stock redeemed 15,096 1,269 3,418
Distribution and service plan fees 6,556 15,174 13,306
Directors' fees - Note 1 32,164 27,898 26,666
Transfer and shareholder servicing agent fees -- 1,418 3,343
Custodian fees 14,554 15,915 15,344
Other 16,948 20,075 25,256
-----------------------------------------
Total liabilities 539,871 695,187 634,423
-----------------------------------------
NET ASSETS $30,054,283 $67,706,756 $59,918,794
-----------------------------------------
-----------------------------------------
COMPOSITION OF NET ASSETS:
Par value of shares of capital stock $2,716 $5,348 $4,385
Additional paid-in capital 27,574,543 56,641,705 47,659,568
Undistributed net investment income 2,079 209,750 858,469
Accumulated net realized gain from investments and foreign
currency transactions 404,251 3,257,932 3,466,954
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 2,070,694 7,592,021 7,929,418
-----------------------------------------
NET ASSETS $30,054,283 $67,706,756 $59,918,794
-----------------------------------------
-----------------------------------------
*Cost $27,723,982 $59,200,693 $51,331,382
-----------------------------------------
-----------------------------------------
</TABLE>
46 Oppenheimer LifeSpan Funds
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER
LIFESPAN LIFESPAN LIFESPAN
INCOME BALANCED GROWTH
FUND FUND FUND
-----------------------------------------
<S> <C> <C> <C>
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 $29,205,770 $62,261,972 $53,318,387
Shares of capital stock 2,639,654 4,919,634 3,900,030
Price per share $11.06 $12.66 $13.67
Maximum offering price per share (net asset value plus sales
charge of 5.75% of offering price for each fund) $11.73 $13.43 $14.50
-----------------------------------------
CLASS B SHARES:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets and shares of capital stock outstanding):
Net assets $816,411 $4,761,973 $5,390,939
Shares of capital stock 73,513 374,239 395,745
Price per share $11.11 $12.72 $13.62
-----------------------------------------
CLASS C SHARES:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets and shares of capital stock outstanding):
Net assets $32,102 $682,811 $1,209,468
Shares of capital stock 2,893 54,094 89,402
Price per share $11.10 $12.62 $13.53
-----------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
47 Oppenheimer LifeSpan Funds
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS For the Year Ended October 31, 1997
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER
LIFESPAN LIFESPAN LIFESPAN
INCOME BALANCED GROWTH
FUND FUND FUND
-----------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 1,686,587 $ 2,157,148 $ 1,159,982
Dividends (net of foreign withholding taxes of $837, $12,509
and $15,954, respectively) 273,552 626,821 670,676
-----------------------------------------
Total income 1,960,139 2,783,969 1,830,658
-----------------------------------------
EXPENSES:
Management fees - Note 4 212,649 527,770 457,316
Distribution and service plan fees - Note 4:
Class A 69,406 145,068 123,431
Class B 6,756 34,948 39,156
Class C 199 8,787 7,192
Transfer and shareholder servicing agent fees - Note 4 4,186 17,573 34,890
Accounting service fees 15,000 15,000 15,000
Custodian fees and expenses 6,961 49,727 46,602
Legal and auditing fees 24,064 31,475 35,958
Shareholder reports 32,380 42,866 41,370
Directors' fees and expenses - Note 1 35,289 29,321 31,956
Insurance expenses 3,188 3,645 3,500
Registration and filing fees:
Class A 802 1,885 1,882
Class B 106 747 822
Class C 9 2 291
Other 4,684 7,463 6,038
-----------------------------------------
Total expenses 415,679 916,277 845,404
-----------------------------------------
Less expenses paid indirectly - Note 4 (6,961) (14,168) (9,362)
-----------------------------------------
Net expenses 408,718 902,109 836,042
-----------------------------------------
NET INVESTMENT INCOME 1,551,421 1,881,860 994,616
-----------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) from:
Investments 425,024 3,580,369 3,818,755
Foreign currency transactions -- (304,895) (324,763)
-----------------------------------------
Net realized gain 425,024 3,275,474 3,493,992
Net change in unrealized appreciation or depreciation on:
Investments 1,052,959 2,130,004 2,117,903
Translation of assets and liabilities denominated in
foreign currencies -- (5,158) (17,066)
-----------------------------------------
Net change 1,052,959 2,124,846 2,100,837
-----------------------------------------
Net realized and unrealized gain 1,477,983 5,400,320 5,594,829
-----------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 3,029,404 $ 7,282,180 $ 6,589,445
-----------------------------------------
-----------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
48 Oppenheimer LifeSpan Funds
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED OCTOBER 31, 1997 AND
1996
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER
LIFESPAN LIFESPAN LIFESPAN
INCOME BALANCED GROWTH
FUND FUND FUND
----------------------------------------------------------------------------
1997 1996(1) 1997 1996(1) 1997 1996(1)
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $1,551,421 $1,166,091 $1,881,860 $1,269,662 $994,616 $610,399
Net realized gain 425,024 375,456 3,275,474 1,455,276 3,493,992 2,207,221
Net change in unrealized appreciation or depreciation 1,052,959 (394,375) 2,124,846 1,910,667 2,100,837 2,238,220
----------------------------------------------------------------------------
Net increase in net assets resulting from operations 3,029,404 1,147,172 7,282,180 4,635,605 6,589,445 5,055,840
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
Dividends from net investment income:
Class A (1,519,218) (1,164,346) (1,751,264) (919,554) (279,883) (289,194)
Class B (31,306) (14,052) (86,844) (21,226) (11,776) (9,326)
Class C (908) (24) (20,115) (10,575) (1,248) (143)
Distributions from net realized gain:
Class A (381,291) (63,862) (1,432,693) (140,249) (2,163,698) (129,620)
Class B (7,459) (925) (69,269) (3,811) (128,434) (4,802)
Class C (77) (2) (23,260) (1,725) (11,808) (65)
CAPITAL STOCK TRANSACTIONS:
Net increase (decrease) in net assets resulting from
capital stock - Note 2:
Class A 1,816,130 1,803,488 6,516,290 6,793,292 5,756,041 5,139,745
Class B 334,568 264,631 2,657,192 1,370,222 2,665,936 1,697,392
Class C 29,825 1,000 (190,802) 821,670 978,007 137,860
----------------------------------------------------------------------------
NET ASSETS:
Total increase 3,269,668 1,973,080 12,881,415 12,523,649 13,392,582 11,597,687
Beginning of period 26,784,615 24,811,535 54,825,341 42,301,692 46,526,212 34,928,525
----------------------------------------------------------------------------
End of period $30,054,283 $26,784,615 $67,706,756 $54,825,341 $59,918,794 $46,526,212
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Undistributed net investment income $2,079 $11 $209,750 $194,574 $858,469 $171,706
</TABLE>
1. The Funds changed their fiscal year end from December 31 to October 31.
See accompanying Notes to Financial Statements.
49 Oppenheimer LifeSpan Funds
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Oppenheimer LifeSpan Income Fund
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------- --------------------------------------
PERIOD ENDED PERIOD ENDED
YEAR ENDED OCTOBER 31, DECEMBER 31, YEAR ENDED OCTOBER 31, DECEMBER 31,
1997 1996(3) 1995(4) 1997 1996(3) 1995(2)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.65 $10.70 $10.00 $10.69 $10.74 $10.45
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .59 .48 .37 .51 .41 .12
Net realized and unrealized gain (loss) .56 (.02) .73 .57 (.02) .32
- -----------------------------------------------------------------------------------------------------------------------------------
Total income from investment
operations 1.15 .46 1.10 1.08 .39 .44
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.59) (.48) (.36) (.51) (.41) (.11)
Distributions from net realized gain (.15) (.03) (.04) (.15) (.03) (.04)
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.74) (.51) (.40) (.66) (.44) (.15)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.06 $10.65 $10.70 $11.11 $10.69 $10.74
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 11.30% 4.45% 11.22% 10.51% 3.69% 4.30%
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $29,206 $26,328 $24,619 $816 $456 $192
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $27,678 $25,463 $22,128 $677 $350 $107
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.49% 5.43%(6) 5.35%(6) 4.69% 4.93%(6) 5.23%(6)
Expenses 1.45%(7) 1.56%(6) 1.50%(6) 2.18%(7) 2.31%(6) 2.25%(6)
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 39.6% 75.3% 45.8% 39.6% 75.3% 45.8%
Average brokerage commission rate(9) $0.0681 $0.0694 -- $0.0681 $0.0694 --
<CAPTION>
CLASS C
-----------------------
YEAR ENDED OCTOBER 31,
1997 1996(1)
- --------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.66 $10.53
- --------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .55 .25
Net realized and unrealized gain (loss) .58 .16
- --------------------------------------------------------------------
Total income from investment
operations 1.13 .41
- --------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.54) (.25)
Distributions from net realized gain (.15) (.03)
- --------------------------------------------------------------------
Total dividends and distributions
to shareholders (.69) (.28)
- --------------------------------------------------------------------
Net asset value, end of period $11.10 $10.66
-----------------------
-----------------------
- --------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 11.03% 3.96%
- --------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $32 $1
- --------------------------------------------------------------------
Average net assets (in thousands) $20 $1
- --------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.64% 4.68%(6)
Expenses 2.20%(7) 2.25%(6)
- --------------------------------------------------------------------
Portfolio turnover rate(8) 39.6% 75.3%
Average brokerage commission rate(9) $0.0681 $0.0694
</TABLE>
1. For the period from May 1, 1996 (inception of offering) to October 31, 1996.
2. For the period from October 2, 1995 (inception of offering) to December 31,
1995.
3. For the ten months ended October 31, 1996. The Fund changed its fiscal year
end from December 31 to October 31. On March 18, 1996, OppenheimerFunds, Inc.
became the investment advisor to the Fund.
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. Annualized.
7. The expense ratio reflects the effect of expenses paid indirectly by the
Fund.
8. 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, 1997 were $12,166,241 and $10,297,628, respectively.
9. 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.
50 Oppenheimer LifeSpan Funds
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Oppenheimer LifeSpan Balanced Fund
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------- --------------------------------------
PERIOD ENDED PERIOD ENDED
YEAR ENDED OCTOBER 31, DECEMBER 31, YEAR ENDED OCTOBER 31, DECEMBER 31,
1997 1996(3) 1995(4) 1997 1996(3) 1995(2)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $11.90 $11.05 $10.00 $11.98 $11.16 $10.95
- -----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .37 .29 .24 .27 .20 .05
Net realized and unrealized gain 1.08 .81 1.29 1.08 .82 .45
- -----------------------------------------------------------------------------------------------------------------------------------
Total income from investment
operations 1.45 1.10 1.53 1.35 1.02 .50
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.37) (.22) (.25) (.29) (.17) (.06)
Distributions from net realized gain (.32) (.03) (.23) (.32) (.03) (.23)
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.69) (.25) (.48) (.61) (.20) (.29)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.66 $11.90 $11.05 $12.72 $11.98 $11.16
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 12.66% 10.04% 15.33% 11.70% 9.22% 4.49%
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $62,262 $52,104 $41,861 $4,762 $1,893 $441
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $57,769 $47,116 $37,417 $3,504 $1,225 $247
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 3.08% 3.15%(6) 3.47%(6) 2.31% 2.41%(6) 3.01%(6)
Expenses 1.42%(7) 1.56%(6) 1.55%(6) 2.18%(7) 2.32%(6) 2.30%(6)
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 59.7% 61.0% 76.3% 59.7% 61.0% 76.3%
Average brokerage commission rate(9) $0.0067 $0.0078 -- $0.0067 $0.0078 --
<CAPTION>
CLASS C
-----------------------
YEAR ENDED OCTOBER 31,
1997 1996(1)
- --------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $11.88 $11.74
- --------------------------------------------------------------------
Income from investment operations:
Net investment income .28 .13
Net realized and unrealized gain 1.07 .24
- --------------------------------------------------------------------
Total income from investment
operations 1.35 .37
- --------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.29) (.20)
Distributions from net realized gain (.32) (.03)
- --------------------------------------------------------------------
Total dividends and distributions
to shareholders (.61) (.23)
- --------------------------------------------------------------------
Net asset value, end of period $12.62 $11.88
-----------------------
-----------------------
- --------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 11.73% 3.21%
- --------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $683 $828
- --------------------------------------------------------------------
Average net assets (in thousands) $879 $551
- --------------------------------------------------------------------
Ratios to average net assets:
Net investment income 2.37% 2.53%(6)
Expenses 2.16%(7) 2.27%(6)
- --------------------------------------------------------------------
Portfolio turnover rate(8) 59.7% 61.0%
Average brokerage commission rate(9) $0.0067 $0.0078
</TABLE>
1. For the period from May 1, 1996 (inception of offering) to October 31, 1996.
2. For the period from October 2, 1995 (inception of offering) to December 31,
1995.
3. For the ten months ended October 31, 1996. The Fund changed its fiscal year
end from December 31 to October 31. On March 18, 1996, OppenheimerFunds, Inc.
became the investment advisor to the Fund.
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. Annualized.
7. The expense ratio reflects the effect of expenses paid indirectly by the
Fund.
8. 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, 1997 were $42,186,840 and $34,319,496, respectively.
9. 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. Generally, non-U.S. commissions are lower than U.S.
commissions when expressed as cents per share but higher when expressed as a
percentage of transactions because of the lower per-share prices of many
non-U.S. securities.
See accompanying Notes to Financial Statements.
51 Oppenheimer LifeSpan Funds
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------- --------------------------------------
PERIOD ENDED PERIOD ENDED
YEAR ENDED OCTOBER 31, DECEMBER 31, YEAR ENDED OCTOBER 31, DECEMBER 31,
1997 1996(3) 1995(4) 1997 1996(3) 1995(2)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $12.78 $11.39 $10.00 $12.81 $11.47 $11.14
- -----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .24 .18 .16 .14 .08 .03
Net realized and unrealized gain 1.35 1.34 1.63 1.35 1.36 .56
- -----------------------------------------------------------------------------------------------------------------------------------
Total income from investment
operations 1.59 1.52 1.79 1.49 1.44 .59
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.08) (.09) (.17) (.06) (.06) (.03)
Distributions from net realized gain (.62) (.04) (.23) (.62) (.04) (.23)
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.70) (.13) (.40) (.68) (.10) (.26)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.67 $12.78 $11.39 $13.62 $12.81 $11.47
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 12.96% 13.37% 18.02% 12.07% 12.58% 5.34%
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $53,318 $43,980 $34,368 $5,391 $2,405 $561
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $49,213 $39,576 $29,046 $3,925 $1,475 $230
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.91% 1.81%(6) 2.32%(6) 1.14% 1.11%(6) 1.70%(6)
Expenses 1.50%(7) 1.61%(6) 1.55%(6) 2.27%(7) 2.37%(6) 2.30%(6)
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 66.0% 64.2% 71.8% 66.0% 64.2% 71.8%
Average brokerage commission rate(9) $0.0069 $0.0059 -- $0.0069 $0.0059 --
<CAPTION>
CLASS C
-----------------------
YEAR ENDED OCTOBER 31,
1997 1996(1)
- --------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $12.74 $12.49
- --------------------------------------------------------------------
Income from investment operations:
Net investment income .14 .11
Net realized and unrealized gain 1.34 .27
- --------------------------------------------------------------------
Total income from investment
operations 1.48 .38
- --------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.07) (.09)
Distributions from net realized gain (.62) (.04)
- --------------------------------------------------------------------
Total dividends and distributions
to shareholders (.69) (.13)
- --------------------------------------------------------------------
Net asset value, end of period $13.53 $12.74
-----------------------
-----------------------
- --------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 12.05% 3.04%
- --------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $1,209 $141
- --------------------------------------------------------------------
Average net assets (in thousands) $722 $54
- --------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.11% 1.32%(6)
Expenses 2.29%(7) 2.43%(6)
- --------------------------------------------------------------------
Portfolio turnover rate(8) 66.0% 64.2%
Average brokerage commission rate(9) $0.0069 $0.0059
</TABLE>
1. For the period from May 1, 1996 (inception of offering) to October 31, 1996.
2. For the period from October 2, 1995 (inception of offering) to December 31,
1995.
3. For the ten months ended October 31, 1996. The Fund changed its fiscal year
end from December 31 to October 31. On March 18, 1996, OppenheimerFunds, Inc.
became the investment advisor to the Fund.
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. Annualized.
7. The expense ratio reflects the effect of expenses paid indirectly by the
Fund.
8. 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, 1997 were $39,384,627 and $31,934,908, respectively.
9. 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. Generally, non-U.S. commissions are lower than U.S.
commissions when expressed as cents per share but higher when expressed as a
percentage of transactions because of the lower per-share prices of many
non-U.S. securities.
See accompanying Notes to Financial Statements.
52 Oppenheimer LifeSpan Funds
<PAGE>
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. The Fund's investment advisor is OppenheimerFunds, Inc.
(the Manager). 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 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.
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.
53 Oppenheimer LifeSpan Funds
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
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. During
the year ended October 31, 1997, the provision for projected benefit
obligations, payments to retired directors and the accumulated liability for
each of the Funds is as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------
LifeSpan Income Fund LifeSpan Balanced Fund LifeSpan Growth Fund
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Provision for projected benefit
obligations $34,321 $28,138 $28,147
- ------------------------------------------------------------------------------------------------------------
Payments to retired directors 1,509 1,509 1,509
- ------------------------------------------------------------------------------------------------------------
Accumulated liability as of
October 31, 1997 32,882 27,628 26,878
- ------------------------------------------------------------------------------------------------------------
</TABLE>
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 was recorded by the
Funds.
The Funds 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 year ended October 31, 1997 are shown
below:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Adjustments for the Year Ended October 31, 1997
- --------------------------------------------------------------------------------------------------------------
Undistributed Net Investment Income Accumulated Net Realized Gain on Investments
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LifeSpan Income Fund $ 2,079 $(2,079)
- --------------------------------------------------------------------------------------------------------------
LifeSpan Balanced Fund (8,461) 8,461
- --------------------------------------------------------------------------------------------------------------
LifeSpan Growth Fund (14,946) 14,946
- --------------------------------------------------------------------------------------------------------------
</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.
54 Oppenheimer LifeSpan Funds
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
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:
<TABLE>
<CAPTION>
OPPENHEIMER LIFESPAN INCOME FUND
YEAR ENDED OCTOBER 31, 1997 PERIOD ENDED OCTOBER 31, 1996(1)
----------------------------------- -----------------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Class A:
Sold 76,799 $ 839,632 146,543 $ 1,546,169
Dividends and distributions reinvested 169,781 1,828,122 112,062 1,180,611
Redeemed (78,072) (851,624) (88,357) (923,292)
-------------- -------------- -------------- --------------
Net increase 168,508 $ 1,816,130 170,248 $ 1,803,488
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Class B:
Sold 35,037 $ 380,109 23,725 $ 253,904
Dividends and distributions reinvested 3,360 36,336 1,286 13,606
Redeemed (7,512) (81,877) (271) (2,879)
-------------- -------------- -------------- --------------
Net increase 30,885 334,568 24,740 $ 264,631
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Class C:
Sold 2,712 $ 28,892 95 $ 1,000
Dividends and distributions reinvested 86 933 -- --
Redeemed -- -- -- --
-------------- -------------- -------------- --------------
Net increase 2,798 $ 29,825 95 $ 1,000
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
OPPENHEIMER LIFESPAN BALANCED FUND
SHARES AMOUNT SHARES AMOUNT
Class A:
Sold 672,918 $ 8,115,315 591,611 $ 6,806,310
Dividends and distributions reinvested 263,094 3,160,977 90,394 1,056,157
Redeemed (393,016) (4,760,002) (92,638) (1,069,175)
-------------- -------------- -------------- --------------
Net increase 542,996 $ 6,516,290 589,367 $ 6,793,292
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Class B:
Sold 253,560 $ 3,096,696 118,679 $ 1,371,576
Dividends and distributions reinvested 12,325 149,308 2,108 24,736
Redeemed (49,667) (588,812) (2,244) (26,090)
-------------- -------------- -------------- --------------
Net increase 216,218 $ 2,657,192 118,543 $ 1,370,222
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Class C:
Sold 47,180 $ 560,673 68,739 $ 810,364
Dividends and distributions reinvested 3,637 43,355 1,054 12,284
Redeemed (66,431) (794,830) (85) (978)
-------------- -------------- -------------- --------------
Net increase (decrease) (15,614) $ (190,802) 69,708 $ 821,670
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
OPPENHEIMER LIFESPAN GROWTH FUND
SHARES AMOUNT SHARES AMOUNT
Class A:
Sold 590,543 $ 7,650,233 424,020 $ 5,146,023
Dividends and distributions reinvested 195,679 2,440,118 33,590 418,507
Redeemed (327,056) (4,334,310) (35,427) (424,785)
-------------- -------------- -------------- --------------
Net increase 459,166 $ 5,756,041 422,183 $ 5,139,745
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Class B:
Sold 227,007 $ 2,916,327 154,309 $ 1,879,045
Dividends and distributions reinvested 11,173 139,662 1,098 13,603
Redeemed (30,185) (390,053) (16,551) (195,256)
-------------- -------------- -------------- --------------
Net increase 207,995 $ 2,665,936 138,856 $ 1,697,392
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Class C:
Sold 86,490 $ 1,086,489 11,124 $ 138,640
Dividends and distributions reinvested 846 10,506 16 198
Redeemed (8,994) (118,988) (80) (978)
-------------- -------------- -------------- --------------
Net increase 78,342 $ 978,007 11,060 $ 137,860
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
1. 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.
55 Oppenheimer LifeSpan Funds
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At October 31, 1997, 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 $2,305,354 $8,991,592 $9,439,956
- ------------------------------------------------------------------------------------------------------------
Gross depreciation 234,660 1,399,741 1,510,732
- ------------------------------------------------------------------------------------------------------------
Net unrealized appreciation $2,070,694 $7,591,851 $7,929,224
- ------------------------------------------------------------------------------------------------------------
</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 average annual 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 average annual net assets in excess
of $250 million. The Manager acts as the accounting agent for the Funds at
an annual fee of $15,000 per Fund, plus out-of-pocket costs and expenses
reasonably incurred.
For Oppenheimer LifeSpan Income Fund, the Manager has entered into a
sub-advisory agreement with BEA Associates 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-advisors 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 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 year ended October 31, 1997, (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, (4) sales charges advanced to affiliated broker/dealers and (5)
contingent deferred sales charges retained by OFDI were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
(1) Commissions (2) Commissions (3) Sales Charges (4) Paid to Affiliates (5) Contingent
Retained Advanced Deferred Sales
Charges
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LifeSpan Income Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Class A $19,537 $13,796 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Class B -- -- $14,373 $11,515 $5,923
- ----------------------------------------------------------------------------------------------------------------------------------
Class C -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
LifeSpan Balanced Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Class A $100,461 $67,205 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Class B -- -- $114,889 $67,463 --
- ----------------------------------------------------------------------------------------------------------------------------------
Class C -- -- $5,414 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
LifeSpan Growth Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Class A $137,511 $111,486 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Class B -- -- $102,107 $64,131 $2,500
- ----------------------------------------------------------------------------------------------------------------------------------
Class C -- -- $9,869 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
56 Oppenheimer LifeSpan Funds
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (continued)
The Funds have adopted Service Plans for Class A shares to reimburse OFDI
for a portion of its costs incurred in connection with the personal service
and maintenance of shareholder accounts that hold Class A shares.
Reimbursement is made quarterly at an annual rate that may not exceed 0.25%
of the average annual net assets of Class A shares of the Funds. OFDI uses
the service fee to reimburse brokers, dealers, banks and other financial
institutions quarterly for providing personal service and maintenance of
accounts of their customers that hold Class A shares. During the year ended
October 31, 1997, OFDI made payments to an affiliated broker/dealer as
reimbursement for Class A personal service and maintenance expenses as
follows:
LifeSpan Income Fund. . . . . . . .$ 68,271
LifeSpan Balanced Fund. . . . . . .$ 141,239
LifeSpan Growth Fund. . . . . . . .$ 117,788
The Funds have adopted Distribution and Service Plans for Class B and Class
C shares to compensate OFDI for its 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 for its services rendered in distributing Class B and Class C shares.
OFDI also receives a service fee of 0.25% per year to compensate dealers for
providing services for accounts that hold Class B and C shares. Each fee is
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 year
ended October 31, 1997, 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,
1997 are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Amount Retained by OFDI Unreimbursed Expenses
- ------------------------------------------------------------------------------------------
<S> <C> <C>
LifeSpan Income Fund, Class B $ 5,749 $ 8,787
- ------------------------------------------------------------------------------------------
LifeSpan Balanced Fund, Class B 25,286 135,290
- ------------------------------------------------------------------------------------------
LifeSpan Balanced Fund, Class C 5,576 14,197
- ------------------------------------------------------------------------------------------
LifeSpan Growth Fund, Class B 34,240 131,807
- ------------------------------------------------------------------------------------------
LifeSpan Growth Fund, Class C 6,064 12,680
- ------------------------------------------------------------------------------------------
</TABLE>
5. ILLIQUID AND RESTRICTED SECURITIES
At October 31, 1997, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in
private placement transactions, are not registered under the Securities Act
of 1933, may have contractual restrictions on resale, and are valued under
methods approved by the Board of Directors as reflecting fair value. A
security may be considered illiquid if it lacks a readily-available market
or if its valuation has not changed for a certain period of time. The Funds
intend to invest no more than 10% of their net assets (determined at the
time of purchase and reviewed periodically) in illiquid or restricted
securities. Certain restricted securities, eligible for resale to qualified
institutional investors, are not subject to that limit. The aggregate value
of illiquid or restricted securities subject to this limitation at October
31, 1997 are as follows:
- --------------------------------------------------------------------------------
Amount Percentage to Net Assets as of
October 31, 1997
- --------------------------------------------------------------------------------
LifeSpan Income Fund $1,108,880 3.69%
- --------------------------------------------------------------------------------
LifeSpan Balanced Fund 1,605,278 2.37
- --------------------------------------------------------------------------------
LifeSpan Growth Fund 715,076 1.19
- --------------------------------------------------------------------------------
57 Oppenheimer LifeSpan Funds
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
6. BORROWINGS
The Funds may borrow from a bank for temporary or emergency purposes
including, without limitation, funding of shareholder redemptions provided
asset coverage for borrowings exceeds 300%. The Funds have entered into an
agreement which enables them to participate with other Oppenheimer funds in
an unsecured line of credit with a bank, which permits borrowings up to $400
million, collectively. Interest is charged to each fund, based on its
borrowings, at a rate equal to the Federal Funds Rate plus 0.35%.
Borrowings are payable 30 days after such loan is executed. Each fund also
pays a commitment fee equal to its pro rata share of the average unutilized
amount of the credit facility at a rate of 0.0575% per annum.
The Funds had no borrowings outstanding during the year ended October 31,
1997.
7. SUBSEQUENT EVENT
On December 11, 1997, the Board of Directors approved the reorganization of
Oppenheimer LifeSpan Income Fund with and into Oppenheimer Bond Fund,
Oppenheimer LifeSpan Balanced Fund with and into Oppenheimer Disciplined
Allocation Fund and Oppenheimer LifeSpan Growth Fund with and into
Oppenheimer Disciplined Value Fund. Shareholders of each of the Oppenheimer
LifeSpan Funds will be asked to approve a reorganization whereby
shareholders would receive shares of Oppenheimer Bond Fund, Oppenheimer
Disciplined Allocation Fund and Oppenheimer Disciplined Value Fund, as
applicable, and the Oppenheimer LifeSpan Funds would be liquidated. If
shareholder approval is received, it is expected that the reorganization
will occur during the second quarter of calendar 1998.
