Registration No. 2-11052
File No. 811-490
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. ___ / /
POST-EFFECTIVE AMENDMENT NO. 78 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 /X/
Amendment No. 35 /X/
OPPENHEIMER TOTAL RETURN FUND, INC.
- ------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
3410 South Galena Street, Denver, Colorado 80231
- ------------------------------------------------------------------
(Address of Principal Executive Offices)
303-671-3200
- -------------------------------------------------------------------
(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
Oppenheimer Management Corporation
Two World Trade Center, New York, New York 10048-0203
- -------------------------------------------------------------------
(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 April 1, 1996, pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / On ---------------, pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / On _______ pursuant to paragraph (a)(2) of Rule 485.
Registration of Shares Under the Securities Act of 1933
-------------------------------------------------------
The Registrant has registered an indefinite number of shares
under the Securities Act of 1933 pursuant to Rule 24f-2 promulgated
under the Investment Company Act of 1940. A Rule 24f-2 Notice for
the Registrant's fiscal year ended December 31, 1995, was filed on
February 28, 1996.
<PAGE>
FORM N-1A
OPPENHEIMER TOTAL RETURN FUND, INC.
Cross Reference Sheet
Part A of
Form N-1A
Item No. Prospectus Heading
- --------- ------------------
1 Front Cover Page
2 Expenses; Brief Overview of the Fund
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; How the Fund is Managed--
Organization and History; Investment Objectives and
Policies
5 How the Fund is Managed; Expenses; Back Cover
5A Performance of the Fund
6 How the Fund is Managed-Organization and History;
The Transfer Agent; Dividends, Capital Gains and
Taxes; Investment Objectives and
Policies-Portfolio Turnover
7 Shareholder Account Rules and Policies; How To Buy
Shares; How to Exchange Shares; Special Investor
Services; Service Plan for Class A Shares;
Distribution and Service Plan for Class B Shares;
Distribution and Service Plan for Class C Shares;
How to Sell Shares
8 How to Sell Shares; Special Investor Services
9 *
Part B of
Form N-1A
Item No. Heading In Statement of Additional Information
- --------- ----------------------------------------------
10 Cover Page
11 Cover Page
12 *
13 Investment Objectives and Policies; Other
Investment Techniques and Strategies; Additional
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 Your Investment Account - How to Buy Shares; How to
Sell Shares; How to Exchange Shares
20 Dividends, Capital Gains and Taxes
21 How the Fund is Managed; Brokerage Policies of the
Fund
22 Performance of the Fund
23 *
- ----------------
* Not applicable or negative answer.
<PAGE>
OPPENHEIMER TOTAL RETURN FUND, INC.
Supplement dated April 1, 1996 to the
Prospectus dated April 1, 1996
The Prospectus is changed as follows:
In addition to paying dealers the regular commission for (1)
sales of Class A shares stated in the sales charge table in "Buying
Class A Shares" on page 30, (2) sales of Class B or Class C shares
described in the third paragraph in "Distribution and Service Plan
for Class B and Class C Shares" on page 36, the Distributor will
pay additional commission to each participating broker, dealer and
financial institution that has a sales agreement with the
Distributor (these are referred to as "participating firms") for
Class A, B and C shares of the Fund sold in "qualifying
transactions" (the "promotion"). The additional commission will be
.75% of the offering price of shares of the Fund sold by a
registered representative or sales representative of a
participating firm during the promotion. If the additional
commission is paid on the sale of Class A shares of $1 million or
more and those shares are redeemed within 13 months from the end of
the month in which they were purchased, the participating firm will
be required to return the additional commission.
"Qualifying transactions" are sales of Class A, Class B and/or
Class C shares of any one or more of the Oppenheimer funds (except
money market funds and tax-exempt funds) for (1) new Individual
Retirement Accounts ("IRAs"), using the OppenheimerFunds prototype
IRA agreement, including rollover IRAs, SEP IRAs and SAR-SEP IRAs,
where the IRA is established and the purchase payment is received
during the period from January 1, 1996 through April 15, 1996 (the
"promotion period") or, (2) IRAs using the A.G. Edwards & Sons,
Inc. prototype IRA agreement, including rollover IRAs, SEP IRAs and
SAR-SEP IRAs, where the purchase payment is received during the
promotion period. "Qualifying transactions" also include
purchases of shares of Oppenheimer funds for existing
OppenheimerFunds or A.G. Edwards & Sons, Inc. prototype IRAs,
rollover IRAs, SEP IRAs and SAR-SEP IRAs effected through a
rollover from an investor, or through a direct rollover or trustee-
to-trustee transfer from another retirement plan trustee, of IRA
assets or other employee benefit plan assets from an account or
investment other than an account or investment in the Oppenheimer
funds. To qualify, the payment for the shares purchased for a
rollover to an OppenheimerFunds prototype IRA or for a rollover,
direct rollover or trustee-to-trustee transfer to an A.G. Edwards
& Sons, Inc. prototype IRA must be received during the promotion
period, or the acceptance of a direct rollover or trustee-to-
trustee transfer to an OppenheimerFunds prototype IRA must be
acknowledged by the trustee of the OppenheimerFunds prototype IRA
during the promotion period. "Qualifying transactions" do not
include (1) purchases of Class A shares intended but not yet made
under a Letter of Intent, and (2) purchases of Class A, Class B
and/or Class C shares with the redemption proceeds from an existing
OppenheimerFunds account.
April 1, 1996 PS0420.009
<PAGE>
OPPENHEIMER TOTAL RETURN FUND, INC.
Prospectus dated April 1, 1996
Oppenheimer Total Return Fund, Inc. is a mutual fund with
the investment objective of seeking high total return. The Fund
intends to seek its investment objective through investment in
securities which it believes will provide a high return, including
investments which are expected to provide opportunities for growth
or to produce income, or both. The Fund is not restricted to any
specific type of security and may also use certain hedging
instruments to try to reduce risks of market fluctuations that
affect the value of the securities the Fund holds. The securities
the Fund invests in are described more completely in "Investment
Objective and Policies."
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 April 1, 1996 Statement
of Additional Information. For a free copy, call OppenheimerFunds
Services, the Fund's Transfer Agent, at 1-800-525-7048, or write to
the Transfer Agent at the address on the back cover. The Statement
of Additional Information has been filed with the Securities and
Exchange Commission and is incorporated into this Prospectus by
reference (which means that it is legally part of this Prospectus).
(OppenheimerFunds logo)
Shares of the Fund are not deposits or obligations of any bank, are
not guaranteed by any bank, and are not insured by the F.D.I.C. or
any other agency, and involve investment risks, including the
possible loss of the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
Contents
ABOUT THE FUND
Expenses
A Brief Overview of the Fund
Financial Highlights
Investment Objective and Policies
How the Fund is Managed
Performance of the Fund
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Class Y Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Appendix, Special Sales Charge Arrangements
<PAGE>
ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for management
of its assets, administration, distribution of its shares and other
services, and those expenses are subtracted from the Fund's assets
to calculate the Fund's net asset value per share. All
shareholders therefore pay those expenses indirectly. Shareholders
pay other expenses directly, such as sales charges and account
transaction charges. The following tables are provided to help you
understand your direct expenses of investing in the Fund and your
share of the Fund's business operating expenses that you will bear
indirectly. The calculations are based on the Fund's expenses
during its last fiscal year ended December 31, 1995.
-- Shareholder Transaction Expenses are charges you pay
when you buy or sell shares of the Fund. Please refer to "About
Your Account," starting on pages 24, for an explanation of how and
when these charges apply.
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
Shares Shares Shares Shares
<S> <C> <C> <C> <C>
Maximum Sales Charge on 5.75% None None None
Purchases (as a % of
offering price)
Sales Charge On Reinvested None None None None
Dividends
Deferred Sales Charge None(1) 5% in the 1% if shares None
as a % of the lower of the first year, are redeemed
original purchase price or declining to within 12
redemption proceeds) 1% in the months of
sixth year purchase(2)
and
eliminated
thereafter(2)
Exchange Fee None None None
Redemption Fee None(3) None(3) None(3) None(3)
</TABLE>
(1)If you invest $1 million or more ($500,000 or more for
purchases by OppenheimerFunds prototype 401(k) plans) in Class A
shares, you may have to pay a sales charge of up to 1% if you sell
your shares within 18 calendar months from the end of the calendar
month in which you purchased those shares. See "How to Buy Shares
- -- Buying Class A Shares," below.
(2)See "How to Buy Shares - Buying Class B Shares" and "Buying
Class C Shares" below for more information on contingent deferred
sales charges.
(3)There is a $10 transaction fee for redemptions paid by Federal
Funds wire, but not for redemptions paid by check or by ACH
transfer through AccountLink. See "How to Sell Shares" below.
-- Annual Fund Operating Expenses are paid out of the
Fund's assets and represent the Fund's expenses in operating its
business. For example, the Fund pays management fees to its
investment adviser, OppenheimerFunds, Inc. (which is referred to in
this Prospectus as the "Manager"). The rates of the Manager's fees
are set forth in "How the Fund is Managed," below. The Fund has
other regular expenses for services, such as transfer agent fees,
custodial fees paid to the bank that holds the Fund's portfolio
securities, audit fees and legal expenses. Those expenses are
detailed in the Fund's Financial Statements in the Statement of
Additional Information.
Annual Fund Operating Expenses
Class A Class B Class C Class Y
Shares Shares Shares Shares
Average Net Assets
Management Fees 0.54% 0.54% 0.54% 0.54%
12b-1 Distribution
Plan Fees 0.18% 1.00% 1.00% None
Other Expenses 0.20% 0.21% 0.23% 0.33%
Total Fund Operating
Expenses 0.92% 1.75% 1.77% 0.87%
The numbers in the chart above are based upon the Fund's
expenses in its last fiscal year. These amounts are shown as a
percentage of the average net assets of each class of the Fund's
shares for that year. The 12b-1 Plan Fees for Class A shares are
Service Plan Fees (the maximum fee is 0.25% of average annual net
assets of that class) and for Class B and Class C shares are the
Service Plan Fees (the maximum service fee is 0.25% of average
annual net assets of the class) and the asset-based sales charges
of 0.75%. These plans are described in greater detail in "How to
Buy Shares," below. Class C shares were not publicly offered
before August 29, 1995. Therefore, the Annual Fund Operating
Expenses shown for Class C shares are estimates based on expenses
that would have been payable if Class C shares had been outstanding
during the entire fiscal year.
The actual expenses for each class of shares in future years
may be more or less than the figures in the table, depending on a
number of factors, including the actual value of the Fund's assets
represented by each class of shares.
-- Examples. To try to show the effect of these expenses on
an investment over time, we have created the hypothetical examples
shown below. Assume that you make a $1,000 investment in each
class of shares of the Fund, and that the Fund's annual return is
5%, and that its operating expenses for each class are the ones
shown in the Annual Fund Operating Expenses table above. If you
were to redeem your shares at the end of each period shown below,
your investment would incur the following expenses by the end of 1,
3, 5 and 10 years:
1 year 3 years 5 years 10 years*
Class A Shares $66 $85 $106 $164
Class B Shares $68 $85 $115 $164
Class C Shares $28 $56 $96 $208
Class Y Shares $ 9 $28 $48 $107
If you did not redeem your investment, it would incur the
following expenses:
1 year 3 years 5 years 10 years*
Class A Shares $66 $85 $106 $164
Class B Shares $18 $55 $95 $164
Class C Shares $18 $56 $96 $208
Class Y Shares $ 9 $28 $48 $107
- --------------
*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 an amount greater than the maximum front-end sales
charge allowed under applicable regulations. For Class B
shareholders, the automatic conversion of Class B shares to Class
A shares is designed to minimize the likelihood that this will
occur. Please refer to "How to Buy Shares - Buying Class B Shares"
for more information.
These examples show the effect of expenses on an investment,
but are not meant to state or predict actual or expected costs or
investment returns of the Fund, all of which may be more or less
than those shown.
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized
below, with references to the section of this Prospectus where more
complete information can be found. You should carefully read the
entire Prospectus before making a decision about investing in the
Fund. Keep the Prospectus for reference after you invest,
particularly for information about your account, such as how to
sell or exchange shares.
-- What Is The Fund's Investment Objective? The Fund's
investment objective is to seek high total return.
-- What Does the Fund Invest In? To achieve its objective,
the Fund primarily invests in securities which it believes will
provide a high return, including investments which are expected to
provide opportunities for growth or to produce income, or both.
The Fund may also write covered calls and use certain types of
securities called "derivative investments" and hedging instruments
to try to manage investment risks. These investments are more
fully explained in "Investment Objective and Policies" starting on
page __.
-- Who Manages the Fund? The Fund's investment adviser is
OppenheimerFunds, Inc, which (including a subsidiary) manages
investment company portfolios having over $50 billion in assets.
Prior to January 5, 1996, OppenheimerFunds, Inc. was known as
Oppenheimer Management Corporation. The Manager is paid an
advisory fee by the Fund, based on its assets. The Fund's
portfolio managers are Bruce Bartlett and Diane Sobin, who are
employed by the Manager. They are primarily responsible for the
selection of the Fund's securities. The Manager is paid an
advisory fee by the Fund, based on its assets. The Fund's Board of
Directors, elected by shareholders, oversees the investment adviser
and the portfolio manager. Please refer to "How the Fund is
Managed," starting on page ___ for more information about the
Manager and its fees.
-- How Risky is the Fund? All investments carry risks to
some degree. The Fund'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 particular stocks or bonds may result from an event
affecting the issuer, or changes in interest rates that can affect
stock and bond prices. These changes affect the value of the
Fund's investments and its share prices for each class of its
shares. In the Oppenheimer funds spectrum, the Fund is more
aggressive than most growth & income funds but less aggressive than
aggressive growth funds. In addition, there are certain risks
associated with the foreign securities the Fund may purchase and
the hedging strategies the Manager may utilize. While the Manager
tries to reduce risks by diversifying investments, by carefully
researching securities before they are purchased for the portfolio,
and in some cases by using hedging techniques, there is no
guarantee of success in achieving the Fund's objectives and your
shares may be worth more or less than their original cost when you
redeem them. Please refer to "Investment Objective and Policies"
starting on page ___ for a more complete discussion of the Fund's
investment risks.
-- How Can I Buy Shares? You can buy shares through your
dealer or financial institution, or you can purchase shares
directly through the Distributor by completing an Application or by
using an Automatic Investment Plan under AccountLink. Please refer
to "How To Buy Shares" on page 24 for more details.
-- Will I Pay a Sales Charge to Buy Shares? The Fund offers
Class A, Class B and Class C shares to the individual investor.
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 a front-end sales charge, but
may be subject to a contingent deferred sales charge if redeemed
within 6 years or 12 months, respectively, of purchase. There are
also annual asset-based sales charges on Class B and Class C
shares. Please review "How To Buy Shares" starting on page 25 for
more details, including a discussion about factors you and your
financial advisor should consider in determining which class may be
appropriate for you.
-- How Can I Sell My Shares? Shares can be redeemed by mail
or by telephone call to the Transfer Agent on any business day, or
through your dealer. Please refer to "How To Sell Shares" on page
40. The Fund also offers exchange privileges to other Oppenheimer
funds, described in "How To Exchange Shares" on page 42.
-- How Has the Fund Performed? The Fund measures its
performance by quoting its dividend yield, average annual total
return and cumulative total return, which measure historical
performance. Those yields and returns can be compared to the
yields and returns (over similar periods) of other funds. Of
course, other funds may have different objectives, investments, and
levels of risk. The Fund's performance can also be compared to a
broad market index, which we have done on pages 23 and 24. 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. This information has been audited by Deloitte & Touche
LLP, the Fund's independent auditors, whose report on the Fund's
financial statements for the fiscal year ended December 31, 1995 is
included in the Statement of Additional Information. Class C
shares were only offered during a portion of that period,
commencing on August 29, 1995.
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------------
Year Ended December 31,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
========================================================================
Per Share Operating Data:
Net asset value, beginning of period $7.80 $8.69 $7.84 $7.49 $6.13
- --------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .23 .23 .18 .17 .24
Net realized and unrealized gain (loss) 2.09 (.91) 1.45 .75 1.91
---------- ---------- --------- -------- ---------
Total income (loss) from investment operations 2.32 (.68) 1.63 .92 2.15
- --------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.22) (.21) (.20) (.20) (.23)
Distributions from net realized gain (.55) -- (.58) (.37) (.56)
---------- ---------- --------- -------- ---------
Total dividends and distributions
to shareholders (.77) (.21) (.78) (.57) (.79)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.35 $7.80 $8.69 $7.84 $7.49
========== ========== ========= ======== =========
=======================================================================================
Total Return, at Net Asset Value(4) 30.12% (7.86)% 21.24% 12.83% 36.26%
=======================================================================================
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $1,550,710 $1,235,637 $1,223,395 $795,474 $555,865
- --------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,394,245 $1,261,729 $992,381 $662,917 $475,741
- --------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 2.53% 2.88% 2.21% 2.68% 3.26%
Expenses .92% 1.01% .93% .96% .95%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 84.8% 117.2% 143.9% 143.5% 161.5%
Average brokerage commission rate(7) $0.08 -- -- -- --
</TABLE>
1. For the period from June 1, 1994 (inception of offering) to December 31,
1994.
2. For the period from August 29, 1995 (inception of offering) to December 31,
1995.
3. For the period from May 1, 1993 (inception of offering) to December 31, 1993.
4. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions reinvested
in additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Sales charges
are not reflected in the total returns. Total returns are not annualized for
periods of less than one full year.
18 Oppenheimer Total Return Fund, Inc.
<PAGE>
<TABLE>
<CAPTION>
Class B Class C Class Y
- ---------------------------------------------------------- ------------------------------- -------- ---------------
Period
Ended Year Ended
Year Ended December 31, Dec. 31, December 31,
1990 1989 1988 1987 1986 1995 1994 1993(3) 1995(2) 1995 1994(1)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
===============================================================================
$6.68 $6.35 $5.95 $6.76 $6.81 $7.76 $8.66 $8.23 $9.19 $7.80 $8.23
- --------------------------------------------------------------------------------------------------------------------------------
.24 .27 .26 .25 .35 .15 .17 .09 .07 .20 .15
(.49) .93 .53 .63 1.00 2.08 (.91) 1.03 .73 2.13 (.41)
- --------- ------- -------- -------- -------- -------- -------- ------- -------- ------ -----
(.25) 1.20 .79 .88 1.35 2.23 (.74) 1.12 .80 2.33 (.26)
- --------------------------------------------------------------------------------------------------------------------------------
(.24) (.28) (.27) (.32) (.37) (.15) (.16) (.11) (.11) (.23) (.17)
(.06) (.59) (.12) (1.37) (1.03) (.55) -- (.58) (.55) (.55) --
-------- ------ ------- ------- ------- -------- -------- ------- ------- ------ ------
(.30) (.87) (.39) (1.69) (1.40) (.70) (.16) (.69) (.66) (.78) (.17)
- --------------------------------------------------------------------------------------------------------------------------------
$6.13 $6.68 $6.35 $5.95 $6.76 $9.29 $7.76 $8.66 $9.33 $9.35 $7.80
========= ======== ======== ======= ======== ======== ======== ======= ====== ====== ======
======================================================================================================
(3.86)% 19.25% 13.35% 12.35% 19.70% 29.03% (8.64)% 13.91% 8.82% 30.23% (3.15)%
======================================================================================================
$396,240 $389,413 $314,039 $274,068 $234,674 $589,804 $429,427 $218,716 $1,655 $6,709 $1,074
- --------------------------------------------------------------------------------------------------------------------------------
$394,903 $356,994 $298,509 $277,877 $246,530 $510,744 $360,773 $ 90,952 $ 784 $3,944 $ 320
- --------------------------------------------------------------------------------------------------------------------------------
3.87% 3.96% 4.22% 3.42% 4.37% 1.70% 2.11% 1.09%(5) 1.42%(5) 2.51% 4.07%(5)
.98% .98% .94% .88% .85% 1.75% 1.87% 1.87%(5) 1.77%(5) .87% .96%(5)
- --------------------------------------------------------------------------------------------------------------------------------
114.1% 151.6% 127.3% 173.4% 88.3% 84.8% 117.2% 143.9% 84.8% 84.8% 117.2%
-- -- -- -- -- $0.08 -- -- $0.08 $0.08 --
</TABLE>
5. Annualized.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the period ended December 31, 1995 were $1,485,059,143 and $1,650,904,965,
respectively.
7. Total brokerage commissions paid on purchases and sales of portfolio
securities for the period divided by the total number of related shares
purchased and sold.
<PAGE>
Investment Objective and Policies
Objective. The Fund's investment objective is to seek high total
return. "Total return" is defined as a change in asset value over
a particular period taking into account both income and capital
appreciation.
Investment Policies and Strategies. In general, the Fund will
attempt to invest its assets to gain both reasonable income and
capital appreciation. The Manager does not follow a specified
formula for allocating the Fund's assets between income and capital
appreciation. Depending on the assessment of market conditions by
the Fund's investment adviser, OppenheimerFunds, Inc. (the
"Manager"), the Fund may emphasize investment in common stocks and
securities convertible into common stocks, or securities which are
acquired primarily to produce income, or a combination of both
types of investments. The Fund's investments, however, are not
restricted to any specific type of securities. When the investment
climate is viewed as favorable, common stocks may be more heavily
emphasized. In an uncertain environment when it would be
appropriate to maintain a temporary defensive position, investment
in preferred stocks, bonds, cash equivalents, Treasury bills or
commercial paper may be stressed.
While the Fund may invest in securities having appreciation
possibilities, such securities will not be selected which, in the
view of the Manager, would involve undue risk (e.g., securities of
companies having questionable financial solvency or securities
having limited marketability). The amount of dividends paid by the
Fund may fluctuate. The Fund is not intended for investors whose
principal objective is assured income and conservation of capital.
Since market risks are inherent in all investments to varying
degrees, there can be no assurance that the Fund's investment
objective will be met.
The Fund may try to hedge against losses in the value of its
portfolio of securities by using hedging strategies and derivative
investments described below. The Fund's portfolio managers may
employ special investment techniques in selecting securities for
the Fund. These are also described below. Additional information
may be found about them under the same headings in the Statement of
Additional Information.
-- Can the Fund's Investment Objective and Policies Change?
The Fund has an investment objective, which is 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 techniques 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 a fundamental policy.
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.
-- 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 value 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, 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.
As discussed below, 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. Because 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 objectives, and when you redeem your shares,
they may be worth more or less than what you paid for them.
-- Investments in Convertible Securities. When investing in
convertible securities, the Manager looks to the conversion feature
and treats the securities as "equity securities." The Fund can buy
unrated securities, and when doing so, the Manager will determine
whether unrated securities are of comparable quality to securities
rated by rating organizations.
-- Interest Rate Risks. Debt securities which the Fund may
purchase are subject to changes in their values due to changes in
prevailing interest rates. When prevailing interest rates fall,
the value of already-issued debt securities generally rise. When
interest rates rise, the values of already-issued debt securities
generally decline. The magnitude of these fluctuations will often
be greater for longer-term debt securities than shorter-term debt
securities. Changes in the value of securities held by the Fund
mean that the Fund's share prices can go up or down when interest
rates change because of the effect of the change on the value of
the Fund's portfolio of debt securities.
-- Special Risks of Lower-Rated Securities. In seeking high
return, the Fund may invest in domestic and foreign debt
securities, including high-yield, "lower-grade" debt securities
(including both high-yielding rated and unrated securities),
commonly known as "junk bonds," because they generally offer higher
income potential than investment grade securities. Currently, the
Fund has no intention of investing more than 35% of its assets in
such securities. "Lower-grade" securities are those rated below
"investment grade," which means they have a rating below "BBB" by
Standard & Poor's Corporation or "Baa" by Moody's Investors
Service, Inc. or similar ratings by other rating organizations.
"Lower-grade" debt securities the Fund may invest in also include
securities that are not rated by a nationally-recognized rating
organization like Standard & Poor's or Moody's, but which the
Manager judges to be comparable to lower-rated securities. The
Fund may invest in securities rated as low as "D" by Standard &
Poor's or "C" by Moody's.
High yield, lower-grade securities, whether rated or unrated,
often have speculative characteristics. Lower-grade securities
have special risks that make them riskier investments than
investment grade securities. They may be subject to greater market
fluctuations and risk of loss of income and principal than lower
yielding, investment grade securities. There may be less of a
market for them and therefore they may be harder to sell at an
acceptable price. There is a relatively greater possibility that
the issuer's earnings may be insufficient to make the payments of
interest due on the bonds. The issuer's low creditworthiness may
increase the potential for its insolvency ("credit risk"). All
corporate debt securities (whether foreign or domestic) are subject
to some degree of credit risk. For foreign lower-grade debt
securities, these risks are in addition to the risks of investing
in foreign securities, described in "Foreign Securities," below.
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. However, convertible securities may be less subject to
some of these risks than other debt securities, to the extent they
can be converted into stock, which may be more liquid and less
affected by these risks.
-- Foreign Securities. To broaden its opportunities to seek
its investment objective, the Fund may purchase equity and debt
securities (which may be denominated in U.S. dollars or non-U.S.
currencies) issued or guaranteed by foreign companies or debt
securities issued by foreign governments, including foreign
government agencies, that are traded on foreign securities
exchanges or in the foreign over-the-counter markets. The Fund may
buy securities of companies or governments in any country,
developed or underdeveloped. The Fund may invest up to 100% of its
assets in foreign securities. The Fund will hold foreign currency
only to effect foreign securities transactions and not as an
investment.
- Foreign securities have special risks. For example,
foreign issuers are not subject to the same accounting and
disclosure requirements that U.S. companies are subject to. The
value of foreign investments may be affected by changes in foreign
currency exchange rates, exchange control regulations,
expropriation or nationalization of a company's assets, foreign
taxes, delays in settlement of transactions, changes in
governmental economic or monetary policy in the U.S. or abroad, or
other political and economic factors. More information about the
risks and potential rewards of investing in foreign securities is
contained in the Statement of Additional Information.
-- Portfolio Turnover. A change in the securities held by
the Fund is known as "portfolio turnover." The Fund ordinarily does
not engage in short-term trading to try to achieve its objective.
As a result, the Fund's portfolio turnover is not expected to be
more than 150% each year. The "Financial Highlights," above, show
the Fund's portfolio turnover rate during past fiscal years.
Portfolio turnover affects brokerage costs, dealer markups and
other transaction costs, and results in the Fund's realization of
capital gains or losses for tax purposes. It may also affect the
Fund's ability to qualify as a "regulated investment company" under
the Internal Revenue Code for tax deductions for dividends and
capital gains distributions the Fund pays to shareholders. The
Fund qualified in its last fiscal year and intends to do so in the
coming year, although it reserves the right not to qualify.
Other Investment Techniques and Strategies. The Fund may also use
the investment techniques and strategies described below. These
techniques involve certain risks. The Statement of Additional
Information contains more information about these practices,
including limitations on their use that are designed to reduce some
of the risks.
-- Derivative Investments. The Fund can invest in a number
of different kinds of "derivative investments." They are used in
some cases for hedging purposes and in other cases to attempt to
seek income or total return. In general, a "derivative investment"
is a specially designed investment whose performance is linked to
the performance of another investment or security, such as an
option, future, index, currency or commodity. In the broadest
sense, exchange-traded options and futures contracts (discussed in
"Hedging," below) may be considered "derivative investments."
The Fund may invest in different types of derivatives.
"Index-linked" or "commodity-linked" notes are debt securities of
companies that call for interest payments and/or payment on the
maturity of the note in different terms than the typical note where
the borrower agrees to make fixed payments and/or to pay a fixed
sum on the maturity of the note. Principal and/or interest
payments on an index-linked note depends on the performance of one
or more market indices, such as the S & P 500 Index or a weighted
index of commodity futures, such as crude oil, gasoline and natural
gas. The Fund may invest in debt exchangeable for common stock of
an issuer or "equity-linked" debt securities of an issuer. At
maturity, the principal amount of the debt security is exchanged
for common stock of the issuer or is payable in an amount based on
the issuer's common stock price at the time of maturity. In either
case there is a risk that the amount payable at maturity will be
less than the principal amount of the debt.
The Fund may also invest in currency-indexed securities.
Typically, these are short-term or intermediate-term debt
securities having a value at maturity, and or an interest rate
determined by reference to one or more foreign currencies. The
currency-indexed securities purchased by the Fund may make payments
based on a formula. The payment of principal or periodic interest
may be calculated as a multiple of the movement of one currency
against another currency, or against an index. These investments
may entail increased risk to principal and increased price
volatility.
There are special risks in investing in derivative
investments. The company issuing the instrument may fail to pay
the amount due on the maturity of the instrument. Also, the
underlying investment or security might not perform the way the
Manager expected it to perform. Markets, underlying securities and
indices may move in a direction not anticipated by the Manager.
The 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."
-- Hedging. As described below, the Fund may purchase and
sell certain kinds of futures contracts, put and call options,
forward contracts, and options on futures, on broadly-based stock
indices and on foreign currencies, or enter into interest rate swap
agreements. These are all referred to as "hedging instruments."
The Fund does not use hedging instruments for speculative purposes,
and has limits on the use of them, described below. The hedging
instruments the Fund may use are described below and in greater
detail in the Statement of Additional Information.
The Fund may buy and sell options, futures and forward
contracts for a number of purposes. It may do so to try to manage
its exposure to the possibility that the prices of its portfolio
securities may decline, or to establish a position in the equities
market as a temporary substitute for purchasing particular equity
securities. It may do so to try to manage its exposure to changing
interest rates. Some of these strategies, such as selling futures,
buying puts and writing covered calls, hedge the Fund's portfolio
against price fluctuations.
Other hedging strategies, such as buying futures and call
options, tend to increase the Fund's exposure to the securities
market. Forward contacts are used to try to manage foreign
currency risks on the Fund's foreign investments. Foreign currency
options are used to try to protect against declines in the dollar
value of foreign securities the Fund owns, or to protect against an
increase in the dollar cost of buying foreign securities. Writing
covered call options may also provide income to the Fund for
liquidity purposes or defensive reasons.
- Futures. The Fund may buy and sell futures contracts that
relate to (1) foreign currencies (these are Forward Contracts), and
(2) broadly-based stock indices (these are referred to as Stock
Index Futures). These types of Futures are described in "Hedging"
in the Statement of Additional Information.
- Put and Call Options. The Fund may buy and sell certain
kinds of put options (puts) and call options (calls).
The Fund may buy calls only on securities, securities indices,
or Stock Index Futures, or to terminate its obligation on a call
the Fund previously wrote. The Fund may write (that is, sell) call
options only if they are "covered." That means the Fund must own
the security subject to the call while the call is outstanding (or
own other securities acceptable for applicable escrow
requirements). When the Fund writes a call, it receives cash
(called a premium). The call gives the buyer the ability to buy
the investment on which the call was written from the Fund at the
call price during the period in which the call may be exercised.
If the value of the investment does not rise above the call price,
it is likely that the call will lapse without being exercised,
while the Fund keeps the cash premium (and the investment). The
Fund may write calls to generate additional income or for defensive
purposes if, after any sale, not more than 25% of the Fund's total
assets are subject to calls. The Fund may also purchase "relative
performance call options." These are call options that have a cash
settlement based on the difference between the returns on two
market indices. These options are subject to the risk that the
value of the option may decline because of adverse movements in the
market indices.
The Fund may purchase puts. Buying a put on an investment
gives the Fund the right to sell the investment at a set price to
a seller of a put on that investment. The Fund can buy only those
puts that relate to (1) securities (whether or not held by it), (2)
Stock Index Futures (whether or not it holds such Stock Index
Futures in its portfolio), or (3) broadly-based stock indices. The
Fund may sell a put on securities, securities indices, or Futures,
but only if the puts are covered by segregated liquid assets. The
Fund will not write puts if more than 50% of the Fund's net assets
would have to be segregated to cover put obligations.
A call or put may be purchased only if, after the purchase,
the value of all call and put options held by the Fund will not
exceed 5% of the Fund's total assets. The Fund may buy and sell
put and 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 and traded by major recognized dealers in those options.
Options traded in the over-the-counter market may be "illiquid,"
and therefore may be subject to the Fund's restrictions on illiquid
investments, described in "Illiquid and Restricted Securities,"
below.
- Forward Contracts. Forward Contracts are foreign currency
exchange contracts. They are used to buy or sell foreign currency
for future delivery at a fixed price. The Fund uses them to try to
"lock in" the U.S. dollar price of a security denominated in a
foreign currency that the Fund has purchased or sold, or to protect
against possible losses from changes in the relative value of the
U.S. dollar and a foreign currency. The Fund may also use "cross
hedging," where the Fund hedges against changes in currencies other
than the currency in which a security it holds is denominated.
- Interest Rate Swaps. In an interest rate swap, the Fund and
another party exchange their right to receive, or their obligation
to pay, interest on a security. For example, they may swap a right
to receive floating rate interest payments for fixed rate payments.
The Fund enters into swaps only on securities it owns. The Fund
may not enter into swaps with respect to more than 25% of its total
assets. The Fund will segregate liquid assets (such as cash or
U.S. Government securities) to cover any amounts it could owe under
swaps that exceed the amounts it is entitled to receive, and it
will adjust that amount daily, as needed.
- Hedging instruments can be volatile investments and may
involve special risks. The use of hedging instruments requires
special skills and knowledge of investment techniques that are
different 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 are not correlated with
its other investments or if it could not close out a position
because of an illiquid market for the future or option.
Options trading involves the payment of premiums and has
special tax effects on the Fund. There are also special risks in
particular hedging strategies. For example, in writing puts, there
is a risk that the 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.
The Fund limits its exposure in foreign currency exchange contracts
to the amount of its assets denominated in the foreign currency, to
avoid having to buy or sell foreign currency at disadvantageous
prices. 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 receives under them, as a result of interest rate changes.
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. These risks are described in greater detail in the
Statement of Additional Information.
-- Illiquid and Restricted Securities. Under the policies
and procedures 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. The Fund will not invest more than 10% of
its net assets in illiquid or restricted securities (that limit may
increase to 15% if certain state laws are changed or the Fund's
shares are no longer sold in those states). The Fund's percentage
limitation on these investments does not apply to certain
restricted securities that are eligible for resale to qualified
institutional purchasers.
-- Repurchase Agreements. The Fund may enter into repurchase
agreements to generate income and for liquidity purposes to meet
anticipated redemptions, or pending the investment of proceeds from
sales of Fund shares or settlement of purchases of portfolio
investments. 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 incur costs in disposing of the
collateral and may experience losses if there is any delay in its
ability to do so. The Fund will not enter into a repurchase
agreement that will cause more than 15% of its net assets to be
subject to repurchase agreements maturing in more than seven days.
There is no limit on the amount of the Fund's net assets that may
be subject to repurchase agreements of seven days or less. See
the Statement of Additional Information for more details.
-- Loans of Portfolio Securities. To attempt to increase its
income, the Fund may lend its portfolio securities to brokers,
dealers and other financial institutions. The Fund must receive
collateral for a loan. These loans are limited to not more than 10%
of the value of the Fund's net assets, and are subject to other
conditions described in the Statement of Additional Information.
The Fund presently does not intend to lend its portfolio
securities, but if it does, the value of securities loaned is not
expected to exceed 5% of the value of the Fund's total assets in
the coming year.
Other Investment Restrictions. The Fund has other investment
restrictions which, together with its investment objective, are
fundamental policies. Under these fundamental policies, the Fund
cannot do any of the following:
- The Fund may not borrow or lend money, or lend, pledge,
mortgage, or hypothecate securities except as provided above under
"Loans of Portfolio Securities" (however, the Fund may purchase
bonds or other debt securities, and enter into escrow arrangements
contemplated by the writing of covered call options or other
collateral or margin arrangements in connection with Hedging Instr
uments the Fund may use under its other fundamental policies);
- The Fund may not invest more than 5% of its assets in
securities of any one issuer other than the U.S. Government;
- The Fund may not purchase the securities of any one
issuer if immediately thereafter, the Fund would own more than 10%
of the outstanding voting securities or 10% of any one class of
securities of such issuer (except for securities of investment
companies acquired in exchange for Fund shares); or
- The Fund may not concentrate investments in a particular
industry or group of industries; therefore, the Fund will not
purchase the securities of companies in any one industry if,
thereafter, more than 25% of the value of the Fund's assets would
consist of securities of companies in that industry.
All of the percentage restrictions described above and
elsewhere in this Prospectus apply only at the time the Fund
purchases a security, and the Fund need not dispose of a security
merely because the size of the Fund's assets has changed or the
security has increased in value relative to the size of the Fund.
There are other fundamental policies discussed in the Statement of
Additional Information.
How the Fund is Managed
Organization and History. The Fund was organized in 1944. Since
1979, the Fund has been a Maryland corporation. The Fund is a
diversified open-end, management investment company.
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 provides more information about them and the officers
of the Fund. Although the Fund is not required by law to hold
annual meetings, it may hold shareholder meetings from time to time
on important matters, and shareholders have such rights as are
provided under Maryland law..
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 entitles a shareholder to
one vote on matters submitted to the shareholder to vote on, with
fractional shares voting proportionally. Only shares of a
particular class vote as a class on matters that affect that class
alone. Shares are freely transferrable. Please refer to "How the
Fund is Managed" in the Statement of Additional Information for
more information on the 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 fees paid by the Fund to the Manager and describes the
expenses that the Fund is responsible to pay to conduct its
business.
The Manager has operated as an investment adviser since 1959.
The Manager (including a subsidiary) currently manages investment
companies, including other Oppenheimer funds, with assets of more
than $50 billion, held in more than 2.8 million shareholder
accounts. The Manager is owned by Oppenheimer Acquisition Corp.,
a holding company that is owned in part by senior officers of the
Manager and controlled by Massachusetts Mutual Life Insurance
Company.
-- Portfolio Manager. The portfolio managers of the Fund are
Bruce Bartlett and Diane Sobin. Since July 5, 1995, they have been
the individuals primarily responsible for the day-to-day management
of the Fund's portfolio. Each of them is a Vice President of the
Manager and serves as a Vice President and Portfolio Manager of the
Fund. Mr. Bartlett was previously a Vice President and Senior
Portfolio Manager with First of America Investment Corporation.
Ms. Sobin was previously a Vice President and Senior Portfolio
Manager with Dean Witter Intercapital, Inc. For more information
about the Fund's other officers and Directors, see "Directors and
Officers of the Fund" in the Statement of Additional Information.
-- Fees and Expenses. Under the investment advisory
agreement, the Fund pays the Manager the following annual fees,
which decline on additional assets as the Fund grows: 0.75% of the
first $100 million of net assets, 0.70% of the next $100 million,
0.65% of the next $100 million, 0.60% of the next $100 million,
0.55% of the next $100 million, and 0.50% of net assets in excess
of $500 million. The Fund's management fee for each of its share
classes its last fiscal year was 0.54% of average annual net
assets, which may be higher than the rate paid by some other mutual
funds.
The Fund pays expenses related to its daily operations, such
as custodian fees, 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 adviser.
-- The Distributor. The Fund's shares are sold through
dealers and brokers 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 other Oppenheimer funds and is sub-
distributor for funds managed by a subsidiary of the Manager.
-- The Transfer Agent. The Fund's transfer agent is
OppenheimerFunds Services, a division of the Manager, which acts as
the shareholder servicing agent for the Fund on an "at-cost" basis.
It also acts as the shareholder servicing agent for the other
Oppenheimer funds. Shareholders should direct inquiries about
their accounts to the Transfer Agent at the address and toll-free
numbers shown below in this Prospectus and on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms
"total return," "average annual total return" and "dividend yield"
to illustrate its performance. The performance of each class of
shares is shown separately, because the performance of each class
of shares will usually be different as a result of the different
kinds of expenses each class bears. This performance information
may be useful to help you see how well your investment has done and
to compare it to other funds or market indices, as we have done
below.
It is important to understand that the Fund's total returns
and yields represent past performance and should not be considered
to be predictions of future returns or performance. This
performance data is described below, but more detailed information
about how total returns are calculated is contained in the
Statement of Additional Information, which also contains
information about other ways to measure and compare the Fund's
performance. The Fund's investment performance will vary over time,
depending on market conditions, the composition of the portfolio,
expenses and which class of shares you purchase.
-- Total Returns. There are different types of total returns
used to measure the Fund's performance. Total return is the change
in value of a hypothetical investment in the Fund over a given
period, assuming that all dividends and capital gains distributions
are reinvested in additional shares. The cumulative total return
measures the change in value over the entire period (for example,
ten years). An average annual total return shows the average rate
of return for each year in a period that would produce the
cumulative total return over the entire period. However, average
annual total returns do not show the Fund's actual year-by-year
performance.
When total returns are quoted for Class A shares, normally the
current maximum initial sales charge has been deducted. When total
returns are shown for Class B or Class C shares, normally the
contingent deferred sales charge that applies to the period for
which total return is shown has been deducted. Total returns may
also be quoted "at net asset value," without including the sales
charge, and those returns would be less if sales charges were
deducted.
-- Dividend Yield. Dividend yield is calculated by dividing
the dividends of a class derived from net investment income during
a stated period by the maximum offering price on the last day of
the period. Yields and dividend yields for Class A shares reflect
the deduction of the maximum initial sales charge, but may also be
shown based on the Fund's net asset value per share. Yields for
Class B and Class C shares do not reflect the deduction of the
contingent deferred sales charge.
How Has the Fund Performed? Below is a discussion by the Manager
of the Fund's performance during its last fiscal year ended
December 31, 1995, followed by graphical comparisons of the Fund's
performance to an appropriate broad-based market index.
-- Management's Discussion of Performance. During the Fund s
fiscal year ended December 31, 1995, the Fund s performance
benefited from the general rise in the U.S. stock markets. In
response to the strong performance of the U.S. markets, the Fund
increased its holdings in domestic securities, however the Fund
also increased its cash position to provide a cushion against
market volatility. during the last fiscal year, the Fund realized
profits by selling some of its long-term bonds after a rally in the
market, and increased its holdings in convertible securities and
utility and energy stocks. In addition, the Fund s capital growth
was enhanced by the Manager s investments in technology stocks,
healthcare stocks, and foreign pharmaceutical firms as well as
companies that were restructuring their operations in order to
improve productivity and efficiency. The Fund s performance was
negatively affected by its investments in the basic materials
sector which generally underperformed the market, however the
portfolio managers took advantage of the lower prices of those
stocks to increase the Fund s holdings.
-- 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 December 31, 1995; in the case of Class A shares,
for the past ten-year period, in the case of Class B shares, from
the inception of the Class on May 1, 1993, in the case of C shares,
from the inception of the Class on August 29, 1995, and in the case
of Class Y shares, from the inception of the Class on June 1, 1994,
with all dividends and capital gains distributions reinvested in
additional shares. As a result, the performance for Class B, Class
C and Class Y shares is shown for relatively short periods of time,
and investors should realize that such time periods may not be as
appropriate or useful as a comparison for a longer period. The
graphs reflect the deduction of the 5.75% current maximum initial
sales charge on Class A shares, the 3% contingent deferred sales
charge that applies to redemptions of Class B shares, and the 1%
contingent deferred sales charge on Class C shares.
The Fund's performance is compared to the performance of the
Standard & Poor's ("S&P") 500 Index. The S&P 500 Index is a broad
based index of equity securities widely regarded as the general
measure 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 securities in the Index.
Moreover, the index performance data does not reflect any
assessment of the risk of the investments included in the Index.
Comparison of Change in Value
of $10,000 Hypothetical Investments
In: Class A, Class B, Class C and Class Y Oppenheimer Total
Return Fund, Inc. and
S&P 500
[Graphs]
Average Annual Total Returns Average Annual Total Returns
of the Fund at 12/31/95 (1) of the Fund at 12/31/95(2)
- ---------------------------- ------------------------
A Shares 1-Year 5-Years 10 Years B Shares ___ 22.64%
16.06% 13.92% 1-Year Life (2)
24.03% 10.74%
Cumulative Total Return
of the Fund at 12/31/95
--------------------------------
C Shares
Life
24.89
Average Annual Total Return of
Class Y shares of the Fund
at 12/31/95 (3)
----------------------------
1-Year Life
30.23% 15.79%
- ---------------
(1) 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.
(2) Class B shares of the Fund were first publicly offered on
5/1/93. The average annual total returns reflect reinvestment of
all dividends and capital gains distributions and are shown net of
the applicable 5% and 3% contingent deferred sales charges,
respectively, for the 1-year period and life-of-the-class. The
ending account value in the graph is net of the applicable 3%
contingent deferred sales charge.
(3) Class C shares of the Fund were first publicly offered on
August 29, 1995. The performance information in the graph of the
S&P 500 Index begins on September 1, 1995. The cumulative total
return for Class C shares reflects the reinvestment of all
dividends and capital gains distributions and is shown net of the
applicable 1% contingent deferred sales charge.
(4) Class Y shares of the Fund were first publicly offered on
6/1/94.
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 three different classes of
shares to individual investors: Class A, Class B and Class C.