58 Oppenheimer LifeSpan Funds
<PAGE>
Appendix A
Corporate Industry Classifications
Aerospace/Defense Food
Air Transportation Gas Utilities
Auto Parts Distribution Gold
Automotive Health Care/Drugs
Bank Holding Companies Health Care/Supplies & Services
Banks Homebuilders/Real Estate
Beverages Hotel/Gaming
Broadcasting Industrial Services
Broker-Dealers Information Technology
Building Materials Insurance
Cable Television Leasing & Factoring
Chemicals Leisure
Commercial Finance Manufacturing
Computer Hardware Metals/Mining
Computer Software Nondurable Household Goods
Conglomerates Oil - Integrated
Consumer Finance Paper
Containers Publishing/Printing
Convenience Stores Railroads
Department Stores Restaurants
Diversified Financial Savings & Loans
Diversified Media Shipping
Drug Stores Special Purpose Financial
Drug Wholesalers Specialty Retailing
Durable Household Goods Steel
Education Supermarkets
Electric Utilities Telecommunications - Technology
Electrical Equipment Telephone - Utility
Electronics Textile/Apparel
Energy Services & Producers Tobacco
Entertainment/Film Toys
Environmental Trucking
Wireless Services
A-1
<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
The Bank of New York
One Wall Street
New York, New York 1015
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
<PAGE>
OPPENHEIMER SERIES FUND, INC.
FORM N-1A
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
- -------- ----------------------------------
(a) Financial Statements:
(1) Financial Highlights - See Parts A and B of each
of the following:
(i) Oppenheimer Disciplined Allocation Fund
("Allocation Fund") - Filed herewith.
(ii) Oppenheimer Disciplined Value Fund ("Value
Fund") - Filed herewith.
(iii) Oppenheimer LifeSpan Growth Fund ("LifeSpan
Growth Fund") - Filed herewith.
(iv) Oppenheimer LifeSpan Balanced Fund ("LifeSpan
Balanced Fund") - Filed herewith.
(v) Oppenheimer LifeSpan Income Fund ("LifeSpan
Income Fund") - Filed herewith.
(2) Independent Auditors' Report - See Part B of each
of the following:
(i) Allocation Fund - Filed herewith.
(ii) Value Fund - Filed herewith.
(iii)LifeSpan Growth Fund - Filed herewith.
(iv) LifeSpan Balanced Fund - Filed herewith.
(v) LifeSpan Income Fund - Filed herewith.
(3) Statements of Investment - See Part B of each of
the following:
(i) Allocation Fund - Filed herewith.
(ii) Value Fund - Filed herewith.
(iii)LifeSpan Growth Fund - Filed herewith.
(iv) LifeSpan Balanced Fund - Filed herewith.
(v) LifeSpan Income Fund - Filed herewith.
(4) Statement of Net Assets and Liabilities - See Part
B of each of the following:
(i) Allocation Fund - Filed herewith.
(ii) Value Fund - Filed herewith.
(iii)LifeSpan Growth Fund - Filed herewith.
(iv) LifeSpan Balanced Fund - Filed herewith.
(v) LifeSpan Income Fund - Filed herewith.
(5) Statement of Operations See Part B of each of the
following:
(i)Allocation Fund - Filed herewith.
(ii) Value Fund - Filed herewith.
(iii) LifeSpan Growth Fund - Filed herewith.
(iv) LifeSpan Balanced Fund - Filed herewith.
(v) LifeSpan Income Fund - Filed herewith.
(6) Statement of Changes in Net Assets - See Part
B of each of the following:
(I) Allocation Fund - Filed herewith.
(ii) Value Fund - Filed herewith.
(iii) LifeSpan Growth Fund - Filed herewith.
(iv) LifeSpan Balanced Fund - Filed herewith.
(v) LifeSpan Income Fund - Filed herewith.
(7) Notes to Financial Statements - See Part
B of each of the following:
(I) Allocation Fund - Filed herewith.
(ii) Value Fund - Filed herewith.
(iii)LifeSpan Growth Fund - Filed herewith.
(iv) LifeSpan Balanced Fund - Filed herewith.
(v) LifeSpan Income Fund - Filed herewith.
(b) Exhibits
(1) Amended and Restated Articles of Incorporation dated January 6,
1995: Filed with Registrant's Post-Effective Amendment NO. 28, 3/1/96,
and Incorporated herein by reference.
(1) (a) Articles Supplementary dated September, 1995:
Filed with Registrant's Post-Effective Amendment No. 28,
3/1/96, and incorporated herein by reference.
(1) (b) Articles Supplementary dated May, 1995: Filed
with Registrant's Post-Effective Amendment No. 28,
3/1/96, and incorporated herein by reference.
(1) (c) Articles Supplementary dated November 15, 1996:
Filed with Registrant's Post-Effective Amendment No. 31,
12/16/96, and incorporated herein by reference.
(2) By-Laws: Filed with Registrant's Post-Effective
Amendment No. 28, 3/1/96, and incorporated herein by
reference.
(3) Not Applicable
(4) (a) Oppenheimer Disciplined Allocation Fund - Specimen Class A
Share Certificate: Filed with Registrant's Post-Effective
Amendment No. 31, 12/16/96, and incorporated herein by
reference.
(4) (b) Oppenheimer Disciplined Allocation Fund
Specimen Class B Share Certificate: Filed with
Registrant's Post-Effective Amendment No. 31,
12/16/96, and incorporated herein by
reference.
(4) (c) Oppenheimer Disciplined Allocation Fund
Specimen Class C Share Certificate: Filed with
Registrant's Post-Effective Amendment No. 31,
12/16/96, and incorporated herein by
reference.
(4) (d) Oppenheimer Disciplined Value Fund
Specimen Class A Share Certificate: Filed with
Registrant's Post-Effective Amendment No. 31,
12/16/96, and incorporated herein by
reference.
(4) (e) Oppenheimer Disciplined Value Fund
Specimen Class B Share Certificate: Filed with
Registrant's Post-Effective Amendment No. 31,
12/16/96, and incorporated herein by
reference.
(4) (f) Oppenheimer Disciplined Value Fund
Specimen Class C Share Certificate: Filed with
Registrant's Post-Effective Amendment No. 31,
12/16/96, and incorporated herein by
reference.
(4) (g) Oppenheimer Disciplined Value Fund
Specimen Class Y Share Certificate: Filed with
Registrant's Post-Effective Amendment No. 31,
12/16/96, and incorporated herein by
reference.
(4) (h) Oppenheimer LifeSpan Growth Fund
Specimen Class A Share Certificate: Filed with
Registrant's Post-Effective Amendment No. 31,
12/16/96, and incorporated herein by
reference.
(4) (i) Oppenheimer LifeSpan Growth Fund
Specimen Class B Share Certificate: Filed with
Registrant's Post-Effective Amendment No. 31,
12/16/96, and incorporated herein by
reference.
(4) (j) Oppenheimer LifeSpan Growth Fund
Specimen Class C Share Certificate: Filed with
Registrant's Post-Effective Amendment No. 31,
12/16/96, and incorporated herein by
reference.
(4) (k) Oppenheimer LifeSpan Balanced Fund
Specimen Class A Share Certificate: Filed with
Registrant's Post-Effective Amendment No. 31, 12/16/96,
and incorporated herein by reference.
(4) (l) Oppenheimer LifeSpan Balanced Fund
Specimen Class B Share Certificate: Filed with
Registrant's Post-Effective Amendment No. 31,
12/16/96, and incorporated herein by
reference.
(4) (m) Oppenheimer LifeSpan Balanced Fund
Specimen Class C Share Certificate: Filed with
Registrant's Post-Effective Amendment No. 31,
12/16/96, and incorporated herein by
reference.
(4) (n) Oppenheimer LifeSpan Income Fund
Specimen Class A Share Certificate: Filed with
Registrant's Post-Effective Amendment No. 31,
12/16/96, and incorporated herein by
reference.
(4) (o) Oppenheimer LifeSpan Income Fund
Specimen Class B Share Certificate: Filed with
Registrant's Post-Effective Amendment No. 31,
12/16/96, and incorporated herein by
reference.
(4) (p) Oppenheimer LifeSpan Income Fund
Specimen Class C Share Certificate: Filed with
Registrant's Post-Effective Amendment No. 31,
12/16/96, and incorporated herein by
reference.
(5) Investment Advisory Agreement between the Registrant, on behalf of
Connecticut Mutual Total Return Account and OppenheimerFunds, Inc. and
schedule of omitted substantially similar documents: Filed with
Registrant's Post-Effective Amendment No. 29, 4/30/96, and incorporated
herein by reference.
(5) (a) Investment Subadvisory Agreement between
OppenheimerFunds, Inc. and Pilgrim, Baxter & Associates,
Ltd. (for CMIA LifeSpan Balanced Account) and schedule of
omitted substantially similar documents: Filed with
Registrant's Post-Effective Amendment No. 29, 4/30/96,
and incorporated herein by reference.
(5) (b) Investment Subadvisory Agreement between OppenheimerFunds, Inc.
and BEA Associates (for CMIA LifeSpan Balanced Account) and schedule of
omitted substantially similar documents: Filed with Registrant's
Post-Effective Amendment No. 29, 4/30/96, and incorporated herein by
reference.
(5) (c) Investment Subadvisory Agreement between OppenheimerFunds, Inc.
and Babson-Stewart Ivory International (for CMIA LifeSpan Balanced
Account) and schedule of omitted substantially similar documents: Filed
with Registrant's Post-Effective Amendment No. 29, 4/30/96, and
incorporated herein by reference.
(6) (a) General Distributor's Agreement between
Registrant on behalf of Oppenheimer Disciplined
Allocation Fund and OppenheimerFunds Distributor, Inc.
("OFDI"): Filed with Registrant's Post-Effective
Amendment No. 29, 4/30/96, and incorporated herein by
reference.
(6) (b) General Distributor's Agreement between
Registrant on behalf of Oppenheimer Disciplined Value
Fund and OFDI: Filed with Registrant's Post-Effective
Amendment No. 29, 4/30/96 and incorporated herein by
reference.
(6)(c) General Distributor's Agreement between Registrant on behalf of
Oppenheimer LifeSpan Growth Fund and OFDI: Filed with Post-Effective
Amendment No. 29, 4/30/96, and incorporated herein by reference.
(6)(d) General Distributor's Agreement between Registrant on behalf of
Oppenheimer LifeSpan Balanced Fund and OFDI: Filed with Post-Effective
Amendment No. 29, 4/30/96, and incorporated herein by reference.
(6)(e) General Distributor's Agreement between Registrant on behalf of
Oppenheimer LifeSpan Income Fund and OFDI: Filed with Post-Effective
Amendment No. 29, 4/30/96, and incorporated herein by reference.
(7) Not Applicable
(8)(a) Master Custodian Agreement between Registrant, on behalf of each
series of the Registrant, and State Street Bank and Trust Company:
Filed with Registrant's Post-Effective Amendment No. 28, 3/1/96, and
incorporated
herein by reference.
(8) (b) Amendment (LifeSpan Funds) to Custodian
Agreement between Registrant and State Street Bank and
Trust Company: Filed with Registrant's Post-Effective
Amendments No. 28, 3/1/96, and incorporated herein by
reference.
(8) (c) Custodian Agreement between Registrant, on behalf of each
series of the Registrant and The Bank of New York dated June 11, 1997:
Filed herewith.
(9) Service Contract between Registrant and OppenheimerFunds Services:
Filed with Registrant's Post- Effective Amendments No.29, 4/30/96, and
incorporated herein by reference.
(10) Opinion and Consent of Counsel dated 2/28/96: Filed as an exhibit
to 24f-2 notice.
(11) (a) Consent of Independent Auditors - Disciplined Value Fund:
Filed herewith.
(11) (b) Consent of Independent Auditors - Disciplined Allocation
Fund: Filed herewith.
(11) (c) Consent of Independent Auditors - LifeSpan Funds:
Filed herewith.
(12) Not applicable.
(13) Not Applicable.
(14) (a) Form of Individual Retirement Account Trust
Agreement: Filed as Exhibit 14 of Post-Effective
Amendment No. 21 of Oppenheimer U.S. Government Trust
(Reg. No. 2-76645), 8/25/93, and incorporated herein by
reference.
(14) (b) Form of prototype Standardized and Non-
Standardized Profit-Sharing Plan and Money Purchase
Pension Plan for self-employed persons and corporations:
Filed with Post-Effective Amendment No. 3 of Oppenheimer
Global Growth & Income Fund (File No. 33-33799), 1/31/92,
and refiled with Post-Effective Amendment No. 7 to the
Registration Statement of Oppenheimer Global Growth &
Income Fund (Reg. No. 33-33799), 12/1/94, pursuant to
Item 102 of Regulation S-T, and incorporated herein by
reference.
(14) (c) Form of Tax-Sheltered Retirement Plan and
Custody Agreement for employees of public schools and
tax-exempt organizations: Filed with Post-Effective
Amendment No. 47 to the Registration Statement of
Oppenheimer Growth Fund (Reg. No. 2-45272), 10/21/94, and
incorporated herein by reference.
(14) (d) Form of Simplified Employee Pension IRA: Filed
with Post-Effective Amendment No. 42 to the Registration
Statement of Oppenheimer Equity Income Fund (Reg. No. 2-
33043), 10/28/94, and incorporated herein by reference.
(14) (e) Form of SAR-SEP Simplified Employee Pension
IRA: Filed with Registrant's Post-Effective Amendment No.
19, 3/1/94, and incorporated herein by reference.
(14) (f) Form of Prototype 401(k) plan: Filed with Post-Effective
Amendment No. 7 to the Registration Statement of Oppenheimer Strategic
Income & Growth Fund (33-47378), 9/28/95, and incorporated herein by
reference.
(15)(a) Service Plan and Agreement between Oppenheimer Disciplined
Allocation Fund and OppenheimerFunds Distributor, Inc. for Class A
Shares and schedule of substantially similar omitted documents: Filed
with the Registrant's Post-Effective Amendment No. 29, 4/30/96, and
incorporated herein by reference.
(15)(b) Distribution and Service Plan and Agreement with
OppenheimerFunds Distributor, Inc. for Class B Shares of Oppenheimer
Disciplined Allocation Fund and schedule of substantially similar
omitted documents: Filed with the Registrant's Post-Effective Amendment
No. 29, 4/30/96, and incorporated herein by reference.
(15)(c) Distribution and Service Plan and Agreement with
OppenheimerFunds Distributor, Inc. for Class C Shares of Oppenheimer
Disciplined Allocation Fund and schedule of substantially similar
omitted documents: Filed with the Registrant's Post-Effective Amendment
No. 29, 4/30/96, and incorporated herein by reference.
(15)(d) Service Plan and Agreement between Oppenheimer
Disciplined Value Fund and OppenheimerFunds Distributor,
Inc. for Class A shares: Filed with Post-Effective
Amendment No. 31, 12/16/96, and incorporated herein by
reference.
(15)(e) Distribution and Service Plan and Agreement
with OppenheimerFunds Distributor, Inc. for Class B
shares of Oppenheimer Disciplined Value Fund: Filed with
Post-Effective Amendment No. 31, 12/16/96, and
incorporated herein by reference.
(15)(f) Distribution and Service Plan and Agreement with
OppenheimerFunds Distributor, Inc. for Class C shares of
Oppenheimer Disciplined Value Fund: Filed with Post-
Effective Amendment No. 31, 12/16/96, and incorporated
herein by reference.
(15)(g) Service Plan and Agreement between LifeSpan
Growth Fund and OppenheimerFunds Distributor, Inc. for
Class A shares: Filed with Post-Effective Amendment No.
29, 4/30/96, and incorporated herein by reference.
(15)(h) Distribution and Service Plan and Agreement
with OppenheimerFunds Distributor, Inc. for Class B
shares of LifeSpan Growth Fund: Filed with Post-
Effective Amendment No. 29, 4/30/96, and incorporated
herein by reference.
(15)(i) Distribution and Service Plan and Agreement
with OppenheimerFunds Distributor, Inc. for Class C
shares of LifeSpan Growth Fund: Filed with Post-
Effective Amendment No. 29, 4/30/96, and incorporated
herein by reference.
(15)(j) Service Plan and Agreement between LifeSpan
Balanced Fund and OppenheimerFunds Distributor, Inc. for
Class A shares: Filed with Post-Effective Amendment No.
29, 4/30/96, and incorporated herein by reference.
(15)(k) Distribution and Service Plan and Agreement
with OppenheimerFunds Distributor, Inc. for Class B
shares of LifeSpan Balanced Fund: Filed with Post-
Effective Amendment No. 29, 4/30/96, and incorporated
herein by reference.
(15)(l) Distribution and Service Plan and Agreement
with OppenheimerFunds Distributor, Inc. for Class C
shares of LifeSpan Balanced Fund: Filed with Post-
Effective Amendment No. 29, 4/30/96, and incorporated
herein by reference.
(15)(m) Service Plan and Agreement between LifeSpan
Income Fund and OppenheimerFunds Distributor, Inc. for
Class A shares: Filed with Post-Effective Amendment No.
29, 4/30/96, and incorporated herein by reference.
(15)(n) Distribution and Service Plan and Agreement
with OppenheimerFunds Distributor, Inc. for Class B
shares of LifeSpan Income Fund: Filed with Post-
Effective Amendment No. 29, 4/30/96, and incorporated
herein by reference.
(15)(o) Distribution and Service Plan and Agreement
with OppenheimerFunds Distributor, Inc. for Class C
shares of LifeSpan Income Fund: Filed with Post-
Effective Amendment No. 29, 4/30/96, and incorporated
herein by reference.
(16)(a) Performance Data Computation Schedule for Disciplined Value
Fund: Filed herewith.
(16)(b) Performance Data Computation Schedule for
Disciplined Allocation Fund: Filed herewith.
(16)(c) Performance Data Computation Schedule for
LifeSpan Growth Fund: Filed herewith.
(16)(d) Performance Data Computation Schedule for
LifeSpan Balanced Fund: Filed herewith.
(16)(e) Performance Data Computation Schedule for
LifeSpan Income Fund: Filed herewith.
(17)(a) Financial Data Schedule for Class A Shares of
Value Fund: Filed herewith.
(17)(b) Financial Data Schedule for Class B Shares of
Value Fund: Filed herewith.
(17)(c) Financial Data Schedule for Class C Shares of
Value Fund: Filed herewith.
(17)(d) Financial Data Schedule for Class Y Shares of
Value Fund: Filed herewith.
(17)(e) Financial Data Schedule for Class A Shares of Allocation Fund:
Filed herewith.
(17)(f) Financial Data Schedule for Class B Shares of
Allocation Fund: Filed herewith.
(17)(g) Financial Data Schedule for Class C Shares of
Allocation Fund: Filed herewith.
(17)(h) Financial Data Schedule for Class A Shares of LifeSpan Growth
Fund: Filed herewith.
(17)(i) Financial Data Schedule for Class B Shares of LifeSpan Growth
Fund: Filed herewith.
(17)(j) Financial Data Schedule for Class C Shares of LifeSpan Growth
Fund: Filed herewith.
(17)(k) Financial Data Schedule for Class A Shares of LifeSpan Balanced
Fund: Filed herewith.
(17)(l) Financial Data Schedule for Class B Shares of LifeSpan Balanced
Fund: Filed herewith.
(17)(m) Financial Data Schedule for Class C Shares of LifeSpan Balanced
Fund: Filed herewith.
(17)(n) Financial Data Schedule for Class A Shares of LifeSpan Income
Fund: Filed herewith.
(17)(o) Financial Data Schedule for Class B Shares of LifeSpan Income
Fund: Filed herewith.
(17)(p) Financial Data Schedule for Class C Shares of LifeSpan Income
Fund: Filed herewith.
(18) Rule 18f-3 Multiple Class Plan for Oppenheimer Disciplined
Allocation Fund, Oppenheimer Disciplined Value Fund, Oppenheimer
LifeSpan Growth Fund, Oppenheimer LifeSpan Balanced Fund and
Oppenheimer LifeSpan Income Fund: Filed with the Registrant's
Post-Effective Amendment No. 28, 3/1/96, and incorporated herein by
reference.
-- Powers of Attorney - Filed with Post-Effective Amendment
No. 31, 12/16/96, and incorporated herein by reference.
ITEM 25. Persons controlled by or Under Common Control with
- -------- ---------------------------------------------------
Registrant
----------
None
ITEM 26. Number of Holders of Securities
- -------- -------------------------------
Number of Record Holders
TITLE OF CLASS as of February 9, 1998
- --------------- ------------------------
Oppenheimer Disciplined
Allocation Fund
Class A 12,241
Class B 884
Class C 133
Oppenheimer Disciplined
Value Fund
Class A 20,668
Class B 9,241
Class C 904
Class Y 4
Oppenheimer LifeSpan
Growth Fund
Class A 1,159
Class B 708
Class C 182
Oppenheimer LifeSpan
Balanced Fund
Class A 599
Class B 368
Class C 83
Oppenheimer LifeSpan
Income Fund
Class A 135
Class B 67
Class C 21
ITEM 27. Indemnification
- -------- ---------------
Reference is made to Article VI of Registrant's By-laws filed with
Post-Effective Amendment Number 28.
Item 28. Business and Other Connections of Investment Adviser
- -------- ----------------------------------------------------
(a) OppenheimerFunds, Inc. is the investment adviser of the Registrant; it
and certain subsidiaries and affiliates act in the same capacity to other
registered investment companies as described in Parts A and B hereof and listed
in Item 28(b) below.
(b) There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each officer
and director of OppenheimerFunds, Inc. is, or at any time during the past two
fiscal years has been, engaged for his/her own account or in the capacity of
director, officer, employee, partner or trustee.
Name and Current Position
with OppenheimerFunds, Inc. Other Business and Connections
("OFI") During the Past Two Years
- --------------------------- ------------------------------
Mark J.P. Anson,
Vice President Vice President of Oppenheimer Real Asset
Management, Inc.
("ORAMI"); formerly Vice
President of Equity Derivatives
at Salomon Brothers, Inc.
Peter M. Antos,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer
funds; a Chartered Financial
Analyst; Senior Vice President
of HarbourView Asset Management
Corporation ("HarbourView");
prior to March, 1996 he was the senior
equity portfolio manager
for the Panorama Series Fund,
Inc. (the "Company") and other
mutual funds and pension funds
managed by G.R. Phelps & Co.
Inc. ("G.R. Phelps"), the
Company's former investment
adviser, which was a subsidiary
of Connecticut Mutual Life
Insurance Company; was also
responsible for managing the
common stock department and
common stock investments of
Connecticut Mutual Life
Insurance Co.
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
Bruce Bartlett,
Vice President An officer and/or portfolio manager of
certain Oppenheimer
funds. Formerly a Vice
President and Senior Portfolio
Manager at First of America
Investment Corp.
Beichert, Kathleen None.
Rajeev Bhaman,
Vice President Formerly Vice President (January 1992 -
February, 1996)
of Asian Equities for Barclays
de Zoete Wedd, Inc.
Robert J. Bishop,
Vice President Vice President of Mutual Fund Accounting
(since May 1996); an
officer of other Oppenheimer
funds; formerly an Assistant
Vice President of OFI/Mutual
Fund Accounting (April 1994-May
1996), and a Fund Controller
for OFI.
George C. Bowen,
Senior Vice President
& Treasurer Vice President (since June 1983) and
Treasurer (since
March 1985) of OppenheimerFunds
Distributor, Inc. (the
"Distributor"); Vice President
(since October 1989) and
Treasurer (since April 1986) of
HarbourView; Senior Vice
President (since February
1992), Treasurer (since July
1991)and a director (since
December 1991) of Centennial;
President, Treasurer and a
director of Centennial Capital
Corporation (since June 1989);
Vice President and Treasurer
(since August 1978) and
Secretary (since April 1981)
of Shareholder Services, Inc.
("SSI"); Vice President,
Treasurer and Secretary of
Shareholder Financial Services,
Inc. ("SFSI") (since November
1989); Treasurer of Oppenheimer
Acquisition Corp. ("OAC")
(since June 1990); Treasurer of
Oppenheimer Partnership
Holdings, Inc. (since November
1989); Vice President and
Treasurer of ORAMI (since July
1996); Chief Executive
Officer, Treasurer and a
director of MultiSource
Services, Inc., a broker-dealer
(since December 1995); an
officer of other Oppenheimer
funds.
Scott Brooks,
Vice President None.
Susan Burton,
Assistant Vice President None.
Adele Campbell,
Assistant Vice President
& Assistant Treasurer:
Rochester Division Formerly Assistant Vice President
of Rochester Fund
Services, Inc.
Michael Carbuto,
Vice President An officer and/or portfolio manager
of certain Oppenheimer
funds; Vice President of
Centennial.
Ruxandra Chivu,
Assistant Vice President None.
H.C. Digby Clements,
Assistant Vice President:
Rochester Division None.
O. Leonard Darling,
Executive Vice President Trustee (1993 - present) of
Awhtolia College - Greece.
Robert A. Dense,
Senior Vice President None.
Sherd Devereux,
Assistant Vice President None.
Robert Doll, Jr.,
Executive Vice President
& Director An officer and/or portfolio manager
of certain Oppenheimer
funds.
John Doney,
Vice President An officer and/or portfolio
manager of
certain Oppenheimer funds.
Andrew J. Donohue,
Executive Vice President,
General Counsel and Director Executive Vice President (since
September 1993), and a director
(since January 1992) of the
Distributor; Executive Vice
President, General Counsel and
a director of HarbourView,
SSI, SFSI and Oppenheimer
Partnership Holdings, Inc.
since (September 1995) and
MultiSource Services, Inc. (a
broker-dealer) (since December
1995); President and a
director of Centennial (since
September 1995); President and
a director of ORAMI (since
July 1996); General Counsel
(since May 1996) and Secretary
(since April 1997) of OAC;
Vice President of
OppenheimerFunds International,
Ltd. ("OFIL") and Oppenheimer
Millennium Funds plc (since
October 1997); an officer of
other Oppenheimer funds.
George Evans,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Edward Everett,
Assistant Vice President None.
Scott Farrar,
Vice President Assistant Treasurer of Oppenheimer
Millennium Funds
plc (since October 1997); an
officer of other Oppenheimer
funds; formerly an Assistant
Vice President of OFI/Mutual
Fund Accounting (April 1994-May
1996), and a Fund Controller
for OFI.
Leslie A. Falconio,
Assistant Vice President None.
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary of the
Distributor; Secretary of
HarbourView, MultiSource and
Centennial; Secretary, Vice
President and Director of
Centennial Capital Corporation;
Vice President and Secretary of
ORAMI.
Ronald H. Fielding,
Senior Vice President;
Chairman: Rochester Division An officer, Director and/or portfolio
manager of certain
Oppenheimer funds; Presently
he holds the following other
positions: Director (since
1995) of ICI Mutual Insurance
Company; Governor (since 1994)
of St. John's College; Director
(since 1994 - present) of
International Museum of
Photography at George Eastman
House; Director (since 1986) of
GeVa Theatre. Formerly he held
the following positions:
formerly, Chairman of the Board
and Director of Rochester Fund
Distributors, Inc. ("RFD");
President and Director of
Fielding Management Company,
Inc. ("FMC"); President and
Director of Rochester Capital
Advisors, Inc. ("RCAI");
Managing Partner of Rochester
Capital Advisors, L.P.,
President and Director of
Rochester Fund Services, Inc.