Only certain institutional investors may purchase a fourth class of
shares, Class Y shares. The different classes of shares represent
investments in the same portfolio of securities but are subject to
different expenses and will likely have different share prices.
-- Class A Shares. If you buy Class A shares, you may pay an
initial sales charge on investments up to $1 million (up to
$500,000 for purchases by OppenheimerFunds prototype 401(k) plans).
If you purchase Class A shares as part of an investment of at least
$1 million ($500,000 for OppenheimerFunds prototype 401(k) plans)
in shares of one or more Oppenheimer funds, you will not pay an
initial sales charge, but if you sell any of those shares within 18
months after your purchase, you may pay a contingent deferred sales
charge. The amount of that sales charge will vary depending on the
amount you invested. Sales charge rates are described in "Buying
Class A Shares" below.
-- Class B Shares. If you buy Class B shares, you pay no
sales charge at the time of purchase, but if you sell your shares
within six years of buying them, you will normally pay a contingent
deferred sales charge, described below, that varies depending on
how long you own your shares, as described in "Buying Class B
Shares" below.
-- Class C Shares. If you buy Class C shares, you pay no
sales charge at the time of purchase, but if you sell your shares
within 12 months of buying them, you will normally pay a contingent
deferred sales charge of 1%, as discussed in "Buying Class C
Shares" below.
-- Class Y Shares. Class Y Shares are sold at net asset
value per share without the imposition of a sales charge at the
time of purchase to separate accounts of insurance companies and
other institutional investors ("Class Y Sponsors") having an
agreement ("Class Y Agreements") with the Manager or the
Distributor. The intent of Class Y Agreements is to allow tax
qualified institutional investors to invest indirectly (through
separate accounts of the Class Y Sponsor) in Class Y Shares of the
Fund and to allow institutional investors to invest directly in
Class Y shares of the Fund. Individual investors are not permitted
to invest directly in Class Y Shares. As of the date of this
Prospectus, Massachusetts Mutual Life Insurance Company (an
affiliate of the Manager and the Distributor) acts as Class Y
Sponsor for all outstanding Class Y Shares of the Fund. While
Class Y shares are not subject to a contingent deferred sales
charge, asset-based sales charge or service fee, a Class Y sponsor
may impose charges on separate accounts investing in Class Y
shares.
None of the instructions described elsewhere in this
Prospectus or the Statement of Additional Information for the
purchase, redemption, reinvestment, exchange or transfer of shares
of the Fund, the selection of classes of shares or the reinvestment
of dividends apply to its Class Y shares. Clients of Class Y
Sponsors must request their Sponsor to effect all transactions in
Class Y shares on their behalf.
Which Class of Shares Should You Choose? Once you decide that
the Fund is an appropriate investment for you, the decision as to
which class of shares is better suited to your needs depends on a
number of factors which you should discuss with your financial
advisor. The Fund's operating costs that apply to a class of
shares and the effect of the different types of sales charges on
your investment will vary your investment results over time. The
most important factors are how much you plan to invest and how long
you plan to hold your investment. If your goals and objectives
change over time and you plan to purchase additional shares, you
should re-evaluate those factors to see if you should consider
another class of shares.
In the following discussion, to help provide you and your
financial advisor with a framework in which to choose a class, we
have made some assumptions using a hypothetical investment in the
Fund. We assumed you are an individual investor, and therefore
ineligible to purchase Class Y shares. We used the sales charge
rates that apply to Class A, Class B and Class C shares and
considered the effect of the asset-based sales charge on Class B
and Class C expenses (which, like all expenses, will affect your
investment return). For the sake of comparison, we have assumed
that there is a 10% rate of appreciation in the investment each
year. Of course, the actual performance of your investment cannot
be predicted and will vary, based on the Fund's actual investment
returns, and the operating expenses borne by each class of shares,
and which class of shares you invest in.
The factors discussed below are not intended to be investment
advice or recommendations, because each investor's financial
considerations are different. The discussion below of the factors
to consider in purchasing a particular class of shares assumes that
you will purchase only one class of shares and not a combination of
shares of different classes.
-- How Long Do You Expect to Hold Your Investment? While
future financial needs cannot be predicted with certainty, knowing
how long you expect to hold your investment will assist you in
selecting the appropriate class of shares. The effect of the sales
charge, overtime, using our assumptions, will generally depend on
the amount invested. Because of the effect of class-based
expenses, your choice will also depend on how much you plan to
invest. For example, the reduced sales charges available for
larger purchases of Class A shares may, over time, offset the
effect of paying an initial sales charge on your investment (which
reduces the amount of your investment dollars used to buy shares
for your account), compared to the effect over time of higher
class-based expenses on shares of Class B or C for which no initial
sales charge is paid.
- Investing for the Short Term. If you have a short-term
investment horizon (that is, you plan to hold your shares for not
more than six years), you should probably consider purchasing Class
A or Class C shares rather than Class B shares, because of the
effect of the Class B contingent deferred sales charge if you
redeem in less than 7 years, as well as the effect of the Class B
asset-based sales charge on the investment return for that class in
the short-term. Class C shares might be the appropriate choice
(especially for investments of less than $100,000), because there
is no initial sales charge on Class C shares, and the contingent
deferred sales charge does not apply to amounts you sell after
holding them one year.
However, if you plan to invest more than $100,000 for the
shorter term, then the more you invest and the more your investment
horizon increases toward six years, Class C shares might not be as
advantageous as Class A shares. That is because the annual asset-
based sales charge on Class C shares will have a greater 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 most investors who invest $1 million or more, in most
cases Class A shares will be the most advantageous choice, no
matter how long you intend to hold your shares. For that reason,
the Distributor normally will not accept purchase orders of
$500,000 or more for Class B shares or $1 million or more of Class
C shares, from a single investor.
- Investing for the Longer Term. If you are investing for
the longer-term, for example, for retirement, and do not expect to
need access to your money for seven years or more, Class B shares
may be an appropriate consideration, if you plan to invest less
than $100,000. If you plan to invest more than $100,000 over the
long term, Class A shares will likely be more advantageous than
Class B shares or C shares, as discussed above, because of the
effect of the expected lower expenses for Class A shares and the
reduced initial sales charges available for larger investments in
Class A shares under the Fund's Right of Accumulation.
Of course, these examples are based on approximations of the
effect of current sales charges and expenses on a hypothetical
investment over time, using the assumptions stated above, and
therefore, you should analyze your options carefully.
-- Are There Differences in Account Features That Matter to
You? Because some account features may not be available to Class
B or Class C shareholders, 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, that may be a factor to
consider. Additionally, the dividends payable to Class B and Class
C shareholders will be reduced by the additional expenses borne
solely by those classes, such as the asset-based sales charges to
which Class B and Class C shares are subject, as described below
and in the Statement of Additional Information.
-- How Does It Affect Payments to My Broker? A salesperson,
such as a broker, or any other person who is entitled to receive
compensation for selling Fund shares may receive different
compensation for selling one class than for selling another class.
It is important that investors understand that the purpose of the
Class B and Class C contingent deferred sales charges and asset-
based sales charges are the same as the purpose of the front-end
sales charge on sales of Class A shares: that is, to compensate the
Distributor for commissions it pays to dealers and financial
institutions for selling shares.
How Much Must You Invest? You can open a Fund account with a
minimum initial investment of $1,000 and make additional
investments at any time with as little as $25. There are reduced
minimum investments under special investment plans:
With Asset Builder Plans, Automatic Exchange Plans,
403(b)(7) custodial plans and military allotment plans, you can
make initial and subsequent investments for as little as $25; and
subsequent purchases of at least $25 can be made by telephone
through AccountLink.
Under pension and profit-sharing plans and Individual
Retirement Accounts (IRAs), you can make an initial investment of
as little as $250 (if your IRA is established under an Asset
Builder Plan, the $25 minimum applies), and subsequent investments
may be as little as $25.
There is no minimum investment requirement if you are
buying shares by reinvesting dividends from the Fund or other
Oppenheimer funds (a list of them appears in the Statement of
Additional Information, or you can ask your dealer or call the
Transfer Agent), or by reinvesting distributions from unit
investment trusts that have made arrangements with the Distributor.
-- How Are Shares Purchased? You can buy shares several ways
- -- through any dealer, broker or financial institution that has a
sales agreement with the Distributor, or directly through the
Distributor, or automatically from your bank account through an
Asset Builder Plan under the OppenheimerFunds AccountLink service.
When you buy shares, be sure to specify Class A, Class B or Class
C shares. If you do not choose, your investment will be made in
Class A shares.
-- Buying Shares Through Your Dealer. Your dealer will place
your order with the Distributor on your behalf.
-- Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "OppenheimerFunds Distributor, Inc." Mail it to P.O. Box
5270, Denver, Colorado 80217. If you don't list a dealer on the
application, the Distributor will act as your agent in buying the
shares. However, we recommend that you discuss your investment
first with a financial advisor, to be sure it is appropriate for
you.
-- Buying Shares Through OppenheimerFunds AccountLink. You
can use AccountLink to link your Fund account with an account at a
U.S. bank or other financial institution that is an Automated
Clearing House (ACH) member. You can then 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 the regular business
day the Distributor is instructed by you to initiate the ACH
transfer to buy shares. You can provide those instructions
automatically, under an Asset Builder Plan, described below, or by
telephone instructions using OppenheimerFunds PhoneLink, also
described below. You should request AccountLink privileges on the
application or dealer settlement instructions used to establish
your account. Please refer to "AccountLink" below for more details.
-- Asset Builder Plans. You may purchase shares of the Fund
(and up to four other Oppenheimer funds) automatically each month
from your account at a bank or other financial institution under an
Asset Builder Plan with AccountLink. Details are on the Application
and in the Statement of Additional Information.
-- At What Price Are Shares Sold? 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. In most cases,
to enable you to receive that day's offering price, the Distributor
must receive your order by the time of day The New York Stock
Exchange closes, which is normally 4:00 P.M., New York time, but
may be earlier on some days (all references to time in this
Prospectus mean "New York time"). The net asset value of each
class of shares is determined as of that time on each day The New
York Stock Exchange is open (which is a "regular business day").
If you buy shares through a dealer, the dealer must receive
your order by the close of The New York Stock Exchange on a regular
business day, and transmit it to the Distributor so that it is
received before the Distributor's close of business that day, which
is normally 5:00 P.M. The Distributor may reject any purchase order
for the Fund's shares, in its sole discretion.
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 (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, 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 a commission. The current sales charge
rates and commissions paid to dealers and brokers are as follows:
<TABLE>
<CAPTION>
Front-End Front-End
Sales Charge Sales Charge
as as Commission as
Percentage of Percentage of Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 4.75%
- -----------------------------------------------------------------------
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
- ----------------------------------------------------------------------
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
- -----------------------------------------------------------------------
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
- -----------------------------------------------------------------------
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
- -----------------------------------------------------------------------
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
</TABLE>
The Distributor reserves the right to reallow the entire
commission to dealers. If that occurs, the dealer may be
considered an "underwriter" under Federal securities laws.
-- Class A Contingent Deferred Sales Charge. There is no
initial sales charge on purchases of Class A shares of any one or
more of the Oppenheimer funds in the following cases:
- purchases aggregating $1 million or more, or
- purchases by an OppenheimerFunds prototype 401(k) plan
that: (1) buys shares costing $500,000 or more or (2) has, at the
time of purchase, 100 or more eligible participants, or (3)
certifies that it projects to have annual plan purchases of
$200,000 or more.
The Distributor pays dealers of record commissions on those
purchases in an amount equal to the sum of 1.0% of the first $2.5
million, plus 0.50% of the next $2.5 million, plus 0.25% of
purchases over $5 million. That commission will be paid only on the
amount of those purchases in excess of $1 million ($500,000 for
purchases by OppenheimerFunds 401(k) prototype plans) that were not
previously subject to a front-end sales charge and dealer
commission.
If you redeem any of those shares within 18 months of the end
of the calendar month of their purchase, a contingent deferred
sales charge (called the "Class A contingent deferred sales
charge") will be deducted from the redemption proceeds. That sales
charge will be equal to 1.0% of either (1) the aggregate net asset
value of the redeemed shares (not including shares purchased by
reinvestment of dividends or capital gain distributions), or (2)
the original cost of the shares, whichever is less. However, the
Class A contingent deferred sales charge will not exceed the
aggregate commissions the Distributor paid to your dealer on all
Class A shares of all Oppenheimer funds you purchased subject to
the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is
payable, the Fund will first redeem shares that are not subject to
the sales charge, including shares purchased by reinvestment of
dividends and capital gains, and then will redeem other shares in
the order that you purchased them. The Class A contingent deferred
sales charge is waived in certain cases described in "Waivers of
Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on
exchanges of shares under the Fund's exchange privilege (described
below). However, if the shares acquired by exchange are redeemed
within 18 months of the end of the calendar month of the purchase
of the exchanged shares, the contingent deferred sales charge will
apply.
-- Special Arrangements With Dealers. The Distributor may
advance up to 13 months' commissions to dealers that have
established special arrangements with the Distributor for Asset
Builder Plans for their clients. Dealers whose sales of Class A
shares of Oppenheimer funds (other than money market funds) under
OppenheimerFunds-sponsored 403(b)(7) custodial plans exceed $5
million per year (calculated per quarter), will receive monthly
one-half of the Distributor's retained commissions on those sales,
and if those sales exceed $10 million per year, those dealers will
receive the Distributor's entire retained commission on those
sales.
Reduced Sales Charges for Class A Share Purchases. You may be
eligible to buy Class A shares at reduced sales charge rates in one
or more of the following ways:
-- Right of Accumulation. To qualify for the lower sales
charge rates that apply to larger purchases of Class A shares, you
and your spouse can add together Class A and Class B shares you
purchase for your individual accounts, or jointly, or for trust or
custodial accounts on behalf of your children who are minors. A
fiduciary can count all shares purchased for a trust, estate or
other fiduciary account (including one or more employee benefit
plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class
A and Class B shares of the Fund and other Oppenheimer funds to
reduce the sales charge rate that applies to current purchases of
Class A shares. You can also count Class A and Class B shares of
Oppenheimer funds you previously purchased subject to an initial or
contingent deferred sales charge to reduce the sales charge rate
for current purchases of Class A shares, provided that you still
hold your investment in one of the Oppenheimer funds. The value of
those shares will be based on the greater of the amount you paid
for the shares or their current value (at offering price). The
Oppenheimer funds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from
the Distributor. The reduced sales charge will apply only to
current purchases and must be requested when you buy your shares.
-- Letter of Intent. Under a Letter of Intent, if you
purchase Class A shares or Class A shares and Class B shares of the
Fund and other Oppenheimer funds during a 13-month period, you can
reduce the sales charge rate that applies to your purchases of
Class A shares. The total amount of your intended purchases of both
Class A and Class B shares will determine the reduced sales charge
rate for the Class A shares purchased during that period. This can
include purchases made up to 90 days before the date of the Letter.
More information is contained in the Application and in "Reduced
Sales Charges" in the Statement of Additional Information.
-- Waivers of Class A Sales Charges. The Class A sales
charges are not imposed in the circumstances described below. There
is an explanation of this policy in "Reduced Sales Charges" in the
Statement of Additional Information.
Waivers of Initial and Contingent Deferred Sales Charges for
Certain Purchasers. Class A shares purchased by the following
investors are not subject to any Class A sales charges:
- the Manager or its affiliates;
- present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced
Sales Charges" in the Statement of Additional Information) of the
Fund, the Manager and its affiliates, and retirement plans
established by them for their employees;
- registered management investment companies, or separate
accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose;
- dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
- employees and registered representatives (and their spouses)
of dealers or brokers described above or financial institutions
that have entered into sales arrangements with such dealers or
brokers (and are identified to the Distributor) or with the
Distributor; the purchaser must certify to the Distributor at the
time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor
children);
- dealers, brokers or registered investment advisers that have
entered into an agreement with the Distributor (1) providing
specifically for the use of shares of the Fund in particular
investment products made available to their clients (those clients
may be charged a transaction fee by their dealer, broker, or
advisor for the purchase or sale of Fund shares), or (2) that have
entered into an agreement with the Distributor to sell shares to
defined contribution employee retirement plans for which the
dealer, broker or investment adviser provides administrative
services;
- directors, trustees, officers or full-time employees of
OpCap Advisors or its affiliates, their relatives or any trust,
pension, profit sharing or other benefit plan which beneficially
owns shares for those persons;
- accounts for which Oppenheimer Capital is the investment
adviser (the Distributor must be advised of this arrangement) and
persons who are directors or trustees of the company or trust which
is the beneficial owner of such accounts;
- any unit investment trust that has entered into an
appropriate agreement with the Distributor;
- a TRAC-2000 401(k) plan (sponsored by the former Quest For
Value Advisors) whose Class B or Class C shares of a Former Quest
for Value Fund were exchanged for Class A shares of that Fund due
to the termination of the Class B and Class C TRAC-2000 program on
November 24, 1995; or
- qualified retirement plans that had agreed with the former
Quest for Value Advisors to purchase shares of any of the Former
Quest for Value Funds at net asset value, with such shares to be
held through DCXchange, a sub-transfer agency mutual fund
clearinghouse, provided that such arrangements are consummated and
share purchases commence by December 31, 1996.
Waivers of Initial and Contingent Deferred Sales Charges in
Certain Transactions. Class A shares issued or purchased in the
following transactions are not subject to Class A sales charges:
- shares issued in plans of reorganization, such as
mergers, asset acquisitions and exchange offers, to which the Fund
is a party,
- shares purchased by the reinvestment of loan repayments
by a participant in a retirement plan for which the Manager or its
affiliates acts as sponsor,
- shares purchased by the reinvestment of dividends or
other distributions reinvested from the Fund or other Oppenheimer
funds (other than Oppenheimer Cash Reserves) or unit investment
trusts for which reinvestment arrangements have been made with the
Distributor,
- shares purchased and paid for with the proceeds of
shares redeemed in the prior 12 months from a mutual fund (other
than a fund managed by the Manager or any of its subsidiaries) on
which an initial sales charge or contingent deferred sales charge
was paid (this waiver also applies to shares purchased by exchange
of shares of Oppenheimer Money Market Fund, Inc. that were
purchased and paid for in this manner); this waiver must be
requested when the purchase order is placed for your shares of the
Fund, and the Distributor may require evidence of your
qualification for this waiver, or
- shares purchased with the proceeds of maturing
principal or units of any Qualified Unit Investment Trust Series.
Waivers of the Class A Contingent Deferred Sales Charge for
Certain Redemptions. The Class A contingent deferred sales charge
does not apply to purchases of Class A shares at net asset value
without sales charge as described in the two sections above. It is
also waived if shares that would otherwise be subject to the
contingent deferred sales charge are redeemed in the following
cases:
- for retirement distributions or loans to participants or
beneficiaries from qualified retirement plans, deferred
compensation plans or other employee benefit plans, including
OppenheimerFunds prototype 401(k) plans (these are all referred to
as "Retirement Plans");
- to return excess contributions made to Retirement Plans;
- to make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the original account value;
- involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see "Shareholder Account
Rules and Policies," below);
- if, at the time a purchase order is placed for Class A
shares that would otherwise be subject to the Class A contingent
deferred sales charge, the dealer agrees to accept the dealer's
portion of the commission payable on the sale in installments of
1/18th of the commission per month (and no further commission will
be payable if the shares are redeemed within 18 months of
purchase); or
- for distributions from OppenheimerFunds prototype 401(k)
plans for any of the following cases or purposes: (1) following the
death or disability (as defined in the Internal Revenue Code) of
the participant or beneficiary (the death or disability must occur
after the participant's account was established); (2) hardship
withdrawals, as defined in the plan; (3) under a Qualified Domestic
Relations Order, as defined in the Internal Revenue Code; (4) to
meet the minimum distribution requirements of the Internal Revenue
Code; (5) to establish "substantially equal periodic payments" as
described in Section 72(t) of the Internal Revenue Code, or (6)
separation from service.
-- Service Plan for Class A Shares. The Fund has adopted a
Service Plan for Class A shares to reimburse the Distributor for a
portion of its costs incurred in connection with the personal
service and maintenance of accounts that hold Class A shares.
Reimbursement is made quarterly at an annual rate that may not
exceed 0.25% of the average annual net asset value 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 yet done) for its other
expenditures under the Plan.
Services to be provided include, among others, answering
customer inquiries about the Fund, assisting in establishing and
maintaining accounts in the Fund, making the Fund's investment
plans available and providing other services at the request of the
Fund or the Distributor. Payments are made by the Distributor
quarterly at an annual rate not to exceed 0.25% of the average
annual net asset value of Class A shares held in accounts of the
dealer or its customers. The payments under the Plan increase the
annual expenses of Class A shares of the Fund by up to 0.25% of the
class' average annual net assets. For more details, please refer to
"Distribution and Service Plans" in the Statement of Additional
Information.
Buying Class B Shares. Class B shares are sold at net asset value
per share without an initial sales charge. However, if Class B
shares are redeemed within 6 years of their purchase, a contingent
deferred sales charge will be deducted from the redemption
proceeds. That sales charge will not apply to shares purchased by
the reinvestment of dividends or capital gains distributions. The
charge will be assessed on the lesser of the net asset value of the
shares at the time of redemption or the original purchase price.
The contingent deferred sales charge is not imposed on the amount
of your account value represented by the increase in net asset
value over the initial purchase price. The Class B contingent
deferred sales charge is paid to the Distributor to reimburse its
expenses of providing distribution-related services to the Fund in
connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 6 years, and (3)
shares held the longest during the 6-year period. The contingent
deferred sales charge is not imposed in the circumstances described
in "Waivers of Class B and Class C sales charges," below.
The amount of the contingent deferred sales charge will depend
on the number of years since you invested and the dollar amount
being redeemed, according to the following schedule:
Contingent Deferred Sales Charge
Years Since Beginning of Month In on Redemptions in that Year
Which Purchase Order Was Accepted (As % of Amount Subject to
Charge)
0 - 1 5.0%
1 - 2 4.0%
2 - 3 3.0%
3 - 4 3.0%
4 - 5 2.0%
5 - 6 1.0%
6 and following None
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of
the month in which the purchase was made.
-- Automatic Conversion of Class B Shares. 72 months after
you purchase Class B shares, those shares will automatically
convert to Class A shares. This conversion feature relieves Class
B shareholders of the asset-based sales charge that applies to
Class B shares under the Class B Distribution and Service Plan,
described below. The conversion is based on the relative net asset
value of the two classes, and no sales load or other charge is
imposed. When Class B shares convert, any other Class B shares that
were acquired by the reinvestment of dividends and distributions on
the converted shares will also convert to Class A shares. The
conversion feature is subject to the continued availability of a
tax ruling described in "Alternative Sales Arrangements - Class A,
Class B and Class C Shares" in the Statement of Additional
Information.
Buying Class C Shares. Class C shares are sold at net asset
value per share without an initial sales charge. However, if the
Class C shares are redeemed within 12 months of their purchase, a
contingent deferred sales charge of 1.0% will be deducted from the
redemption proceeds. That sales charge will not apply to shares
purchased by the reinvestment of dividends or capital gains
distributions. The charge will be assessed on the lesser of the
net asset value of the shares at the time of redemption or the
original purchase price. The contingent deferred sales charge is
not imposed on the amount of your account value represented by the
increase in net asset value over the initial purchase price
(including increases due to the reinvestment of dividends and
capital gains distributions). The Class C contingent deferred
sales charge is paid to compensate the Distributor for its expenses
of providing distribution-related services to the Fund in
connection with the sales of Class C shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 12 months, and (3)
shares held the longest during the 12-month period.
-- Distribution and Service Plan for Class 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
services and 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 6 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. After the
shares have been held for a year, the Distributor pays the service
fees to dealers on a quarterly basis.
The asset-based sales charge allows investors to buy Class B
or C shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell those shares. The Fund
pays the asset-based sales charges to the Distributor for its
services rendered in distributing Class B and Class C shares.
Those payments are at a fixed rate that is not related to the
Distributor's expenses. The services rendered by the Distributor
include paying and financing the payment of sales commissions,
service fees and other costs of distributing and selling Class B
and Class C shares.
The Distributor currently pays sales commissions of 3.75% of
the purchase price of Class B shares to dealers from its own
resources at the time of sale. Including the advance of the
service fee, the total amount paid by the Distributor to the dealer
at the time of sale of Class B shares is therefore 4.00% of the
purchase price. The Distributor retains the Class B asset-based
sales charge. The Distributor currently pays sales commissions of
0.75% of the purchase price of Class C shares to dealers from its
own resources at the time of sale. Including the advance of the
service fee, the total amount paid by the Distributor to the dealer
at the time of sale of Class C shares is therefore 1.00% of the
purchase price. The Distributor plans to pay the asset-based sales
charge as an ongoing commission to the dealer on Class C shares
that have been outstanding for a year or more.
The Distributor's actual expenses in selling Class B and C
shares may be more than the payments it receives from contingent
deferred sales charges collected on redeemed shares and from the
Fund under the Distribution and Service Plans for Class B and C
shares. If 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 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 charge will not be applied to
shares purchased in certain types of transactions nor will it apply
to Class B and Class C shares redeemed in certain circumstances as
described below. The reasons for this policy are in "Reduced Sales
Charges" in the Statement of Additional Information.
Waivers for Redemptions of Shares in Certain Cases. The Class
B and Class C contingent deferred sales charge will be waived for
redem ptions of shares in the following cases:
- to make 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 which
occurred after the account was opened;
- redemptions from accounts other than Retirement Plans
following the death or disability of the last surviving shareholder
(the death or disability must have occurred after the account was
established and you must provide evidence of a determination of
disability by the Social Security Administration);
- to make returns of excess contributions to Retirement Plans,
and
- to make distributions from IRAs (including SEP-IRAs and
SAR/SEP accounts) before the participant is age 59-1/2, and
distributions from 403(b)(7) custodial plans or pension or profit
sharing plans before the participant is age 59-1/2 but only after
the participant has separated from service, if the distributions
are made in substantially equal periodic payments over the life (or
life expectancy) of the participant or the joint lives (or joint
life and last survivor expectancy) of the participant and the
participant's designated beneficiary (and the distributions must
comply with other requirements for such distributions under the
Internal Revenue Code and may not exceed 10% of the account value
annually, measured from the date the Transfer Agent receives the
request);
- shares redeemed involuntarily, as described in "Shareholder
Account Rules and Policies," below; or
- for distributions from OppenheimerFunds prototype 401(k)
plans (1) for hardship withdrawals; (2) under a Qualified Domestic
Relations Order, as defined in the Internal Revenue Code; (3) to
meet minimum distribution requirements as defined in the Internal
Revenue Code; (4) to make "substantially equal periodic payments"
as described in Section 72(t) of the Internal Revenue Code; or (5)
for separation from service.
Waivers for Shares Sold or Issued in Certain Transactions.
The contingent deferred sales charge is also waived on Class B and
Class C shares in the following cases:
- shares sold to the Manager or its affiliates;
- shares sold to registered management investment companies or
separate accounts of insurance companies having an agreement with
the Manager or the Distributor for that purpose; and
- shares issued in plans of reorganization to which the Fund
is a party.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account
to your account at your bank or other financial institution to
enable you to send money electronically between those accounts to
perform a number of types of account transactions. These include
purchases of shares by telephone (either through a service
representative or by PhoneLink, described below), automatic
investments under Asset Builder Plans, and sending dividends and
distributions or Automatic Withdrawal Plan payments directly to
your bank account. Please refer to the Application for details or
call the Transfer Agent for more information.
AccountLink privileges should be requested on the Application
you use to buy shares, or on your dealer's settlement instructions
if you buy your shares through your dealer. After your account is
established, you can request AccountLink privileges by sending
signature-guaranteed instructions to the Transfer Agent.
AccountLink privileges will apply to each shareholder listed in the
registration on your account as well as to your dealer
representative of record unless and until the Transfer Agent
receives written instructions terminating or changing those
privileges. After you establish AccountLink for your account, any
change of bank account information must be made by signature-
guaranteed instructions to the Transfer Agent signed by all
shareholders who own the account.
-- Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase
shares in amounts up to $250,000 through a telephone
representative, call the Distributor at 1-800-852-8457. The
purchase payment will be debited from your bank account.
-- PhoneLink. PhoneLink is the OppenheimerFunds automated
telephone system that enables shareholders to perform a number of
account transactions automatically using a touch-tone phone.
PhoneLink may be used on already-established Fund accounts after
you obtain a Personal Identification Number (PIN), by calling the
special PhoneLink number: 1-800-533-3310.
- Purchasing Shares. You may purchase shares in amounts up
to $100,000 by phone, by calling 1-800-533-3310. You must have
established AccountLink privileges to link your bank account with
the Fund, to pay for these purchases.
- Exchanging Shares. With the OppenheimerFunds exchange
privilege, described below, you can exchange shares automatically
by phone from your Fund account to another Oppenheimer funds
account you have already established by calling the special
PhoneLink number. Please refer to "How to Exchange Shares," below,
for details.
- Selling Shares. You can redeem shares by telephone
automatically by calling the PhoneLink number and the Fund will
send the proceeds directly to your AccountLink bank account.
Please refer to "How to Sell Shares," below, for details.
Automatic Withdrawal and Exchange Plans. The Fund has several
plans that enable you to sell shares automatically or exchange them
to another Oppenheimer funds account on a regular basis:
-- Automatic Withdrawal Plans. If your Fund account is $5,000
or more, you can establish an Automatic Withdrawal Plan to receive
payments of at least $50 on a monthly, quarterly, semi-annual or
annual basis. The checks may be sent to you or sent automatically
to your bank account on AccountLink. You may even set up certain
types of withdrawals of up to $1,500 per month by telephone. You
should consult the Application and Statement of Additional
Information for more details.
-- Automatic Exchange Plans. You can authorize the Transfer
Agent to exchange an amount you establish in advance automatically
for shares of up to five other Oppenheimer funds on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange
Plan. The minimum purchase for each Oppenheimer funds account is
$25. These exchanges are subject to the terms of the exchange
privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class A
or B shares of the Fund, you have up to 6 months to reinvest all or
part of the redemption proceeds in Class A shares of the Fund or
other Oppenheimer funds without paying a sales charge. This
privilege applies only to Class A shares you purchased subject to
an initial sales charge and to Class A or B shares on which you
paid a contingent deferred sales charge when you redeemed them. It
does not apply to Class C shares. Please consult the Statement of
Additional Information for more details.
Retirement Plans. Fund shares are available as an investment for
your retirement plans. If you participate in a plan sponsored by
your employer, the plan trustee or administrator must make the
purchase of shares for your retirement plan account. The
Distributor offers a number of different retirement plans that can
be used by individuals and employers:
- Individual Retirement Accounts including rollover IRAs,
for individuals and their spouses
- 403(b)(7) Custodial Plans for employees of eligible tax-
exempt organizations, such as schools, hospitals and charitable
organizations
- SEP-IRAs (Simplified Employee Pension Plans) for small
business owners or people with income from self-employment,
including SAR/SEP-IRAs
- Pension and Profit-Sharing Plans for self-employed
persons and small business owners
- 401(k) prototype retirement plans for businesses
Please call the Distributor for the OppenheimerFunds plan
documents, which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account by selling
(redeeming) some or all of your shares on any regular business day. Your
shares will be sold at the next net asset value calculated after
your order is received and accepted by the Transfer Agent. The
Fund offers you a number of ways to sell your shares: in writing or
by telephone. You can also set up Automatic Withdrawal Plans to
redeem shares on a regular basis, as described above. If you have
questions about any of these procedures, and especially if you are
redeeming shares in a special situation, such as due to the death
of the owner, or from a retirement plan, please call the Transfer
Agent first, at 1-800-525-7048, for assistance.
-- Retirement Accounts. To sell shares in an
OppenheimerFunds retirement account in your name, call the Transfer
Agent for a distribution request form. There are special income tax
withholding requirements for distributions from retirement plans
and you must submit a withholding form with your request to avoid
delay. If your retirement plan account is held for you by your
employer, you must arrange for the distribution request to be sent
by the plan administrator or trustee. There are additional details
in the Statement of Additional Information.
-- Certain Requests Require a Signature Guarantee. To
protect you and the Fund from fraud, certain redemption requests
must be in writing and must include a signature guarantee in the
following situations (there may be other situations also requiring
a signature guarantee):
- You wish to redeem more than $50,000 worth of shares and
receive a check
- A redemption check is not payable to all shareholders
listed on the account statement
- A redemption check is not sent to the address of record
on your account statement
- Shares are being transferred to a Fund account with a
different owner or name
- Shares are redeemed by someone other than the owners
(such as an Executor)
-- Where Can I Have My Signature Guaranteed? The Transfer
Agent will accept a guarantee of your signature by a number of
financial institutions, including: a U.S. bank, trust company,
credit union or savings association, or by a foreign bank that has
a U.S. correspondent bank, or by a U.S. registered dealer or broker
in securities, municipal securities or government securities, or by
a U.S. national securities exchange, a registered securities
association or a clearing agency. If you are signing on behalf of
a corporation, partnership or other business, or as a fiduciary,
you must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that
includes:
- Your name
- The Fund's name
- Your Fund account number (from your account statement)
- The dollar amount or number of shares to be redeemed
- Any special payment instructions
- Any share certificates for the shares you are selling
- The signatures of all registered owners exactly as the
account is registered, and
- Any special requirements or documents requested by the
Transfer Agent to assure proper authorization of the person asking
to sell shares.
Use the following address for requests by mail: Send courier or
Express Mail requests to:
OppenheimerFunds Services
OppenheimerFunds Services
P.O. Box 5270
10200 E. Girard Avenue, Building D
Denver, Colorado 80217
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. Shares held in an OppenheimerFunds retirement plan
or under a share certificate may not be redeemed by telephone.
- To redeem shares through a service representative, call
1-800-852-8457
- To redeem shares automatically on PhoneLink, call 1-800-
533-3310
Whichever method you use, you may have a check sent to the
address on the account statement, or, if you have linked your Fund
account to your bank account on AccountLink, you may have the
proceeds wired to that bank account.
-- Telephone Redemptions Paid by Check. Up to $50,000 may be
redeemed by telephone, in any 7-day period. The check must be
payable to all owners of record of the shares and must be sent to
the address on the account. This service is not available within
30 days of changing the address on an account.
-- Telephone Redemptions Through AccountLink or By Wire.
There are no dollar limits on telephone redemption proceeds sent to
a bank account designated when you establish AccountLink. Normally
the ACH wire to your bank is initiated on the business day after
the redemption. You do not receive dividends on the proceeds of
the shares you redeemed while they are waiting to be wired.
Shareholders may also have the Transfer Agent send redemption
proceeds of $2,500 or more by Federal Funds wire to a designated
commercial bank account. The bank must be a member of the Federal
Reserve wire system. 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. There is a $10 fee for each wire.
Selling Shares Through Your Dealer. The Distributor has made
arrangements to repurchase Fund shares from dealers and brokers on
behalf of their customers. To find out more information about this
service, please contact your dealer or broker. Brokers or dealers
may charge for that service. Please refer to "Special Arrangements
for Repurchase of Shares from Dealers and Brokers" in the Statement
of Additional Information for more details.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain
Oppenheimer funds at net asset value per share at the time of
exchange, without sales charge. To exchange shares, you must meet
several conditions:
- Shares of the fund selected for exchange must be
available for sale in your state of residence
- The prospectuses of this Fund and the fund whose shares
you want to buy must offer the exchange privilege
- You must hold the shares you buy when you establish your
account for at least 7 days before you can exchange them; after the
account is open 7 days, you can exchange shares every regular
business day
- You must meet the minimum purchase requirements for the
fund you purchase by exchange
- Before exchanging into a fund, you should obtain and read
its prospectus
Shares of a particular class of the Fund may be exchanged only
for shares of the same class in the other Oppenheimer funds. For
example, you can exchange Class A shares of this Fund only for
Class A shares of another fund. At present, Oppenheimer Money
Market Fund, Inc. offers only one class of shares, which are
considered to be Class A shares for this purpose. In some cases,
sales charges may be imposed on exchange transactions. Please
refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.
Exchanges may be requested in writing or by telephone:
-- Written Exchange Requests. Submit an OppenheimerFunds
Exchange Request form, signed by all owners of the account. Send
it to the Transfer Agent at the addresses listed in "How to Sell
Shares."
-- Telephone Exchange Requests. Telephone exchange requests
may be made either by calling a service representative at 1-800-
852-8457 or by using PhoneLink for automated exchanges, by calling
1-800-533-3310. Telephone exchanges may be made only between
accounts that are registered with the same name(s) and address.
Shares held under certificates may not be exchanged by telephone.
You can find a list of Oppenheimer funds currently available
for exchanges in the Statement of Additional Information or by
calling a service representative at 1-800-525-7048. Exchanges of
shares involve a redemption of the shares of the fund you own and
a purchase of shares of the other fund.
There are certain exchange policies you should be aware of:
- Shares are normally redeemed from one fund and purchased
from the other fund in the exchange transaction on the same regular
business day on which the Transfer Agent receives an exchange
request that is in proper form by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M., but may be earlier
on some days. However, either fund may delay the purchase of
shares of the fund you are exchanging into up to 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 disposition of securities at a time or price
disadvantageous to the Fund.
- Because excessive trading can hurt fund performance and
harm shareholders, the Fund reserves the right to refuse any
exchange request that will disadvantage it, or to refuse multiple
exchange requests submitted by a shareholder or dealer.
- The Fund may amend, suspend or terminate the exchange
privilege at any time. Although the Fund will attempt to provide
you notice whenever it is reasonably able to do so, it may impose
these changes at any time.
- If the Transfer Agent cannot exchange all the shares you
request because of a restriction cited above, only the shares
eligible for exchange will be exchanged.
Shareholder Account Rules and Policies
-- Net Asset Value Per Share is determined for each class of
shares as of the close of The New York Stock Exchange, which is
normally 4:00 P.M. but may be earlier on some days, on each day the
Exchange is open by dividing the value of the Fund's net assets
attributable to a class by the number of shares of that class that
are outstanding. The Fund's Board of Directors has established
procedures to value the Fund's securities to determine net asset
value. In general, securities values are based on market value.
There are special procedures for valuing illiquid and restricted
securities and for obligations for which market values cannot be
readily obtained. These procedures are described more completely
in the Statement of Additional Information.
-- The offering of shares may be suspended during any period
in which the determination of net asset value is suspended, and the
offering may be suspended by the Board of Directors at any time the
Board believes it is in the Fund's best interest to do so.
-- Telephone Transaction Privileges for purchases,
redemptions or exchanges may be modified, suspended or terminated
by the Fund at any time. If an account has more than one owner,
the Fund and the Transfer Agent may rely on the instructions of any
one owner. Telephone privileges apply to each owner of the account
and the dealer representative of record for the account unless and
until the Transfer Agent receives cancellation instructions from an
owner of the account.
-- The Transfer Agent will record any telephone calls to
verify data concerning transactions and has adopted other
procedures to confirm that telephone instructions are genuine, by
requiring callers to provide tax identification numbers and other
account data or by using PINs, and by confirming such transactions
in writing. If the Transfer Agent does not use reasonable
procedures it may be liable for losses due to unauthorized
transactions, but otherwise neither it nor the Fund will be liable
for losses or expenses arising out of telephone instructions
reasonably believed to be genuine. If you are unable to reach the
Transfer Agent during periods of unusual market activity, you may
not be able to complete a telephone transaction and should consider
placing your order by mail.
-- Redemption or transfer requests will not be honored until
the Transfer Agent receives all required documents in proper form.
From time to time, the Transfer Agent in its discretion may waive
certain of the requirements for redemptions stated in this
Prospectus.
-- Dealers that can perform account transactions for their
clients by participating in NETWORKING through the National
Securities Clearing Corporation are responsible for obtaining their
clients' permission to perform those transactions and are
responsible to their clients who are shareholders of the Fund if
the dealer performs any transaction erroneously.
-- The redemption price for shares will vary from day to day
because the value of the securities in the Fund's portfolio
fluctuates, and the redemption price, which is the net asset value
per share, will normally be different for Class A, Class B, Class
C and Class Y shares. Therefore, the redemption value of your
shares may be more or less than their original cost.
-- Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the
shareholder under the redemption procedures described above) within
7 days after the Transfer Agent receives redemption instructions in
proper form, except under unusual circumstances determined by the
Securities and Exchange Commission delaying or suspending such
payments. For accounts registered in the name of a broker-dealer,
payment will be forwarded within 3 business days. The Transfer
Agent may delay forwarding a check or processing a payment via
AccountLink for recently purchased shares, but only until the
purchase payment has cleared. That delay may be as much as 10 days
from the date the shares were purchased. That delay may be avoided
if you purchase shares by certified check or arrange to have your
bank provide telephone or written assurance to the Transfer Agent
that your purchase payment has cleared.
-- Involuntary redemptions of small accounts may be made by
the Fund if the account value has fallen below $500 for reasons
other than the fact that the market value of shares has dropped,
and in some cases involuntary redemptions may be made to repay the
Distributor for losses from the cancellation of share purchase
orders.
-- Under unusual circumstances, shares of the Fund may be
redeemed "in kind," which means that the redemption proceeds will
be paid with securities from the Fund's portfolio. Please refer to
"How to Sell Shares" in the Statement of Additional Information for
more details.
-- "Backup Withholding" of Federal income tax may be applied
at the rate of 31% from dividends, distributions and redemption
proceeds (including exchanges) if you fail to furnish the Fund a
certified Social Security or Employer Identification Number when
you sign your application, or if you violate Internal Revenue
Service regulations on tax reporting of income.
-- The Fund does not charge a redemption fee, but if your
dealer or broker handles your redemption, they may charge a fee.
That fee can be avoided by redeeming your Fund shares directly
through the Transfer Agent. Under the circumstances described in
"How To Buy Shares," you may be subject to a contingent deferred
sales charges when redeeming certain Class A, Class B and Class C
shares.
-- To avoid sending duplicate copies of materials to
households, the Fund will mail only one copy of each annual and
semi-annual report to shareholders having the same last name and
address on the Fund's records. However, each shareholder may call
the Transfer Agent at 1-800-525-7048 to ask that copies of those
materials be sent personally to that shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A,
Class B, Class C and Class Y shares from net investment income on
a quarterly basis and pays those dividends to shareholders in
March, June, September and December on a date set by the Fund's
Board. Also, dividends paid on Class A and Class Y shares
generally are expected to be higher than for Class B and Class C
shares because expenses allocable to Class B and Class C shares
will generally be higher. There is no fixed dividend rate and
there can be no assurance as to the payment of any dividends or the
realization of any gains.
Capital Gains. The Fund may make distributions annually in December
out of any net short-term or long-term capital gains, and the Fund
may make supplemental distributions of dividends and capital gains
following the end of its fiscal year. Long-term capital gains will
be separately identified in the tax information the Fund sends you
after the end of the year. Short-term capital gains are treated as
dividends for tax purposes. There can be no assurance that the Fund
will pay any capital gains distributions in a particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are
reinvested. For other accounts, you have four options:
-- Reinvest All Distributions in the Fund. You can elect to
reinvest all dividends and long-term capital gains distributions in
additional shares of the Fund.
-- Reinvest Long-Term Capital Gains Only. You can elect to
reinvest long-term capital gains in the Fund while receiving
dividends by check or sent to your bank account on AccountLink.
-- Receive All Distributions in Cash. You can elect to
receive a check for all dividends and long-term capital gains
distributions or have them sent to your bank on AccountLink.
-- Reinvest Your Distributions in Another Oppenheimer Fund
Account. You can reinvest all distributions in another Oppenheimer
fund account you have established.
Taxes. If your account is not a tax-deferred retirement account,
you should be aware of the following tax implications of investing
in the Fund. Long-term capital gains are taxable as long-term
capital gains when distributed to shareholders. It does not matter
how long you held your shares. Dividends paid from short-term
capital gains and net investment income are taxable as ordinary
income. Distributions are subject to federal income tax and may be
subject to state or local taxes. Your distributions are taxable
when paid, whether you reinvest them in additional shares or take
them in cash. Every year the Fund will send you and the IRS a
statement showing the amount of each taxable distribution you
received in the previous year.
-- "Buying a Dividend": When a fund goes ex-dividend, its
share price is reduced by the amount of the distribution. If you
buy shares on or just before the ex-dividend date, or just before
the Fund declares a capital gains distribution, you will pay the
full price for the shares and then receive a portion of the price
back as a taxable dividend or capital gain.
-- Taxes on Transactions: Share redemptions, including
redemptions for exchanges, are subject to capital gains tax. A
capital gain or loss is the difference between the price you paid
for the shares and the price you received when you sold them.
-- Returns of Capital: In certain cases distributions made by
the Fund may be considered a non-taxable return of capital to
shareholders. If that occurs, it will be identified in notices to
shareholders. A non-taxable return of capital may reduce your tax
basis in your Fund shares.
This information is only a summary of certain federal tax
information about your investment. More information is contained
in the Statement of Additional Information, and in addition you
should consult with your tax adviser about the effect of an
investment in the Fund on your particular tax situation.