("RFS"); President and Director
of Rochester Tax Managed Fund,
Inc.; Director (1993 - 1997) of
VehiCare Corp.; Director (1993
- 1996) of VoiceMode.
John Fortuna,
Vice President None.
Patricia Foster,
Vice President Formerly she held the following
positions: An officer of
certain Oppenheimer funds (May,
1993 - January, 1996);
Secretary of Rochester Capital
Advisors, Inc. and General
Counsel (June, 1993 - January
1996) of Rochester Capital
Advisors, L.P.
Jennifer Foxson,
Assistant Vice President None.
Paula C. Gabriele,
Executive Vice President Formerly, Managing Director (1990-1996)
for Bankers Trust Co.
Robert G. Galli,
Vice Chairman Trustee of the New York-based
Oppenheimer Funds. Formerly
Vice President and General
Counsel of Oppenheimer Acquisition Corp.
Linda Gardner,
Vice President None.
Alan Gilston,
Vice President Formerly Vice President for Schroder
Capital Management
International.
Jill Glazerman,
Assistant Vice President None.
Jeremy Griffiths,
Chief Financial Officer Currently a Member and Fellow of the
Institute of Chartered
Accountants; formerly an
accountant for Arthur Young
(London, U.K.).
Robert Grill,
Vice President Formerly Marketing Vice President for
Bankers Trust Company (1993-1996); Steering
Committee Member, Subcommittee Chairman for
American Savings Education Council (1995-1996).
Caryn Halbrecht,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; formerly Vice
President of Fixed Income Portfolio
Management at Bankers Trust.
Elaine T. Hamann,
Vice President Formerly Vice President (September, 1989 -
January, 1997) of Bankers Trust Company.
Glenna Hale,
Director of Investor Marketing Formerly, Vice President (1994-
1997) of Retirement Plans
Services for OppenheimerFunds
Services.
Thomas B. Hayes,
Vice President None.
Barbara Hennigar,
Executive Vice President and
Chief Executive Officer of
OppenheimerFunds Services,
a division of the Manager President and Director
of SFSI; President and Chief executive Officer
of SSI.
Dorothy Hirshman, None.
Assistant Vice President
Alan Hoden,
Vice President None.
Merryl Hoffman,
Vice President None.
Nicholas Horsley,
Vice President Formerly a Senior Vice President
and Portfolio Manager
for Warburg, Pincus
Counsellors, Inc. (1993-1997),
Co-manager of Warburg, Pincus
Emerging Markets Fund (12/94 -10/97),
Co-manager Warburg,
Pincus Institutional Emerging
Markets Fund - Emerging Markets
Portfolio (8/96 - 10/97),
Warburg Pincus Japan OTC Fund,
Associate Portfolio Manager of
Warburg Pincus International
Equity Fund, Warburg Pincus
Institutional Fund -Intermediate
Equity Portfolio,
and Warburg Pincus EAFE Fund.
Scott T. Huebl,
Assistant Vice President None.
Richard Hymes,
Assistant Vice President None.
Jane Ingalls,
Vice President None.
Byron Ingram,
Assistant Vice President None.
Ronald Jamison,
Vice President Formerly Vice President and
Associate General Counsel at
Prudential Securities, Inc.
Frank Jennings,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; formerly, a Managing
Director of Global Equities at
Paine Webber's Mitchell
Hutchins division.
Thomas W. Keffer,
Senior Vice President Formerly Senior Managing Director
(1994 - 1996) of Van
Eck Global.
Avram Kornberg,
Vice President None.
Joseph Krist,
Assistant Vice President None.
Paul LaRocco,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; formerly, a
Securities Analyst for Columbus Circle
Investors.
Michael Levine,
Assistant Vice President None.
Shanquan Li,
Vice President Director of Board (since 2/96),
Chinese Finance Society;
formerly, Chairman (11/94-
2/96), Chinese Finance Society;
and Director (6/94-6/95),
Greater China Business
Networks.
Stephen F. Libera,
Vice President An officer and/or portfolio manager
for certain Oppenheimer
funds; a Chartered Financial
Analyst; a Vice President of
HarbourView; prior to March
1996, the senior bond portfolio
manager for Panorama Series
Fund Inc., other mutual funds
and pension accounts managed by
G.R. Phelps; also responsible for
managing the public fixed-
income securities department at
Connecticut Mutual Life
Insurance Co.
Mitchell J. Lindauer,
Vice President None.
David Mabry,
Assistant Vice President None.
Steve Macchia,
Assistant Vice President None.
Bridget Macaskill,
President, Chief Executive
Officer and Director Chief Executive Officer (since
September 1995); President and
director (since June 1991) of
HarbourView; Chairman and a
director of SSI (since August
1994), and SFSI (September
1995); President (since
September 1995) and a director
(since October 1990) of OAC;
President (since September
1995) and a director (since
November 1989) of Oppenheimer
Partnership Holdings, Inc., a
holding company subsidiary of
OFI; a director of ORAMI (since
July 1996) ; President and a
director (since October 1997)
of OFIL, an offshore fund
manager subsidiary of OFI and
Oppenheimer Millennium Funds
plc (since October 1997);
President and a director of
other Oppenheimer funds; a
director of the NASDAQ Stock
Market, Inc. and of Hillsdown
Holdings plc (a U.K. food
company); formerly an Executive
Vice President of OFI.
Wesley Mayer,
Vice President Formerly Vice President (January,
1995 - June, 1996) of
Manufacturers Life Insurance
Company.
Loretta McCarthy,
Executive Vice President None.
Kevin McNeil,
Vice President Treasurer (September, 1994 -present)
for the Martin Luther
King Multi-Purpose Center (non-profit
community
organization); Formerly Vice President (January,
1995 - April, 1996) for Lockheed Martin IMS.
Tanya Mrva,
Assistant Vice President None.
Lisa Migan,
Assistant Vice President None.
Robert J. Milnamow,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; formerly a Portfolio
Manager (August, 1989 - August, 1995) with
Phoenix Securities Group.
Denis R. Molleur,
Vice President None.
Linda Moore,
Vice President Formerly, Marketing Manager (July 1995
-November 1996) for
Chase Investment Services Corp.
Tanya Mrva,
Assistant Vice President None.
Kenneth Nadler,
Vice President None.
David Negri,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Barbara Niederbrach,
Assistant Vice President None.
Robert A. Nowaczyk,
Vice President None.
Richard M. O'Shaugnessy,
Assistant Vice President:
Rochester Division None.
Gina M. Palmieri,
Assistant Vice President None.
Robert E. Patterson,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
John Pirie,
Assistant Vice President Formerly, a Vice President with
CohaRafferty Securities, Inc.
Tilghman G. Pitts III,
Executive Vice President
and Director Chairman and Director of the Distributor.
Jane Putnam,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Russell Read,
Senior Vice President Formerly a consultant for Prudential
Insurance on behalf
of the General Motors Pension
Plan.
Thomas Reedy,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; formerly, a
Securities Analyst for the Manager.
David Robertson,
Vice President None.
Adam Rochlin,
Vice President None.
Michael S. Rosen
Vice President; President,
Rochester Division An officer and/or portfolio manager
of certain Oppenheimer
funds; Formerly, Vice President
(June, 1983 - January, 1996) of
RFS, President and Director of
RFD; Vice President and Director
of FMC; Vice President
and director of RCAI; General
Partner of RCA; Vice President
and Director of Rochester Tax
Managed Fund Inc.
Richard H. Rubinstein,
Senior Vice President An officer and/or portfolio manager
of certain Oppenheimer
funds; formerly Vice President
and Portfolio Manager/Security
Analyst for Oppenheimer Capital
Corp., an investment adviser.
Lawrence Rudnick,
Assistant Vice President None.
James Ruff,
Executive Vice President None.
Valerie Sanders,
Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Stephanie Seminara,
Vice President Formerly, Vice President of
CiticorpInvestment Services
Richard Soper,
Vice President None.
Nancy Sperte,
Executive Vice President None.
Donald W. Spiro,
Chairman Emeritus and Director Vice Chairman and Trustee of the
New York-based Oppenheimer
Funds; formerly Chairman of the
Manager and the Distributor.
Richard A. Stein,
Vice President:
Rochester Division Assistant Vice President (since 1995)
of Rochester Capitol
Advisors, L.P.
Arthur Steinmetz,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
Ralph Stellmacher,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer funds.
John Stoma,
Senior Vice President,
Director Retirement Plans Formerly Vice President of U.S. Group
Pension Strategy and
Marketing for Manulife
Financial.
Michael C. Strathearn,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; a Chartered Financial
Analyst; a Vice President of
HarbourView; prior to March
1996, an equity portfolio
manager for Panorama Series
Fund, Inc. and other mutual
funds and pension accounts
managed by G.R. Phelps.
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee, Director
or Managing Partner of
the Denver-based Oppenheimer
Funds; President and a Director
of Centennial; formerly
President and Director of OAMC,
and Chairman of the Board of
SSI.
James Tobin,
Vice President None.
Jay Tracey,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; formerly Managing
Director of Buckingham Capital
Management.
Gary Tyc,
Vice President, Assistant
Secretary and
Assistant Treasurer Assistant Treasurer of the Distributor and SFSI.
Ashwin Vasan,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Dorothy Warmack,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Jerry Webman,
Senior Vice President Director of New York-based tax-
exempt fixed income Oppenheimer
funds; Formerly, Managing
Director and Chief Fixed Income
Strategist at Prudential Mutual
Funds.
Christine Wells,
Vice President None.
Joseph Welsh,
Assistant Vice President None.
Kenneth B. White,
Vice President An officer and/or portfolio manager
of certain Oppenheimer
funds; a Chartered Financial
Analyst; Vice President of
HarbourView; prior to March
1996, an equity portfolio
manager for Panorama Series
Fund, Inc. and other mutual
funds and pension funds managed
by G.R. Phelps.
William L. Wilby,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer funds; Vice
President of HarbourView.
Carol Wolf,
Vice President An officer and/or portfolio manager
of certain Oppenheimer
funds; Vice President of
Centennial; Vice President, Finance and
Accounting and member of the Board of Directors
of the Junior League of Denver, Inc.; Point of
Contact: Finance Supporters of Children; Member
of the Oncology Advisory Board of the Childrens
Hospital; Member of the Board of Directors of
the Colorado Museum of Contemporary Art.
Caleb Wong,
Assistant Vice President None.
Robert G. Zack,
Senior Vice President and
Assistant Secretary, Associate
General Counsel Assistant Secretary of SSI (since
May 1985), and SFSI
(since November 1989);
Assistant Secretary of
Oppenheimer Millennium Funds
plc (since October 1997); an
officer of other Oppenheimer
funds.
Jill Zachman,
Assistant Vice President:
Rochester Division None.
Arthur J. Zimmer,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer funds; Vice
President of Centennial.
The Oppenheimer Funds include the New York-based Oppenheimer
Funds, the Denver-based Oppenheimer Funds and the Oppenheimer/Quest Rochester
Funds, as set forth below:
New York-based Oppenheimer Funds
- --------------------------------
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Developing Markets Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer International Small Company Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Municipal Trust
Oppenheimer Multiple Strategies Fund
Oppenheimer Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer Series Fund, Inc.
Oppenheimer U.S. Government Trust
Oppenheimer World Bond Fund
Quest/Rochester Funds
- ---------------------
Limited Term New York Municipal Fund
Oppenheimer Bond Fund For Growth
Oppenheimer MidCap Fund
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest For Value Funds
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Rochester Fund Municipals
Denver-based Oppenheimer Funds
- ------------------------------
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Municipal Fund
Oppenheimer Real Asset Fund
Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
The address of OppenheimerFunds, Inc., the New York-based
Oppenheimer Funds, the Quest Funds, OppenheimerFunds Distributor,
Inc., HarbourView Asset Management Corp., Oppenheimer Partnership
Holdings, Inc., and Oppenheimer Acquisition Corp. is Two World
Trade Center, New York, New York 10048-0203.
The address of the Denver-based Oppenheimer Funds, Shareholder Financial
Services, Inc., Shareholder Services, Inc., OppenheimerFunds Services,
Centennial Asset Management Corporation, Centennial Capital Corp., and
Oppenheimer Real Asset Management, Inc. is 6803 South Tucson Way, Englewood,
Colorado 80112.
The address of MultiSource Services, Inc. is 1700 Lincoln
Street, Denver, Colorado 80203.
The address of the Rochester-based funds is 350 Linden Oaks, Rochester, New
York 14625-2807.
Item 29. Principal Underwriter
- -------- ---------------------
(a) OppenheimerFunds Distributor, Inc. is the Distributor of the
Registrant's shares. It is also the Distributor of each of the other registered
open-end investment companies for which OppenheimerFunds, Inc. is the investment
adviser, as described in Part A and B of this Registration Statement and listed
in Item 28(b) above.
(b) The directors and officers of the Registrant's principal underwriter
are:
Name & Principal Positions & Offices Positions & Offices
Business Address with Underwriter with Registrant
- ---------------- ------------------- -------------------
George C. Bowen(1) Vice President and Vice President and
Treasurer Treasurer of the Oppenheimer funds.
Julie Bowers Vice President None
21 Dreamwold Road
Scituate, MA 02066
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Maryann Bruce(2) Senior Vice PresidentNone
Director: Financial
Institution Division
Robert Coli Vice President None
12 White Tail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce de Leon Ave.
Decatur, GA 30030
William Coughlin Vice President None
542 West Surf - #2N
Chicago, IL 60657
Mary Crooks(1)
Rhonda Dixon-Gunner(1) Assistant
Vice President None
Andrew John Donohue(2) Executive Vice Secretary of the
President & Director Oppenheimer funds.
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
Todd Ermenio Vice President None
11011 South Darlington
Tulsa, OK 74137
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
George Fahey Vice President None
201 E. Rund Grove Rd.
#26-22
Lewisville, TX 75067
Katherine P. Feld(2) Vice President None
& Secretary
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding(3) Vice President None
Reed F. Finley Vice President None
1657 Graefield
Birmingham, MI 48009
Wendy Fishler(2) Vice President None
Ronald R. Foster Senior Vice PresidentNone
11339 Avant Lane
Cincinnati, OH 45249
Patricia Gadecki Vice President None
950 First St., S.
Suite 204
Winter Haven, FL 33880
Luiggino Galleto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President None
5506 Bryn Mawr
Dallas, TX 75209
Ralph Grant(2) Vice President/National
Sales Manager None
Sharon Hamilton Vice President None
720 N. Juanita Ave.,#1
Redondo Beach, CA 90277
Byron Ingram(2) Assistant
Vice President None
Mark D. Johnson Vice President None
129 Girard Place
Kirkwood, MO 63105
Michael Keogh(2) Vice President None
Richard Klein Vice President None
4820 Fremont Avenue So.
Minneapolis, MN 55409
Daniel Krause Vice President None
13416 Larchmere Square
Shaker Heights, OH 44120
Ilene Kutno(2) Assistant
Vice President None
Todd Lawson Vice President None
3333 E. Bayaud Avenue
Unit 714
Denver, CO 80209
Wayne A. LeBlang Senior
23 Fox Trail Vice President None
Lincolnshire, IL 60069
Dawn Lind Vice President None
7 Maize Court
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
Todd Marion Vice President None
21 N. Passaic Avenue
Chatham, N.J. 07928
Marie Masters Vice President None
520 E. 76th Street
New York, NY 10021
John McDonough Vice President None
P.O. Box 760
50 Riverview Road
New Castle, NH 03854
Tanya Mrva(2) Assistant
Vice President None
Laura Mulhall(2) Senior Vice PresidentNone
Charles Murray Vice President None
18 Spring Lake Drive
Far Hills, NJ 07931
Wendy Murray Vice President None
32 Carolin Road
Upper Montclair, NJ 07043
Chad V. Noel Vice President None
3238 W. Taro Lane
Phoenix, AZ 85027
Joseph Norton Vice President None
2518 Fillmore Street
San Francisco, CA 94115
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Kevin Parchinski Vice President None
1105 Harney St., #310
Omaha, NE 68102
Randall Payne Vice President None
3530 Providence Plantation Way
Charlotte, NC 28270
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice President None
1777 Larimer St. #807
Denver, CO 80202
Tilghman G. Pitts, III(Chairman & Director None
Elaine Puleo(2) Vice President None
Minnie Ra Vice President None
895 Thirty-First Ave.
San Francisco, CA 94121
Michael Raso Vice President None
16 N. Chatsworth Ave.
Apt. 301
Larchmont, NY 10538
John C. Reinhardt(3) Vice President None
Douglas Rentschler Vice President None
867 Pemberton
Grosse Pointe Park, MI
48230
Ian Robertson Vice President None
4204 Summit Way
Marietta, GA 30066
Michael S. Rosen(3) Vice President None
Kenneth Rosenson Vice President None
3802 Knickerbocker Place
Apt. #3D
Indianapolis, IN 46240
James Ruff(2) President None
Timothy Schoeffler Vice President None
1717 Fox Hall Road
Washington, DC 77479
Michael Sciortino Vice President None
785 Beau Chene Drive
Mandeville, LA 70471
Robert Shore Vice President None
26 Baroness Lane
Laguna Niguel, CA 92677
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Andrew Sweeny Vice President None
5967 Bayberry Drive
Cincinnati, OH 45242
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
David G. Thomas Vice President None
8116 Arlingon Blvd.
#123
Falls Church, VA 22042
Philip St. John TrimbleVice President None
2213 West Homer
Chicago, IL 60647
Sarah Turpin Vice President None
2735 Dover Road
Atlanta, GA 30327
Gary Paul Tyc(1) Assistant Treasurer None
Mark Stephen Vandehey(1)Vice President None
Marjorie Williams Vice President None
6930 East Ranch Road
Cave Creek, AZ 85331
(1) 6803 South Tucson Way, Englewood, Colorado 80112
(2) Two World Trade Center, New York, NY 10048-0203
(3) 350 Linden Oaks, Rochester, NY 14625-2807
(c) Not applicable.
ITEM 30. Management Services
- -------- -------------------
Applicable.
Undertakings.
(a) Not Applicable.
(b) Not Applicable.
(c) The company will furnish each person to whom a prospectus is delivered
with a copy of the Company's latest annual report to shareholders, upon
request and without charge.
(d) The Registrant undertakes to comply with Section 16(c) of the
Investment Company Act of 1940, as amended, as it relates to the
assistance to be rendered to shareholders with respect to the call of a
meeting to replace a director.
C-1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this registration statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York and State of New York on the 18th day of
February, 1998
OPPENHEIMER SERIES FUND, INC.
By: /s/ Bridget A. Macaskill*
----------------------------------------
Bridget A. Macaskill, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities on
the dates indicated:
Signatures Title Date
- ---------- ----- ----
/s/ Leon Levy* Chairman of the February 18, 1998
- ---------------- Board of Directors
Leon Levy
/s/ Bridget A. Macaskill* President, Principal February 18, 1998
- -------------------- Executive Officer
Bridget A. Macaskill and Director
/s/ Donald W. Spiro* Director February 18, 1998
- --------------------
Donald W. Spiro
/s/ George Bowen* Chief Financial February 18, 1998
- ------------------ Accounting Officer
George Bowen and Treasurer
/s/ Robert G. Galli* Director February 18, 1998
- -------------------
Robert G. Galli
Signatures Title Date
- ---------- ----- ----
/s/ Benjamin Lipstein* Director February 18, 1998
- --------------------
Benjamin Lipstein
/s/ Elizabeth B. Moynihan* Director February 18, 1998
- ---------------------
Elizabeth B. Moynihan
/s/ Kenneth A. Randall* Director February 18, 1998
- ---------------------
Kenneth A. Randall
/s/ Edward V. Regan* Director February 18, 1998
- --------------------
Edward V. Regan
/s/ Russell S. Reynolds, JrDirector February 18, 1998
- ---------------------
Russell S. Reynolds, Jr.
/s/ Pauline Trigere* Director February 18, 1998
- ---------------------
Pauline Trigere
/s/ Clayton K. Yeutter* Director February 18, 1998
- ---------------------
Clayton K. Yeutter
*By: /s/ Robert G. Zack
- --------------------------------
Robert G. Zack, Attorney-in-Fact
C-2
<PAGE>
OPPENHEIMER SERIES FUND, INC.
Registration No. 2-75276
Index to Exhibits
-----------------
Exhibit No. Description
- ----------- -----------
24(b)(8)(c) Custodian Agreement between Registrant and The Bank
of New York
24(b)(11)(a) Independent Auditors' Consent - Disciplined Value Fund
24(b)(11)(b) Independent Auditors' Consent - Disciplined Allocation Fund
24(b)(11)(c) Independent Auditors' Consent - LifeSpan Funds
24(b)(16)(a) Disciplined Value Fund - Performance Data Computation Schedule
24(b)(16)(b) Disciplined Allocation Fund - Performance Data Computation
Schedule
24(b)(16)(c) LifeSpan Growth Fund - Performance Data Computation
Schedule
24(b)(16)(d) LifeSpan Balanced Fund - Performance Data
Computation Schedule
24(b)(16)(e) LifeSpan Income Fund - Performance Data Computation
Schedule
24(b)(17)(a) Disciplined Value Fund - Financial Data Schedule for
Class A Shares
24(b)(17)(b) Disciplined Value Fund - Financial Data Schedule for
Class B Shares
24(b)(17)(c) Disciplined Value Fund - Financial Data Schedule for
Class C Shares
24(b)(17)(d) Disciplined Value Fund - Financial Data Schedule for
Class Y Shares
24(b)(17)(e) Disciplined Allocation Fund - Financial Data Schedule for
Class A Shares
24(b)(17)(f) Disciplined Allocation Fund - Financial Data Schedule for
Class B Shares
24(b)(17)(g) Disciplined Allocation Fund - Financial Data Schedule for
Class C Shares
24(b)(17)(h) LifeSpan Growth Fund - Financial Data Schedule for
Class A Shares
24(b)(17)(i) LifeSpan Growth Fund - Financial Data Schedule for
Class B Shares
24(b)(17)(j) LifeSpan Growth Fund - Financial Data Schedule for
Class C Shares
24(b)(17)(k) LifeSpan Balanced Fund - Financial Data Schedule for
Class A Shares
24(b)(17)(l) LifeSpan Balanced Fund - Financial Data Schedule for
Class B Shares
24(b)(17)(m) LifeSpan Balanced Fund - Financial Data Schedule for
Class C Shares
24(b)(17)(n) LifeSpan Income Fund - Financial Data Schedule for
Class A Shares
24(b)(17)(o) LifeSpan Income Fund - Financial Data Schedule for
Class B Shares
24(b)(17)(p) LifeSpan Income Fund - Financial Data Schedule for
Class C Shares
C-3
OPPENHEIMER SERIES FUND, INC.
CUSTODY AGREEMENT
Agreement made as of this 11th day of June, 1997, between OPPENHEIMER
SERIES FUND, INC. a corporation organized and existing under the laws of the
State of Maryland, having its principal office and place of business at Two
World Trade Center, New York, NY 10048-0203 (hereinafter called the "Fund"), and
THE BANK OF NEW YORK, a New York corporation authorized to do a banking
business, having its principal office and place of business at 48 Wall Street,
New York, New York 10286 (hereinafter called the "Custodian").
WITNESSETH, that for and in consideration of the mutual promises
hereinafter set forth, the Fund and the Custodian agree as follows:
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, shall
have the following meanings:
1. "Agreement" shall mean this Custody Agreement and all Appendices and
Certifications described in the Exhibits delivered in connection herewith.
2. "Authorized Person" shall mean any person, whether or not such person
is an Officer or employee of the Fund, duly authorized by the Board of Directors
of the Fund to give Oral Instructions and Written Instructions on behalf of the
Fund and listed in the Certificate annexed hereto as Appendix A or such other
Certificate as may be received by the Custodian from time to time, provided that
each person who is designated in any such Certificate as an "Officer of OSS"
shall be an Authorized Person only for purposes of Articles XII and XIII hereof.
3. "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for United States and federal agency securities, its successor or
successors and its nominee or nominees.
4. "Call Option" shall mean an exchange traded Option with respect to
Securities other than Index, Futures Contracts, and Futures Contract Options
entitling the holder, upon timely exercise and payment of the exercise price, as
specified therein, to purchase from the writer thereof the specified underlying
instruments, currency, or Securities.
5. "Certificate" shall mean any notice, instruction, or other instrument
in writing, authorized or required by this Agreement to be given to the
Custodian which is actually received (irrespective of constructive receipt) by
the Custodian and signed on behalf of the Fund by any two Officers. The term
Certificate shall also include instructions by the Fund to the Custodian
1
<PAGE>
communicated by a Terminal Link.
6. "Clearing Member" shall mean a registered broker-dealer which is a
clearing member under the rules of O.C.C. and a member of a national securities
exchange qualified to act as a custodian for an investment company, or any
broker-dealer reasonably believed by the Custodian to be such a clearing member.
7. "Collateral Account" shall mean a segregated account so denominated
which is specifically allocated to a Series and pledged to the Custodian as
security for, and in consideration of, the Custodian's issuance of any Put
Option guarantee letter or similar document described in paragraph 8 of Article
V herein.
8. "Covered Call Option" shall mean an exchange traded Option entitling
the holder, upon timely exercise and payment of the exercise price, as specified
therein, to purchase from the writer thereof the specified underlying
instruments, currency, or Securities (excluding Futures Contracts) which are
owned by the writer thereof.
9. "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission, its
successor or successors and its nominee or nominees. The term "Depository" shall
further mean and include any other person authorized to act as a depository
under the Investment Company Act of 1940, its successor or successors and its
nominee or nominees, specifically identified in a certified copy of a resolution
of the Fund's Board of Directors specifically approving deposits therein by the
Custodian, including, without limitation, a Foreign Depository.
10. "Financial Futures Contract" shall mean the firm commitment to buy or
sell financial instruments on a U.S. commodities exchange or board of trade at a
specified future time at an agreed upon price.
11. "Foreign Subcustodian" shall mean an "Eligible Foreign Custodian" as
defined in Rule 17-5 which is appointed by the Custodian to perform or
coordinate the receipt, custody and delivery of Foreign Property of the Fund
outside the United States in a manner consistent with the provisions of this
Agreement and whose written contract is approved by the Board of Directors of
the Fund in accordance with Rule 17f-5. References to the Custodian herein
shall, when appropriate, include reference to its Foreign Subcustodians.
12. "Foreign Depository" shall mean an entity organized under the laws of
a foreign country which operates a system outside the United States in general
use by foreign banks and securities brokers for the central or transnational
handling of securities or equivalent book-entries which is regulated by a
foreign government or agency thereof and which is an "Eligible Foreign
Custodian" as defined in Rule 17f-5.
13. "Foreign Securities" shall mean securities and/or short term paper as
defined in Rule 17f-5 under the Act, whether issued in registered or bearer
form.
2
<PAGE>
14. "Foreign Property" shall mean Foreign Securities and money of any
currency which is held outside of the United States.
15. "Futures Contract" shall mean a Financial Futures Contract and/or
Index Futures Contracts.
16. "Futures Contract Option" shall mean an Option with respect to a
Futures Contract.
17. "Investment Company Act of 1940" shall mean the Investment Company Act
of 1940, as amended, and the rules and regulations thereunder.
18. "Index Futures Contract" shall mean a bilateral agreement pursuant to
which the parties agree to take or make delivery of an amount of cash equal to a
specified dollar amount times the difference between the value of a particular
index at the close of the last business day of the contract and the price at
which the futures contract is originally struck.