<PAGE>
(the text of Appendix A, below is all new)
APPENDIX A
Special Sales Charge Arrangements for Shareholders of the Fund
Who Were Shareholders of the Former Quest for Value Funds
The initial and contingent sales charge rates and waivers for
Class A, Class B and Class C shares of the Fund described elsewhere
in this Prospectus are modified as described below for those
shareholders of (i) Quest for Value Fund, Inc., Quest for Value
Growth and Income Fund, Quest for Value Opportunity Fund, Quest for
Value Small Capitalization Fund and Quest for Value Global Equity
Fund, Inc. on November 24, 1995, when OppenheimerFunds, Inc. became
the investment adviser to those funds, and (ii) Quest for Value
U.S. Government Income Fund, Quest for Value Investment Quality
Income Fund, Quest for 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) received by such shareholder pursuant to the
merger of any of the Former Quest for Value Funds into an
Oppenheimer fund on November 24, 1995.
Class A Sales Charges
- -- Reduced Class A Initial Sales Charge Rates for Certain Former
Quest Shareholders
- - Purchases by Groups, Associations and Certain Qualified
Retirement Plans. The following table sets forth the initial sales
charge rates for Class A shares purchased by a "Qualified
Retirement Plan" through a single broker, dealer or financial
institution, or by members of "Associations" formed for any purpose
other than the purchase of securities if that Qualified Retirement
Plan or that Association purchased shares of any of the Former
Quest for Value Funds or received a proposal to purchase such
shares from OCC Distributors prior to November 24, 1995. For this
purpose only, a "Qualified Retirement Plan" includes any 401(k)
plan, 403(b) plan, and SEP/IRA or IRA plan for employees of a
single employer.
Front-End Front-End
Sales Sales Commission
Charge Charge as
as a as a Percentage
Number of Percentage Percentage of
Eligible Employees of Offering of Amount Offering
or Members Price Invested Price
9 or fewer 2.50% 2.56%
2.00%
At least 10 but not
more than 49 2.00% 2.04%
1.60%
For purchases by Qualified Retirement plans and Associations
having 50 or more eligible employees or members, there is no
initial sales charge on purchases of Class A shares, but those
shares are subject to the Class A contingent deferred sales charge
described on pages30 to31 of this Prospectus.
Purchases made under this arrangement qualify for the lower of
the sales charge rate in the table based on the number of eligible
employees in a Qualified Retirement Plan or members of an
Association or the sales charge rate that applies under the Rights
of Accumulation described above in the Prospectus. In addition,
purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they
qualified to purchase shares of any of the Former Quest For Value
Funds by virtue of projected contributions or investments of $1
million or more each year. Individuals who qualify under this
arrangement for reduced sales charge rates as members of
Associations, or as eligible employees in Qualified Retirement
Plans also may purchase shares for their individual or custodial
accounts at these reduced sales charge rates, upon request to the
Fund's Distributor.
- -- Special Class A Contingent Deferred Sales Charge Rates. Class
A shares of the Fund purchased by exchange of shares of other
Oppenheimer funds that were acquired as a result of the merger of
Former Quest for Value Funds into those Oppenheimer funds, and
which shares were subject to a Class A contingent deferred sales
charge prior to November 24, 1995, will be subject to a contingent
deferred sales charge at the following rates: if they are redeemed
within 18 months of the end of the calendar month in which they
were purchased, at a rate equal to 1.0% if the redemption occurs
within 12 months of their initial purchase and at a rate of 0.50 of
1.0% if the redemption occurs in the subsequent six months. Class
A shares of any of the Former Quest Fund for Value Funds purchased
without an initial sales charge on or before November 22, 1995 will
continue to be subject to the applicable contingent deferred sales
charge in effect as of that date as set forth in the then-current
prospectus for such fund.
- -- Waiver of Class A Sales Charges for Certain Shareholders.
Class A shares of the Fund purchased by the following investors are
not subject to any Class A initial or contingent deferred sales
charges:
- Shareholders of the Fund who were shareholders of the AMA
Family of Funds on February 28, 1991 and who acquired shares of any
of the Former Quest for Value Funds by merger of a portfolio of the
AMA Family of Funds.
- Shareholders of the Fund who acquired shares of any Former
Quest for Value Fund by merger of any of the portfolios of the
Unified Funds.
- -- Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions. The Class A contingent deferred sales charge will
not apply to redemptions of Class A shares of the Fund purchased by
the following investors who were shareholders of any Former Quest
for Value Fund:
- Investors who purchased Class A shares from a dealer that is
or was not permitted to receive a sales load or redemption fee
imposed on a shareholder with whom that dealer has a fiduciary
relationship under the Employee Retirement Income Security Act of
1974 and regulations adopted under that law.
- Participants in Qualified Retirement Plans that purchased
shares of any of the Former Quest For Value Funds pursuant to a
special "strategic alliance" with the distributor of those funds.
The Fund's Distributor will pay a commission to the dealer for
purchases of Fund shares as described above in "Class A Contingent
Deferred Sales Charge."
Class A, Class B and Class C Contingent Deferred Sales Charge
Waivers
- -- Waivers for Redemptions of Shares Purchased Prior to March 6,
1995. In the following cases, the contingent deferred sales charge
will be waived for redemptions of Class A, B or C shares of the
Fund by exchange from an Oppenheimer fund that was a Former Quest
for Value Fund or into which such a former Quest for Value Fund
merged, if those shares were purchased prior to March 6, 1995: in
connection with (i) distributions to participants or beneficiaries
of plans qualified under Section 401(a) of the Internal Revenue
Code or from custodial accounts under Section 403(b)(7) of the
Code, Individual Retirement Accounts, deferred compensation plans
under Section 457 of the Code, and other employee benefit plans,
and returns of excess contributions made to each type of plan,
(ii) withdrawals under an automatic withdrawal plan holding only
either Class B or C shares if the annual withdrawal does not exceed
10% of the initial value of the account, and (iii) liquidation of
a shareholder's account if the aggregate net asset value of shares
held in the account is less than the required minimum value of such
accounts.
- -- Waivers for Redemptions of Shares Purchased on or After March
6, 1995 but Prior to November 24, 1995. In the following cases,
the contingent deferred sales charge will be waived for redemptions
of Class A, B or C shares of the Fund 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 this Fund or another Oppenheimer fund.
Special Dealer Arrangements
Dealers who sold Class B shares of a Former Quest for Value Fund to
Quest for Value prototype 401(k) plans that were maintained on the
TRAC-2000 recordkeeping system and that were transferred to an
OppenheimerFunds prototype 401(k) plan shall be eligible for an
additional one-time payment by the Distributor of 1% of the value
of the plan assets transferred, but that payment may not exceed
$5,000 as to any one plan.
Dealers who sold Class C shares of a Former Quest for Value Fund to
Quest for Value prototype 401(k) plans that were maintained on the
TRAC-2000 recordkeeping system and (i) the shares held by those
plans were exchanged for Class A shares, or (ii) the plan assets
were transferred to an OppenheimerFunds prototype 401(k) plan,
shall be eligible for an additional one-time payment by the
Distributor of 1% of the value of the plan assets transferred, but
that payment may not exceed $5,000.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER TOTAL RETURN FUND, INC.
Graphic material included in Prospectus of Oppenheimer Total
Return Fund, Inc.: "Comparison of Total Return of Oppenheimer Total
Return Fund, Inc. with the S&P 500 Index - Change in Value of a
$10,000 Hypothetical Investment"
A linear graph will be included in the Prospectus of
Oppenheimer Total Return Fund, Inc. (the "Fund") depicting the
initial account value and subsequent account value of a
hypothetical $10,000 investment in (i) Class A shares of the Fund
for each of the Fund's most ten recently completed fiscal years,
and (ii) Class B shares of the Fund for the period May 1, 1993
(commencement of class) to December 31, 1995,(iii) Class C shares
of the Fund for the period August 29, 1995 (inception of class) to
December 31, 1995, and (iv) Class Y shares of the Fund for the
period from June 1, 1994 through December 31, 1995, and comparing
such values with the same 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-How Has the Fund Performed."
Fiscal Oppenheimer Total Return S & P 500
Year Ended Fund, Inc. Class A Shares Index
12/31/84 $ 9,425 $10,627
12/31/85 $12,664 $13,999
12/31/86 $15,158 $16,613
12/31/87 $17,030 $17,485
12/31/88 $19,303 $20,380
12/31/89 $23,018 $26,826
12/31/90 $22,130 $25,992
12/31/91 $30,153 $33,894
12/31/92 $34,020 $36,473
12/31/93 $41,247 $40,142
12/31/94 $38,006 $40,668
12/31/95 $ $
Fiscal Oppenheimer Total Return S&P 500
Period Ended Fund, Inc. Class B Shares Index
05/01/93 $10,000 $10,000
12/31/93 $11,391 $10,807
12/31/94 $10,030 $10,949
12/31/95 $ $
Fiscal Oppenheimer Total Return S&P 500
Year Ended Fund, Inc. Class C Shares Index
12/31/95 $ $
Fiscal Oppenheimer Total Return S&P 500
Period Ended Fund, Inc. Class Y Shares Index
6/1/94 $10,000 $11,056
12/31/94 $ 9,686 $10,203
12/31/95 $ $
<PAGE>
Oppenheimer Total Return Fund, Inc.
3410 South Galena Street
Denver, Colorado 80231
1-800-525-7048
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
Deloitte & Touche LLP
555 Seventeenth Street, Suite 3600
Denver, Colorado 80202-3942
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202
No dealer, broker, salesperson or any other person has been
authorized to give any information or to make any representations
other than those contained in this Prospectus or the Statement of
Additional 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.
PRO420.001.0496 Printed on recycled paper
<PAGE>
Oppenheimer Total Return Fund, Inc.
3410 South Galena Street, Denver, Colorado 80231
1-800-525-7048
Statement of Additional Information dated April 1, 1996
This Statement of Additional Information is not a Prospectus.
This document contains additional information about the Fund and
supplements information in the Prospectus dated April 1, 1996. 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.
<TABLE>
<caption
TABLE OF CONTENTS
Page
<S> <C>
About the Fund
Investment Objective and Policies. . . . . . . . . . . . . . . . . . . . .
Investment Policies and Strategies. . . . . . . . . . . . . . . . . .
Other Investment Techniques 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 A: Industry Classifications. . . . . . . . . . . . . . . . . . .
</TABLE>
<PAGE>
ABOUT THE FUND
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and
policies of the Fund are discussed in the Prospectus. Set forth
below is supplemental information about these 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 are defined in the Prospectus.
-- Foreign Securities. "Foreign securities" include equity
and debt securities of companies organized under the laws of
countries other than the United States and debt securities of
foreign governments, that are traded on foreign securities
exchanges or in the foreign over-the-counter markets. Securities
of foreign issuers that are represented by American Depository
Receipts or that are listed on a U.S. securities exchange or traded
in the U.S. over-the-counter markets are not considered "foreign
securities" for the purpose of the Fund's investment allocations,
because they are not subject to many of the special considerations
and risks, discussed below, that apply to foreign securities traded
and held abroad.
Investing in foreign securities offers the Fund 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 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 or depositories holding them
must be approved by the Fund's Board of Directors to the extent
that approval is required under applicable rules of the Securities
and Exchange Commission. 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.
-- Risks of Foreign Investing. Investing in foreign
securities involves special additional risks and considerations not
typically associated with investing in securities of issuers traded
in the U.S. These include: reduction of income by foreign taxes;
fluctuation in value of foreign portfolio investments due to
changes in currency rates and control regulations (e.g., currency
blockage); transaction charges for currency exchange; lack of
public information about foreign issuers; lack of uniform
accounting, auditing and financial reporting standards comparable
to those applicable to domestic issuers; less volume on foreign
exchanges than on U.S. exchanges; greater volatility and less
liquidity 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 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.
Other Investment Techniques and Strategies.
-- Hedging. As described in the Prospectus, the Fund may
employ one or more types of Hedging Instruments. When hedging to
attempt to protect against declines in the market value of the
Fund's portfolio, to permit the Fund to retain unrealized gains in
the value of portfolio securities which have appreciated, or to
facilitate selling securities for investment reasons, the Fund may:
(i) sell Stock Index Futures, (ii) buy puts, (iii) write covered
calls on securities, securities indices or on Stock Index Futures,
or (iv) enter into interest rate swap agreements. When hedging to
permit the Fund to establish a position in the equity market as a
temporary substitute for purchasing individual equity securities
(which the Fund will normally purchase, and then terminate that
hedging position), the Fund may (1) buy Stock Index Futures, or
(ii) buy calls on such Futures on Securities held until. Covered
calls and puts may also be written on debt securities to attempt to
increase the Fund's income.
The Fund's strategy of hedging with Futures and options on
Futures will be incidental to the Fund's activities in the
underlying cash market. 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.
- Writing Covered Call Options. 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 has retained the risk of
loss should the price of the underlying security decline during the
call period, which may be offset to some extent by the premium.
To terminate its obligation on a call it has written, the Fund
may purchase a corresponding call in a "closing purchase
transaction." A profit or loss will be realized, depending upon
whether the net of the amount of the option transaction costs and
the premium received on the call written is more or less than the
price of the call subsequently purchased. A profit may also be
realized if the call lapses unexercised, because the Fund retains
the underlying investment and the premium received. Any such
profits are considered short-term capital gains for Federal income
tax purposes, and when distributed by the Fund are taxable as
ordinary income. An option position may be closed out only on a
market that provides secondary trading for options of the same
series, and there is no assurance that a liquid secondary market
will exist for a particular option. 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.
- Writing Put Options. A put option on securities gives the
purchaser the right to sell, and the writer the obligation to buy,
the underlying investment at the exercise price during the option
period. Writing a put covered by segregated liquid assets equal to
the exercise price of the put has the same economic effect to the
Fund as writing a covered call. The premium the Fund receives from
writing a put option represents a profit, as long as the price of
the underlying investment remains above the exercise price.
However, the Fund has also assumed the obligation during the option
period to buy the underlying investment from the buyer of the put
at the exercise price, even though the value of the investment may
fall below the exercise price. If the put lapses unexercised, the
Fund (as the writer of the put) realizes a gain in the amount of
the premium. If the put is exercised, the Fund must fulfill its
obligation to purchase the underlying investment at the exercise
price, which will usually exceed the market value of the investment
at that time. In that case, the Fund may incur a loss, equal to
the sum of the current market value of the underlying investment
and the premium received minus the sum of the exercise price and
any transaction costs incurred.
When writing put options on securities, to secure its
obligation to pay for the underlying security, the Fund will
deposit in escrow liquid assets with a value equal to or greater
than the exercise price of the put option. The Fund therefore
forgoes the opportunity of investing the segregated assets or
writing calls against those assets. As long as the obligation of
the Fund as the put writer continues, it may be assigned an
exercise notice by the broker-dealer through whom such option was
sold, requiring the Fund to take delivery of the underlying
security against payment of the exercise price. The Fund has no
control over when it may be required to purchase the underlying
security, since it may be assigned an exercise notice at any time
prior to the termination of its obligation as the writer of the
put. This obligation terminates upon expiration of the put, or
such earlier time at which the Fund effects a closing purchase
transaction by purchasing a put of the same series as that
previously sold. Once the Fund has been assigned an exercise
notice, it is thereafter not allowed to effect a closing purchase
transaction.
The Fund may effect a closing purchase transaction to realize
a profit on an outstanding put option it has written or to prevent
an underlying security from being put. Furthermore, effecting such
a closing purchase transaction will permit the Fund to write
another put option to the extent that the exercise price thereof is
secured by the deposited assets, or to utilize the proceeds from
the sale of such assets for other investments by the Fund. The
Fund will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the
premium received from writing the option. As above for writing
covered calls, any and all such profits described herein from
writing puts are considered short-term gains for Federal tax
purposes, and when distributed by the Fund, are taxable as ordinary
income.
- Purchasing Calls and Puts. When the Fund purchases a call
(other than in a closing purchase transaction), it pays a premium
and, except as to calls on securities indices or Stock Index
Futures, has the right to buy the underlying investment from a
seller of a corresponding call on the same investment during the
call period at a fixed exercise price. When the Fund purchases a
call on a securities index or Stock Index Future, it pays a
premium, but settlement is in cash rather than by delivery of the
underlying investment to the Fund. In purchasing a call, the Fund
benefits only if the call is sold at a profit or if, during the
call period, the market price of the underlying investment is above
the sum of the call price plus the transaction costs and the
premium paid and the call is exercised. If the call is not
exercised or sold (whether or not at a profit), it will become
worthless at its expiration date and the Fund will lose its premium
payment and the right to purchase the underlying investment.
When the Fund purchases a put, it pays a premium and, except
as to puts on stock indices or Stock Index Futures, has the right
to sell the underlying investment to a seller of a corresponding
put on the same investment during the put period at a fixed
exercise price. Buying a put on an investment the Fund owns
enables the Fund to protect itself during the put period against a
decline in the value of the underlying investment below the
exercise price by selling such underlying investment at the
exercise price to a seller of a corresponding put. If the market
price of the underlying investment is equal to or above the
exercise price and as a result the put is not exercised or resold,
the put will become worthless at its expiration date, and the Fund
will lose its premium payment and the right to sell the underlying
investment. The put may, however, be sold prior to expiration
(whether or not at a profit.)
Buying a put on an investment it does not own, either a put on
an index or a put on a Stock Index Future not held by the Fund,
permits the Fund either to resell the put or buy the underlying
investment and sell it at the exercise price. The resale price of
the put will vary inversely with the price of the underlying
investment. If the market price of the underlying investment is
above the exercise price and as a result the put is not exercised,
the put will become worthless on its expiration date. When the
Fund purchases a put on a stock index, or on a Stock Index Future
not held by it, the put protects the Fund to the extent that the
index moves in a similar pattern to the securities held. In the
case of a put on a stock index or Stock Index Future, settlement is
in cash rather than by delivery by the Fund of the underlying
investment.
Puts and calls on broadly-based indices or Futures are similar
to puts and calls on securities or futures contracts except that
all settlements are in cash and gain or loss depends on changes in
the index in question (and thus on price movements in the stock
market generally) rather than on price movements in individual
securities or futures contracts. When the Fund buys a calls on an
index or Future, it pays a premium. During the call period, upon
exercise of a call by the Fund, a seller of a corresponding call on
the same investment will pay the Fund an amount of cash to settle
the call if the closing level of the index or Future upon which the
call is based is greater than the exercise price of the call. That
cash payment is equal to the difference between the closing price
of the index and the exercise price of the call times a specified
multiple (the "multiplier"), which determines the total dollar
value for each point of difference. When the Fund buys a put on an
index or Future, it pays a premium and has the right during the put
period to require a seller of a corresponding put, upon the Fund's
exercise of its put, to deliver to the Fund an amount of cash to
settle the put if the closing level of the index or Future upon
which the put is based is less than the exercise price of the put.
That cash payment is determined by the multiplier, in the same
manner as described above as to calls.
An option position may be closed out only on a market which
provides secondary trading for options of the same series and there
is no assurance that a liquid secondary market will exist for any
particular option. The Fund's option activities may affect its
turnover rate and brokerage commissions. The exercise by the Fund
of puts on securities will cause the sale of related investments,
increasing portfolio turnover. Although such exercise is within
the Fund's control, holding a put might cause the Fund to sell the
related investments for reasons which would not exist in the
absence of the put. The Fund will pay a brokerage commission each
time it buys a put or call, sells a call, or buys or sells an
underlying investment in connection with the exercise of a put or
call. Such commissions may be higher than those which would apply
to direct purchases or sales of such underlying investments.
Premiums paid for options are small in relation to the market value
of the related investments, and consequently, put or call options
offer large amounts of leverage. The leverage offered by trading
in options could result in the Fund's net asset value being more
sensitive to changes in the value of the underlying investments.
- Stock Index Futures. The Fund may buy and sell "Stock
Index Futures," a type of Financial Future for which the index used
as the basis for trading is a broadly-based stock index (including
stocks that are not limited to issuers in a particular industry or
group of industries). A stock index assigns relative values to the
common stocks included in the index and fluctuates with the changes
in the market value of those stocks. Stock 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 or Stock
Index 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"). Initial margin payments 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 certain specified conditions. As the Future is marked
to market (that is, its value on the Fund's books is changed) to
reflect changes in its market value, subsequent margin payments,
called variation margin, will be paid to or by the futures broker
on a daily basis.
At any time prior to the expiration of the Future, the Fund
may elect to close out its position by taking an opposite position,
at which time a final determination of variation margin is made and
additional cash is required to be paid by or released to the Fund.
Any gain or loss is then realized by the Fund on the Future for tax
purposes. Although Stock Index Futures by their terms call for
settlement by the delivery of cash, in most cases the settlement
obligation is fulfilled without such delivery by entering into an
offsetting transaction. All Futures transactions are effected
through a clearing house associated with the exchange on which the
contracts are traded.
- Forward Contracts. A Forward Contract involves bilateral
obligations of one party to purchase, and another party to sell, a
specific currency at a future date (which may be any fixed number
of days from the date of the contract agreed upon by the parties),
at a price set at the time the contract is entered into. These
contracts are traded in the interbank market conducted directly
between currency traders (usually large commercial banks) and their
customers.
The Fund may 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 the Fund anticipates receipt of dividend
payments in a foreign currency, the Fund may desire to "lock-in"
the U.S. dollar price of the security or the U.S. dollar equivalent
of such payment by entering into a Forward Contract, for a fixed
amount of U.S. dollars per unit of foreign currency, for the
purchase or sale of the amount of foreign currency involved in the
underlying transaction ("transaction hedge"). The Fund will
thereby be able to protect itself against a possible loss resulting
from an adverse change in the relationship between the currency
exchange rates during the period between the date on which the
security is purchased or sold, or on which the payment is declared,
and the date on which such payments are made or received.
The Fund may also use Forward Contracts to lock in the U.S.
dollar value of portfolio positions ("position hedge"). In a
position hedge, for example, when the Fund believes that foreign
currency may suffer a substantial decline against the U.S. dollar,
it may enter into a forward sale contract to sell an amount of that
foreign currency approximating the value of some or all of the
Fund's portfolio securities denominated in such foreign currency,
or when the Fund believes that the U.S. dollar may suffer a
substantial decline against a foreign currency, it may enter into
a forward purchase contract to buy that foreign currency for a
fixed dollar amount. In this situation the Fund may, in the
alternative, enter into a forward contract to sell a different
foreign currency for a fixed U.S. dollar amount where the Fund
believes that the U.S. dollar value of the currency to be sold
pursuant to the forward contract will fall whenever there is a
decline in the U.S. dollar value of the currency in which portfolio
securities of the Fund are denominated ("cross hedge").
The Fund 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. 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 that currency 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, the Fund may purchase a call option permitting
the Fund to purchase the amount of foreign currency being hedged by
a forward sale contract at a price no higher than the forward
contract price or the Fund may purchase a put option permitting the
Fund to sell the amount of foreign currency subject to a forward
purchase contract at a price as high or higher than the forward
contract price. Unanticipated changes in currency prices may
result in poorer overall performance for the Fund than if it had
not entered into such contracts.
The precise matching of the Forward Contract amounts and the
value of the securities involved will not generally be possible
because the future value of such securities in foreign currencies
will change as a consequence of market movements in the value of
these securities between the date the Forward Contract is entered
into and the date it is sold. Accordingly, it may be necessary for
the Fund to purchase additional foreign currency on the spot
(i.e., cash) market (and bear the expense of such purchase), if the
market value of the security is less than the amount of foreign
currency the Fund is obligated to deliver and if a decision is made
to sell the security and make delivery of the foreign currency.
Conversely, it may be necessary to sell on the spot market some of
the foreign currency received upon the sale of the portfolio
security if its market value exceeds the amount of foreign currency
the Fund is obligated to deliver. The projection of short-term
currency market movements is extremely difficult, and the
successful execution of a short-term hedging strategy is highly
uncertain. Forward Contracts involve the risk that anticipated
currency movements will not be accurately predicted, causing the
Fund to sustain losses on these contracts and transactions costs.
At or before the maturity of a Forward Contract requiring the
Fund to sell a currency, the Fund may either sell a portfolio
security and use the sale proceeds to make delivery of the currency
or retain the security and offset its contractual obligation to
deliver the currency by purchasing a second contract pursuant to
which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly,
the Fund may close out a Forward Contract requiring it to purchase
a specified currency by entering into a second contract entitling
it to sell the same amount of the same currency on the maturity
date of the first contract. The Fund would realize a gain or loss
as a result of entering into such an offsetting Forward Contract
under either circumstance to the extent the exchange rate or rates
between the currencies involved moved between the execution dates
of the first contract and offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies
with factors such as the currencies involved, the length of the
contract period and the market conditions then prevailing. Because
Forward Contracts are usually entered into on a principal basis, no
fees or commissions are involved. Because such contracts are not
traded on an exchange, the Fund must evaluate the credit and
performance risk of each particular counterparty under a Forward
Contract.
Although the Fund values its assets daily in terms of U.S.
dollars, it does not intend to convert its holdings of foreign
currencies into U.S. dollars on a daily basis. The Fund may
convert foreign currency from time to time, and investors should be
aware of the costs of currency conversion. Foreign exchange
dealers do not charge a fee for conversion, but they do seek to
realize a profit based on the difference between the prices at
which they buy and sell various currencies. Thus, a dealer may
offer to sell a foreign currency to the Fund at one rate, while
offering a lesser rate of exchange should the Fund desire to resell
that currency to the dealer.
- Interest Rate Swap Transactions. Swap agreements entail
both interest rate risk and credit risk. There is a risk that,
based on movements of interest rates in the future, the payments
made by the Fund under a swap agreement will have been greater than
those received by it. Credit risk arises from the possibility that
the counterparty will default. If the counterparty to an interest
rate swap defaults, the Fund's loss will consist of the net amount
of contractual interest payments that the Fund has not yet
received. The Manager will monitor the creditworthiness of
counterparties to the Fund's interest rate swap transactions on an
ongoing basis. The Fund will enter into swap transactions with
appropriate counterparties pursuant to master netting agreements.
A master netting agreement provides that all swaps done
between the Fund and that counterparty under the master agreement
shall be regarded as parts of an integral agreement. If on any
date amounts are payable in the same currency in respect of one or
more swap transactions, the net amount payable on that date in that
currency shall be paid. In addition, the master netting agreement
may provide that if one party defaults generally or on one swap,
the counterparty may terminate the swaps with that party. Under
such agreements, if there is a default resulting in a loss to one
party, the measure of that party's damages is calculated by
reference to the average cost of a replacement swap with respect to
each swap (i.e., the mark-to-market value at the time of the
termination of each swap). The gains and losses on all swaps are
then netted, and the result is the counterparty's gain or loss on
termination. The termination of all swaps and the netting of gains
and losses on termination is generally referred to as
"aggregation."
- 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 on the expiration of the option or upon the Fund's
entering into a closing 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 the Fund writes an over-the-counter("OTC") option, it
will enter into an arrangement with a primary U.S. Government
securities dealer, which would establish a formula price at which
the Fund would have the absolute right to repurchase that OTC
option. 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 the 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 the Prospectus) the
mark-to-market value of any OTC option held by it. The Securities
and Exchange Commission is evaluating whether OTC options should be
considered liquid securities, and the procedure described above
could be affected by the outcome of that evaluation.
The Fund's option activities may affect its turnover rate and
brokerage commissions. The exercise of calls written by the Fund
may cause the Fund to sell related portfolio securities, thus
increasing its turnover rate in a manner beyond the Fund's control.
The exercise by the Fund of puts on securities or Futures may cause
the sale of related investments, also increasing portfolio
turnover. Although such exercise is within the Fund's control,
holding a put might cause the Fund to sell the related investments
for reasons which would not exist in the absence of the put. The
Fund will pay a brokerage commission each time it buys or sells a
put, a call, or an underlying investment in connection with the
exercise of a put or call. Such commissions may be higher than
those which would apply to direct purchases or sales of the
underlying investments. Premiums paid for options are small in
relation to the market value of the related investments, and
consequently, put and call options offer large amounts of leverage.
The leverage offered by trading in options could result in the
Fund's net asset value being more sensitive to changes in the value
of the underlying investments.
- 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 on Futures established by
the Commodity Futures Trading Commission ("CFTC"). In particular,
the Fund is exempted from registration with the CFTC as a
"commodity pool operator" if the Fund complies with the
requirements of Rule 4.5 adopted by the CFTC. The Rule does not
limit the percentage of the Fund's assets that may be used for
Futures margin and related options premiums for a bona fide hedging
position. However, under the Rule the Fund must limit its
aggregate Futures margin and related options premiums to no more
than 5% of the Fund's net assets for hedging strategies that are
not considered bona fide hedging strategies under the Rule.
Transactions in options by the Fund are subject to limitations
established by option exchanges governing the maximum number of
options that may be written or held by a single investor or group
of investors acting in concert, regardless of whether the options
were written or purchased on the same or different exchanges or are
held in one or more accounts or through one or more different
exchanges or through one or more brokers. Thus, the number of
options which the Fund may write or hold may be affected by options
written or held by other entities, including other investment
companies having the same adviser as the Fund (or an adviser that
is an affiliate of the Fund's adviser. The exchanges also impose
position limits on Futures transactions which apply to Futures. An
exchange may order the liquidation of positions found to be in
violation of those limits and may impose certain other sanctions.
Due to requirements under the Investment Company Act, when the
Fund purchases a Future, the Fund will maintain, in a segregated
account or accounts with its Custodian, cash or readily-marketable,
short-term (maturing in one year or less) debt instruments in an
amount equal to the market value of the securities underlying such
Future, less the margin deposit applicable to it.
- Tax Aspects of 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). One of the tests for
the Fund's qualification as a regulated investment company is that
less than 30% of its gross income must be derived from gains
realized on the sale of securities held for less than three months.
To comply with that 30% cap, the Fund will limit the extent to
which it engages in the following activities, but will not be
precluded from them: (i) selling investments, including Stock Index
Futures, held for less than three months, whether or not they were
purchased on the exercise of a call held by the Fund; (ii)
purchasing calls or puts which expire in less than three months;
(iii) effecting closing transactions with respect to calls or puts
purchased less than three months previously; (iv) exercising puts
or calls held by the Fund for less than three months; or (v)
writing calls on investments held for less than three months.
Certain foreign currency exchange contracts ("Forward
Contracts") in which the Fund may invest are treated as "section
1256 contracts." Gains or losses relating to section 1256
contracts generally are characterized under the Internal Revenue
Code as 60% long-term and 40% short-term capital gains or losses.
However, foreign currency gains or losses arising from certain
section 1256 contracts (including Forward Contracts) generally are
treated as ordinary income or loss. In addition, section 1256
contracts held by the Fund at the end of each taxable year are
"marked-to-market" with the result that unrealized gains or losses
are treated as though they were realized. These contracts also may
be marked-to-market for purposes of the excise tax applicable to
investment company distributions and for other purposes under rules
prescribed pursuant to the Internal Revenue Code. An election can
be made by the Fund to exempt these transactions from this marked-
to-market treatment.
Certain Forward Contracts entered into by the Fund may result
in "straddles" for Federal income tax purposes. The straddle rules
may affect the character of gains (or losses) realized by the Fund
on straddle positions. Generally, a loss sustained on the
disposition of a position 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, gains or losses attributable
to fluctuations in exchange rates that occur between the time the
Fund accrues interest or other receivables or accrues expenses or
other liabilities denominated in a foreign currency and the time
the Fund actually collects such receivables or pays such
liabilities generally are treated as ordinary income or ordinary
loss. Similarly, on disposition of debt securities denominated in
a foreign currency and on disposition of foreign currency forward
contracts, gains or losses attributable to fluctuations in the
value of a foreign currency between the date of acquisition of the
security or contract and the date of disposition also are treated
as ordinary gain or loss. Currency gains and losses are offset
against market gains and losses before determining a net "Section
988" gain or loss under the Internal Revenue Code, which may
increase or decrease the amount of the Fund's investment company
income available for distribution to its shareholders.
- Risks of Hedging With Options and Futures. An option
position may be closed out only on a market that provides secondary
trading for options of the same series, and there is no assurance
that a liquid secondary market will exist for any particular
option. In addition to the risks associated with hedging that are
discussed in the Prospectus and above, there is a risk in using
short hedging by selling Stock Index Futures or purchasing puts on
stock indices or Stock Index Futures to attempt to protect against
decline in value of the Fund's equity securities that the prices of
the Futures or applicable index will correlate imperfectly with the
behavior of the cash (i.e., market value) prices of the Fund's
equity securities. The ordinary spreads between prices in the cash
and futures markets are subject to distortions due to differences
in the natures of those markets. First, all participants in the
futures markets are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit
requirements, investors may close out futures contracts through
offsetting transactions which could distort the normal relationship
between the cash and futures markets. Second, the liquidity of the
futures markets depend on participants entering into offsetting
transactions rather than making or taking delivery. To the extent
participants decide to make or take delivery, liquidity in the
futures markets could be reduced, thus producing distortion.
Third, from the point of view of speculators, the deposit
requirements in the futures markets are less onerous than margin
requirements in the securities markets. Therefore, increased
participation by speculators in the futures markets may cause
temporary price distortions.
If the Fund uses hedging instruments to establish a position
in the equities markets as a temporary substitute for the purchase
of particular equity securities by buying Stock Index Futures
and/or calls on such Futures, on securities or on stock indices, it
is possible that the market may decline. If the Fund then
concludes not to invest in equity securities at that time because
of concerns as to possible further market decline or for other
reasons, the Fund will realize a loss on the hedging instruments
that is not offset by a reduction in the price of the equity
securities purchased.
The risk of imperfect correlation increases as the composition
of the Fund's portfolio diverges from the securities included in
the applicable index. To compensate for the imperfect correlation
of movements in the price of the equity securities being hedged and
movements in the price of the hedging instruments, the Fund may use
hedging instruments in a greater dollar amount than the dollar
amount of equity securities being hedged if the historical
volatility of the prices of the equity securities being hedged is
more than the historical volatility of the applicable index. It is
also possible that if the Fund has used hedging instruments in a
short hedge, the market may advance and the value of equity
securities held in the Fund's portfolio may decline. If that
occurred, the Fund would lose money on the hedging instruments and
also experience a decline in value in its portfolio securities.
However, while this could occur for a very brief period or to a
very small degree, over time the value of a diversified portfolio
of equity securities will tend to move in the same direction as the
indices upon which the hedging instruments are based.
-- Illiquid and Restricted Securities. To enable the Fund to
sell restricted securities not registered under the Securities Act
of 1933, the Fund may have to cause those securities to be
registered. The expenses of registration of restricted securities
may be negotiated by the Fund with the issuer at the time such
securities are purchased by the Fund, if such registration is
required before such securities may be sold publicly. When
registration must be arranged because the Fund wishes to sell the
security, a considerable period may elapse between the time the
decision is made to sell the securities and the time the Fund would
be permitted to sell them. The Fund would bear the risks of any
downward price fluctuation during that period. The Fund may also
acquire, through private placements, securities having contractual
restrictions on their resale, which might limit the Fund's ability
to dispose of such securities and might lower the amount realizable
upon the sale of such securities.
The Fund has percentage limitations that apply to purchases of
restricted securities, as stated in the Prospectus. Those
percentage restrictions do not limit purchases of restricted
securities that are eligible for sale to qualified institutional
purchasers pursuant to Rule 144A under the Securities Act of 1933,
provided that those securities have been determined to be liquid by
the Board of Directors of the Fund or by the Manager under Board-
approved guidelines. Those guidelines take into account the
trading activity for such securities and the availability of
reliable pricing information, among other factors. If there is a
lack of trading interest in a particular Rule 144A security, the
Fund's holding of that security may be deemed to be illiquid.
-- Repurchase Agreements. In a repurchase transaction, the
Fund acquires a security from, and simultaneously resells it to, an
approved vendor (a U.S. commercial bank or the U.S. branch of a
foreign bank or a broker-dealer which has been designated a primary
dealer in government securities which must meet the credit
requirements set up by the Fund's Board of Directors from time to
time) for delivery on an agreed-on future date. The resale price
exceeds the purchase price by an amount that reflects an agreed-
upon interest rate effective for the period during which the
repurchase agreement is in effect. The majority of these
transactions run from day to day, and delivery pursuant to the
resale typically will occur within one to five days of the
purchase. Repurchase agreements are considered "loans" under the
Investment Company Act of 1940 (the "Investment Company Act"),
collateralized by the underlying security. The Fund's repurchase
agreements require that at all times while the repurchase agreement
is in effect, the collateral's value must equal or exceed the
repurchase price to fully collateralize the repayment obligation.
Additionally, the Manager will impose creditworthiness requirements
to confirm that the vendor is financially sound and will
continuously monitor the collateral's value.
-- Loans of Portfolio Securities. The Fund may lend its
portfolio securities subject to the restrictions stated in the
Prospectus, to attempt to increase the Fund's income. Under
applicable regulatory requirements (which are subject to change),
the loan collateral must, on each business day, be at least equal
to the value of the loaned securities and must consist of cash,
bank letters of credit or securities of the U.S. Government, or
other cash equivalents in which the Fund is permitted to invest.
To be acceptable as collateral, letters of credit must obligate a
bank to pay amounts demanded by the Fund if the demand meets the
terms of the letter. Such terms and the issuing bank must be
satisfactory to the Fund. In a portfolio securities lending
transaction, the Fund receives from the borrower an amount equal to
the dividends declared or interest paid on loaned securities during
the terms of this loan as well as the interest on the collateral
securities, less any finder's, administrative or other fees the
Fund pays in connection with the loan. The Fund may share the
interest it receives on the collateral securities with the borrower
as long as it realizes at least a minimum amount of interest
required by the lending guidelines established by its Board of
Directors. The Fund will not lend its portfolio securities to any
officer, director, trustee, employee or affiliate of the Fund or
its Manager. The terms of the Fund's loans must meet certain tests
under the Internal Revenue Code and permit the Fund to reacquire
loaned securities on five business days' notice or in time to vote
on any important matter.
Other Investment Restrictions
The Fund's significant investment restrictions are described
in the Prospectus. There are additional investment restrictions
that the Fund must follow that are also fundamental policies.
Fundamental policies and the Fund's investment objective, cannot be
changed without the vote of a "majority" of the Fund's outstanding
voting securities. Under the Investment Company Act, such a
"majority" vote is defined as the vote of the holders of the lesser
of: (i) 67% or more of the shares present or represented by proxy
at a shareholders meeting if the holders of more than 50% of the
outstanding shares are present or represented by proxy, or (ii)
more than 50% of the outstanding shares.
Under these additional restrictions:
- The Fund cannot purchase securities on margin or sell
securities short; however, the Fund may make margin deposits in
connection with any of the Hedging Instruments which it may use as
permitted by any of its other investment policies;
- The Fund cannot invest in other companies for the purpose of
exercising control or management;
- The Fund cannot purchase the securities of other investment
companies, except in connection with a merger or consolidation;
- The Fund cannot purchase or sell real estate, including
interests in real estate investment trusts;
- The Fund cannot purchase or sell commodities or commodity
contracts or purchase securities for speculative short-term
purposes; however, the Fund may buy or sell any of the Hedging
Instruments which it may use as permitted by any of its other
investment policies, whether or not any such Hedging Instrument is
considered to be a commodity or a commodity contract;
- The Fund cannot accept the purchase price for any of its
shares without immediately thereafter issuing an appropriate number
of shares;
- The Fund cannot invest in securities of any corporation
which has a record of less than three years' continuous operation;
or
- The Fund cannot purchase or retain securities of any issuer
if those officers and directors of the Fund or its adviser who own
beneficially more than 0.5% of the securities of such issuer
together own beneficially more than 5% of the securities of such
issuer.
In connection with the qualification of its shares in certain
states, the Fund has undertaken that in addition to the above, as
a non-fundamental policy, it will not (i) invest in real estate
limited partnerships, (ii) invest in oil, gas and other mineral
leases and (iii) invest more than 5% of the value of its net assets
in warrants (valued at the lower of cost or market) of which no
more than 2% of the value of the Fund's net assets will be invested
in warrants that are not listed on the New York Stock Exchange or
the American Stock Exchange; warrants acquired in units or attached
to other securities are not subject to this restriction. In the
event that the Fund's shares cease to be qualified under such laws
or if such undertaking(s) otherwise cease to be operative, the Fund
would not be subject to such restrictions.
For purposes of the Fund's policy not to concentrate described
in investment restriction number 4 of the Prospectus, the Fund has
adopted the industry classifications set forth in Appendix A to
this Statement of Additional Information. This is not a
fundamental policy.
How the Fund Is Managed
Organization and History. As a Maryland corporation, 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. Each share of the Fund
represents an interest in the Fund proportionately equal to the
interest of each other share of the same class and entitles the
holder to one vote per share (and a fractional vote for a
fractional share) on matters submitted to their vote at
shareholders' meetings. Shareholders of the Fund vote together in
the aggregate on certain matters at shareholders' meetings, such as
the election of Directors and ratification of appointment of
auditors for the Trust. Shareholders of a particular class vote
separately on proposals which affect that class, and shareholders
of a class which is not affected by that matter are not entitled to
vote on the proposal. For example, only shareholders of a class
vote on certain amendments to the Distribution and/or Service Plans
if the amendments affect that class.
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 set forth below. Each Director is
also a Trustee, Director or Managing General Partner of Daily Cash
Accumulation Fund, Inc., Centennial Money Market Trust, Centennial
Tax Exempt Trust, Centennial Government Trust, Centennial New York
Tax Exempt Trust, Centennial California Tax Exempt Trust,
Oppenheimer Equity Income Fund, Oppenheimer Champion Income Fund,
Oppenheimer High Yield Fund, Oppenheimer Cash Reserves, Oppenheimer
Variable Account Funds, Oppenheimer Main Street Funds, Inc.,
Oppenheimer Integrity Funds, Oppenheimer Strategic Funds Trust,
Centennial America Fund, L.P., Oppenheimer Tax-Exempt Fund,
Oppenheimer International Bond Fund, Oppenheimer Limited-Term
Government Fund, and The New York Tax-Exempt Income Fund, Inc.
(collectively, the "Denver-based Oppenheimer funds") except for Ms.
Macaskill and Mr. Fossel who are Trustees, Directors, or Managing
General Partners of all the Denver-based Oppenheimer funds except
Oppenheimer Integrity Funds and Oppenheimer Strategic Income Fund.
Messrs. Bishop, Bowen, Donohue, Farrar and Zack hold similar
positions as officers of all such Funds. Ms. Macaskill is
President and Mr. Swain is Chairman of each of the Denver-based
Oppenheimer funds. As of March 1, 1996, the Directors and officers
of the Fund as a group owned of record or beneficially less than 1%
of each class of shares of the Fund. The foregoing statement does
not reflect ownership of shares held of record by an employee
benefit plan for employees of the Manager (for which plan two of
the officers listed below, Ms. Macaskill and Mr. Donohue, are
trustees), other than the shares beneficially owned under that plan
by the officers of the Fund listed above.
Robert G. Avis, Director*, Age: 64
One North Jefferson Ave., St. Louis, Missouri 63103
Vice Chairman of A.G. Edwards & Sons, Inc. (a broker-dealer) and
A.G. Edwards, Inc. (its parent holding company); Chairman of A.G.E.
Asset Management and A.G. Edwards Trust Company (its affiliated
investment adviser and trust company, respectively).
William A. Baker, Director; Age: 80
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
Charles Conrad, Jr., Director; Age: 65
19411 Merion Circle, Huntington Beach, California 92648
Vice President of McDonnell Douglas Space Systems Co.; formerly
associated with the National Aeronautics and Space Administration.
Jon S. Fossel, Director*: Age: 53
Two World Trade Center, New York, New York 10048-0203
Chairman and a director of OppenheimerFunds, Inc. ("OFI")
(the"Manager"); President and a director of HarbourView Asset
Management Corporation, a subsidiary of the Manager
("HarbourView"); a director of Oppenheimer Acquisition Corp.
("OAC"), the Manager's parent holding company, Shareholder
Services, Inc. ("SSI") and Shareholder Financial Services, Inc.
("SFSI"), transfer agent subsidiaries of the Manager; formerly
President of the Manager.
Raymond J. Kalinowski, Director; Age: 66
44 Portland Drive, St. Louis, Missouri 63131
Director of Wave Technologies International, Inc.; formerly Vice
Chairman and a director of A.G. Edwards, Inc., parent holding
company of A.G. Edwards & Sons, Inc. (a broker-dealer), of which he
was a Senior Vice President.
C. Howard Kast, Director; Age: 74
2552 East Alameda, Denver, Colorado 80209
Formerly Managing Partner of Deloitte, Haskins & Sells (an
accounting firm).
Robert M. Kirchner, Director; Age: 74
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
Bridget A. Macaskill, President and Director*; Age: 47
President, Chief Executive Officer and a Director of the Manager;
Chairman and a Director of SSI, President and a Director of OAC and
HarbourView; and a Director of Oppenheimer Partnership Holdings,
Inc., a holding company subsidiary of the Manager; formerly an
Executive Vice President of the Manager.