19. "Index Option" shall mean an exchange traded Option entitling the
holder, upon timely exercise, to receive an amount of cash determined by
reference to the difference between the exercise price and the value of the
index on the date of exercise.
20. "Margin Account" shall mean a segregated account in the name of a
broker, dealer, futures commission merchant, or a Clearing Member, or in the
name of the Fund for the benefit of a broker, dealer, futures commission
merchant, or Clearing Member, or otherwise, in accordance with an agreement
between the Fund, the Custodian and a broker, dealer, futures commission
merchant or a Clearing Member (a "Margin Account Agreement"), separate and
distinct from the custody account, in which certain Securities and/or money of
the Fund shall be deposited and withdrawn from time to time in connection with
such transactions as the Fund may from time to time determine. Securities held
in the Book-Entry System or a Depository shall be deemed to have been deposited
in, or withdrawn from, a Margin Account upon the Custodian's effecting an
appropriate entry in its books and records.
21. "Money Market Security" shall mean all instruments and obligations
commonly known as a money market instruments, where the purchase and sale of
such securities normally requires settlement in federal funds on the same day as
such purchase or sale, including, without limitation, certain Reverse Repurchase
Agreements, debt obligations issued or guaranteed as to interest and/or
principal by the government of the United States or agencies or
instrumentalities thereof, any tax, bond or revenue anticipation note issued by
any state or municipal government or public authority, commercial paper,
certificates of deposit and bankers' acceptances, repurchase agreements with
respect to Securities and bank time deposits.
22. "Nominee" shall mean, in addition to the name of the registered
nominee of the Custodian, (i) a partnership or other entity of a Foreign
Subcustodian which is used solely for the assets of its customers other than the
Custodian and the Foreign Subcustodian, if any, by which it was appointed; or
(ii) the nominee of a Foreign Depository which is used for the securities and
other assets of its customers, members or participants.
3
<PAGE>
23. "O.C.C." shall mean the Options Clearing Corporation, a clearing
agency registered under Section 17A of the Securities Exchange Act of 1934, its
successor or successors, and its nominee or nominees.
24. "Officers" shall mean the President, any Vice President, the
Secretary, the Treasurer, the Controller, any Assistant Secretary, any Assistant
Treasurer, and any other person or persons, whether or not any such other person
is an officer or employee of the Fund, but in each case only if duly authorized
by the Board of Directors of the Fund to execute any Certificate, instruction,
notice or other instrument on behalf of the Fund and listed in the Certificate
annexed hereto as Appendix A or such other Certificate as may be received by the
Custodian from time to time; provided that each person who is designated in any
such Certificate as holding the position of "Officer of OSS" shall be an Officer
only for purposes of Articles XII and XIII hereof.
25. "Option" shall mean a Call Option, Covered Call Option, Index Option
and/or a Put Option.
26. "Oral Instructions" shall mean verbal instructions actually received
(irrespective of constructive receipt) by the Custodian from an Authorized
Person or from a person reasonably believed by the Custodian to be an Authorized
Person.
27. "Put Option" shall mean an exchange traded Option with respect to
instruments, currency, or Securities other than Index Options, Futures
Contracts, and Futures Contract Options entitling the holder, upon timely
exercise and tender of the specified underlying instruments, currency, or
Securities, to sell such instruments, currency, or Securities to the writer
thereof for the exercise price.
28. "Repurchase Agreement" shall mean an agreement pursuant to which the
Fund buys Securities and agrees to resell such Securities at a described or
specified date and price.
29. "Reverse Repurchase Agreement" shall mean an agreement pursuant to
which the Fund sells Securities and agrees to repurchase such Securities at a
described or specified date and price.
30. "Rule 17f-5" shall mean Rule 17f-5 (Reg. Section 270.17f-5)
promulgated by the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended.
31. "Security" shall be deemed to include, without limitation, Money
Market Securities, Call Options, Put Options, Index Options, Index Futures
Contracts, Index Futures Contract Options, Financial Futures Contracts,
Financial Futures Contract Options, Reverse Repurchase Agreements, over the
counter Options on Securities, common stocks and other securities having
characteristics similar to common stocks, preferred stocks, debt obligations
issued by state or municipal governments and by public authorities, (including,
without limitation, general obligation bonds, revenue bonds, industrial bonds
and industrial development bonds), bonds, debentures, notes, mortgages or other
obligations, and any certificates, receipts, warrants or other instruments
representing rights to receive, purchase, sell or subscribe for the same, or
evidencing or representing
4
<PAGE>
any other rights or interest therein, or rights to any property or assets.
32. "Senior Security Account" shall mean an account maintained and
specifically allocated to a Series under the terms of this Agreement as a
segregated account, by recordation or otherwise, within the custody account in
which certain Securities and/or other assets of the Fund specifically allocated
to such Series shall be deposited and withdrawn from time to time in accordance
with Certificates received by the Custodian in connection with such transactions
as the Fund may from time to time determine.
33. "Series" shall mean the various portfolios, if any, of the Fund as
described from time to time in the current and effective prospectus for the
Fund, except that if the Fund does not have more than one portfolio, "Series"
shall mean the Fund or be ignored where a requirement would be imposed on the
Fund or the Custodian which is unnecessary if there is only one portfolio.
34. "Shares" shall mean the shares of beneficial interest of the Fund and
its Series.
35. "Terminal Link" shall mean an electronic data transmission link
between the Fund and the Custodian requiring in connection with each use of the
Terminal Link the use of an authorization code provided by the Custodian and at
least two access codes established by the Fund, provided, that the Fund shall
have delivered to the Custodian a Certificate substantially in the form of
Appendix B.
36. "Transfer Agent" shall mean Oppenheimer Shareholder Services, a
division of Oppenheimer Management Corporation, its successors and assigns.
37. "Transfer Agent Account" shall mean any account in the name of the
Fund, or the Transfer Agent, as agent for the Fund, maintained with United
Missouri Bank or such other Bank designated by the Fund in a Certificate.
38. "Written Instructions" shall mean written communications actually
received (irrespective of constructive receipt) by the Custodian from an
Authorized Person or from a person reasonably believed by the Custodian to be an
Authorized Person by telex or any other such system whereby the receiver of such
communications is able to verify by codes or otherwise with a reasonable degree
of certainty the identity of the sender of such communication.
ARTICLE I
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as custodian of
the Securities and moneys at any time owned or held by the Fund during the
period of this Agreement.
2. The Custodian hereby accepts appointment as such custodian and agrees
to perform the duties thereof as hereinafter set forth.
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ARTICLE II
CUSTODY OF CASH AND SECURITIES
1. Except for monies received and maintained in the Transfer Agent
Account, or as otherwise provided in paragraph 7 of this Article or in Article
VIII or XV, the Fund will deliver or cause to be delivered to the Custodian all
Securities and all moneys owned by it, at any time during the period of this
Agreement, and shall specify with respect to such Securities and money the
Series to which the same are specifically allocated, and the Custodian shall not
be responsible for any Securities or money not so delivered. Except for assets
held at DTC, the Custodian shall physically segregate, keep and maintain the
Securities of the Series separate and apart from each other Series and from
other assets held by the Custodian. Except as otherwise expressly provided in
this Agreement, the Custodian will not be responsible for any Securities and
moneys not actually received by it, unless the Custodian has been negligent or
has engaged in willful misconduct with respect thereto. The Custodian will be
entitled to reverse any credit of money made on the Fund's behalf where such
credits have been previously made and moneys are not finally collected, unless
the Custodian has been negligent or has engaged in willful misconduct with
respect thereto; provided that if such reversal is thirty (30) days or more
after the credit was issued, the Custodian will give five (5) days' prior notice
of such reversal. The Fund shall deliver to the Custodian a certified resolution
of the Board of Directors of the Fund, substantially in the form of Exhibit A
hereto, approving, authorizing and instructing the Custodian on a continuous and
on-going basis to deposit in the Book-Entry System all Securities eligible for
deposit therein, regardless of the Series to which the same are specifically
allocated and to utilize the Book-Entry System to the extent possible in
connection with its performance hereunder, including, without limitation, in
connection with settlements of purchases and sales of Securities, loans of
Securities and deliveries and returns of Securities collateral. Prior to a
deposit of Securities specifically allocated to a Series in any Depository, the
Fund shall deliver to the Custodian a certified resolution of the Board of
Directors of the Fund, substantially in the form of Exhibit B hereto, approving,
authorizing and instructing the Custodian on a continuous and ongoing basis
until instructed to the contrary by a Certificate to deposit in such Depository
all Securities specifically allocated to such Series eligible for deposit
therein, and to utilize such Depository to the extent possible with respect to
such Securities in connection with its performance hereunder, including, without
limitation, in connection with settlements of purchases and sales of Securities,
loans of Securities, and deliveries and returns of Securities collateral.
Securities and moneys deposited in either the Book-Entry System or a Depository
will be represented in accounts which include only assets held by the Custodian
for customers, including, but not limited to, accounts in which the Custodian
acts in a fiduciary or representative capacity and will be specifically
allocated on the Custodian's books to the separate account for the applicable
Series. Prior to the Custodian's accepting, utilizing and acting with respect to
Clearing Member confirmations for Options and transactions in Options for a
Series as provided in this Agreement, the Custodian shall have received a
certified resolution of the Fund's Board of Directors, substantially in the form
of Exhibit C hereto, approving, authorizing and instructing the Custodian on a
continuous and on-going basis, until instructed to the contrary by a Certificate
to accept, utilize and act in accordance with such confirmations as provided in
this Agreement with respect to such Series. All Securities are to be held or
disposed of by the Custodian for, and subject at all times to the instructions
of, the Fund pursuant to the terms of this Agreement.
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The Custodian shall have no power or authority to assign, hypothecate, pledge or
otherwise dispose of any Securities except as provided by the terms of this
Agreement, and shall have the sole power to release and deliver Securities held
pursuant to this Agreement.
2. The Custodian shall establish and maintain separate accounts, in the
name of each Series, and shall credit to the separate account for each Series
all moneys received by it for the account of the Fund with respect to such
Series. Money credited to a separate account for a Series shall be subject only
to drafts, orders, or charges of the Custodian pursuant to this Agreement and
shall be disbursed by the Custodian only:
(a) As hereinafter provided;
(b) Pursuant to Certificates or Resolutions of the Fund's
Board of Directors certified by an Officer and by the Secretary or Assistant
Secretary of the Fund setting forth the name and address of the person to whom
the payment is to be made, the Series account from which payment is to be made,
the purpose for which payment is to be made, and declaring such purpose to be a
proper corporate purpose; provided, however, that amounts representing
dividends, distributions, or redemptions proceeds with respect to Shares shall
be paid only to the Transfer Agent Account;
(c) In payment of the fees and in reimbursement of the
expenses and liabilities of the Custodian attributable to such Series and
authorized by this Agreement; or
(d) Pursuant to Certificates to pay interest, taxes,
management fees or operating expenses (including, without limitation thereto,
Board of Directors' fees and expenses, and fees for legal accounting and
auditing services), which Certificates set forth the name and address of the
person to whom payment is to be made, state the purpose of such payment and
designate the Series for whose account the payment is to be made.
3. Promptly after the close of business on each day, the Custodian shall
furnish the Fund with confirmations and a summary, on a per Series basis, of all
transfers to or from the account of the Fund for a Series, either hereunder or
with any co-custodian or Subcustodian appointed in accordance with this
Agreement during said day. Where Securities are transferred to the account of
the Fund for a Series but held in a Depository, the Custodian shall upon such
transfer also by book-entry or otherwise identify such Securities as belonging
to such Series in a fungible bulk of Securities registered in the name of the
Custodian (or its nominee) or shown on the Custodian's account on the books of
the Book-Entry System or the Depository. At least monthly and from time to time,
the Custodian shall furnish the Fund with a detailed statement, on a per Series
basis, of the Securities and moneys held under this Agreement for the Fund.
4. Except as otherwise provided in paragraph 7 of this Article and in
Article VIII, all Securities held by the Custodian hereunder, which are issued
or issuable only in bearer form, except such Securities as are held in the
Book-Entry System, shall be held by the Custodian in that form; all other
Securities held hereunder may be registered in the name of the Fund, in the name
of any duly appointed registered nominee of the Custodian as the Custodian may
from time to time
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determine, or in the name of the Book-Entry System or a Depository or their
successor or successors, or their nominee or nominees. The Fund agrees to
furnish to the Custodian appropriate instruments to enable the Custodian to hold
or deliver in proper form for transfer, or to register in the name of its
registered nominee or in the name of the Book-Entry System or a Depository any
Securities which it may hold hereunder and which may from time to time be
registered in the name of the Fund. The Custodian shall hold all such Securities
specifically allocated to a Series which are not held in the Book-Entry System
or in a Depository in a separate account in the name of such Series physically
segregated at all times from those of any other person or persons.
5. Except as otherwise provided in this Agreement and unless otherwise
instructed to the contrary by a Certificate, the Custodian by itself, or through
the use of the Book-Entry System or a Depository with respect to Securities held
hereunder and therein deposited, shall with respect to all Securities held for
the Fund hereunder in accordance with preceding paragraph 4:
(a) Promptly collect all income, dividends and distributions
due or payable;
(b) Promptly give notice to the Fund and promptly present for
payment and collect the amount of money or other consideration payable upon such
Securities which are called, but only if either (i) the Custodian receives a
written notice of such call, or (ii) notice of such call appears in one or more
of the publications listed in Appendix C annexed hereto, which may be amended at
any time by the Custodian without the prior consent of the Fund, provided the
Custodian gives prior notice of such amendment to the Fund;
(c) Promptly present for payment and collect for the Fund's
account the amount payable upon all Securities which mature;
(d) Promptly surrender Securities in temporary form in
exchange for definitive Securities;
(e) Promptly execute, as custodian, any necessary declarations
or certificates of ownership under the Federal Income Tax Laws or the laws or
regulations of any other taxing authority now or hereafter in effect;
(f) Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for the account of a
Series, all rights and similar securities issued with respect to any Securities
held by the Custodian for such Series hereunder; and
(g) Promptly deliver to the Fund all notices, proxies, proxy
soliciting materials, consents and other written information (including, without
limitation, notices of tender offers and exchange offers, pendency of calls,
maturities of Securities and expiration of rights) relating to Securities held
pursuant to this Agreement which are actually received by the Custodian, such
proxies and other similar materials to be executed by the registered holder (if
Securities are registered otherwise than in the name of the Fund), but without
indicating the manner in which proxies or consents are to be voted.
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<PAGE>
6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository, shall:
(a) Promptly execute and deliver to such persons as may be
designated in such Certificate proxies, consents, authorizations, and any other
instruments whereby the authority of the Fund as owner of any Securities held
hereunder for the Series specified in such Certificate may be exercised;
(b) Promptly deliver any Securities held hereunder for the
Series specified in such Certificate in exchange for other Securities or cash
issued or paid in connection with the liquidation, reorganization, refinancing,
merger, consolidation or recapitalization of any corporation, or the exercise of
any right, warrant or conversion privilege and receive and hold hereunder
specifically allocated to such Series any cash or other Securities received in
exchange;
(c) Promptly deliver any Securities held hereunder for the
Series specified in such Certificate to any protective committee, reorganization
committee or other person in connection with the reorganization, refinancing,
merger, consolidation, recapitalization or sale of assets of any corporation,
and receive and hold hereunder specifically allocated to such Series in exchange
therefor such certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery or such Securities as
may be issued upon such delivery; and
(d) Promptly present for payment and collect the amount
payable upon Securities which may be called as specified in the Certificate.
7. Notwithstanding any provision elsewhere contained herein, the Custodian
shall not be required to obtain possession of any instrument or certificate
representing any Futures Contract, any Option, or any Futures Contract Option
until after it shall have determined, or shall have received a Certificate from
the Fund stating, that any such instruments or certificates are available. The
Fund shall deliver to the Custodian such a Certificate no later than the
business day preceding the availability of any such instrument or certificate.
Prior to such availability, the Custodian shall comply with Section 17(f) of the
Investment Company Act of 1940 in connection with the purchase, sale,
settlement, closing out or writing of Futures Contracts, Options, or Futures
Contract Options by making payments or deliveries specified in Certificates in
connection with any such purchase, sale, writing, settlement or closing out upon
its receipt from a broker, dealer, or futures commission merchant of a statement
or confirmation reasonably believed by the Custodian to be in the form
customarily used by brokers, dealers, or future commission merchants with
respect to such Futures Contracts, Options, or Futures Contract Options, as the
case may be, confirming that such Security is held by such broker, dealer or
futures commission merchant, in book-entry form or otherwise in the name the
Custodian (or any nominee of the Custodian) as custodian for the Fund; provided,
however, that notwithstanding the foregoing, payments to or deliveries from the
Margin Account and payments with respect to Securities to which a Margin Account
relates, shall be made in accordance with the terms and conditions of the Margin
Account Agreement. Whenever any such instruments or certificates are available,
the Custodian shall, notwithstanding any provision in this Agreement to the
contrary, make payment for any Futures Contract, Option, or Futures Contract
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<PAGE>
Option for which such instruments or such certificates are available only
against the delivery to the Custodian of such instrument or such certificate,
and deliver any Futures Contract, Option or Futures Contract Option for which
such instruments or such certificates are available only against receipt by the
Custodian of payment therefor. Any such instrument or certificate delivered to
the Custodian shall be held by the Custodian hereunder in accordance with, and
subject to, the provisions of this Agreement.
ARTICLE III
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS,
FUTURES CONTRACT OPTIONS, REPURCHASE AGREEMENTS,
REVERSE REPURCHASE AGREEMENTS AND SHORT SALES
1. Promptly after each execution of a purchase of Securities by the Fund,
other than a purchase of an Option, a Futures Contract, a Futures Contract
Option, a Repurchase Agreement, a Reverse Repurchase Agreement or a Short Sale,
the Fund shall deliver to the Custodian (i) with respect to each purchase of
Securities which are not Money Market Securities, a Certificate, and (ii) with
respect to each purchase of Money Market Securities, a Certificate, oral
Instructions or Written Instructions, specifying with respect to each such
purchase: (a) the Series to which such Securities are to be specifically
allocated; (b) the name of the issuer and the title of the Securities; (c) the
number of shares or the principal amount purchased and accrued interest, if any;
(d) the date of purchase and settlement; (e) the purchase price per unit; (f)
the total amount payable upon such purchase; (g) the name of the person from
whom or the broker through whom the purchase was made, and the name of the
clearing broker, if any; and (h) the name of the broker or other party to whom
payment is to be made. Custodian shall, upon receipt of such Securities
purchased by or for the Fund, pay to the broker specified in the Certificate out
of the moneys held for the account of such Series the total amount payable upon
such purchase, provided that the same conforms to the total amount payable as
set forth in such Certificate, oral Instructions or Written Instructions.
2. Promptly after each execution of a sale of Securities by the Fund,
other than a sale of any Option, Futures Contract, Futures Contract Option,
Repurchase Agreement, Reverse Repurchase Agreement or Short Sale, the Fund shall
deliver such to the Custodian (i) with respect to each sale of Securities which
are not Money Market Securities, a Certificate, and (ii) with respect to each
sale of Money Market Securities, a Certificate, Oral Instructions or Written
Instructions, specifying with respect to each such sale: (a) the Series to which
such Securities were specifically allocated; (b) the name of the issuer and the
title of the Security; (c) the number of shares or principal amount sold, and
accrued interest, if any; (d) the date of sale and settlement; (e) the sale
price per unit; (f) the total amount payable to the Fund upon such sale; (g) the
name of the broker through whom or the person to whom the sale was made, and the
name of the clearing broker, if any; and (h) the name of the broker to whom the
Securities are to be delivered. On the settlement date, the Custodian shall
deliver the Securities specifically allocated to such Series to the broker in
accordance with generally accepted street practices and as specified in the
Certificate upon receipt of the total amount payable to the Fund upon such sale,
provided that the same conforms to the total amount payable as set forth in such
Certificate, oral Instructions or Written Instructions.
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ARTICLE IV
OPTIONS
1. Promptly after each execution of a purchase of any Option by the Fund
other than a closing purchase transaction, the Fund shall deliver to the
Custodian a Certificate specifying with respect to each Option purchased: (a)
the Series to which such Option is specifically allocated; (b) the type of
Option (put or call); (c) the instrument, currency, or Security underlying such
Option and the number of Options, or the name of the in the case of an Index
Option, the index to which such Option relates and the number of Index Options
purchased; (d) the expiration date; (e) the exercise price; (f) the dates of
purchase and settlement; (g) the total amount payable by the Fund in connection
with such purchase; and (h) the name of the Clearing Member through whom such
Option was purchased. The Custodian shall pay, upon receipt of a Clearing
Member's written statement confirming the purchase of such Option held by such
Clearing Member for the account of the Custodian (or any duly appointed and
registered nominee of the Custodian) as Custodian for the Fund, out of moneys
held for the account of the Series to which such Option is to be specifically
allocated, the total amount payable upon such purchase to the Clearing Member
through whom the purchase was made, provided that the same conforms to the
amount payable as set forth in such Certificate.
2. Promptly after the execution of a sale of any Option purchased by the
Fund, other than a closing sale transaction, pursuant to paragraph 1 hereof, the
Fund shall deliver to the Custodian a Certificate specifying with respect to
each such sale: (a) the Series to which such Option was specifically allocated;
(b) the type of Option (put or call); (c) the instrument, currency, or Security
underlying such Option and the number of Options, or the name of the issuer and
the title and number of shares subject to such Option or, in the case of a Index
Option, the index to which such Option relates and the number of Index Options
sold; (d) the date of sale; (e) the sale price; (f) the date of settlement; (g)
the total amount payable to the Fund upon such sale; and (h) the name of the
Clearing Member through whom the sale was made. The Custodian shall consent to
the delivery of the Option sold by the Clearing Member which previously supplied
the confirmation described in preceding paragraph of this Article with respect
to such Option upon receipt by the Custodian of the total amount payable to the
Fund, provided that the same conforms to the total amount payable as set forth
in such Certificate.
3. Promptly after the exercise by the Fund of any Call Option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the Custodian
a Certificate specifying with respect to such Call Option: (a) the Series to
which such Call Option was specifically allocated; (b) the name of the issuer
and the title and number of shares subject to the Call Option; (c) the
expiration date; (d) the date of exercise and settlement; (e) the exercise price
per share; (f) the total amount to be paid by the Fund upon such exercise; and
(g) the name of the Clearing Member through whom such Call Option was exercised.
The Custodian shall, upon receipt of the Securities underlying the Call Option
which was exercised, pay out of the moneys held for the account of the Series to
which such Call Option was specifically allocated the total amount payable to
the Clearing Member through whom the Call Option was exercised, provided that
the same conforms to the total amount
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<PAGE>
payable as set forth in such Certificate.
4. Promptly after the exercise by the Fund of any Put Option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the Custodian
a Certificate specifying with respect to such Put Option: (a) the Series to
which such Put Option was specifically allocated; (b) the name of the issuer and
the title and number of shares subject to the Put Option; (c) the expiration
date; (d) the date of exercise and settlement; (e) the exercise price per share;
(f) the total amount to be paid to the Fund upon such exercise; and (g) the name
of the Clearing Member through whom such Put Option was exercised. The Custodian
shall, upon receipt of the amount payable upon the exercise of the Put Option,
deliver or direct a Depository to deliver the Securities specifically allocated
to such Series, provided the same conforms to the amount payable to the Fund as
set forth in such Certificate.
5. Promptly after the exercise by the Fund of any Index Option purchased
by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to the
Custodian a Certificate specifying with respect to such Index Option: (a) the
Series to which such Index Option was specifically allocated; (b) the type of
Index Option (put or call) (c) the number of Options being exercised; (d) the
index to which such Option relates; (e) the expiration date; (f) the exercise
price; (g) the total amount to be received by the Fund in connection with such
exercise; and (h) the Clearing Member from whom such payment is to be received.
6. Whenever the Fund writes a Covered Call Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to such Covered
Call Option: (a) the Series for which such Covered Call Option was written; (b)
the name of the issuer and the title and number of shares for which the Covered
Call Option was written and which underlie the same; (c) the expiration date;
(d) the exercise price; (e) the premium to be received by the Fund; (f) the date
such Covered Call Option was written; and (g) the name of the Clearing Member
through whom the premium is to be received. The Custodian shall deliver or cause
to be delivered, upon receipt of the premium specified in the Certificate with
respect to such Covered Call Option, such receipts as are required in accordance
with the customs prevailing among Clearing Members dealing in Covered Call
Options and shall impose, or direct a Depository to impose, upon the underlying
Securities specified in the Certificate specifically allocated to such Series
such restrictions as may be required by such receipts. Notwithstanding the
foregoing, the Custodian has the right, upon prior written notification to the
Fund, at any time to refuse to issue any receipts for Securities in the
possession of the Custodian and not deposited with a Depository underlying a
Covered Call Option.
7. Whenever a Covered Call Option written by the Fund and described in the
preceding paragraph of this Article is exercised, the Fund shall promptly
deliver to the Custodian a Certificate instructing the Custodian to deliver, or
to direct the Depository to deliver, the Securities subject to such Covered Call
Option and specifying: (a) the Series for which such Covered Call Option was
written; (b) the name of the issuer and the title and number of shares subject
to the Covered Call Option; (c) the Clearing Member to whom the underlying
Securities are to be delivered; and (d) the total amount payable to the Fund
upon such delivery. Upon the return and/or cancellation of any receipts
delivered pursuant to paragraph 6 of this Article, the Custodian shall deliver,
or direct a Depository to deliver, the underlying Securities as specified in the
Certificate upon payment of the
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<PAGE>
amount to be received as set forth in such Certificate.
8. Whenever the Fund writes a Put Option, the Fund shall promptly deliver
to the Custodian a Certificate specifying with respect to such Put Option: (a)
the Series for which such Put Option was written; (b) the name of the issuer and
the title and number of shares for which the Put Option is written and which
underlie the same; (c) the expiration date; (d) the exercise price; (e) the
premium to be received by the Fund; (f) the date such Put Option is written; (g)
the name of the Clearing Member through whom the premium is to be received and
to whom a Put Option guarantee letter is to be delivered; (h) the amount of
cash, and/or the amount and kind of Securities, if any, specifically allocated
to such Series to be deposited in the Senior Security Account for such Series;
and (i) the amount of cash and/or the amount and kind of Securities specifically
allocated to such Series to be deposited into the Collateral Account for such
Series. The Custodian shall, after making the deposits into the Collateral
Account specified in the Certificate, issue a Put Option guarantee letter
substantially in the form utilized by the Custodian on the date hereof, and
deliver the same to the Clearing Member specified in the Certificate upon
receipt of the premium specified in said Certificate. Notwithstanding the
foregoing, the Custodian shall be under no obligation to issue any Put Option
guarantee letter or similar document if it is unable to make any of the
representations contained therein.
9. Whenever a Put Option written by the Fund and described in the
preceding paragraph is exercised, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which such Put Option was
written; (b) the name of the issuer and title and number of shares subject to
the Put Option; (c) the Clearing Member from whom the underlying Securities are
to be received; (d) the total amount payable by the Fund upon such delivery; (e)
the amount of cash and/or the amount and kind of Securities specifically
allocated to such Series to be withdrawn from the Collateral Account for such
Series and (f) the amount of cash and/or the amount and kind of Securities,
specifically allocated to such series, if any, to be withdrawn from the Senior
Security Account. Upon the return and/or cancellation of any Put Option
guarantee letter or similar document issued by the Custodian in connection with
such Put Option, the Custodian shall pay out of the moneys held for the account
of the series to which such Put Option was specifically allocated the total
amount payable to the Clearing Member specified in the Certificate as set forth
in such Certificate, upon delivery of such Securities, and shall make the
withdrawals specified in such Certificate.
10. Whenever the Fund writes an Index Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to such Index
Option: (a) the Series for which such Index Option was written; (b) whether such
Index Option is a put or a call; (c) the number of Options written; (d) the
index to which such Option relates; (e) the expiration date; (f) the exercise
price; (g) the Clearing Member through whom such Option was written; (h) the
premium to be received by the Fund; (i) the amount of cash and/or the amount and
kind of Securities, if any, specifically allocated to such Series to be
deposited in the Senior Security Account for such Series; (j) the amount of cash
and/or the amount and kind of Securities, if any, specifically allocated to such
Series to be deposited in the Collateral Account for such Series; and (k) the
amount of cash and/or the amount and kind of Securities, if any, specifically
allocated to such Series to be deposited in a Margin Account, and the name in
which such account is to be or has been established. The Custodian shall, upon
receipt of
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<PAGE>
the premium specified in the Certificate, make the deposits, if any, into the
Senior Security Account specified in the Certificate, and either (1) deliver
such receipts, if any, which the Custodian has specifically agreed to issue,
which are in accordance with the customs prevailing among Clearing Members in
Index Options and make the deposits into the Collateral Account specified in the
Certificate, or (2) make the deposits into the Margin Account specified in the
Certificate.
11. Whenever an Index Option written by the Fund and described in the
preceding paragraph of this Article is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to such Index
Option: (a) the Series for which such Index Option was written; (b) such
information as may be necessary to identify the Index Option being exercised;
(c) the Clearing Member through whom such Index Option is being exercised; (d)
the total amount payable upon such exercise, and whether such amount is to be
paid by or to the Fund; (e) the amount of cash and/or amount and kind of
Securities, if any, to be withdrawn from the Margin Account; and (f) the amount
of cash and/or amount and kind of Securities, if any, to be withdrawn from the
Senior Security Account for such Series; and the amount of cash and/or the
amount and kind of Securities, if any, to be withdrawn from the Collateral
Account for such Series. Upon the return and/or cancellation of the receipt, if
any, delivered pursuant to the preceding paragraph of this Article, the
Custodian shall pay out of the moneys held for the account of the Series to
which such Stock Index Option was specifically allocated to the Clearing Member
specified in the Certificate the total amount payable, if any, as specified
therein.
12. Promptly after the execution of a purchase or sale by the Fund of any
Option identical to a previously written Option described in paragraphs, 6, 8 or
10 of this Article in a transaction expressly designated as a "Closing Purchase
Transaction" or a "Closing Sale Transaction", the Fund shall promptly deliver to
the Custodian a Certificate specifying with respect to the Option being
purchased: (a) that the transaction is a Closing Purchase Transaction or a
Closing Sale Transaction; (b) the Series for which the Option was written; (c)
the instrument, currency, or Security subject to the Option, or, in the case of
an Index Option, the index to which such Option relates and the number of
Options held; (d) the exercise price; (e) the premium to be paid by or the
amount to be paid to the Fund; (f) the expiration date; (g) the type of Option
(put or call); (h) the date of such purchase or sale; (i) the name of the
Clearing Member to whom the premium is to be paid or from whom the amount is to
be received; and (j) the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Collateral Account, a specified
Margin Account, or the Senior Security Account for such Series. Upon the
Custodian's payment of the premium or receipt of the amount, as the case may be,
specified in the Certificate and the return and/or cancellation of any receipt
issued pursuant to paragraphs 6, 8 or 10 of this Article with respect to the
Option being liquidated through the Closing Purchase Transaction or the Closing
Sale Transaction, the Custodian shall remove, or direct a Depository to remove,
the previously imposed restrictions on the Securities underlying the Call
Option.
13. Upon the expiration, exercise or consummation of a Closing Purchase
Transaction with respect to any Option purchased or written by the Fund and
described in this Article, the Custodian shall delete such Option from the
statements delivered to the Fund pursuant to paragraph 3 Article III herein, and
upon the return and/or cancellation of any receipts issued by the Custodian,
shall make such withdrawals from the Collateral Account, and the Margin Account
and/or the Senior
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Security Account as may be specified in a Certificate received in connection
with such expiration, exercise, or consummation.
14. Securities acquired by the Fund through the exercise of an Option
described in this Article shall be subject to Article IV hereof.
ARTICLE V
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures Contract, the Fund shall
deliver to the Custodian a Certificate specifying with respect to such Futures
Contract, (or with respect to any number of identical Futures Contract (s)): (a)
the Series for which the Futures Contract is being entered; (b) the category of
Futures Contract (the name of the underlying index or financial instrument); (c)
the number of identical Futures Contracts entered into; (d) the delivery or
settlement date of the Futures Contract(s); (e) the date the Futures Contract(s)
was (were) entered into and the maturity date; (f) whether the Fund is buying
(going long) or selling (going short) such Futures Contract(s); (g) the amount
of cash and/or the amount and kind of Securities, if any, to be deposited in the
Senior Security Account for such Series; (h) the name of the broker, dealer, or
futures commission merchant through whom the Futures Contract was entered into;
and (i) the amount of fee or commission, if any, to be paid and the name of the
broker, dealer, or futures commission merchant to whom such amount is to be
paid. The Custodian shall make the deposits, if any, to the Margin Account in
accordance with the terms and conditions of the Margin Account Agreement. The
Custodian shall make payment out of the moneys specifically allocated to such
Series of the fee or commission, if any, specified in the Certificate and
deposit in the Senior Security Account for such Series the amount of cash and/or
the amount and kind of Securities specified in said Certificate.
2. (a) Any variation margin payment or similar payment required to be made
by the Fund to a broker, dealer, or futures commission merchant with respect to
an outstanding Futures Contract shall be made by the Custodian in accordance
with the terms and conditions of the Margin Account Agreement.
(b) Any variation margin payment or similar payment from a
broker, dealer, or futures commission merchant to the Fund with respect to an
outstanding Futures Contract shall be received and dealt with by the Custodian
in accordance with the terms and conditions of the Margin Account Agreement.
3. Whenever a Futures Contract held by the Custodian hereunder is retained
by the Fund until delivery or settlement is made on such Futures Contract, the
Fund shall deliver to the Custodian prior to the delivery or settlement date a
Certificate specifying: (a) the Futures Contract and the Series to which the
same relates; (b) with respect to an Index Futures Contract, the total cash
settlement amount to be paid or received, and with respect to a Financial
Futures Contract, the Securities and/or amount of cash to be delivered or
received; (c) the broker, dealer, or futures commission merchant to or from whom
payment or delivery is to be made or received; and (d) the
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amount of cash and/or Securities to be withdrawn from the Senior Security
Account for such Series. The Custodian shall make the payment or delivery
specified in the Certificate, and delete such Futures Contract from the
statements delivered to the Fund pursuant to paragraph 3 of Article III herein.
4. Whenever the Fund shall enter into a Futures Contract to offset a
Futures Contract held by the Custodian hereunder, the Fund shall deliver to the
Custodian a Certificate specifying: (a) the items of information required in a
Certificate described in paragraph 1 of this Article, and (b) the Futures
Contract being offset. The Custodian shall make payment out of the money
specifically allocated to such Series of the fee or commission, if any,
specified in the Certificate and delete the Futures Contract being offset from
the statements delivered to the Fund pursuant to paragraph 3 of Article III
herein, and make such withdrawals from the Senior Security Account for such
Series as may be specified in the Certificate. The withdrawals, if any, to be
made from the Margin Account shall be made by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
ARTICLE VI
FUTURES CONTRACT OPTIONS
1. Promptly after the execution of a purchase of any Futures Contract
Option by the Fund, the Fund shall deliver to the Custodian a Certificate
specifying with respect to such Futures Contract Option: (a) the Series to which
such Option is specifically allocated; (b) the type of Futures Contract Option
(put or call); (c) the type of Futures Contract and such other information as
may be necessary to identify the Futures Contract underlying the Futures
Contract Option purchased; (d) the expiration date; (e) the exercise price; (f)
the dates of purchase and settlement; (g) the amount of premium to be paid by
the Fund upon such purchase; (h) the name of the broker or futures commission
merchant through whom such Option was purchased; and (i) the name of the broker,
or futures commission merchant, to whom payment is to be made. The Custodian
shall pay out of the moneys specifically allocated to such Series the total
amount to be paid upon such purchase to the broker or futures commissions
merchant through whom the purchase was made, provided that the same conforms to
the amount set forth in such Certificate.
2. Promptly after the execution of a sale of any Futures Contract Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to
the Custodian a Certificate specifying with respect to each such sale: (a)
Series to which such Futures Contract Option was specifically allocated; (b) the
type of Future Contract Option (put or call); (c) the type of Futures Contract
and such other information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option; (d) the date of sale; (e) the sale
price; (f) the date of settlement; (g) the total amount payable to the Fund upon
such sale; and (h) the name of the broker of futures commission merchant through
whom the sale was made. The Custodian shall consent to the cancellation of the
Futures Contract Option being closed against payment to the Custodian of the
total amount payable to the Fund, provided the same conforms to the total amount
payable as set
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forth in such Certificate.
3. Whenever a Futures Contract Option purchased by the Fund pursuant to
paragraph 1 is exercised by the Fund, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which such Futures
Contract Option was specifically allocated; (b) the particular Futures Contract
Option (put or call) being exercised; (c) the type of Futures Contract
underlying the Futures Contract Option; (d) the date of exercise; (e) the name
of the broker or futures commission merchant through whom the Futures Contract
Option is exercised; (f) the net total amount, if any, payable by the Fund; (g)
the amount, if any, to be received by the Fund; and (h) the amount of cash
and/or the amount and kind of Securities to be deposited in the Senior Security
Account for such Series. The Custodian shall make, out of the moneys and
Securities specifically allocated to such Series, the payments of money, if any,
and the deposits of Securities, if any, into the Senior Security Account as
specified in the Certificate. The deposits, if any, to be made to the Margin
Account shall be made by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
4. Whenever the Fund writes a Futures Contract Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to such
Futures Contract Option: (a) the Series for which such Futures Contract Option
was written; (b) the type of Futures Contract Option (put or call); (c) the type
of Futures Contract and such other information as may be necessary to identify
the Futures Contract underlying the Futures Contract Option; (d) the expiration
date; (e) the exercise price; (f) the premium to be received by the Fund; (g)
the name of the broker or futures commission merchant through whom the premium
is to be received; and (h) the amount of cash and/or the amount and kind of
Securities, if any, to be deposited in the Senior Security Account for such
Series. The Custodian shall, upon receipt of the premium specified in the
Certificate, make out of the moneys and Securities specifically allocated to
such Series the deposits into the Senior Security Account, if any, as specified
in the Certificate. The deposits, if any, to be made to the Margin Account shall
be made by the Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
5. Whenever a Futures Contract Option written by the Fund which is a call
is exercised, the Fund shall promptly deliver to the Custodian a Certificate
specifying: (a) the Series to which such Futures Contract Option was
specifically allocated; (b) the particular Futures Contract Option exercised;
(c) the type of Futures Contract underlying the Futures Contract Option; (d) the
name of the broker or futures commission merchant through whom such Futures
Contract Option was exercised; (e) the net total amount, if any, payable to the
Fund upon such exercise; (f) the net total amount, if any, payable by the Fund
upon such exercise; and (g) the amount of cash and/or the amount and kind of
Securities to be deposited in the Senior Security Account for such Series. The
Custodian shall, upon its receipt of the net total amount payable to the Fund,
if any, specified in such Certificate make the payments, if any, and the
deposits, if any, into the Senior Security Account as specified in the
Certificate. The deposits, if any, to be made to the Margin Account shall be
made by the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
6. Whenever a Futures Contract Option which is written by the Fund and
which is a put is exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying: (a) the Series
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to which such Option was specifically allocated; (b) the particular Futures
Contract Option exercised; (c) the type of Futures Contract underlying such
Futures Contract Option; (d) the name of the broker or futures commission
merchant through whom such Futures Contract Option is exercised; (e) the net
total amount, if any, payable to the Fund upon such exercise; (f) the net total
amount, if any, payable by the Fund upon such exercise; and (g) the amount and
kind of Securities and/or cash to be withdrawn from or deposited in, the Senior
Security Account for such Series, if any. The Custodian shall, upon its receipt
of the net total amount payable to the Fund, if any, specified in the
Certificate, make out of the moneys and Securities specifically allocated to
such Series, the payments, if any, and the deposits, if any, into the Senior
Security Account as specified in the Certificate. The deposits to and/or
withdrawals from the Margin Account, if any, shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account Agreement.
7. Promptly after the execution by the Fund of a purchase of any Futures
Contract Option identical to a previously written Futures Contract Option
described in this Article in order to liquidate its position as a writer of such
Futures Contract Option, the Fund shall deliver to the Custodian a Certificate
specifying with respect to the Futures Contract Option being purchased: (a) the
Series to which such Option is specifically allocated; (b) that the transaction
is a closing transaction; (c) the type of Future Contract and such other
information as may be necessary to identify the Futures Contract underlying the
Futures Option Contract; (d) the exercise price; (e) the premium to be paid by
the Fund; (f) the expiration date; (g) the name of the broker or futures
commission merchant to whom the premium is to be paid; and (h) the amount of
cash and/or the amount and kind of Securities, if any, to be withdrawn from the
Senior Security Account for such Series. The Custodian shall effect the
withdrawals from the Senior Security Account specified in the Certificate. The
withdrawals, if any, to be made from the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the Margin Account
Agreement.
8. Upon the expiration, exercise, or consummation of a closing transaction
with respect to, any Futures Contract Option written or purchased by the Fund
and described in this Article, the Custodian shall (a) delete such Futures
Contract Option from the statements delivered to the Fund pursuant to paragraph
3 of Article III herein and (b) make such withdrawals from and/or in the case of
an exercise such deposits into the Senior Security Account as may be specified
in a Certificate. The deposits to and/or withdrawals from the Margin Account, if
any, shall be made by the Custodian in accordance with the terms and conditions
of the Margin Account Agreement.
9. Futures Contracts acquired by the Fund through the exercise of a
Futures Contract Option described in this Article shall be subject to Article VI
hereof.
ARTICLE VII
SHORT SALES
1. Promptly after the execution of any short sales of Securities by
any Series of the
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Fund, the Fund shall deliver to the Custodian a Certificate specifying: (a) the
Series for which such short sale was made; (b) the name of the issuer-and the
title of the Security; (c) the number of shares or principal amount sold, and
accrued interest or dividends, if any; (d) the dates of the sale and settlement;
(e) the sale price per unit; (f) the total amount credited to the Fund upon such
sale, if any, (g) the amount of cash and/or the amount and kind of Securities,
if any, which are to be deposited in a Margin Account and the name in which such
Margin Account has been or is to be established; (h) the amount of cash and/or
the amount and kind of Securities, if any, to be deposited in a Senior Security
Account, and (i) the name of the broker through whom such short sale was made.
The Custodian shall upon its receipt of a statement from such broker confirming
such sale and that the total amount credited to the Fund upon such sale, if any,
as specified in the Certificate is held by such broker for the account of the
Custodian (or any nominee of the Custodian) as custodian of the Fund, issue a
receipt or make the deposits into the Margin Account and the Senior Security
Account specified in the Certificate.
2. Promptly after the execution of a purchase to close-out any short sale
of Securities, the Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to each such closing out: (a) the Series for which such
transaction is being made; (b) the name of the issuer and the title of the
Security; (c) the number of shares or the principal amount, and accrued interest
or dividends, if any, required to effect such closing-out to be delivered to the
broker; (d) the dates of closing-out and settlement; (e) the purchase price per
unit; (f) the net total amount payable to the Fund upon such closing-out; (g)
the net total amount payable to the broker upon such closing-out; (h) the amount
of cash and the amount and kind of Securities to be withdrawn, if any, from the
Margin Account; (i) the amount of cash and/or the amount and kind of Securities,
if any, to be withdrawn from the Senior Security Account; and (j) the name of
the broker through whom the Fund is effecting such closing-out. The Custodian
shall, upon receipt of the net total amount payable to the Fund upon such
closing-out, and the return and/or cancellation of the receipts, if any, issued
by the Custodian with respect to the short sale being closed-out, pay out of the
moneys held for the account of the Fund to the broker the net total amount
payable to the broker, and make the withdrawals from the Margin Account and the
Senior Security Account, as the same are specified in the Certificate.
ARTICLE VIII
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters a Repurchase Agreement or a Reverse
Repurchase Agreement with respect to Securities and money held by the Custodian
hereunder, the Fund shall deliver to the Custodian a Certificate, or in the
event such Repurchase Agreement or Reverse Repurchase Agreement is a Money
Market Security, a Certificate, Oral Instructions, or Written Instructions
specifying: (a) the Series for which the Repurchase Agreement or Reverse
Repurchase Agreement is entered; (b) the total amount payable to or by the Fund
in connection with such Repurchase Agreement or Reverse Repurchase Agreement and
specifically allocated to such Series; (c) the broker, dealer, or financial
institution with whom the Repurchase Agreement or Reverse
19
<PAGE>
Repurchase Agreement is entered; (d) the amount and kind of Securities to be
delivered or received by the Fund to or from such broker, dealer, or financial
institution; (e) the date of such Repurchase Agreement or Reverse Repurchase
Agreement; and (f) the amount of cash and/or the amount and kind of Securities,
if any, specifically allocated to such Series to be deposited in a Senior
Security Account for such Series in connection with such Reverse Repurchase
Agreement. The Custodian shall, upon receipt of the total amount payable to or
by the Fund specified in the Certificate, Oral Instructions, or Written
Instructions make or accept the delivery to or from the broker, dealer, or
financial institution and the deposits, if any, to the Senior Security Account,
specified in such Certificate, Oral Instructions, or Written Instructions.
2. Upon the termination of a Repurchase Agreement or a Reverse Repurchase
Agreement described in preceding paragraph 1 of this Article, the Fund shall
promptly deliver a Certificate or, in the event such Repurchase Agreement or
Reverse Repurchase Agreement is a Money Market Security, a Certificate, Oral
Instructions, or Written Instructions to the Custodian specifying: (a) the
Repurchase Agreement or Reverse Repurchase Agreement being terminated and the
Series for which same was entered; (b) the total amount payable to or by the
Fund in connection with such termination; (c) the amount and kind of Securities
to be received or delivered by the Fund and specifically allocated to such
Series in connection with such termination; (d) the date of termination; (e) the
name of the broker, dealer, or financial institution with whom the Repurchase
Agreement or Reverse Repurchase Agreement is to be terminated; and (f) the
amount of cash and/or the amount and kind of Securities, if any, to be withdrawn
from the Senior Securities Account for such Series. The Custodian shall, upon
receipt or delivery of the amount and kind of Securities or cash to be received
or delivered by the Fund specified in the Certificate, Oral Instructions, or
Written Instructions, make or receive the payment to or from the broker, dealer,
or financial institution and make the withdrawals, if any, from the Senior
Security Account, specified in such Certificate, Oral Instructions, or Written
Instructions.
3. The Certificates, Oral Instructions, or Written Instructions described
in paragraphs 1 and 2 of this Article may with respect to any particular
Repurchase Agreement or Reverse Repurchase Agreement be combined and delivered
to the Custodian at the time of entering into such Repurchase Agreement or
Reverse Repurchase Agreement.
ARTICLE IX
LOANS OF PORTFOLIO SECURITIES OF THE FUND
1. Promptly after each loan of portfolio Securities specifically allocated
to a Series held by the Custodian hereunder, the Fund shall deliver or cause to
be delivered to the Custodian a Certificate specifying with respect to each such
loan: (a) the Series to which the loaned Securities are specifically allocated;
(b) the name of the issuer and the title of the Securities, (c) the number of
shares or the principal amount loaned, (d) the date of loan and delivery, (e)
the total amount to be delivered to the Custodian against the loan of the
Securities, including the amount of cash collateral and the premium, if any,
separately identified, and (f) the name of the broker, dealer, or financial
20
<PAGE>
institution to which the loan was made. The Custodian shall deliver the
Securities thus designated to the broker, dealer or financial institution to
which the loan was made upon receipt of the total amount designated in the
Certificate as to be delivered against the loan of Securities. The Custodian may
accept payment in connection with a delivery otherwise than through the
Book-Entry System or a Depository only in the form of a certified or bank
cashier's check payable to the order of the Fund or the Custodian drawn on New
York Clearing House funds.
2. In connection with each termination of a loan of Securities by the
Fund, the Fund shall deliver or cause to be delivered to the Custodian a
Certificate specifying with respect to each such loan termination and return of
Securities: (a) the Series to which the loaned Securities are specifically
allocated; (b) the name of the issuer and the title of the Securities to be
returned, (c) the number of shares or the principal amount to be returned, (d)
the date of termination, (e) the total amount to be delivered by the Custodian
(including the cash collateral for such Securities minus any offsetting credits
as described in said Certificate), and (f) the name of the broker, dealer, or
financial institution from which the Securities will be returned. The Custodian
shall receive all Securities returned from the broker, dealer, or financial
institution to which such Securities were loaned and upon receipt thereof shall
pay, out of the moneys held for the account of the Fund, the total amount
payable upon such return of Securities as set forth in the Certificate.
ARTICLE X
CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY
ACCOUNTS, AND COLLATERAL ACCOUNTS
1. The Custodian shall establish a Senior Security Account and from time
to time make such deposits thereto, or withdrawals therefrom, as specified in a
Certificate. Such Certificate shall specify the Series for which such deposit or
withdrawal is to be made and the amount of cash and/or the amount and kind of
Securities specifically allocated to such Series to be deposited in, or
withdrawn from, such Senior Security Account for such Series. In the event that
the Fund fails to specify in a Certificate the Series, the name of the issuer,
the title and the number of shares or the principal amount of any particular
Securities to be deposited by the Custodian into, or withdrawn from, a Senior
Securities Account, the Custodian shall be under no obligation to make any such
deposit or withdrawal and shall promptly notify the Fund that no such deposit
has been made.
2. The Custodian shall make deliveries or payments from a Margin Account
to the broker, dealer, futures commission merchant or Clearing Member in whose
name, or for whose benefit, the account was established as specified in the
Margin Account Agreement.
3. Amounts received by the Custodian as payments or distributions with
respect to Securities deposited in any Margin Account shall be dealt with in
accordance with the terms and conditions of the Margin Account Agreement.
4. The Custodian shall to the extent permitted by the Fund's Articles of
Incorporation,
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investment restrictions and the Investment Company Act of 1940 have a continuing
lien and security interest in and to any property at any time held by the
Custodian in any Collateral Account described herein. In accordance with
applicable law the Custodian may enforce its lien and realize on any such
property whenever the Custodian has made payment or delivery pursuant to any Put
Option guarantee letter or similar document or any receipt issued hereunder by
the Custodian; provided, however, that the Custodian shall not be required to
issue any Put Option guarantee letter unless it shall have received an opinion
of counsel to the Fund or its investment adviser that the issuance of such
letters is authorized by the Fund and that the Custodian's continuing lien and
security interest is valid, enforceable and not limited by the Articles of
Incorporation, any investment restrictions or the Investment Company Act of
1940. In the event the Custodian should realize on any such property net
proceeds which are less than the Custodian's obligations under any Put Option
guarantee letter or similar document or any receipt, such deficiency shall be a
debt owed the Custodian by the Fund within the scope of Article XIV herein.
5. On each business day the Custodian shall furnish the Fund with a
statement with respect to each Margin Account in which money or Securities are
held specifying as of the close of business on the previous business day: (a)
the name of the Margin Account; (b) the amount and kind of Securities held
therein; and (c) the amount of money held therein. The Custodian shall make
available upon request to any broker, dealer, or futures commission merchant
specified in the name of a Margin Account a copy of the statement furnished the
Fund with respect to such Margin Account.
6. The Custodian shall establish a Collateral Account and from time to
time shall make such deposits thereto as may be specified in a Certificate.
Promptly after the close of business on each business day in which cash and/or
Securities are maintained in a Collateral Account for any Series, the Custodian
shall furnish the Fund with a statement with respect to such Collateral Account
specifying the amount of cash and/or the amount and kind of Securities held
therein. No later than the close of business next succeeding the delivery to the
Fund of such statement, the Fund shall furnish to the Custodian a Certificate or
Written Instructions specifying the then market value of the Securities
described in such statement. In the event such then market value is indicated to
be less than the Custodian's obligation with respect to any outstanding Put
Option guarantee letter or similar document, the Fund shall promptly specify in
a Certificate the additional cash and/or Securities to be deposited in such
Collateral Account to eliminate such deficiency.
ARTICLE XI
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of the resolution of the
Board of Directors of the Fund, certified by the Secretary or any Assistant
Secretary, either (i) setting forth with respect to the Series specified therein
the date of the declaration of a dividend or distribution, the date of payment
thereof, the record date as of which shareholders entitled to payment shall be
determined, the amount payable per Share of such Series to the shareholders of
record as of that date
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and the total amount payable to the Transfer Agent Account and any sub-dividend
agent or co- dividend agent of the Fund on the payment date, or (ii) authorizing
with respect to the Series specified therein and the declaration of dividends
and distributions thereon the Custodian to rely on Oral Instructions, Written
Instructions, or a Certificate setting forth the date of the declaration of such
dividend or distribution, the date of payment thereof, the record date as of
which shareholders entitled to payment shall be determined, the amount payable
per Share of such Series to the shareholders of record as of that date and the
total amount payable to the Transfer Agent Account on the payment date.
2. Upon the payment date specified in such resolution, Oral Instructions,
Written Instructions, or Certificate, as the case may be, the Custodian shall
pay to the Transfer Agent Account out of the moneys held for the account of the
Series specified therein the total amount payable to the Transfer Agent Account
and with respect to such Series.
ARTICLE XII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall deliver or cause to
be delivered, to the Custodian a Certificate duly specifying:
(a) The Series, the number of Shares sold, trade date, and
price; and
(b) The amount of money to be received by the Custodian for
the sale of such Shares and specifically allocated to the separate account in
the name of such Series.
2. Upon receipt of such money from the Fund's General Distributor, the
Custodian shall credit such money to the separate account in the name of the
Series for which such money was received.
3. Upon issuance of any Shares of any Series the Custodian shall pay, out
of the money held for the account of such Series, all original issue or other
taxes required to be paid by the Fund in connection with such issuance upon the
receipt of a Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund desires the Custodian
to make payment out of the money held by the Custodian hereunder in connection
with a redemption of any Shares, it shall furnish, or cause to be furnished, to
the Custodian a Certificate specifying:
(a) The number and Series of Shares redeemed; and
(b) The amount to be paid for such Shares.
5. Upon receipt of an advice from an Authorized Person setting forth the
Series and number of Shares received by the Transfer Agent for redemption and
that such Shares are in good
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form for redemption, the Custodian shall make payment to the Transfer Agent
Account out of the moneys held in the separate account in the name of the Series
the total amount specified in the Certificate issued pursuant to the foregoing
paragraph 4 of this Article.