Ned M. Steel, Director; Age: 80
3416 South Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; Director of Visiting
Nurse Corporation of Colorado; formerly Senior Vice President and
a Director of Van Gilder Insurance Corp. (insurance brokers).
James C. Swain, Chairman, Chief Executive Officer and Director*;
Age: 63
3410 South Galena Street, Denver, Colorado 80231
Vice Chairman of the Manager; formerly President and a Director of
Centennial Asset Management Corporation, an investment adviser
subsidiary of the Manager ("Centennial"), and Chairman of the Board
of SSI.
Andrew J. Donohue, Vice President and Secretary; Age: 45
Executive Vice President and General Counsel of the Manager and
OppenheimerFunds Distributor, Inc. (the "Distributor"); President
and a Director of Centennial; an officer of other Oppenheimer
funds; formerly Senior Vice President and Associate General Counsel
of the Manager and the Distributor; Partner in, Kraft & McManimon
(a law firm); an officer of First Investors Corporation (a
broker-dealer) and First Investors Management Company, Inc.
(broker-dealer and investment adviser); director and an officer of
First Investors Family of Funds and First Investors Life Insurance
Company.
George C. Bowen, Vice President, Assistant Secretary and
Treasurer; Age: 59
3410 South Galena Street Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President
and Treasurer of the Distributor and HarbourView; Senior Vice
President, Treasurer, Assistant Secretary and a director of
Centennial; Vice President, Treasurer and Secretary of SSI and
SFSI; an officer of other Oppenheimer funds.
Bruce Bartlett, Vice President and Portfolio Manager; Age: 46
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager; an officer of other Oppenheimer
funds, formerly a Vice President and Senior Portfolio Manager at
First of America Investment Corp.
Diane L. Sobin, Vice President and Portfolio Manager; Age: 34
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager; an officer of other Oppenheimer
funds; formerly a Vice President and Senior Portfolio Manager for
Dean Witter Inter Capital, Inc.
Robert G. Zack, Assistant Secretary; Age: 47
Two World Trade Center, New York, New York 10048-0203
Senior Vice President and Associate General Counsel of the Manager,
Assistant Secretary of SSI and SFSI; an officer of other
Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer; Age: 37
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other Oppenheimer funds; formerly a Fund Controller for
the Manager, prior to which he was an Accountant for Yale &
Seffinger, P.C., an accounting firm, and previously an Accountant
and Commissions Supervisor for Stuart James Company Inc., a
broker-dealer.
Scott Farrar, Assistant Treasurer; Age: 30
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other Oppenheimer funds; formerly a Fund Controller for
the Manager, prior to which he was an International Mutual Fund
Supervisor for Brown Brothers Harriman & Co., a bank, and
previously a Senior Fund Accountant for State Street Bank & Trust
Company.
- --------------
*A Director who is an "interested person" of the Fund 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 Messrs. Fossel and Swain; Ms.
Macaskill and Mr. Swain are also officers) receive no salary or fee from the
Fund. The Directors of the Fund (excluding Ms. Macaskill and Messrs. Fossel
and Swain) received the total amounts shown below (i) from the Fund,
during its fiscal year ended December 31, 1995, and (ii) from all
of the Denver-based Oppenheimer funds (including the Fund) listed
in the first paragraph of this section (and from Oppenheimer
Strategic Investment Grade Bond Fund and Oppenheimer Strategic
Short-Term Income Fund, which ceased operation following the
acquisition of their assets by certain other Oppenheimer funds),
for services in the positions shown:
<TABLE>
<CAPTION>
Total Compensation
Aggregate From All
Compensation Denver-based
Name and Position from Fund Oppenheimer funds1
<S> <C> <C>
Robert G. Avis $4,080 $53,000.00
Trustee
William A. Baker $5,639 $73,254.66
Audit and Review
Committee Chairman
and Trustee
Charles Conrad, Jr. $4,951 $64,309.17
Audit and Review
Committee Member
and Trustee
Raymond J. Kalinowski $5,004 $65,000.00
Derivative Instruments
Oversight Committee Member
and Trustee
C. Howard Kast $5,004 $65,000.00
Derivative Instruments
Oversight Committee Member
and Trustee
Robert M. Kirchner $5,257 $68,292.00
Audit and Review
Committee Member
and Trustee
Ned M. Steel $4,080 $53,000.00
Trustee
- -------------
1 For the 1995 calendar year.
</TABLE>
-- Major Shareholders. As of March 1, 1996, no person owned
of record or was known by the Fund to own beneficially 5% or more
of the outstanding shares of the Fund as a whole or of the Fund's
outstanding Class A, Class B or Class C shares. As of that same
date the only person who owned of record or was known by the Fund
to own beneficially 5% or more of the Fund's outstanding Y shares
was Massachusetts Mutual Life Insurance Company Separate Investment
Account No. 1, 1295 State Street, Springfield, Massachusetts 01111,
which owned 536,259.926 Class Y shares (representing 100% of the
Class Y shares then outstanding). Massachusetts Mutual Life
Insurance Company's affiliation with the Manager is described
below.
The Manager and Its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled
by Massachusetts Mutual Life Insurance Company. OAC is also owned
in part by certain of the Manager's directors and officers, some of
whom also serve as officers of the Fund, and three of whom (Ms.
Macaskill and Messrs. Swain and Fossel) serve as Directors of the
Fund.
The Manager and the Fund have a Code of Ethics. It is
designed to detect and prevent improper personal trading by certain
employees, including portfolio managers, that would compete with or
take advantage of the Fund's portfolio transactions. Compliance
with the Code of Ethics is carefully monitored and strictly
enforced by the Manager.
-- The Investment Advisory Agreement. The investment
advisory agreement between the Manager and the Fund requires the
Manager, at its expense, to provide the Fund with adequate office
space, facilities and equipment, and to provide and supervise the
activities of all administrative and clerical personnel required to
provide effective corporate administration for the Fund, including
the compilation and maintenance of records with respect to its
operations, the preparation and filing of specified reports, and
composition of proxy materials and registration statements for
continuous public sale of shares of the Fund.
Expenses not expressly assumed by the Manager under the
advisory agreement or by the Distributor under the General
Distributor's Agreement are paid by the Fund. The advisory
agreement lists examples of expenses paid by the Fund, the major
categories of which relate to interest, taxes, brokerage
commissions, fees to certain Directors, legal and audit expenses,
custodian and transfer agent expenses, share issuance costs,
certain printing and registration costs and non-recurring expenses,
including litigation costs. For the Fund's fiscal years ended
December 31, 1993,1994 and 1995 the management fees paid by the
Fund to the Manager were $6,012,518, $8,860,284 and $10,289,397
respectively.
The advisory agreement contains no expense limitation.
However, independently of the advisory agreement, the Manager has
voluntarily undertaken that the total expenses of the Fund in any
fiscal year (including the management fee but excluding taxes,
interest, brokerage commissions, distribution assistance payments
and extraordinary expenses such as litigation costs) shall not
exceed the most stringent expense limitation imposed under state
law applicable to the Fund. Pursuant to the undertaking, the
Manager's fee will be reduced at the end of a month so that there
will not be any accrued but unpaid liability under this
undertaking. At present, the most stringent state expense
limitation is imposed by California, and limits the Fund's expenses
(with specified exclusions) to 2.5% of the first $30 million of
average annual net assets, 2% of the next $70 million of average
annual net assets, and 1.5% of average annual net assets in excess
of $100 million. The Manager reserves the right to terminate or
amend the undertaking at any time. Any assumption of the Fund's
expenses under this limitation would lower the Fund's overall
expense ratio and increase its total return during any period in
which expenses are limited.
The advisory agreement provides that so long as it shall have
acted with due care and in good faith, the Manager shall not be
liable for any loss sustained by reason of any investment, the
adoption of any investment policy, or the purchase, sale or
retention of any security irrespective of whether the
determinations of the Manager relative thereto shall have been
based, wholly or partly, upon the investigation or research of any
other individual, firm or corporation believed by it to be
reliable. The advisory agreement shall not, however, be construed
to protect the Manager against any liability to the Fund or its
shareholders by reasons of willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of its
reckless disregard of its obligations and duties under the advisory
agreement, or against any liability imposed by law.
-- The Distributor. Under its General Distributor's
Agreement with the Fund, the Distributor acts as the Fund's
principal underwriter in the continuous public offering of the
Fund's Class A, Class B, Class C and Class Y shares but is not
obligated to sell a specific number of shares. Expenses normally
attributable to sales are borne by the Distributor. During the
Fund's fiscal year ended December 31, 1993, 1994 and 1995, the
aggregate amounts of sales charges on sales of the Fund's Class A
shares were $9,787,762, $8,832,144 and $4,061,349, respectively, of
which the Distributor and an affiliated broker retained $3,438,923,
$2,726,018 and $1,236,003, in those respective periods. During the
Fund's fiscal year ended December 31, 1994 and 1995, the contingent
deferred sales charges on the Fund's Class B shares totalled
$731,799 and $1,488,860, all of which the Distributor retained.
During the fiscal year-end 1995 the contingent deferred sales
charges on Class C shares was $20. For additional information about
distribution of the Fund's shares and the payments made by the Fund
to the Distributor in connection with such activities, please refer
to "Distribution and Service Plans," below.
-- The Transfer Agent. OppenheimerFunds Services, the Fund's
Transfer Agent, is responsible for maintaining the Fund's
shareholder registry and shareholder accounting records, and for
shareholder servicing and administrative functions.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of
the duties of the Manager under the advisory agreement is to
arrange the portfolio transactions for the Fund. The advisory
agreement contains provisions relating to the employment of broker-
dealers ("brokers") to effect the Fund's portfolio transactions.
In doing so, the Manager is authorized by the advisory agreement to
employ 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 be aware of the current rates
of eligible brokers and to minimize the commissions paid to the
extent consistent with the interest and policies of the Fund as
established by its Board of Directors. Purchases of securities
from underwriters include a commission or concession paid by the
issuer to the underwriter, and purchases from dealers include a
spread between the bid and asked price.
Under the advisory agreement, the Manager is authorized to
select brokers that provide brokerage and/or research services for
the Fund and/or the other accounts over which the Manager or its
affiliates have investment discretion. The commissions paid to
such brokers may be higher than another qualified broker would have
charged if a good faith determination is made by the Manager that
the commission is fair and reasonable in relation to the services
provided. Subject to the foregoing considerations, the Manager may
also consider sales of shares of the Fund and other investment
companies managed by the Manager or its affiliates as a factor in
the selection of brokers for the Fund's portfolio transactions.
Description of Brokerage Practices Followed by the Manager.
Subject to the provisions of the advisory agreement, and the
procedures and rules described above, allocations of brokerage are
generally made by the Manager's portfolio traders based upon
recommendations from the Manager's portfolio managers. In certain
instances, portfolio managers may directly place trades and
allocate brokerage, also subject to the provisions of the advisory
agreement and the procedures and rules described above. In either
case, brokerage is allocated under the supervision of the Manager's
executive officers. Transactions in securities other than those
for which an exchange is the primary market are generally done with
principals or market makers. Brokerage commissions are paid
primarily for effecting transactions in listed securities or for
certain fixed-income agency transactions in the secondary market,
and are otherwise paid 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 or its affiliates are combined.
The transactions effected pursuant to such combined orders are
averaged as to price and allocated in accordance with the purchase
or sale orders actually placed for each account.
Most purchases of money market instruments and debt
obligations are principal transactions at net prices. Instead of
using a broker for those transactions, the Fund normally deals
directly with the selling or purchasing principal or market maker
unless it determines that a better price or execution can be
obtained by using a broker. Purchases of these securities from
underwriters include a commission or concession paid by the issuer
to the underwriter. Purchases from dealers include a spread
between the bid and asked prices. The Fund seeks to obtain prompt
execution of these orders at the most favorable net price.
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 permits the Manager
to use concessions on fixed price offerings to obtain research in
the same manner as is permitted for agency transactions. The Board
also permits the Manager to use stated commissions on secondary
fixed-income agency trades to obtain research where the broker has
represented to Manager that: (i) the trade is not from or for the
broker's own inventory, (ii) the trade was executed by the broker
on an agency basis at the stated commission, and (iii) the trade is
not a riskless principal transaction.
The research services provided by brokers broaden the scope
and supplement the research activities of the Manager, by making
available additional views for consideration and comparisons, and
by enabling the Manager to obtain market information for the
valuation of securities held in the Fund's portfolio or being
considered for purchase. The Board of 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
Plans described below) annually reviews information furnished by
the Manager as to the commissions paid to brokers furnishing such
services so that the Board may ascertain whether the amount of such
commissions was reasonably related to the value or benefit of such
services.
During the Fund's fiscal years ended December 31, 1993, 1994
and 1995, total brokerage commissions paid by the Fund were
$4,581,702, $10,116,822 and $8,172,905, respectively. During the
fiscal year ended December 31, 1995, $841,921 was paid to brokers
as commissions in return for research services; the aggregate
dollar amount of those transactions was $487,780,655. The
transactions giving rise to those commissions were allocated in
accordance with the Manager's internal allocation procedures.
Performance of the Fund
Yield and Total Return Information. As described in the
Prospectus, from time to time the "dividend yield," "average annual
total return," "cumulative total return," "average annual total
return at net asset value" and "cumulative total return at net
asset value" of an investment in a class of shares of the Fund may
be advertised. An explanation of how these total returns are
calculated for each class and the components of those calculations
is set forth below.
The Fund's advertisements of its performance data must, under
applicable rules of the Securities and Exchange Commission, include
the average annual total returns for each class of shares of the
Fund for the 1, 5, and 10-year periods (or the life of the class,
if less) ending as of the most recently-ended calendar quarter
prior to the publication of the advertisement. This enables an
investor to compare the Fund's performance to the performance of
other funds for the same periods. However, a number of factors
should be considered before using such information as a basis for
comparison with other investments. An investment in the Fund is not
insured; its returns and share prices are not guaranteed and
normally will fluctuate on a daily basis. When redeemed, an
investor's shares may be worth more or less than their original
cost. Returns for any given past period are not a prediction or
representation by the Fund of future returns. The returns of each
class of shares of the Fund are affected by portfolio quality, the
type of investments the Fund holds and its operating expenses
allocated to the particular class.
-- Dividend Yield and Distribution Return. From time to time
the Fund may quote a "dividend yield" or a "distribution return"
for each class. Dividend yield is based on the dividends paid on
shares of a class from net investment income during a stated
period. Distribution return includes dividends derived from net
investment income and from realized capital gains declared during
a stated period. Under those calculations, the dividends and/or
distributions for that class declared during a stated period of one
year or less (for example, 30 days) are added together, and the sum
is divided by the maximum offering price per share of that class on
the last day of the period. When the result is annualized for a
period of less than one year, the "dividend yield" is calculated as
follows:
Dividend Yield of the Class =
Dividends of the Class
-----------------------------------------------------
Max. Offering Price of the Class (last day of period)
divided by Number of days (accrual period) x 365
The maximum offering price for Class A shares includes the
maximum front-end sales charge. For Class B or Class C shares, the
maximum offering price is the net asset value per share without
considering the effect of contingent deferred sales charges.
-- Total Return Information.
- Average Annual Total Returns. The "average annual total
return" of each class is an average annual compounded rate of
return for each year in a specified number of years. It is the
rate of return based on the change in value of a hypothetical
initial investment of $1,000 ("P" in the formula below) held for a
number of years ("n") to achieve an Ending Redeemable Value ("ERV")
of that investment, according to the following formula:
1/n
(ERV)
(---) -1 = Average Annual Total Return
( P )
- Cumulative Total Returns. The cumulative "total return"
calculation measures the change in value of a hypothetical
investment of $1,000 over an entire period of years. Its
calculation uses some of the same factors as average annual total
return but it does not average the rate of return on an annual
basis. Cumulative total return is determined as follows:
ERV - P
------- = Total Return
P
In calculating total returns for Class A shares, the current
maximum sales charge of 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 described below). For Class
B shares, payment of a contingent deferred sales charge of 5.0% for
the first year, 4.0% for the second year, 3.0% for the third and
fourth years, 2.0% for the fifth year and 1.0% for the sixth year,
and none thereafter, is applied, as described in the Prospectus.
For Class C shares, the payment of 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 by 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 for the one, five and
ten-year periods ended December 31, 1995 were 22.64 % 16.06%; and
13.92%, respectively. The average annual total returns on an
investment in Class B shares for the fiscal year ended December 31,
1995, and for the period May 1, 1993 (inception of the class) to
December 31, 1995 were 24.03% and 10.74%, respectively. The
average annual total return on an investment in Class C shares for
the period August 29, 1995 (inception of the class) to December 31,
1995 was 7.82%. The cumulative total return on Class A shares for
the ten-year period ended December 31, 1995, was 268.06%. The
cumulative total return on Class B shares for the period May 19,
1993 through December 31, 1995 was 31.27%. The cumulative total
return on Class C shares for the period August 29, 1995 through
December 31, 1995 was 7.82%.
-- Total Returns At Net Asset Value. From time to time the
Fund may also quote an average annual total return at net asset
value or a cumulative total return at net asset value for Class A,
Class B, Class C or Class Y shares. Each is based on the
difference in net asset value per share at the beginning and the
end of the period for a hypothetical investment in that class of
shares (without considering front-end or contingent deferred sales
charges) and takes into consideration the reinvestment of dividends
and capital gains distributions. The cumulative total return at
net asset value on the Fund's Class A shares for the ten-year
period ended December 31, 1995, was 290.52%. The average annual
total return at net asset value for the period September 30, 1975
to December 31, 1995, for Class A shares was 13.02%. The average
annual total returns at net asset value for Class B shares for the
fiscal year ended December 31, 1995 and for the period May 1, 1993
(inception of that class) to December 31, 1995 were 29.03% and
11.68%, respectively. Average annual total return for Class C at
net asset value for the period August 29, 1995 (inception of the
class) to December 31, 1995 was 8.82% and cumulative total return
at net asset value was 8.82%. The cumulative total return for
Class Y shares from June 1, 1994 (commencement of offering) to
December 31, 1995 was 26.13%.
Total return information may be useful to investors in
reviewing the performance of the Fund's Class A, Class B, Class C
or Class Y shares. However, when comparing total return of an
investment in shares of the Fund, a number of factors should be
considered before using such information as a basis for comparison
with other investments. No adjustment is made for taxes payable on
distributions. An investment in the Fund's shares is not insured;
its total return is not guaranteed and will fluctuate on a daily
basis. Total return for any given past period is not an indication
or representation by the Fund of future rates of return on its
shares. The total return of the Fund's shares is affected by
portfolio quality, portfolio maturity, type of investments held and
operating expenses. When comparing total return of an investment
in shares of the Fund with that of other investment instruments,
investors should understand that certain other investment
alternatives such as money market instruments, certificates of
deposit, U.S. Government securities or bank accounts provide a
return which remains relatively constant over time and also that
bank accounts may be insured. Investors should also understand,
when comparing the Fund's total return with that of other
investment alternatives, that since the Fund is an equity fund
seeking capital appreciation, its shares are subject to greater
market risks than certain other investments. The current price per
share for certain classes is listed daily in newspaper financial
sections.
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
performance of the Fund's classes are ranked against (i) all other
funds, (ii) all other "growth and income" funds, and (iii) all
other growth and income funds in a specific size category. 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. The Fund may also compare its performance from time
to time with that of Morgan Stanley Capital International index, a
capitalization-weighted index which is widely utilized as a measure
of world-wide stock market performance.
From time to time the Fund may publish the 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,
that ranks mutual funds, including the Fund, monthly in broad
investment categories (equity, taxable bond, municipal bond and
hybrid) based on risk-adjusted investment return. Investment
return measures a fund's three, five and ten-year average annual
total returns (when available) in excess of 90-day U.S. Treasury
bill returns after considering sales charges and expenses. Risk
measures fund performance below 90-day U.S. Treasury bill monthly
returns. Risk and return are combined to produce star rankings
reflecting performance relative to the average fund in a fund's
category. Five stars is the "highest" ranking (top 10%), four
stars is "above average" (next 22.5%), three stars is "average"
(next 35%), two stars is "below average" (next 22.5%) and one star
is "lowest" (bottom 10%). Morningstar ranks the Class A and Class
B shares of the Fund in relation to other equity funds and includes
the maximum sales charge as a factor in its ranking computations.
Rankings are subject to change.
The total return on an investment in the Fund's Class A,
Class B, Class C or Class Y shares may be compared with the
performance for the same period of one or more of the following
indices: the Dow Jones Industrial Average ("Dow") or the Standard
& Poor's 500 Index ("S&P 500"), both of which are widely recognized
indices of stock market performance. Both indices consist of
unmanaged groups of common stocks; the Dow consists of thirty such
issues. The performance of both indices includes a factor for the
reinvestment of income dividends. Neither index reflects
reinvestment of capital gains or takes sales charges or taxes into
consideration as these items are not applicable to indices. The
performance of the Fund s Class A, Class B, Class C or Class Y
shares may also be compared in publications to (i) the performance
of various market indices or to other investments for which
reliable performance data is available, and (ii) to averages,
performance rankings or others benchmarks prepared by recognized
mutual fund statistical services.
From time to time, the Fund's Manager may publish rankings or
ratings of the Manager or Transfer Agent or the investor services
provided by them to shareholders of the Oppenheimer funds, other
than performance rankings of the Oppenheimer funds themselves.
Those ratings or rankings of shareholder/investor services by third
parties may compare the 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, based on its research or judgment, or based
upon surveys of investors, brokers, shareholders or others.
Distribution and Service Plans
The Fund has adopted a Service Plan for Class A shares and
Distribution and Service Plans for Class B and Class C shares of
the Fund under Rule 12b-1 of the Investment Company Act pursuant to
which the Fund makes payments to the Distributor in connection with
the distribution and/or servicing of the shares of that class, as
described in the Prospectus. No such plan has been adopted for
Class Y shares. Each Plan has been approved by a vote of (i) the
Board of Directors of the Fund, 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 Plan for Class C
shares, that vote was 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 from their
own resources to Recipients.
Unless terminated as described below, each Plan continues in
effect from year to year but only as long as its continuance is
specifically approved at least annually by the Fund's Board of
Directors and its Independent Directors by a vote cast in person at
a meeting called for the purpose of voting on such continuance. A
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. None of the Plans 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 the 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 Independent Directors.