ARTICLE XIII
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion advance funds on behalf
of any Series which results in an overdraft because the moneys held by the
Custodian in the separate account for such Series shall be insufficient to pay
the total amount payable upon a purchase of Securities specifically allocated to
such Series, as set forth in a Certificate, Oral Instructions, or Written
Instructions or which results in an overdraft in the separate account of such
Series for some other reason, or if the Fund is for any other reason indebted to
the Custodian with respect to a Series, (except a borrowing for investment or
for temporary or emergency purposes using Securities as collateral pursuant to a
separate agreement and subject to the provisions of paragraph 2 of this
Article), such overdraft or indebtedness shall be deemed to be a loan made by
the Custodian to the Fund for such Series payable on demand and shall bear
interest from the date incurred at a rate per annum (based on a 360-day year for
the actual number of days involved) equal to the Federal Funds Rate plus 1/2%,
such rate to be adjusted on the effective date of any change in such Federal
Funds Rate but in no event to be less than 6% per annum. In addition, unless the
Fund has given a Certificate that the Custodian shall not impose a lien and
security interest to secure such overdrafts (in which event it shall not do so),
the Custodian shall have a continuing lien and security interest in the
aggregate amount of such overdrafts and indebtedness as may from time to time
exist in and to any property specifically allocated to such Series at any time
held by it for the benefit of such Series or in which the Fund may have an
interest which is then in the Custodian's possession or control or in possession
or control of any third party acting in the Custodian's behalf. The Fund
authorizes the Custodian, in its sole discretion, at any time to charge any such
overdraft or indebtedness together with interest due thereon against any money
balance in an account standing in the name of such Series' credit on the
Custodian's books. In addition, the Fund hereby covenants that on each Business
Day on which either it intends to enter a Reverse Repurchase Agreement and/or
otherwise borrow from a third party, or which next succeeds a Business Day on
which at the close of business the Fund had outstanding a Reverse Repurchase
Agreement or such a borrowing, it shall prior to 9 a.m., New York City time,
advise the Custodian, in writing, of each such borrowing, shall specify the
Series to which the same relates, and shall not incur any indebtedness,
including pursuant to any Reverse Repurchase Agreement, not so specified other
than from the Custodian.
2. The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the Custodian)
from which it borrows money for investment or for temporary or emergency
purposes using Securities held by the Custodian hereunder as collateral for such
borrowings, a notice or undertaking in the form currently employed by any such
bank setting forth the amount which such bank will loan to the Fund against
delivery
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of a stated amount of collateral. The Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to each such borrowing: (a) the
Series to which such borrowing relates; (b) the name of the bank, (c) the amount
and terms of the borrowing, which may be set forth by incorporating by reference
an attached promissory note, duly endorsed by the Fund, or other loan agreement,
(d) the time and date, if known, on which the loan is to be entered into, (e)
the date on which the loan becomes due and payable, (f) the total amount payable
to the Fund on the borrowing date, (g) the market value of Securities to be
delivered as collateral for such loan, including the name of the issuer, the
title and the number of shares or the principal amount of any particular
Securities, and (h) a statement specifying whether such loan is for investment
purposes or for temporary or emergency purposes and that such loan is in
conformance with the Investment Company Act of 1940 and the Fund's prospectus
and Statement of Additional Information. The Custodian shall deliver on the
borrowing date specified in a Certificate the specified collateral and the
executed promissory note, if any, against delivery by the lending bank of the
total amount of the loan payable, provided that the same conforms to the total
amount payable as set forth in the Certificate. The Custodian may, at the option
of the lending bank, keep such collateral in its possession, but such collateral
shall be subject to all rights therein given the lending bank by virtue of any
promissory note or loan agreement. The Custodian shall deliver such Securities
as additional collateral as may be specified in a Certificate to collateralize
further any transaction described in this paragraph. The Fund shall cause all
Securities released from collateral status to be returned directly to the
Custodian, and the Custodian shall receive from time to time such return of
collateral as may be tendered to it. In the event that the Fund fails to specify
in a Certificate the Series, the name of the issuer, the title and number of
shares or the principal amount of any particular Securities to be delivered as
collateral by the Custodian, to any such bank, the Custodian shall not be under
any obligation to deliver any Securities.
ARTICLE XIV
CUSTODY OF ASSETS OUTSIDE THE U.S.
1. The Custodian is authorized and instructed to employ, as its agent, as
subcustodians for the securities and other assets of the Fund maintained outside
of the United States the Foreign Subcustodians and Foreign Depositories
designated on Schedule A hereto. Except as provided in Schedule A, the Custodian
shall employ no other Foreign Custodian or Foreign Depository. The Custodian and
the Fund may amend Schedule A hereto from time to time to agree to designate any
additional Foreign Subcustodian or Foreign Depository with which the Custodian
has an agreement for such entity to act as the Custodian's agent, as
subcustodian, and which the Custodian in its absolute discretion proposes to
utilize to hold any of the Fund's Foreign Property. Upon receipt of a
Certificate or Written Instructions from the Fund, the Custodian shall cease the
employment of any one or more of such subcustodians for maintaining custody of
the Fund's assets and such custodian shall be deemed deleted from Schedule A.
2. The Custodian shall limit the securities and other assets maintained in
the custody of the Foreign Subcustodians to: (a) "foreign securities," as
defined in paragraph (c)(1) of Rule 17f- 5 under the Investment Company Act of
1940, and (b) cash and cash equivalents in such amounts as the Fund may
determine to be reasonably necessary to effect the foreign securities
transactions of the Fund.
3. The Custodian shall identify on its books as belonging to the Fund, the
Foreign Securities held by each Foreign Subcustodian.
4. Each agreement pursuant to which the Custodian employs a Foreign
Subcustodian shall be substantially in the form reviewed and approved by the
Fund and will not be amended in a way that materially affects the Fund without
the Fund's prior written consent and shall:
(a) require that such institution establish custody account(s) for
the Custodian on behalf of the Fund and physically segregate in each such
account securities and other assets of the fund, and, in the event that such
institution deposits the securities of the Fund in a Foreign Depository, that it
shall identify on its books as belonging to the Fund or the Custodian, as agent
for the Fund, the securities so deposited;
(b) provide that:
(1) the assets of the Fund will not be subject to any right,
charge, security interest, lien or claim of any kind in favor of the Foreign
Subcustodian or its creditors, except a claim of payment for their safe custody
or administration;
(2) beneficial ownership for the assets of the Fund will be
freely transferable without the payment of money or value other than for custody
or administration;
(3) adequate records will be maintained identifying the assets
as belonging to the Fund;
(4) the independent public accountants for the Fund will be
given access to the books and records of the Foreign Subcustodian relating to
its actions under its agreement with the Custodian or confirmation of the
contents of those records;
(5) the Fund will receive periodic reports with respect to the
safekeeping of the Fund's assets, including, but not necessarily limited to,
notification of any transfer to or from the custody account(s); and
(6) assets of the Fund held by the Foreign Subcustodian will
be subject only to the instructions of the Custodian or its agents.
(c) Require the institution to exercise reasonable care in the
performance of its duties and to indemnify, and hold harmless, the Custodian
from and against any loss, damage, cost, expense, liability or claim arising out
of or in connection with the institution's performance of such obligations, with
the exception of any such losses, damages, costs, expenses, liabilities or
claims arising as a result of an act of God. At the election of the Fund, it
shall be entitled to be subrogated to the rights of the Custodian with respect
to any claims against a Foreign Subcustodian as a
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consequence of any such loss, damage, cost, expense, liability or claim of or to
the Fund, if and to the extent that the Fund has not been made whole for any
such loss, damage, cost, expense, liability or claim.
5. Upon receipt of a Certificate or Written Instructions, which may be
continuing instructions when deemed appropriate by the parties, the Custodian
shall on behalf of the Fund make or cause its Foreign Subcustodian to transfer,
exchange or deliver securities owned by the Fund, except to the extent
explicitly prohibited therein. Upon receipt of a Certificate or Written
Instructions, which may be continuing instructions when deemed appropriate by
the parties, the Custodian shall on behalf of the fund pay out or cause its
Foreign Subcustodians to pay out monies of the Fund. The Custodian shall use all
means reasonably available to it, including, if specifically authorized by the
Fund in a Certificate, any necessary litigation at the cost and expense of the
Fund (except as to matters for which the Custodian is responsible hereunder) to
require or compel each Foreign Subcustodian or Foreign Depository to perform the
services required of it by the agreement between it and the Custodian authorized
pursuant to this Agreement.
6. The Custodian shall maintain all books and records as shall be
necessary to enable the Custodian readily to perform the services required of it
hereunder with respect to the Fund's Foreign Properties. The Custodians shall
supply to the Fund from time to time, as mutually agreed upon, statements in
respect of the Foreign Securities and other Foreign Properties of the Fund held
by Foreign Subcustodians, directly or through Foreign Depositories, including
but not limited to an identification of entities having possession of the Fund's
Foreign Securities and other assets, an advice or other notification of any
transfers of securities to or from each custodial account maintained for the
Fund or the Custodian on behalf of the Fund indicating, as to securities
acquired for the Fund, the identity of the entity having physical possession of
such securities. The Custodian shall promptly and faithfully transmit all
reports and information received pertaining to the Foreign Property of the Fund,
including, without limitation, notices or reports of corporate action, proxies
and proxy soliciting materials.
7. Upon request of the Fund, the Custodian shall use reasonable efforts to
arrange for the independent accountants of the Fund to be afforded access to the
books and records of any Foreign Subcustodian, or confirmation of the contents
thereof, insofar as such books and records relate to the Foreign Property of the
Fund or the performance of such Foreign Subcustodian under its agreement with
the Custodian; provided that any litigation to afford such access shall be at
the sole cost and expense of the Fund.
8. The Custodian recognizes that employment of a Foreign Subcustodian or
Foreign Depository for the Fund's Foreign Securities and Foreign Property is
permitted by Section 17(f) of the Investment Company Act of 1940 only upon
compliance with Section (a) of Rule 17f-5 promulgated thereunder. With respect
to the Foreign Subcustodians and Foreign Depositories identified on Schedule A,
the Custodian represents that it has furnished the Fund with certain materials
prepared by the Custodian and with such other information in the possession of
the Custodian as the Fund advised the Custodian was reasonably necessary to
assist the Board of Directors of the Fund in making the determinations required
of the Board of Directors by Rule 17f-5,
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<PAGE>
including, without limitation, consideration of the matters set forth in the
Notes to Rule 17f-5. If the Custodian recommends any additional Foreign
Subcustodian or Foreign Depository, the Custodian shall supply information
similar in kind and scope to that furnished pursuant to the preceding sentence.
Further, the Custodian shall furnish annually to the Fund, at such time as the
Fund and Custodian shall mutually agree, information concerning each Foreign
Subcustodian and Foreign Depository then identified on Schedule A similar in
kind and scope to that furnished pursuant to the preceding two sentences.
9. The Custodian's employment of any Foreign Subcustodian or Foreign
Depository shall constitute a representation that the Custodian believes in good
faith that such Foreign Subcustodian or Foreign Depository provides a reasonable
level of safeguards for maintaining the Fund's assets in light of prevailing
settlement and securities handling practices, procedures and controls in the
relevant market. In addition, the Custodian shall monitor the financial
condition and general operational performance of the Foreign Subcustodians and
Foreign Depositories and shall promptly inform the Fund in the event that the
Custodian has actual knowledge of a material adverse change in the financial
condition thereof or that there appears to be a substantial likelihood that the
shareholders' equity of any Foreign Subcustodian will decline below $200 million
(U.S. dollars or the equivalent thereof) or that its shareholders' equity has
declined below $200 million , or that the Foreign Subcustodian or Foreign
Depository has breached the agreement between it and the Custodian in a way that
the Custodian believes adversely affects the Fund. Further, the Custodian shall
advise the Fund if it believes that there is a material adverse change in the
operating environment of any Foreign Subcustodian or Foreign Depository.
ARTICLE XV
CONCERNING THE CUSTODIAN
1. The Custodian shall use reasonable care in the performance of its
duties hereunder, and, except as hereinafter provided, neither the Custodian nor
its nominee shall be liable for any loss or damage, including counsel fees,
resulting from its action or omission to act or otherwise, either hereunder or
under any Margin Account Agreement, except for any such loss or damage arising
out of its own negligence, bad faith, or willful misconduct or that of the
subcustodians or co-custodians appointed by the Custodian or of the officers,
employees, or agents of any of them. The Custodian may, with respect to
questions of law arising hereunder or under any Margin Account Agreement, apply
for and obtain the advice and opinion of counsel to the Fund, at the expense of
the Fund, or of its own counsel, at its own expense, and shall be fully
protected with respect to anything done or omitted by it in good faith in
conformity with such advice or opinion. The Custodian shall be liable to the
Fund for any loss or damage resulting from the use of the Book-Entry System or
any Depository arising by reason of any negligence, bad faith or willful
misconduct on the part of the Custodian or any of its employees or agents.
2. Notwithstanding the foregoing, the Custodian shall be under no
obligation to inquire into, and shall not be liable for:
(a) The validity (but not the authenticity) of the issue of any
Securities purchased,
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<PAGE>
sold, or written by or for the Fund, the legality of the purchase, sale or
writing thereof, or the propriety of the amount paid or received therefor, as
specified in a Certificate, Oral Instructions, or Written Instructions;
(b) The legality of the sale or redemption of any Shares, or the
propriety of the amount to be received or paid therefor, as specified in a
Certificate;
(c) The legality of the declaration or payment of any dividend by
the Fund, as specified in a resolution, Certificate, Oral Instructions, or
Written Instructions;
(d) The legality of any borrowing by the Fund using Securities as
collateral;
(e) The legality of any loan of portfolio Securities, nor shall the
Custodian be under any duty or obligation to see to it that the cash collateral
delivered to it by a broker, dealer, or financial institution or held by it at
any time as a result of such loan of portfolio Securities of the Fund is
adequate collateral for the Fund against any loss it might sustain as a result
of such loan, except that this subparagraph shall not excuse any liability the
Custodian may have for failing to act in accordance with Article X hereof or any
Certificate, Oral Instructions or Written Instructions given in accordance with
this Agreement. The Custodian specifically, but not by way of limitation, shall
not be under any duty or obligation periodically to check or notify the Fund
that the amount of such cash collateral held by it for the Fund is sufficient
collateral for the Fund, but such duty or obligation shall be the sole
responsibility of the Fund. In addition, the Custodian shall be under no duty or
obligation to see that any broker, dealer or financial institution to which
portfolio Securities of the Fund are lent pursuant to Article X of this
Agreement makes payment to it of any dividends or interest which are payable to
or for the account of the Fund during the period of such loan or at the
termination of such loan, provided, however, that the Custodian shall promptly
notify the Fund in the event that such dividends or interest are not paid and
received when due; or
(f) The sufficiency or value of any amounts of money and/or
Securities held in any Margin Account, Senior Security Account or Collateral
Account in connection with transactions by the Fund, except that this
subparagraph shall not excuse any liability the Custodian may have for failing
to establish, maintain, make deposits to or withdrawals from such accounts in
accordance with this Agreement. In addition, the Custodian shall be under no
duty or obligation to see that any broker, dealer, futures commission merchant
or Clearing Member makes payment to the Fund of any variation margin payment or
similar payment which the Fund may be entitled to receive from such broker,
dealer, futures commission merchant or Clearing Member, to see that any payment
received by the Custodian from any broker, dealer, futures commission merchant
or Clearing Member is the amount the Fund is entitled to receive, or to notify
the Fund of the Custodian's receipt or non-receipt of any such payment.
3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft, or
other instrument for the payment of money, received by it on behalf of the Fund
until the Custodian actually receives such money directly or by the final
crediting of the account representing the Fund's interest at the Book-Entry
System or the Depository.
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4. With respect to Securities held in a Depository, except as otherwise
provided in paragraph 5(b) of Article III hereof, the Custodian shall have no
responsibility and shall not be liable for ascertaining or acting upon any
calls, conversions, exchange offers, tenders, interest rate changes or similar
matters relating to such Securities, unless the Custodian shall have actually
received timely notice from the Depository in which such Securities are held. In
no event shall the Custodian have any responsibility or liability for the
failure of a Depository to collect, or for the late collection or late crediting
by a Depository of any amount payable upon Securities deposited in a Depository
which may mature or be redeemed, retired, called or otherwise become payable.
However, upon receipt of a Certificate from the Fund of an overdue amount on
Securities held in a Depository the Custodian shall make a claim against the
Depository on behalf of the Fund, except that the Custodian shall not be under
any obligation to appear in, prosecute or defend any action suit or proceeding
in respect to any Securities held by a Depository which in its opinion may
involve it in expense or liability, unless indemnity satisfactory to it against
all expense and liability be furnished as often as may be required, or
alternatively, the Fund shall be subrogated to the rights of the Custodian with
respect to such claim against the Depository should it so request in a
Certificate. This paragraph shall not, however, excuse any failure by the
Custodian to act in accordance with a Certificate, Oral Instructions, or Written
Instructions given in accordance with this Agreement.
5. The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount due the Fund from the Transfer Agent of the
Fund nor to take any action to effect payment or distribution by the Transfer
Agent of the Fund of any amount paid by the Custodian to the Transfer Agent of
the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount if the Securities upon which such amount is
payable are in default, or if payment is refused after the Custodian has timely
and properly, in accordance with this Agreement, made due demand or
presentation, unless and until (i) it shall be directed to take such action by a
Certificate and (ii) it shall be assured to its satisfaction of reimbursement of
its costs and expenses in connection with any such action, but the Custodian
shall have such a duty if the Securities were not in default on the payable date
and the Custodian failed to timely and properly make such demand for payment and
such failure is the reason for the non-receipt of payment.
7. The Custodian may, with the prior approval of the Board of Directors of
the Fund, appoint one or more banking institutions as subcustodian or
subcustodians, or as co-Custodian or co-Custodians, of Securities and moneys at
any time owned by the Fund, upon such terms and conditions as may be approved in
a Certificate or contained in an agreement executed by the Custodian, the Fund
and the appointed institution; provided, however, that appointment of any
foreign banking institution or depository shall be subject to the provisions of
Article XV hereof.
8. The Custodian agrees to indemnify the Fund against and save the Fund
harmless from all liability, claims, losses and demands whatsoever, including
attorney's fees, howsoever arising or incurred because of the negligence, bad
faith or willful misconduct of any subcustodian of the Securities and moneys
owned by the Fund.
9. The Custodian shall not be under any duty or obligation (a) to
ascertain whether any
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Securities at any time delivered to, or held by it, for the account of the Fund
and specifically allocated to a Series are such as properly may be held by the
Fund or such Series under the provisions of its then current prospectus, or (b)
to ascertain whether any transactions by the Fund, whether or not involving the
Custodian, are such transactions as may properly be engaged in by the Fund.
10. The Custodian shall be entitled to receive and the Fund agrees to pay
to the Custodian all reasonable out-of-pocket expenses and such compensation as
may be agreed upon in writing from time to time between the Custodian and the
Fund. The Custodian may charge such compensation, and any such expenses with
respect to a Series incurred by the Custodian in the performance of its duties
under this Agreement against any money specifically allocated to such Series.
The Custodian shall also be entitled to charge against any money held by it for
the account of a Series the amount of any loss, damage, liability or expense,
including counsel fees, for which it shall be entitled to reimbursement under
the provisions of this Agreement attributable to, or arising out of, its serving
as Custodian for such Series. The expenses for which the Custodian shall be
entitled to reimbursement hereunder shall include, but are not limited to, the
expenses of subcustodians and foreign branches of the Custodian incurred in
settling outside of New York City transactions involving the purchase and sale
of Securities of the Fund. Notwithstanding the foregoing or anything else
contained in this Agreement to the contrary, the Custodian shall, prior to
effecting any charge for compensation, expenses, or any overdraft or
indebtedness or interest thereon, submit an invoice therefor to the Fund.
11. The Custodian shall be entitled to rely upon any Certificate, notice
or other instrument in writing, Oral Instructions, or Written Instructions
received by the Custodian and reasonably believed by the Custodian to be
genuine. The Fund agrees to forward to the Custodian a Certificate or facsimile
thereof confirming Oral Instructions or Written Instructions in such manner so
that such Certificate or facsimile thereof is received by the Custodian, whether
by hand delivery, telecopier or other similar device, or otherwise, by the close
of business of the same day that such Oral Instructions or Written Instructions
are given to the Custodian. The Fund agrees that the fact that such confirming
instructions are not received by the Custodian shall in no way affect the
validity of the transactions or enforceability of the transactions thereby
authorized by the Fund. The Fund agrees that the Custodian shall incur no
liability to the Fund in acting upon Oral Instructions or Written Instructions
given to the Custodian hereunder concerning such transactions provided such
instructions reasonably appear to have been received from an Authorized Person.
12. The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed by the
Custodian to be given in accordance with the terms and conditions of any Margin
Account Agreement. Without limiting the generality of the foregoing, the
Custodian shall be under no duty to inquire into, and shall not be liable for,
the accuracy of any statements or representations contained in any such
instrument or other notice including, without limitation, any specification of
any amount to be paid to a broker, dealer, futures commission merchant or
Clearing Member. This paragraph shall not excuse any failure by the Custodian to
have acted in accordance with any Margin Agreement it has executed or any
Certificate, Oral Instructions, or Written Instructions given in accordance with
this Agreement.
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13. The books and records pertaining to the Fund, as described in Appendix
D hereto, which are in the possession of the Custodian shall be the property of
the Fund. Such books and records shall be prepared and maintained by the
Custodian as required by the Investment Company Act of 1940, as amended, and
other applicable Securities laws and rules and regulations. The Fund, or the
Fund's authorized representatives, shall have access to such books and records
during the Custodian's normal business hours. Upon the reasonable request of the
Fund, copies of any such books and records shall be provided by the Custodian to
the Fund or the Fund's authorized representative, and the Fund shall reimburse
the Custodian its expenses of providing such copies. Upon reasonable request of
the Fund, the Custodian shall provide in hard copy or on micro-film, whichever
the Custodian elects, any records included in any such delivery which are
maintained by the Custodian on a computer disc, or are similarly maintained, and
the Fund shall reimburse the Custodian for its expenses of providing such hard
copy or micro-film.
14. The Custodian shall provide the Fund with any report obtained by the
Custodian on the system of internal accounting control of the Book-Entry system,
each Depository or O.C.C., and with such reports on its own systems of internal
accounting control as the Fund may reasonably request from time to time.
15. The Custodian shall furnish upon request annually to the Fund a letter
prepared by the Custodian's accountants with respect to the Custodian's internal
systems and controls in the form generally provided by the Custodian to other
investment companies for which the Custodian acts as custodian.
16. The Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever arising out of, or related to, the
Custodian's performance of its obligations under this Agreement, except for any
such liability, claim, loss and demand arising out of the negligence, bad faith,
or willful misconduct of the Custodian, any co-Custodian or subcustodian
appointed by the Custodian, or that of the officers, employees, or agents of any
of them.
17. Subject to the foregoing provisions of this Agreement, the Custodian
shall deliver and receive Securities, and receipts with respect to such
Securities, and shall make and receive payments only in accordance with the
customs prevailing from time to time among brokers or dealers in such Securities
and, except as may otherwise be provided by this Agreement or as may be in
accordance with such customs, shall make payment for Securities only against
delivery thereof and deliveries of Securities only against payment therefor.
18. The Custodian will comply with the procedures, guidelines or
restrictions ("Procedures") adopted by the Fund from time to time for particular
types of investments or transactions, e.g., Repurchase Agreements and Reverse
Repurchase Agreements, provided that the Custodian has received from the Fund a
copy of such Procedures. If within ten days after receipt of any such
Procedures, the Custodian determines in good faith that it is unreasonable for
it to comply with any new procedures, guidelines or restrictions set forth
therein, it may within such ten day period send notice to the Fund that it does
not intend to comply with those new procedures, guidelines or restrictions which
it identifies with particularity in such notice, in which event the
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<PAGE>
Custodian shall not be required to comply with such identified procedures,
guidelines or restrictions; provided, however, that, anything to the contrary
set forth herein or in any other agreement with the Fund, if the Custodian
identifies procedures, guidelines or restrictions with which it does not intend
to comply, the Fund shall be entitled to terminate this Agreement without cost
or penalty to the Fund upon thirty days' written notice.
19. Whenever the Custodian has the authority to deduct monies from the
account for a series without a Certificate, it shall notify the Fund within one
business day of such deduction and the reason for it. Whenever the Custodian has
the authority to sell Securities or any other property of the Fund on behalf of
any Series without a Certificate, the Custodian will notify the Fund of its
intention to do so and afford the Fund the reasonable opportunity to select
which Securities or other property it wishes to sell on behalf of such Series.
If the Fund does not promptly sell sufficient Securities or Deposited Property
on behalf of the Series, then, after notice, the Custodian may proceed with the
intended sale.
20. The Custodian shall have no duties or responsibilities whatsoever
except such duties and responsibilities as are specifically set forth or
referred to in this Agreement, and no covenant or obligation shall be implied in
this Agreement against the Custodian.
ARTICLE XVI
TERMINATION
1. Except as provided in paragraph 3 of this Article, this Agreement shall
continue until terminated by either the Custodian giving to the Fund, or the
Fund giving to the Custodian, a notice in writing specifying the date of such
termination, which date shall be not less than 60 days after the date of the
giving of such notice. In the event such notice or a notice pursuant to
paragraph 3 of this Article is given by the Fund, it shall be accompanied by a
copy of a resolution of the Board of Directors of the Fund, certified by an
Officer and the Secretary or an Assistant Secretary of the Fund, electing to
terminate this Agreement and designating a successor custodian or custodians,
each of which shall be eligible to serve as a custodian for the Securities of a
management investment company under the Investment Company Act of 1940. In the
event such notice is given by the Custodian, the Fund shall, on or before the
termination date, deliver to the Custodian a copy of a resolution of the Board
of Directors of the Fund, certified by the Secretary or any Assistant Secretary,
designating a successor custodian or custodians. In the absence of such
designation by the Fund, the Custodian may designate a successor custodian which
shall be a bank or trust company eligible to serve as a custodian for Securities
of a management investment company under the Investment Company Act of 1940 and
which is acceptable to the Fund. Upon the date set forth in such notice this
Agreement shall terminate, and the Custodian shall upon receipt of a notice of
acceptance by the successor custodian on that date deliver directly to the
successor custodian all Securities and moneys then owned by the Fund and held by
it as Custodian, after deducting all fees, expenses and other amounts for the
payment or reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the Fund or the Custodian
in accordance with the preceding paragraph, the Fund shall upon the date
specified in the notice of termination of
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this Agreement and upon the delivery by the Custodian of all Securities (other
than Securities held in the Book-Entry System which cannot be delivered to the
Fund) and moneys then owned by the Fund be deemed to be its own custodian and
the Custodian shall thereby be relieved of all duties and responsibilities
pursuant to this Agreement arising thereafter, other than the duty with respect
to Securities held in the Book Entry System which cannot be delivered to the
Fund to hold such Securities hereunder in accordance with this Agreement.
3. Notwithstanding the foregoing, the Fund may terminate this Agreement
upon the date specified in a written notice in the event of the "Bankruptcy" of
The Bank of New York. As used in this sub-paragraph, the term "Bankruptcy" shall
mean The Bank of New York's making a general assignment, arrangement or
composition with or for the benefit of its creditors, or instituting or having
instituted against it a proceeding seeking a judgment of insolvency or
bankruptcy or the entry of a order for relief under any applicable bankruptcy
law or any other relief under any bankruptcy or insolvency law or other similar
law affecting creditors rights, or if a petition is presented for the winding up
or liquidation of the party or a resolution is passed for its winding up or
liquidation, or it seeks, or becomes subject to, the appointment of an
administrator, receiver, trustee, custodian or other similar official for it or
for all or substantially all of its assets or its taking any action in
furtherance of, or indicating its consent to approval of, or acquiescence in,
any of the foregoing.
ARTICLE XVII
TERMINAL LINK
1. At no time and under no circumstances shall the Fund be obligated to
have or utilize the Terminal Link, and the provisions of this Article shall
apply if, but only if, the Fund in its sole and absolute discretion elects to
utilize the Terminal Link to transmit Certificates to the Custodian.
2. The Terminal Link shall be utilized only for the purpose of the Fund
providing Certificates to the Custodian and the Custodian providing notices to
the Fund and only after the Fund shall have established access codes and
internal safekeeping procedures to safeguard and protect the confidentiality and
availability of such access codes. Each use of the Terminal Link by the Fund
shall constitute a representation and warranty that at least two officers have
each utilized an access code that such internal safekeeping procedures have been
established by the Fund, and that such use does not contravene the Investment
Company Act of 1940 and the rules and regulations thereunder.
3. Each party shall obtain and maintain at its own cost and expense all
equipment and services, including, but not limited to communications services,
necessary for it to utilize the Terminal Link, and the other party shall not be
responsible for the reliability or availability of any such equipment or
services, except that the Custodian shall not pay any communications costs of
any line leased by the Fund, even if such line is also used by the Custodian.
4. The Fund acknowledges that any data bases made available as part of, or
through the Terminal Link and any proprietary data, software, processes,
information and documentation (other
33
<PAGE>
than any such which are or become part of the public domain or are legally
required to be made available to the public) (collectively, the "Information"),
are the exclusive and confidential property of the Custodian. The Fund shall,
and shall cause others to which it discloses the Information, to keep the
Information confidential by using the same care and discretion it uses with
respect to its own confidential property and trade secrets, and shall neither
make nor permit any disclosure without the express prior written consent of the
Custodian.
5. Upon termination of this Agreement for any reason, each Fund shall
return to the Custodian any and all copies of the Information which are in the
Fund's possession or under its control, or which the Fund distributed to third
parties. The provisions of this Article shall not affect the copyright status of
any of the Information which may be copyrighted and shall apply to all
Information whether or not copyrighted.
6. The Custodian reserves the right to modify the Terminal Link from time
to time without notice to the Fund, except that the Custodian shall give the
Fund notice not less than 75 days in advance of any modification which would
materially adversely affect the Fund's operation, and the Fund agrees not to
modify or attempt to modify the Terminal Link without the Custodian's prior
written consent. The Fund acknowledges that any software provided by the
Custodian as part of the Terminal Link is the property of the Custodian and,
accordingly, the Fund agrees that any modifications to the same, whether by the
Fund or the Custodian and whether with or without the Custodian's consent, shall
become the property of the Custodian.
7. Neither the Custodian nor any manufacturers and suppliers it utilizes
or the Fund utilizes in connection with the Terminal Link makes any warranties
or representations, express or implied, in fact or in law, including but not
limited to warranties of merchantability and fitness for a particular purpose.
8. Each party will cause its officers and employees to treat the
authorization codes and the access codes applicable to Terminal Link with
extreme care, and irrevocably authorizes the other to act in accordance with and
rely on Certificates and notices received by it through the Terminal Link. Each
party acknowledges that it is its responsibility to assure that only its
authorized persons use the Terminal Link on its behalf, and that a party shall
not be responsible nor liable for use of the Terminal Link on behalf of the
other party by unauthorized persons of such other party.
9. Notwithstanding anything else in this Agreement to the contrary,
neither party shall have any liability to the other for any losses, damages,
injuries, claims, costs or expenses arising as a result of a delay, omission or
error in the transmission of a Certificate or notice by use of the Terminal Link
except for money damages for those suffered as the result of the negligence, bad
faith or willful misconduct of such party or its officers, employees or agents
in an amount not exceeding for any incident $100,000; provided, however, that a
party shall have no liability under this Section 9 if the other party fails to
comply with the provisions of Section 11.
10. Without limiting the generality of the foregoing, in no event shall
either party or any manufacturer or supplier of its computer equipment, software
or services relating to the Terminal Link be responsible for any special,
indirect, incidental or consequential damages which the other
34
<PAGE>
party may incur or experience by reason of its use of the Terminal Link even if
such party, manufacturer or supplier has been advised of the possibility of such
damages, nor with respect to the use of the Terminal Link shall either party or
any such manufacturer or supplier be liable for acts of God, or with respect to
the following to the extent beyond such person's reasonable control: machine or
computer breakdown or malfunction, interruption or malfunction of communication
facilities, labor difficulties or any other similar or dissimilar cause.
11. The Fund shall notify the Custodian of any errors, omissions or
interruptions in, or delay or unavailability of, the Terminal Link as promptly
as practicable, and in any event within 24 hours after the earliest of (i)
discovery thereof, and (ii) in the case of any error, the date of actual receipt
of the earliest notice which reflects such error, it being agreed that discovery
and receipt of notice may only occur on a business day. The Custodian shall
promptly advise the Fund whenever the Custodian learns of any errors, omissions
or interruption in, or delay or unavailability of, the Terminal Link.
12. Each party shall, as soon as practicable after its receipt of a
Certificate or a notice transmitted by the Terminal Link, verify to the other
party by use of the Terminal Link its receipt of such Certificate or notice, and
in the absence of such verification the party to which the Certificate or notice
is sent shall not be liable for any failure to act in accordance with such
Certificate or notice and the sending party may not claim that such Certificate
or notice was received by the other party.
ARTICLE XVIII
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by two of the
present Officers of the Fund under its seal, setting forth the names and the
signatures of the present Authorized Persons. The Fund agrees to furnish to the
Custodian a new Certificate in similar form in the event that any such present
Authorized Person ceases to be an Authorized Person or in the event that other
or additional Authorized Persons are elected or appointed. Until such new
Certificate shall be received, the Custodian shall be entitled to rely and to
act upon Oral Instructions, Written Instructions, or signatures of the present
Authorized Persons as set forth in the last delivered Certificate to the extent
provided by this Agreement.
2. Annexed hereto as Appendix A is a Certificate signed by two of the
present Officers of the Fund under its seal, setting forth the names and the
signatures of the present Officers of the Fund. The Fund agrees to furnish to
the Custodian a new Certificate in similar form in the event any such present
officer ceases to be an officer of the Fund, or in the event that other or
additional officers are elected or appointed. Until such new Certificate shall
be received, the Custodian shall be entitled to rely and to act upon the
signatures of the officers as set forth in the last delivered Certificate to the
extent provided by this Agreement.
3. Any notice or other instrument in writing, authorized or required by
this Agreement
35
<PAGE>
to be given to the Custodian, other than any Certificate or Written
Instructions, shall be sufficiently given if addressed to the Custodian and
mailed or delivered to it at its offices at 90 Washington Street, New York, New
York 10286, or at such other place as the Custodian may from time to time
designate in writing.
4. Any notice or other instrument in writing, authorized or rehired by
this Agreement to be given to the Fund shall be sufficiently given if addressed
to the Fund and mailed or delivered to it at its office at the address for the
Fund first above written, or at such other place as the Fund may from time to
time designate in writing.
5. This Agreement constitutes the entire agreement between the parties,
replaces all prior agreements and may not be amended or modified in any manner
except by a written agreement executed by both parties with the same formality
as this Agreement and approved by a resolution of the Board of Directors of the
Fund, except that Appendices A and B may be amended unilaterally by the Fund
without such an approving resolution.
6. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Fund without the written consent
of the Custodian, or by the Custodian or The Bank of New York without the
written consent of the Fund, authorized or approved by a resolution of the
Fund's Board of Directors. For purposes of this paragraph, no merger,
consolidation, or amalgamation of the Custodian, The Bank of New York, or the
Fund shall be deemed to constitute an assignment of this Agreement.
7. This Agreement shall be construed in accordance with the laws of the
State of New York without giving effect to conflict of laws principles thereof.
Each party hereby consents to the jurisdiction of a state or federal court
situated in New York City, New York in connection with any dispute arising
hereunder and hereby waives its right to trial by jury.
8. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
9. A copy of the Articles of Incorporation of the Fund is on file with the
Secretary of State of Maryland, and notice is hereby given that this instrument
is executed on behalf of the Board of Directors of the Fund as Directors and not
individually and that the obligations of the instrument are not binding upon any
of the Directors or shareholders individually but are binding upon the assets
and property of the Fund; provided, however, that the Articles of Incorporation
of the Fund provides that the assets of a particular series of the Fund shall
under no circumstances be charges with liabilities attributable to any other
series of the Fund and that all persons extending credit to, or contracting with
or having any claim against a particular series of the Fund shall look only to
the assets of that particular series for payment of such credit, contract or
claim.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers, thereunto duly authorized and their
respective seals to be hereunto affixed, as of the day and year first above
written.
36
<PAGE>
OPPENHEIMER SERIES FUND, INC.
By: /s/ Andrew J. Donohue
---------------------------------------
Andrew J. Donohue
Secretary
[SEAL]
Attest:
By: /s/ Robert G. Zack
-----------------------------
Robert G. Zack
Assistant Secretary
THE BANK OF NEW YORK
[SEAL] By: /s/ Jorge E. Ramos
-------------------------------
Jorge E. Ramos, Vice President
Attest:
/s/ Michael A. Ceccio
37
<PAGE>
APPENDIX A
I, Andrew J. Donohue, Secretary, and I, Robert G. Zack, Assistant Secretary, of
Oppenheimer Series Fund, Inc., a Maryland corporation (the "Fund"), do hereby
certify that:
The following individuals for whom a position other than "Officer of OSS" is
specified serve in the following positions with the Fund and each has been duly
elected or appointed by the Board of Directors of the Fund to each such position
and qualified therefor in conformity with the Fund's Articles of Incorporation
and By-Laws. With respect to the following individuals for whom a position of
"Officer of OSS" is specified, each such individual has been designated by a
resolution of the Board of Directors of the Fund to be an Officer for purposes
of the Fund's Custody Agreement with The Bank of New York, but only for purposes
of Articles XII and XIII thereof and a certified copy of such resolution is
attached hereto. The signatures of each individual below set forth opposite
their respective names are their true and correct signatures:
Name Position Signature
Andrew J. Donohue Secretary
George C. Bowen Treasurer
Robert G. Zack Assistant Secretary
Robert Bishop Assistant Treasurer
Scott Farrar Assistant Treasurer
Robert Doll Vice President
Stephen F. Libera Vice President
Michael Strathhearn Vice President
Kenneth B. White Vice President
Arthur Zimmer Vice President
Peter M. Antos Senior Vice President OF
Victor Babin Senior Vice President OF
Larry Apolito Vice President OFI
Katherine P. Feld Vice President OFI
Mitchell J. Lindauer Vice President OFI
<PAGE>
Name Position Signature
Ken Nadler Vice President OFI
Dorothy G. Warmack Vice President OFI
Carol Wolf Vice President OFI
Leslie Falconio Assistant Vice President
Gina Palmeri Assistant Vice President
James W. Burns Portfolio Manager
Michael D. Jones Portfolio Manager
John F. Force Portfolio Manager
Richard J. Lindquist Portfolio Manager
Gary L. Pilgrim Portfolio Manager
John G.L. Wright Portfolio Manager
Daniel Baxter Securities Trader
Mark Binning Securities Trader
Donna Compert Securities Trader
David Falicia Securities Trader
Patrick Heeb Securities Trader
Chang Lee Securities Trader
Suzanne Lopata Securities Trader
William Linden Securities Trader
Michael Mon Securities Trader
Richard Misko Securities Trader
Eleni Poullas Securities Trader
Rohit Sah Securities Trader
<PAGE>
IN WITNESS WHEREOF, I hereunto set my hand in the seal of Oppenheimer Series
Fund, Inc., as of the ____ day of _______, 1997.
Andrew J. Donohue
Secretary
Robert G. Zack, Assistant Secretary
<PAGE>
APPENDIX B
The undersigned, Andrew J. Donohue, hereby certifies that he is the duly
elected and acting Secretary of Oppenheimer Series Fund, Inc. (the "Fund"),
further certifies that the following resolutions were adopted by the Board of
Directors of the Fund at a meeting duly held on February 25, 1997 at which a
quorum was at all times present and that such resolutions have not been modified
or rescinded and are in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to a Custody
Agreement between The Bank of New York and the Fund (the "Custody
Agreement") is authorized and instructed on a continuous and ongoing basis
to act in accordance with, and to rely on instructions by the Fund to the
Custodian communicated by a Terminal Link as defined in the Custody
Agreement.
RESOLVED, that the Fund shall establish access codes and grant use of such
access codes only to officers of the Fund as defined in the Custody
Agreement, and shall establish internal safekeeping procedures to safeguard
and protect the confidentiality and availability of such access codes.
RESOLVED, that Officers of the Fund as defined in the Custody Agreement
shall, following the establishment of such access codes and such internal
safekeeping procedures, advise the Custodian that the same have been
established by delivering a Certificate, as defined in the Custody
Agreement, and the Custodian shall be entitled to rely upon such advice.
IN WITNESS WHEREOF, I hereunto set my hand in the seal of Oppenheimer Series
Fund, Inc. as of the _____ day of ___________, 1997.
---------------------------------
Andrew J. Donohue, Secretary
<PAGE>
APPENDIX C
I, Jorge Ramos, a Vice President with THE BANK OF NEW YORK, do hereby
designate the following publications pursuant to Article II, Section 5(b) of
this Agreement:
The Bond Buyer Depository Trust Company Notices Financial Daily Card Service JJ
Kenney Municipal Bond Service London Financial Times New York Times Standard &
Poor's Called Bond Record Wall Street Journal
IN WITNESS WHEREOF, I hereunto set my hand in the seal of The Bank of New York,
as of the 11th day of June, 1997.
--------------------------------
Jorge Ramos, Vice President
<PAGE>
APPENDIX D
The following books and records pertaining to Fund shall be prepared and
maintained by the Custodian and shall be the property of the Fund:
None.
<PAGE>
EXHIBIT A
CERTIFICATION
The undersigned, Robert G. Zack, hereby certifies that he is the duly
elected and acting Assistant Secretary of Oppenheimer Series Fund, Inc., a
Maryland corporation (the "Fund"), and further certifies that the following
resolution was adopted by the Board of Directors of the Fund at a meeting duly
held on February 25, 1997, at which a quorum was at all times present and that
such resolution has not been modified or rescinded and is in full force and
effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to a
Custody Agreement between The Bank of New York and the Fund (the
"Custody Agreement") is authorized and instructed on a continuous
and ongoing basis to deposit in the Book-Entry System, as defined
in the Custody Agreement, all Securities eligible for deposit
therein, regardless of the Series to which the same are
specifically allocated, and to utilize the Book-Entry System to the
extent possible in connection with its performance thereunder,
including, without limitation, in connection with settlements of
purchases and sales of Securities, loans of Securities, and
deliveries and returns of Securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of Oppenheimer
Series Fund Inc., as of the ______ day of ________, 1997.
----------------------------------
Robert G. Zack, Assistant Secretary
[SEAL]
<PAGE>
EXHIBIT B
The undersigned, Andrew J. Donohue, hereby certifies that he is the duly
elected and acting Secretary of Oppenheimer Series Fund, Inc., a Maryland
corporation (the "Fund"), and further certifies that the following resolution
was adopted by the Board of Directors of the Fund at a meeting duly held on
February 25, 1997, at which a quorum was at all times present and that such
resolution has not been modified or rescinded and is in full force and effect as
of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to a
Custody Agreement between The Bank of New York and the Fund (the
"Custody Agreement") is authorized and instructed on a continuous
and ongoing basis until such time as it receives a Certificate, as
defined in the Custody Agreement, to the contrary to deposit in The
Depository Trust Company ("DTC") as a "Depository" as defined in
the Custody Agreement, all Securities eligible for deposit therein,
regardless of the Series to which the same are specifically
allocated, and to utilize DTC to the extent possible in connection
with its performance thereunder, including, without limitation, in
connection with settlements of purchases and sales of Securities,
loans of Securities, and deliveries and returns of Securities
collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of Oppenheimer
Series Fund, Inc. as of the _______ day of _______, 1997.
----------------------------------
Andrew J. Donohue, Secretary
[SEAL]
<PAGE>
EXHIBIT B-1
CERTIFICATION
The undersigned, Andrew J. Donohue, hereby certifies that he is the duly
elected and acting Secretary of Oppenheimer Series Fund, Inc., a Maryland (the
"Fund"), and further certifies that the following resolution was adopted by the
Board of Directors of the Fund at a meeting duly held on February 25, 1997, at
which a quorum was at all times present and that such resolution has not been
modified or rescinded and is in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to a
Custody Agreement between The Bank of New York and the Fund (the
"Custody Agreement") is authorized and instructed on a continuous
and ongoing basis until such time as it receives a Certificate, as
defined in the Custody Agreement, to the contrary to deposit in the
Participants Trust Company as a Depository, as defined in the
Custody Agreement, all Securities eligible for deposit therein,
regardless of the Series to which the same are specifically
allocated, and to utilize the Participants Trust Company to the
extent possible in connection with its performance thereunder,
including, without limitation, in connection with settlements of
purchases and sales of Securities, loans of Securities, and
deliveries and return of Securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of Oppenheimer
Series Fund, Inc. as of the ______ day of _______, 1997.
---------------------------------
Andrew J. Donohue, Secretary
[SEAL]
<PAGE>
EXHIBIT C
CERTIFICATION
The undersigned, Andrew J. Donohue, hereby certifies that he is duly elected
and acting Secretary of Oppenheimer Series Fund, Inc., a Maryland corporation
(the "Fund") and further certifies that the following resolution was adopted by
the Board of Directors of the Fund at a meeting duly held on February 25, 1997,
at which a quorum was at all times present and that such resolution has not been
modified or rescinded and is in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to a
Custody Agreement between The Bank of New York and the Fund (the
"Custody Agreement") is authorized and instructed on a continuous
and ongoing basis until such time as it receives a Certificate, as
defined in the Custody Agreement, to the contrary, to accept,
utilize and act with respect to Clearing Member confirmations for
Options and transactions in Options, regardless of the Series to
which the same are specifically allocated, as such terms are
defined in the Custody Agreement, as provided in the Custody
Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of Oppenheimer
Series Fund, Inc., as of the _____ day of _______, 1997.
-----------------------------------
Andrew J. Donohue, Secretary
[SEAL]
<PAGE>
EXHIBIT D
[THE FORM OF FOREIGN SUBCUSTODIAN AGREEMENT VARIES DEPENDING ON THE
COUNTRY. PLEASE CONTACT OPPENHEIMERFUNDS, INC FOR A SPECIFIC FORM OF
FOREIGN SUBCUSTODIAN AGREEMENT]
Exhibit 24(11)(b)(a)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Oppenheimer Disciplined Value Fund:
We consent to the use of our report dated November 21, 1997 included herein and
to the reference to our firm under the heading "Financial Highlights" in Part A
of the Registration Statement.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Denver, Colorado
February 17, 1998
(24)(b)(11)(b)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Oppenheimer Disciplined Allocation Fund:
We consent to the use of our report dated November 21, 1997 included herein and
to the reference to our firm under the heading "Financial Highlights" in Part A
of the Registration Statement.
/s/KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Denver, Colorado
February 17, 1998
Exhibit 24(b)(11)(c)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors Oppenheimer LifeSpan Growth Fund Oppenheimer LifeSpan
Balanced Fund Oppenheimer LifeSpan Income Fund:
We consent to the use of our report dated November 21, 1997 included herein and
to the reference to our firm under the heading "Financial Highlights" in Part A
of the Registration Statement.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Denver, Colorado
February 17, 1998
Oppenheimer Disciplined Value Fund
Exhibit 24(b)(16) to Form N-1A
Performance Data Computation Schedule
The Fund's average annual total returns and total returns are calculated as
described below, on the basis of the Fund's distributions, for the past 10 years
which are as follows:
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares
12/23/86 0.1288000 0.0000000 12.110
05/08/87 0.0067000 0.6489000 13.800
06/23/87 0.1133000 0.0000000 14.120
12/23/87 0.1024000 0.0000000 11.500
12/31/87 0.0000000 1.4031000 9.800
06/23/88 0.1076000 0.0000000 10.840
08/09/88 0.0032000 0.0000000 10.660
12/28/88 0.0898000 0.0000000 10.940
06/23/89 0.1739000 0.0000000 13.150
08/08/89 0.0032000 0.0000000 14.180
12/28/89 0.3234000 1.2471000 12.910
06/22/90 0.2125000 0.0000000 13.160
08/09/90 0.0078000 0.0696000 12.450
12/28/90 0.1246000 0.0000000 11.580
06/25/91 0.1492000 0.0000000 13.230
08/07/91 0.0001740 0.0000000 14.060
12/30/91 0.1023748 1.2225544 14.330
06/25/92 0.1284000 0.0000000 14.070
08/13/92 0.0006025 0.0544445 14.360
12/29/92 0.1313754 1.5831824 14.160
06/25/93 0.1771000 0.3354085 15.550
08/05/93 0.0015951 0.0000000 15.720
12/29/93 0.1191825 1.3654598 15.190
06/27/94 0.1106000 0.0000000 14.410
08/11/94 0.0001066 0.1453600 14.970
12/29/94 0.1042681 0.4793800 14.220
06/27/95 0.1293000 0.0000000 16.480
08/24/95 0.0002974 0.0899600 17.260
12/28/95 0.1197963 1.1515100 17.750
06/18/96 0.0950000 0.1190000 18.650
12/30/96 0.0705800 1.4128500 19.600
Class B Shares
12/28/95 0.0150773 1.1515100 17.830
06/18/96 0.0670000 0.1190000 18.830
12/30/96 0.0358600 1.4128500 19.740
Class C Shares
06/18/96 0.0950000 0.1190000 18.640
12/30/96 0.0366700 1.4128500 19.520
Class Y Shares
12/30/96 0.0705800 1.4128500 19.600
<PAGE>
Oppenheimer Disciplined Value Fund
Page 2
1. Average Annual Total Returns for the Periods Ended 10/31/97:
The formula for calculating average annual total return is as follows:
1/number of years = n {(ERV/P)^n} - 1 = average annual total return
Where: ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maximum Examples at NAV:
sales charge of 5.75%:
One Year One Year
{($1,202.66/$1,000)^ 1} - 1 = 20.27% {($1,276.04/$1,000)^ 1} - 1 = 27.60%
Five Year Five Year
{($2,356.62/$1,000)^.2} - 1 = 18.70% {($2,500.37/$1,000)^.2} - 1 = 20.12%
Ten Year Ten Year
{($4,832.16/$1,000)^.1} - 1 = 17.06% {($5,126.94/$1,000)^.1} - 1 = 17.76%
Class B Shares
Examples, assuming a maximum Examples at NAV:
contingent deferred sales charge
of 5.00% for the first year, and
3.00% for the inception year:
One Year One Year
{($1,216.14/$1,000)^ 1} - 1 = 21.61% {($1,266.14/$1,000)^ 1} - 1 = 26.61%
Inception Inception
{($1,480.54/$1,000)^.4806}- 1 = 20.76% {($1,510.53/$1,000)^.4806}- 1 = 21.93%
Class C Shares
Examples, assuming a maximum Examples at NAV:
contingent deferred sales charge
of 1.00% for the first year, and
0.00% for the inception year:
One Year One Year
{($1,256.42/$1,000)^ 1} - 1 = 25.64% {($1,266.40/$1,000)^ 1} - 1 = 26.64%
Inception Inception
{($1,334.09/$1,000)^.6667}- 1 = 21.19% {($1,334.09/$1,000)^.6667}- 1 = 21.19%
<PAGE>
Oppenheimer Disciplined Value Fund
Page 3
Class Y Shares
Examples, assuming a maximum Examples at NAV:
contingent deferred sales charge
of 0.00% for the first year, and
0.00% for the inception year:
Inception Inception
{($1,236.16/$1,000)^1.1429}-1 = 27.42% {($1,236.16/$1,000)^1.1429}-1 = 27.42%
2. Cumulative Total Returns for the Periods Ended 10/31/97:
The formula for calculating cumulative total return is as follows:
(ERV - P) / P = Cumulative Total Return
Class A Shares
Examples, assuming a maximum Examples at NAV:
sales charge of 5.75%:
One Year One Year
$1,202.66 - $1,000/$1,000 = 20.27% $1,276.04 - $1,000/$1,000 = 27.60%
Five Year Five Year
$2,356.62 - $1,000/$1,000 = 135.66% $2,500.37 - $1,000/$1,000 = 150.04%
Ten Year Ten Year
$4,832.16 - $1,000/$1,000 = 383.22% $5,126.94 - $1,000/$1,000 = 412.69%
Class B Shares
Examples, assuming a maximum Examples at NAV:
contingent deferred sales charge
of 5.00% for the first year, and
3.00% for the inception year:
One Year One Year
$1,216.14 - $1,000/$1,000 = 21.61% $1,266.14 - $1,000/$1,000 = 26.61%
Inception Inception
$1,480.54 - $1,000/$1,000 = 48.05% $1,510.53 - $1,000/$1,000 = 51.05%
<PAGE>
Oppenheimer Disciplined Value Fund
Page 4
Class C Shares
Examples, assuming a maximum Examples at NAV:
contingent deferred sales charge
of 1.00% for the first year, and
0.00% for the inception year:
One Year One Year
$1,256.42 - $1,000/$1,000 = 25.64% $1,266.40 - $1,000/$1,000 = 26.64%
Inception Inception
$1,334.09 - $1,000/$1,000 = 33.41% $1,334.09 - $1,000/$1,000 = 33.41%
Class Y Shares
Examples, assuming a maximum Examples at NAV:
contingent deferred sales charge
of 0.00% for the first year, and
0.00% for the inception year:
Inception Inception
$1,236.16 - $1,000/$1,000 = 23.62% $1,236.16 - $1,000/$1,000 = 23.62%
Oppenheimer Disciplined Allocation Fund
Exhibit 24(b)(16) to Form N-1A
Performance Data Computation Schedule
The Fund's average annual total returns and total returns are calculated as
described below, on the basis of the Fund's distributions, for the past 10 years
which are as follows:
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares
12/23/87 0.2002000 0.0000000 11.940
12/31/87 0.0000000 0.8426000 10.910
06/23/88 0.2426000 0.0000000 11.580
08/09/88 0.0102000 0.0000000 11.440
12/28/88 0.2760000 0.0000000 11.470
06/23/89 0.3352000 0.0000000 12.730
08/08/89 0.0056000 0.0000000 13.330
12/28/89 0.4155000 0.6331000 12.620
06/22/90 0.3426000 0.0000000 12.610
08/09/90 0.0079000 0.0733000 12.300
12/28/90 0.3070000 0.0000000 11.910
06/25/91 0.2733000 0.0000000 12.980
08/07/91 0.0030224 0.0000000 13.580
12/30/91 0.2605539 0.7048530 13.970
06/25/92 0.2457000 0.0000000 13.920
08/13/92 0.0016206 0.0010962 14.300
12/29/92 0.2537640 1.0716172 13.790
06/25/93 0.2638000 0.0000000 14.760
08/05/93 0.0023355 0.1441885 14.930
12/29/93 0.2127302 0.8216358 14.590
06/27/94 0.2281000 0.0000000 13.760
08/11/94 0.0011003 0.0638300 14.020
12/29/94 0.3163313 0.1807400 13.450
06/27/95 0.3022000 0.0000000 14.850
08/24/95 0.0032867 0.0495800 15.130
12/28/95 0.2903215 0.5171200 15.410
06/18/96 0.2300000 0.0542000 15.440
09/27/96 0.1300000 0.0000000 15.700
12/30/96 0.1733100 1.3871100 15.050
03/27/97 0.1400000 0.0000000 14.910
06/27/97 0.1400000 0.0000000 16.030
09/26/97 0.1100000 0.0000000 17.170
Class B Shares
12/28/95 0.0646221 0.5171200 15.610
06/18/96 0.1980000 0.0542000 15.610
09/27/96 0.0990000 0.0000000 15.870
12/30/96 0.1458700 1.3871100 15.230
03/27/97 0.1150000 0.0000000 15.070
06/27/97 0.1120000 0.0000000 16.210
09/26/97 0.0810000 0.0000000 17.360
Class C Shares
06/18/96 0.2310000 0.0542000 15.420
09/27/96 0.1220000 0.0000000 15.650
12/30/96 0.1476700 1.3871100 14.990
<PAGE>
03/27/97 0.1210000 0.0000000 14.830
06/27/97 0.1170000 0.0000000 15.940
09/26/97 0.0820000 0.0000000 17.070
<PAGE>
Oppenheimer Disciplined Allocation Fund
Page 2
1. Average Annual Total Returns for the Periods Ended 10/31/97:
The formula for calculating average annual total return is as follows:
1/number of years = n {(ERV/P)^n} - 1 = average annual total return
Where: ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maximum Examples at NAV:
sales charge of 5.75%:
One Year One Year
{($1,119.88/$1,000)^ 1} - 1 = 11.99% {($1,188.23/$1,000)^ 1} - 1 = 18.82%
Five Year Five Year
{($1,744.68/$1,000)^.2} - 1 = 11.77% {($1,851.18/$1,000)^.2} - 1 = 13.11%
Ten Year Ten Year
{($3,211.90/$1,000)^.1} - 1 = 12.38% {($3,407.81/$1,000)^.1} - 1 = 13.04%
Class B Shares
Examples, assuming a maximum Examples at NAV:
contingent deferred sales charge
of 5.00% for the first year, and
3.00% for the inception year:
One Year One Year
{($1,129.55/$1,000)^ 1} - 1 = 12.96% {($1,179.55/$1,000)^ 1} - 1 = 17.96%
Inception Inception
{($1,275.97/$1,000)^.4806} - 1 = 12.43%{($1,305.97/$1,000)^.4806} - 1 = 13.69%
Class C Shares
Examples, assuming a maximum Examples at NAV:
contingent deferred sales charge
of 1.00% for the first year, and
0.00% for the inception year:
One Year One Year
{($1,169.30/$1,000)^ 1} - 1 = 16.93%{($1,179.30/$1,000)^ 1} - 1 = 17.93%
Inception Inception
{($1,227.43/$1,000)^.6667} - 1 = 14.64%{($1,227.43/$1,000)^.6667} - 1 = 14.64%
<PAGE>
Oppenheimer Disciplined Allocation Fund
Page 3
2. Cumulative Total Returns for the Periods Ended 10/31/97:
The formula for calculating cumulative total return is as follows:
(ERV - P) / P = Cumulative Total Return
Class A Shares
Examples, assuming a maximum Examples at NAV:
sales charge of 5.75%:
One Year One Year
$1,119.88 - $1,000/$1,000 = 11.99% $1,188.23 - $1,000/$1,000 = 18.82%
Five Year Five Year
$1,744.68 - $1,000/$1,000 = 74.47% $1,851.18 - $1,000/$1,000 = 85.12%
Ten Year Ten Year
$3,211.90 - $1,000/$1,000 = 221.19% $3,407.81 - $1,000/$1,000 = 240.78%
Class B Shares
Examples, assuming a maximum Examples at NAV:
contingent deferred sales charge
of 5.00% for the first year, and
3.00% for the inception year:
One Year One Year
$1,129.55 - $1,000/$1,000 = 12.96% $1,179.55 - $1,000/$1,000 = 17.96%
Inception Inception
$1,275.97 - $1,000/$1,000 = 27.60% $1,305.97 - $1,000/$1,000 = 30.60%
Class C Shares
Examples, assuming a maximum Examples at NAV:
contingent deferred sales charge
of 1.00% for the first year, and
0.00% for the inception year:
One Year One Year
$1,169.30 - $1,000/$1,000 = 16.93% $1,179.30 - $1,000/$1,000 = 17.93%
Inception Inception
$1,227.43 - $1,000/$1,000 = 22.74% $1,227.43 - $1,000/$1,000 = 22.74%
Oppenheimer LifeSpan Growth Fund
Exhibit 24(b)(16) to Form N-1A
Performance Data Computation Schedule
The Fund's average annual total returns and total returns are calculated as
described below, on the basis of the Fund's distributions, for the past 1 year
which are as follows:
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares
06/27/95 0.0517000 0.0000000 10.300
12/28/95 0.1189261 0.2326600 11.340
06/18/96 0.0900000 0.0399000 12.450
12/30/96 0.0800200 0.6186100 12.470
Class B Shares
12/28/95 0.0308857 0.2326600 11.410
06/18/96 0.0610000 0.0399000 12.520
12/30/96 0.0567200 0.6186100 12.500
Class C Shares
06/18/96 0.0870000 0.0399000 12.450
12/30/96 0.0653700 0.6186100 12.420
<PAGE>
Oppenheimer Lifespan Growth Fund
Page 2
1. Average Annual Total Returns for the Periods Ended 10/31/97:
The formula for calculating average annual total return is as follows:
1/number of years = n {(ERV/P)^n} - 1 = average annual total return
Where: ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maxiExamples at NAV:
sales charge of 5.75%:
One Year One Year
{($1,064.61/$1,000)^ 1} - 1 = 6.46% {($1,129.57/$1,000)^ 1} - 1 = 12.96%
Inception Inception
{($1,424.50/$1,000)^.4} - 1 = 15.20% {($1,511.42/$1,000)^.4} - 1 = 17.97%
Class B Shares
Examples, assuming a maxiExamples at NAV: contingent deferred sales charge of
5.00% for the first year, and 3.00% for the inception year:
One Year One Year
{($1,070.67/$1,000)^ 1} - 1 = 7.07% {($1,120.67/$1,000)^ 1} - 1 = 12.07%
Inception Inception
{($1,299.06/$1,000)^.4806}- 1 = 13.40% {($1,329.07/$1,000)^.4806}- 1 = 14.65%
Class C Shares
Examples, assuming a maxiExamples at NAV: contingent deferred sales charge of
1.00% for the first year, and 0.00% for the inception year:
One Year One Year
{($1,110.50/$1,000)^ 1} - 1 = 11.05% {($1,120.50/$1,000)^ 1} - 1 = 12.05%
Inception Inception
{($1,154.57/$1,000)^.6667}- 1 = 10.06% {($1,154.57/$1,000)^.6667}- 1 = 10.06%
<PAGE>
Oppenheimer Lifespan Growth Fund
Page 3
2. Cumulative Total Returns for the Periods Ended 10/31/97:
The formula for calculating cumulative total return is as follows:
(ERV - P) / P = Cumulative Total Return
Class A Shares
Examples, assuming a maxiExamples at NAV:
sales charge of 5.75%:
One Year One Year
$1,064.61 - $1,000/$1,000 = 6.46% $1,129.57 - $1,000/$1,000 = 12.96%
Inception Inception
$1,424.50 - $1,000/$1,000 = 42.45% $1,511.42 - $1,000/$1,000 = 51.14%
Class B Shares
Examples, assuming a maxiExamples at NAV: contingent deferred sales charge of
5.00% for the first year, and 3.00% for the inception year:
One Year One Year
$1,070.67 - $1,000/$1,000 = 7.07% $1,120.67 - $1,000/$1,000 = 12.07%
Inception Inception
$1,299.06 - $1,000/$1,000 = 29.91% $1,329.07 - $1,000/$1,000 = 32.91%
Class C Shares
Examples, assuming a maxiExamples at NAV: contingent deferred sales charge of
1.00% for the first year, and 0.00% for the inception year:
One Year One Year
$1,110.50 - $1,000/$1,000 = 11.05% $1,120.50 - $1,000/$1,000 = 12.05%
Inception Inception
$1,154.57 - $1,000/$1,000 = 15.46% $1,154.57 - $1,000/$1,000 = 15.46%
Oppenheimer LifeSpan Balanced Fund
Exhibit 24(b)(16) to Form N-1A
Performance Data Computation Schedule
The Fund's average annual total returns and total returns are calculated as
described below, on the basis of the Fund's distributions, for the past 10 years
which are as follows:
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares
06/27/95 0.0608000 0.0000000 10.270
12/28/95 0.1879261 0.2260100 11.020
06/18/96 0.1500000 0.0341000 11.600
09/27/96 0.0700000 0.0000000 11.900
12/30/96 0.0923300 0.3240100 11.810
03/27/97 0.0800000 0.0000000 11.430
06/27/97 0.1000000 0.0000000 12.340
09/26/97 0.1000000 0.0000000 13.060
Class B Shares
12/28/95 0.0552015 0.2260100 11.130
06/18/96 0.1220000 0.0341000 11.690
09/27/96 0.0480000 0.0000000 11.990
12/30/96 0.0754400 0.3240100 11.890
03/27/97 0.0610000 0.0000000 11.500
06/27/97 0.0800000 0.0000000 12.420
09/26/97 0.0780000 0.0000000 13.140
Class C Shares
06/18/96 0.1490000 0.0341000 11.590
09/27/96 0.0480000 0.0000000 11.890
12/30/96 0.0709800 0.3240100 11.790
03/27/97 0.0600000 0.0000000 11.410
06/27/97 0.0790000 0.0000000 12.320
09/26/97 0.0770000 0.0000000 13.030
<PAGE>
Oppenheimer Lifespan Balanced Fund
Page 2
1. Average Annual Total Returns for the Periods Ended 10/31/97:
The formula for calculating average annual total return is as follows:
1/number of years = n {(ERV/P)^n} - 1 = average annual total return
Where: ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maxiExamples at NAV:
sales charge of 5.75%:
One Year One Year
{($1,061.84/$1,000)^ 1} - 1 = 6.18% {($1,126.63/$1,000)^ 1} - 1 = 12.66%
Inception Inception
{($1,347.63/$1,000)^.4} - 1 = 12.68% {($1,429.86/$1,000)^.4} - 1 = 15.38%
Class B Shares
Examples, assuming a maxiExamples at NAV: contingent deferred sales charge of
5.00% for the first year, and 3.00% for the inception year:
One Year One Year
{($1,066.97/$1,000)^ 1} - 1 = 6.70% {($1,116.97/$1,000)^ 1} - 1 = 11.70%
Inception Inception
{($1,244.70/$1,000)^.4806}- 1 = 11.09% {($1,274.70/$1,000)^.4806}- 1 = 12.37%
Class C Shares
Examples, assuming a maxiExamples at NAV: contingent deferred sales charge of
1.00% for the first year, and 0.00% for the inception year:
One Year One Year
{($1,107.29/$1,000)^ 1} - 1 = 10.73% {($1,117.29/$1,000)^ 1} - 1 = 11.73%
Inception Inception
{($1,153.11/$1,000)^.6667}- 1 = 9.96% {($1,153.11/$1,000)^.6667}- 1 = 9.96%
<PAGE>
Oppenheimer Lifespan Balanced Fund
Page 3
2. Cumulative Total Returns for the Periods Ended 10/31/97:
The formula for calculating cumulative total return is as follows:
(ERV - P) / P = Cumulative Total Return
Class A Shares
Examples, assuming a maxiExamples at NAV:
sales charge of 5.75%:
One Year One Year
$1,061.84 - $1,000/$1,000 = 6.18% $1,126.63 - $1,000/$1,000 = 12.66%
Inception Inception
$1,347.63 - $1,000/$1,000 = 34.76% $1,429.86 - $1,000/$1,000 = 42.99%
Class B Shares
Examples, assuming a maxiExamples at NAV: contingent deferred sales charge of
5.00% for the first year, and 3.00% for the inception year:
One Year One Year
$1,066.97 - $1,000/$1,000 = 6.70% $1,116.97 - $1,000/$1,000 = 11.70%
Inception Inception
$1,244.70 - $1,000/$1,000 = 24.47% $1,274.70 - $1,000/$1,000 = 27.47%
Class C Shares
Examples, assuming a maxiExamples at NAV: contingent deferred sales charge of
1.00% for the first year, and 0.00% for the inception year:
One Year One Year
$1,107.29 - $1,000/$1,000 = 10.73% $1,117.29 - $1,000/$1,000 = 11.73%
Inception Inception
$1,153.11 - $1,000/$1,000 = 15.31% $1,153.11 - $1,000/$1,000 = 15.31%
Oppenheimer LifeSpan Income Fund
Exhibit 24(b)(16) to Form N-1A
Performance Data Computation Schedule
The Fund's average annual total returns and total returns are calculated as
described below, on the basis of the Fund's distributions, for the past 10 years
which are as follows:
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares
06/27/95 0.0766000 0.0000000 10.250
07/26/95 0.0421000 0.0000000 10.260
08/28/95 0.0508000 0.0000000 10.290
09/26/95 0.0428000 0.0000000 10.450
10/26/95 0.0440000 0.0000000 10.460
11/27/95 0.0469000 0.0000000 10.590
12/28/95 0.0579709 0.0435600 10.680
01/26/96 0.0413000 0.0000000 10.710
02/26/96 0.0445000 0.0000000 10.700
03/26/96 0.0451000 0.0000000 10.600
04/25/96 0.0462000 0.0000000 10.530
05/31/96 0.0549920 0.0000000 10.500
06/28/96 0.0300000 0.0260000 10.520
07/31/96 0.0543800 0.0000000 10.380
08/30/96 0.0526400 0.0000000 10.380
09/30/96 0.0644300 0.0000000 10.500
10/31/96 0.0493600 0.0000000 10.650
11/29/96 0.0463882 0.0000000 10.840
12/31/96 0.0504278 0.1532500 10.630
01/31/97 0.0485854 0.0000000 10.660
02/28/97 0.0505058 0.0000000 10.660
03/31/97 0.0534304 0.0000000 10.500
04/30/97 0.0478535 0.0000000 10.580
05/30/97 0.0535656 0.0000000 10.740
06/30/97 0.0463862 0.0000000 10.850
07/31/97 0.0505938 0.0000000 11.080
08/29/97 0.0516790 0.0000000 10.940
09/30/97 0.0465096 0.0000000 11.160
10/31/97 0.0494384 0.0000000 11.060
Class B Shares
10/26/95 0.0455000 0.0000000 10.480
11/27/95 0.0180000 0.0000000 10.620
12/28/95 0.0496535 0.0435600 10.720
01/26/96 0.0338000 0.0000000 10.750
02/26/96 0.0352000 0.0000000 10.750
03/26/96 0.0375000 0.0000000 10.650
04/25/96 0.0363000 0.0000000 10.580
05/31/96 0.0473630 0.0000000 10.530
06/28/96 0.0230000 0.0260000 10.560
07/31/96 0.0480800 0.0000000 10.410
08/30/96 0.0436600 0.0000000 10.420
09/30/96 0.0591300 0.0000000 10.540
<PAGE>
10/31/96 0.0429400 0.0000000 10.690
11/29/96 0.0395631 0.0000000 10.880
12/31/96 0.0437841 0.1532500 10.660
01/31/97 0.0409584 0.0000000 10.700
02/28/97 0.0439473 0.0000000 10.690
03/31/97 0.0470501 0.0000000 10.540
04/30/97 0.0414425 0.0000000 10.620
05/30/97 0.0464814 0.0000000 10.770
<PAGE>
Oppenheimer Lifespan Income Fund
Page 2
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class B Shares (cont.)
06/30/97 0.0398964 0.0000000 10.890
07/31/97 0.0438208 0.0000000 11.120
08/29/97 0.0444158 0.0000000 10.980
09/30/97 0.0396434 0.0000000 11.190
10/31/97 0.0413118 0.0000000 11.110
Class C Shares
05/31/96 0.0393140 0.0000000 10.510
06/28/96 0.0230000 0.0260000 10.530
07/31/96 0.0472900 0.0000000 10.390
08/30/96 0.0450700 0.0000000 10.390
09/30/96 0.0573800 0.0000000 10.510
10/31/96 0.0414600 0.0000000 10.660
11/29/96 0.0393832 0.0000000 10.840
12/31/96 0.0429764 0.1532500 10.630
01/31/97 0.0310731 0.0000000 10.690
02/28/97 0.0845766 0.0000000 10.690
03/31/97 0.0470124 0.0000000 10.530
04/30/97 0.0398533 0.0000000 10.610
05/30/97 0.0464658 0.0000000 10.770
06/30/97 0.0398706 0.0000000 10.880
07/31/97 0.0438496 0.0000000 11.120
08/29/97 0.0444249 0.0000000 10.970
09/30/97 0.0399987 0.0000000 11.190
10/31/97 0.0422336 0.0000000 11.100
<PAGE>
Oppenheimer Lifespan Income Fund
Page 3
1. Average Annual Total Returns for the Periods Ended 10/31/97:
The formula for calculating average annual total return is as follows:
1/number of years = n {(ERV/P)^n} - 1 = average annual total return
Where: ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maxiExamples at NAV:
sales charge of 5.75%:
One Year One Year
{($1,048.96/$1,000)^ 1} - 1 = 4.90% {($1,112.95/$1,000)^ 1} - 1 = 11.30%
Inception Inception
{($1,218.47/$1,000)^.4} - 1 = 8.22% {($1,292.77/$1,000)^.4} - 1 = 10.82%
Class B Shares
Examples, assuming a maxiExamples at NAV: contingent deferred sales charge of
5.00% for the first year, and 3.00% for the inception year:
One Year One Year
{($1,055.12/$1,000)^ 1} - 1 = 5.51% {($1,105.11/$1,000)^ 1} - 1 = 10.51%
Inception Inception
{($1,165.05/$1,000)^.4806}- 1 = 7.62% {($1,195.05/$1,000)^.4806}- 1 = 8.94%
Class C Shares
Examples, assuming a maxiExamples at NAV: contingent deferred sales charge of
1.00% for the first year, and 0.00% for the inception year:
One Year One Year
{($1,100.35/$1,000)^ 1} - 1 = 10.04% {($1,110.36/$1,000)^ 1} - 1 = 11.04%
Inception Inception
{($1,154.29/$1,000)^.6667}- 1 = 10.04% {($1,154.29/$1,000)^.6667}- 1 = 10.04%
<PAGE>
Oppenheimer Lifespan Income Fund
Page 4
2. Cumulative Total Returns for the Periods Ended 10/31/97:
The formula for calculating cumulative total return is as follows:
(ERV - P) / P = Cumulative Total Return
Class A Shares
Examples, assuming a maxiExamples at NAV:
sales charge of 5.75%:
One Year One Year
$1,048.96 - $1,000/$1,000 = 4.90% $1,112.95 - $1,000/$1,000 = 11.30%
Inception Inception
$1,218.47 - $1,000/$1,000 = 21.85% $1,292.77 - $1,000/$1,000 = 29.28%
Class B Shares
Examples, assuming a maxiExamples at NAV: contingent deferred sales charge of
5.00% for the first year, and 3.00% for the inception year:
One Year One Year
$1,055.12 - $1,000/$1,000 = 5.51% $1,105.11 - $1,000/$1,000 = 10.51%
Inception Inception
$1,165.05 - $1,000/$1,000 = 16.51% $1,195.05 - $1,000/$1,000 = 19.51%
Class C Shares
Examples, assuming a maxiExamples at NAV: contingent deferred sales charge of
1.00% for the first year, and 0.00% for the inception year:
One Year One Year
$1,100.35 - $1,000/$1,000 = 10.04% $1,110.36 - $1,000/$1,000 = 11.04%
Inception Inception
$1,154.29 - $1,000/$1,000 = 15.43% $1,154.29 - $1,000/$1,000 = 15.43%
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 356865
<NAME> OPPENHEIMER DISCIPLINED VALUE- A
<SERIES>
<NUMBER> 5
<NAME> OPPENHEIMER SERIES FUND, INC.
<S> <C>
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 457,479,603
<INVESTMENTS-AT-VALUE> 546,186,811
<RECEIVABLES> 16,304,534
<ASSETS-OTHER> 6,352
<OTHER-ITEMS-ASSETS> 97,315
<TOTAL-ASSETS> 562,595,012
<PAYABLE-FOR-SECURITIES> 5,475,009
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 783,011
<TOTAL-LIABILITIES> 6,258,020
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 397,127,686
<SHARES-COMMON-STOCK> 15,948,062
<SHARES-COMMON-PRIOR> 9,201,201
<ACCUMULATED-NII-CURRENT> 2,934,887
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<PER-SHARE-NAV-END> 23.31
<EXPENSE-RATIO> 1.07
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 356865
<NAME> OPPENHEIMER DISCIPLINED VALUE- B
<SERIES>
<NUMBER> 5
<NAME> OPPENHEIMER SERIES FUND, INC.
<S> <C>
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<ACCUM-APPREC-OR-DEPREC> 88,707,208
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<NET-CHANGE-IN-ASSETS> 368,983,484
<ACCUMULATED-NII-PRIOR> 479,425
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<PER-SHARE-NAV-END> 23.32
<EXPENSE-RATIO> 1.84
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 356865
<NAME> OPPENHEIMER DISCIPLINED VALUE- C
<SERIES>
<NUMBER> 5
<NAME> OPPENHEIMER SERIES FUND, INC.
<S> <C>
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<PAID-IN-CAPITAL-COMMON> 397,127,686
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<DISTRIBUTIONS-OF-GAINS> 63,782
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<NUMBER-OF-SHARES-SOLD> 439,330
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<NET-CHANGE-IN-ASSETS> 368,983,484
<ACCUMULATED-NII-PRIOR> 479,425
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<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,850,924
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<GROSS-EXPENSE> 3,482,860
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<PER-SHARE-NAV-BEGIN> 19.57
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<EXPENSE-RATIO> 1.86
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<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 356865
<NAME> OPPENHEIMER DISCIPLINED VALUE- Y
<SERIES>
<NUMBER> 5
<NAME> OPPENHEIMER SERIES FUND, INC.
<S> <C>
<PERIOD-TYPE> 10-mos
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<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 457,479,603
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<RECEIVABLES> 16,304,534
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<PAID-IN-CAPITAL-COMMON> 397,127,686
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<SHARES-COMMON-PRIOR> 0
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<ACCUMULATED-NET-GAINS> 67,567,211
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<ACCUM-APPREC-OR-DEPREC> 88,707,208
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<EXPENSES-NET> 3,482,860
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<REALIZED-GAINS-CURRENT> 67,704,492
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<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3
<DISTRIBUTIONS-OF-GAINS> 69
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<NUMBER-OF-SHARES-SOLD> 4,130,366
<NUMBER-OF-SHARES-REDEEMED> 231,661
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 368,983,484
<ACCUMULATED-NII-PRIOR> 479,425
<ACCUMULATED-GAINS-PRIOR> 13,295,701
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,850,924
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,482,860
<AVERAGE-NET-ASSETS> 51,774,958
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<PER-SHARE-NII> 0.31
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<PER-SHARE-DIVIDEND> 0.07
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<PER-SHARE-NAV-END> 23.34
<EXPENSE-RATIO> 0.78
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 356865
<NAME> Oppenheimer Disciplined Allocation - A Shares
<SERIES>
<NUMBER> 4
<NAME> Oppenheimer Series Fund, Inc.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 219,783,941
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 341,791
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<ACCUMULATED-NET-GAINS> 27,121,937
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<ACCUM-APPREC-OR-DEPREC> 20,966,391
<NET-ASSETS> 243,267,192
<DIVIDEND-INCOME> 1,968,214
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<EXPENSES-NET> 2,792,481
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<DISTRIBUTIONS-OF-GAINS> 19,860,930
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<NUMBER-OF-SHARES-SOLD> 1,295,002
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<SHARES-REINVESTED> 1,821,876
<NET-CHANGE-IN-ASSETS> 16,064,801
<ACCUMULATED-NII-PRIOR> 1,524,191
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,535,343
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<GROSS-EXPENSE> 2,792,481
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<PER-SHARE-NII> 0.51
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<PER-SHARE-DIVIDEND> 0.56
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<PER-SHARE-NAV-END> 16.81
<EXPENSE-RATIO> 1.11
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 356865
<NAME> Oppenheimer Disciplined Allocation - B Shares
<SERIES>
<NUMBER> 4
<NAME> Oppenheimer Series Fund, Inc.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 219,783,941
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<OTHER-ITEMS-LIABILITIES> 341,791
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<ACCUMULATED-GAINS-PRIOR> 20,128,897
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<GROSS-EXPENSE> 2,792,481
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<PER-SHARE-NII> 0.40
<PER-SHARE-GAIN-APPREC> 2.27
<PER-SHARE-DIVIDEND> 0.45
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<PER-SHARE-NAV-END> 16.99
<EXPENSE-RATIO> 1.89
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<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 356865
<NAME> Oppenheimer Disciplined Allocation - C Shares
<SERIES>
<NUMBER> 4
<NAME> Oppenheimer Series Fund, Inc.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
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<GROSS-EXPENSE> 2,792,481
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<PER-SHARE-GAIN-APPREC> 2.19
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<PER-SHARE-NAV-END> 16.70
<EXPENSE-RATIO> 1.92
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 356865
<NAME> OPPENHEIMER LIFESPAN GROWTH-A
<SERIES>
<NUMBER> 13
<NAME> OPPENHEIMER SERIES FUND, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
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<DISTRIBUTIONS-OF-INCOME> 279,883
<DISTRIBUTIONS-OF-GAINS> 2,163,698
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<NUMBER-OF-SHARES-SOLD> 590,543
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<SHARES-REINVESTED> 195,679
<NET-CHANGE-IN-ASSETS> 13,392,582
<ACCUMULATED-NII-PRIOR> 171,706
<ACCUMULATED-GAINS-PRIOR> 2,261,956
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 457,316
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 845,404
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<PER-SHARE-NAV-BEGIN> 12.78
<PER-SHARE-NII> 0.24
<PER-SHARE-GAIN-APPREC> 1.35
<PER-SHARE-DIVIDEND> 0.08
<PER-SHARE-DISTRIBUTIONS> 0.62
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.67
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 356865
<NAME> OPPENHEIMER LIFESPAN GROWTH-B
<SERIES>
<NUMBER> 13
<NAME> OPPENHEIMER SERIES FUND, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 51,331,382
<INVESTMENTS-AT-VALUE> 59,260,606
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<PAYABLE-FOR-SECURITIES> 538,459
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<OTHER-ITEMS-LIABILITIES> 95,964
<TOTAL-LIABILITIES> 634,423
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 47,663,953
<SHARES-COMMON-STOCK> 395,745
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<NAME> OPPENHEIMER LIFESPAN BALANCED FUND - A
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<NAME> OPPENHEIMER LIFESPAN BALANCED FUND - B
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<NAME> OPPENHEIMER SERIES FUND, INC.
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<NAME> OPPENHEIMER LIFESPAN BALANCED FUND - C
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<NAME> OPPENHEIMER SERIES FUND, INC.
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<CIK> 356865
<NAME> OPPENHEIMER LIFESPAN INCOME FUND-A
<SERIES>
<NUMBER> 11
<NAME> Oppenheimer Series Fund, Inc.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 356865
<NAME> OPPENHEIMER LIFESPAN INCOME FUND-B
<SERIES>
<NUMBER> 11
<NAME> Oppenheimer Series Fund, Inc.
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<NAME> OPPENHEIMER LIFESPAN INCOME FUND-C
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<NAME> Oppenheimer Series Fund, Inc.
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