While the Plans are in effect, the Treasurer of the Fund
shall provide separate written reports to the Fund's Board of
Directors at least quarterly on the amount of all payments made
pursuant to each Plan, the purpose for which each payment was made
and the services rendered in connection with the distribution of
shares. Those reports 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 of the Fund who are not
"interested persons" of the Fund is 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
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 Fund shares
held by the Recipient for itself and its customers did not exceed
a minimum amount, if any, that may be determined from time to time
by a majority of the Fund's Independent Directors. Initially, the
Board of Directors has set the fees at the maximum rate and set no
minimum amount.
For the fiscal year ended December 31, 1995, payments under
the Plan for Class A shares totaled $2,439,398, all of which was
paid by the Distributor to Recipients including $176,017 that 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 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 allows the service fee payment
to be paid by the Distributor to Recipients in advance for the
first year such shares are outstanding, and thereafter on a
quarterly basis, as described in the Prospectus. The advance
payment is based on the net asset value of shares sold. An
exchange of shares does not entitle the Recipient to an advance
service fee payment. In the event shares are redeemed during the
first year such shares are outstanding, the Recipient will be
obligated to repay a pro rata portion of such advance payment to
the Distributor. Payments made under the Class B Plan during the
fiscal year ended December 31, 1995 totalled $5,101,553, of which
$4,233,886 was retained by the Distributor and $52,749 was paid to
a dealer affiliated with the Distributor. For the period August
29, 1995 to December 31, 1995 payments made under the Class C plan
amounted to $2,582, of which $2,325 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 fees on such shares, or to pay Recipients the service fee
on a quarterly basis without payment in advance, the Distributor
presently intends to pay the service fee to Recipients in the
manner described above. A minimum holding period may be
established from time to time under the Class B and the Class C
Plan by the Board. Initially, the Board has set no minimum holding
period. All payments under the Class B 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. on payments of
asset-based sales charges and service fees.
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 or less 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 and pays service fees as
described in the Prospectus, (ii) may finance such commissions
and/or the advance of the service fee payment to Recipients under
those Plans, or may provide such financing from its own resources
or from an affiliate, (iii) employs personnel to support
distribution of shares, and (iv) may bear the costs of sales
literature, advertising and prospectuses (other than those
furnished to current shareholders) and state "blue sky"
registration fees and certain other distribution expenses. For the
fiscal year ended December 31, 1995, the Distributor has incurred
unreimbursed expenses under the Class B Plan of $29,515 (equal to
1.07% of the Fund's net asset represented by Class B shares on that
date) and under the Class C Plan of $90,387 (equal to 1.25% of the Fund's net
asset represented by Class B shares on that date)
About Your Account
How To Buy Shares
Alternative Sales Arrangements - Class A, Class B and Class C
Shares. The availability of three classes of shares to individual
investors 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 generally not accept any
order of $500,000 or more of Class B shares or $1 million or more
of Class C shares on behalf of a single investor (not including
dealer "street name" or omnibus accounts) because generally it will
be more advantageous for that investor to purchase Class A shares
of the Fund instead. A fourth class of shares, may be purchased
only by certain institutional investors at net asset value per
share (the "Class Y Shares").
The four classes of shares each represent an interest in the
same portfolio investments of the Fund. However, each class has
different shareholder privileges and features. The net income
attributable to Class B and Class C shares and the dividends
payable on Class B and Class C shares will be reduced by
incremental expenses borne solely by that class, including the
asset-based sales charges 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
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 that the Exchange is open, by dividing
the value of the Fund's net assets attributable to that class by
the number of shares of that class outstanding. The Exchange
normally closes at 4:00 P.M., New York time, but may close earlier
on some days (for example, in case of weather emergencies or on
days falling before a holiday). The Exchange's most recent annual
holiday schedule (which is subject to change) states that it will
close on New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day. It may also close on other days. Trading may occur in debt
securities and in foreign securities when the Exchange is closed
(including weekends and holidays). Because the Fund's net asset
value will not be calculated at those 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 at times when shareholders may
not 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 NASDAQ
for which last sale information is regularly reported are valued at
the last reported sale price on their primary exchange or NASDAQ
that day (or, in the absence of sales that day, at values based on
the last sales prices of the preceding trading day, or closing bid
and asked prices); (ii) securities actively traded on a foreign
securities exchange are valued at the last sales price available to
the pricing service approved by the Fund's Board of Directors or to
the Manager as reported by the principal exchange on which the
security is traded; (iii) unlisted foreign securities or listed
foreign securities not actively traded are valued as in (i) above,
if available, or at the mean between "bid" and "asked" prices
obtained from active market makers in the security on the basis of
reasonable inquiry; (iv) long-term debt securities having a
remaining maturity in excess of 60 days are valued at the mean
between the "bid" and "asked" prices determined by a portfolio
pricing service approved by the Fund's Board of Directors or
obtained from active market makers in the security on the basis of
reasonable inquiry; (v) debt instruments having a maturity of more
than one year when issued, and non-money market type instruments
having a maturity of one year or less when issued, which have a
remaining maturity of 60 days or less are valued at the mean
between the "bid" and "asked" prices determined by a pricing
service approved by the Fund's Board of Directors or obtained from
active market makers in the security on the basis of reasonable
inquiry; (vi) money market-type debt securities having a maturity
of less than one year when issued that having a remaining maturity
of 60 days or less are valued at cost, adjusted for amortization of
premiums and accretion of discounts; and (vii) securities
(including restricted securities) not having readily-available
market quotations are valued at fair value under the Board's
procedures.
Trading in securities on European and Asian exchanges and
over-the-counter markets is normally completed before the close of
the New York Stock Exchange. Events affecting the values of
foreign securities traded in stock markets that occur between the
time their prices are determined and the close of the Exchange will
not be reflected in the Fund s calculation of net asset value
unless the Board of Trustees or the Manager, under procedures
established by the Board of Trustees, determines that the
particular event would materially affect the Fund s net asset
value, in which case an adjustment would be made, if necessary.
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. Foreign
securities priced in a foreign currency as well as foreign currency
reflect prevailing rates of exchange and have their value converted
to U.S. dollars at the closing price in the London foreign exchange
market as provided by a reliable bank, dealer or pricing service.
In the case of U.S. Government Securities, mortgage-backed
securities and corporate bonds, when last sale information is not
generally available, such pricing procedures may include "matrix"
comparisons to the prices for comparable instruments on the basis
of quality, yield, maturity, and other special factors involved.
The Fund's Board of Directors has authorized the Manager to employ
a pricing service to price U.S. Government Securities, mortgage-
backed securities, and foreign government and corporate bonds. The
Directors will monitor the accuracy of such pricing services by
comparing prices used for portfolio evaluation to actual sales
prices of selected securities.
Puts, calls and Futures held by the Fund are valued at the
last sales price on the principal exchange on which they are
traded, or on NASDAQ, as applicable as determined by a pricing
service approved by the Board of Directors or by the Manager, or,
if there are no sales that day, in accordance with (i), above.
Forward currency contracts are valued at the closing price on the
London foreign exchange market as provided by a reliable bank,
dealer or pricing service. When the Fund writes an option, an
amount equal to the premium received by the Fund is included in the
Fund's Statement of Assets and Liabilities as an asset, and an
equivalent deferred credit is included in the liability section.
The deferred credit is adjusted ("marked-to-market") to reflect the
current market value of the option. In determining the Fund's gain
on investments, if a call written by the Fund is exercised, the
proceeds are increased by the premium received. If a call or put
written by the Fund expires, the Fund has a gain in the amount of
the premium; if the Fund enters into a closing purchase
transaction, it will have a gain or loss depending on whether the
premium was more or less than the cost of the closing transaction.
If the Fund exercises a put it holds, the amount the Fund receives
on its sale of the underlying investment is reduced by the amount
of premium paid by the Fund.
AccountLink. When shares are purchased through AccountLink, each
purchase must be at least $25.00. Shares will be purchased on the
regular business day the Distributor is instructed to initiate the
Automated Clearing House transfer to buy shares. Dividends will
begin to accrue on shares purchased by the proceeds of ACH
transfers on the business day the Fund receives Federal Funds for
the purchase through the ACH system before the close of The New
York Stock Exchange. The Exchange normally closes at 4:00 P.M.,
but may close earlier on certain days. If Federal Funds are
received after the close of the Exchange, the shares will be
purchased and dividends will begin to accrue on the next regular
business day. The proceeds of ACH transfers are normally received
by the Fund 3 days after the transfers are initiated. The
Distributor and the Fund are not responsible for any delays in
purchasing shares resulting from delays in ACH transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced
sales charge rate may be obtained for Class A shares under Right of
Accumulation and Letters of Intent because of the economies of
sales efforts and expenses realized by the Distributor, dealers and
brokers making such sales. No sales charge is imposed in certain
circumstances described in the Prospectus because the Distributor
or dealer or broker incurs little or no selling expenses. The term
"immediate family" refers to one's spouse, children, grandchildren,
grandparents, parents, parents-in-law, sons- and daughters-in-law,
siblings, a sibling's spouse and a spouse's siblings.
-- The Oppenheimer Funds. The Oppenheimer funds are those
mutual funds for which the Distributor acts as the distributor or
the sub-distributor and include the following:
Oppenheimer Tax-Free Bond Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Fund
Oppenheimer Insured Tax-Exempt Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion Income Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Enterprise Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Bond Fund
Oppenheimer International Bond Fund
Oppenheimer International Growth Fund
Oppenheimer Bond Fund for Growth
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer Quest Officers Value Fund
Rochester Fund Municipals
Rochester Portfolio Series-Limited-Term New York Municipal Fund
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
There is an initial sales charge on the purchase of Class A
shares of each of the Oppenheimer funds except Money Market Funds
(under certain circumstances described herein, redemption proceeds
of Money Market Fund shares may be subject to a contingent
deferred sales charge). Current shareholders of Rochester Fund
Municipals, The Bond Fund for Growth or Limited-Term New York
Municipal Fund (collectively referred to as the "Rochester Funds")
may exchange their shares for the same class of shares in any of
the Oppenheimer funds listed above. However, no exchange of shares
of any of Oppenheimer funds for shares of any Rochester fund is
currently permitted.
-- 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 or Class A and Class B
shares of the Fund (and other Oppenheimer funds) during a 13-month
period (the "Letter of Intend period"), which may, at the
investor's request, include purchases made up to 90 days prior to
the date of the Letter. The Letter states the investor's intention
to make the aggregate amount of purchases of shares which, when
added to the investor's holdings of shares of those funds, will
equal or exceed the amount specified in the Letter. Purchases made
by reinvestment of dividends or distributions of capital gains and
purchases made at net asset value without sales charge do not count
toward satisfying the amount of the Letter. A Letter enables an
investor to count the Class A and Class B shares purchased under
the Letter to obtain the reduced sales charge rate on purchases of
Class A shares of the Fund (and other Oppenheimer funds) that
applies under the Right of Accumulation to current purchases of
Class A shares. Each purchase of Class A shares under the Letter
will be made at the public offering price (including the sales
charge) that applies to a single lump-sum purchase of shares in the
amount intended to be purchased under the Letter.
In submitting a Letter, the investor makes no commitment to
purchase shares, but if the investor's purchases of shares within
the Letter of Intent period, when added to the value (at offering
price) of the investor's holdings of shares on the last day of that
period, do not equal or exceed the intended purchase amount, the
investor agrees to pay the additional amount of sales charge
applicable to such purchases, as set forth in "Terms of Escrow,"
below (as those terms may be amended from time to time). The
investor agrees that shares equal in value to 5% of the intended
purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be
bound by the terms of the Prospectus, this Statement of Additional
Information and the Application used for such Letter of Intent, and
if such terms are amended, as they may be from time to time by the
Fund, that those amendments will apply automatically to existing
Letters of Intent.
For purchases of shares of the Fund and other Oppenheimer
funds by OppenheimerFunds prototype 401(k) plans under a Letter of
Intent, the Transfer Agent will not hold shares in escrow. If the
intended purchase amount under the Letter entered into by an
Oppenheimer funds prototype 401(k) plan is not purchased by the
plan by the end of the Letter of Intent period, there will be no
adjustment of commissions paid to the broker-dealer or financial
institution of record for accounts held in the name of that plan.
If the total eligible purchases made during the Letter of
Intent period do not equal or exceed the intended purchase amount,
the commissions previously paid to the dealer of record for the
account and the amount of sales charge retained by the Distributor
will be adjusted to the rates applicable to actual purchases. If
total eligible purchases during the Letter of Intent period exceed
the intended purchase amount and exceed the amount needed to
qualify for the next sales charge rate reduction set forth in the
applicable prospectus, the sales charges paid will be adjusted to
the lower rate, but only if and when the dealer returns to the
Distributor the excess of the amount of commissions allowed or paid
to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the
Distributor will be used to purchase additional shares for the
investor's account at the net asset value per share in effect on
the date of such purchase, promptly after the Distributor's receipt
thereof.
In determining the total amount of purchases made under a
Letter, shares redeemed by the investor prior to the termination of
the Letter of Intent period will be deducted. It is the
responsibility of the dealer of record and/or the investor to
advise the Distributor about the Letter in placing any purchase
orders for the investor during the Letter of Intent period. All of
such purchases must be made through the Distributor.
- Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in
value up to 5% of the intended purchase amount specified in the
Letter shall be held in escrow by the Transfer Agent. For example,
if the intended purchase amount is $50,000, the escrow shall be
shares valued in the amount of $2,500 (computed at the public
offering price adjusted for a $50,000 purchase). Any dividends and
capital gains distributions on the escrowed shares will be credited
to the investor's account.
2. If the intended purchase amount specified under the
Letter is completed within the thirteen-month Letter of Intent
period, the escrowed shares will be promptly released to the
investor.
3. If, at the end of the thirteen-month Letter of Intent
period the total purchases pursuant to the Letter are less than the
intended purchase amount specified in the Letter, the investor must
remit to the Distributor an amount equal to the difference between
the dollar amount of sales charges actually paid and the amount of
sales charges which would have been paid if the total amount
purchased had been made at a single time. Such sales charge
adjustment will apply to any shares redeemed prior to the
completion of the Letter. If such difference in sales charges is
not paid within twenty days after a request from the Distributor or
the dealer, the Distributor will, within sixty days of the
expiration of the Letter, redeem the number of escrowed shares
necessary to realize such difference in sales charges. Full and
fractional shares remaining after such redemption will be released
from escrow. If a request is received to redeem escrowed shares
prior to the payment of such additional sales charge, the sales
charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably
constitutes and appoints the Transfer Agent as attorney-in-fact to
surrender for redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the
holding of which may be counted toward completion of a Letter)
include (a) Class A shares sold with a front-end sales charge or
subject to a Class A contingent deferred sales charge, (b) Class B
shares acquired subject to a contingent deferred sales charge, and
(c) Class A or 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 "Shareholder Account
Rules and Policies," in the Prospectus. Asset Builder Plans also
enable shareholders of Oppenheimer Cash Reserves to use those
accounts for monthly automatic purchases of shares of up to four
other Oppenheimer funds.
There is a front-end sales charge on the purchase of certain
Oppenheimer funds, or a contingent deferred sales charge may apply
to shares purchased by Asset Builder payments. An application
should be obtained from the Distributor, completed and returned,
and a prospectus of the selected fund(s) should be obtained from
the Distributor or your financial advisor before initiating Asset
Builder payments. The amount of the Asset Builder investment may
be changed or the automatic investments may be terminated at any
time by writing to the Transfer Agent. A reasonable period
(approximately 15 days) is required after the Transfer Agent's
receipt of such instructions to implement them. The Fund reserves
the right to amend, suspend, or discontinue offering such plans at
any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders
for the Fund's shares (for example, when a purchase check is
returned to the Fund unpaid) causes a loss to be incurred when the
net asset value of the Fund's shares on the cancellation date is
less than on the purchase date. That loss is equal to the amount
of the decline in the net asset value per share multiplied by the
number of shares in the purchase order. The investor is
responsible for that loss. If the investor fails to compensate the
Fund for the loss, the Distributor will do so. The Fund may
reimburse the Distributor for that amount by redeeming shares from
any account registered in that investor's name, or the Fund or the
Distributor may seek other redress.
How To Sell Shares
Information on how to sell shares of the Fund is stated in
the Prospectus. The information below supplements the terms and
conditions for redemptions set forth in the Prospectus.
-- 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 aggregate net asset value of those
shares is less than $500 or such lesser amount as the Board may
fix. The Board of Directors will not cause the involuntary
redemption of shares in an account if the aggregate net asset value
of the shares has fallen below the stated minimum solely as a
result of market fluctuations. Should the Board elect to exercise
this right, it may also fix, in accordance with the Investment
Company Act, and the provisions of Maryland law, 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.
-- Payments "In Kind". The Prospectus states that payment
for shares tendered for redemption is ordinarily made in cash.
However, the Board of Directors of the Fund may determine that it
would be detrimental to the best interests of the remaining
shareholders of the Fund to make payment of a redemption order
wholly or partly in cash. In that case the Fund may pay the
redemption proceeds in whole or in part by a distribution "in kind"
of securities from the portfolio of the Fund, in lieu of cash, in
conformity with applicable rules of the Securities and Exchange
Commission. The Fund has elected to be governed by Rule 18f-1
under the Investment Company Act, pursuant to which the Fund is
obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net assets of the Fund during any 90-day
period for any one shareholder. If shares are redeemed in kind,
the redeeming shareholder might incur brokerage or other costs in
selling the securities for cash. The method of valuing securities
used to make redemptions in kind will be the same as the method the
Fund uses to value its portfolio securities described above under
"Determination of Net Asset Values Per Share" and that valuation
will be made as of the time the redemption price is determined.
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 (ii) Class B shares on which you paid a contingent
deferred sales charge when you redeemed them. It 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.
Transfer of Shares. Shares are not subject to the payment of a
contingent deferred sales charge at the time of transfer to the
name of another person or entity (whether the transfer occurs by
absolute assignment, gift or bequest, not involving, directly or
indirectly, a public sale). The transferred shares will remain
subject to the contingent deferred sales charge, calculated as if
the transferee shareholder had acquired the transferred shares in
the same manner and at the same time as the transferring
shareholder. If less than all shares held in an account are
transferred, and some but not all shares in the account would be
subject to a contingent deferred sales charge if redeemed at the
time of transfer, the priorities described in the Prospectus under
"How to Buy Shares" for the imposition of the Class B or the 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
Prospectus or on the back cover of this Statement of Additional
Information. The request must: (i) state the reason for the
distribution; (ii) state the owner's awareness of tax penalties if
the distribution is premature; and (iii) conform to the
requirements of the plan and the Fund's other redemption
requirements. Participants (other than self-employed persons
maintaining a plan account in their own name) in OppenheimerFunds-
sponsored prototype pension, profit-sharing or 401(k) plans may not
directly redeem or exchange shares held for their account under
those plans. The employer 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 its
shares from authorized dealers or brokers. The repurchase price
per share will be the net asset value next computed after the
Distributor receives the order placed by the dealer or broker,
except that if the Distributor receives a repurchase order from a
dealer or broker after the close of The New York Stock Exchange on
a regular business day, it will be processed at that day's net
asset value if the order was received by the dealer or broker from
its customers prior to the time the Exchange closes (normally, that
is 4:00 P.M., but may be earlier on some days) and the order was
transmitted to and received by the Distributor prior to its close
of business that day (normally 5:00 P.M.). Ordinarily, for
accounts redeemed by a broker-dealer under this procedure, payment
will be made within three business days after the shares have been
redeemed upon the Distributor's receipt of the required redemption
documents in proper form, with the signature(s) of the registered
owners guaranteed on the redemption document as described in the
Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares
of the Fund valued at $5,000 or more can authorize the Transfer
Agent to redeem shares (minimum $50) automatically on a monthly,
quarterly, semi-annual or annual basis under an Automatic
Withdrawal Plan. Shares will be redeemed three business days prior
to the date requested by the shareholder for receipt of the
payment. Automatic withdrawals of up to $1,500 per month may be
requested by telephone if payments are to be made by check payable
to all shareholders of record and sent to the address of record for
the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on
this basis. Payments are normally made by check, but shareholders
having AccountLink privileges (see "How To Buy Shares") may arrange
to have Automatic Withdrawal Plan payments transferred to the bank
account designated on the OppenheimerFunds New Account Application
or signature-guaranteed instructions. The Fund cannot guarantee
receipt of a payment on the date requested and reserves the right
to amend, suspend or discontinue offering such plans at any time
without prior notice. Because of the sales charge assessed on
Class A share purchases, shareholders should not make regular
additional Class A share purchases while participating in an
Automatic Withdrawal Plan. Class B and Class C shareholders should
not establish withdrawal plans because of the imposition of the
contingent deferred sales charge on such withdrawals (except where
the Class B or the Class C contingent deferred sales charge is
waived as described in the Prospectus under "Waivers of Class B
Sales Charge" or in "Waivers of Class C Sales Charge").
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such
plans, as stated below and in the provisions of the
OppenheimerFunds Application relating to such Plans, as well as the
Prospectus. These provisions may be amended from time to time by
the Fund and/or the Distributor. When adopted, such amendments
will automatically apply to existing Plans.
-- Automatic Exchange Plans. Shareholders can authorize the
Transfer Agent (on the OppenheimerFunds Application or signature-
guaranteed instructions) to exchange a pre-determined amount of
shares of the Fund for shares (of the same class) of other
Oppenheimer funds automatically on a monthly, quarterly, semi-
annual or annual basis under an Automatic Exchange Plan. The
minimum amount that may be exchanged to each other fund account is
$25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "How to
Exchange Shares" in the Prospectus and below in this Statement of
Additional Information.
-- Automatic Withdrawal Plans. Fund shares will be redeemed
as necessary to meet withdrawal payments. Shares acquired without
a sales charge will be redeemed first and shares acquired with
reinvested dividends and capital gains distributions will be
redeemed next, followed by shares acquired with a sales charge, to
the extent necessary to make withdrawal payments. Depending upon
the amount withdrawn, the investor's principal may be depleted.
Payments made under withdrawal plans should not be considered as a
yield or income on your investment.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the
"Planholder") who executed the Plan authorization and application
submitted to the Transfer Agent. The Transfer Agent and the Fund
shall incur no liability to the Planholder for any action taken or
omitted by the Transfer Agent in good faith to administer the Plan.
Certificates will not be issued for shares of the Fund purchased
for and held under the Plan, but the Transfer Agent will credit all
such shares to the account of the Planholder on the records of the
Fund. Any share certificates held by a Planholder may be
surrendered unendorsed to the Transfer Agent with the Plan
application so that the shares represented by the certificate may
be held under the Plan.
For accounts subject to Automatic Withdrawal Plans,
distributions of capital gains must be reinvested in shares of the
Fund, which will be done at net asset value without a sales charge.
Dividends on shares held in the account may be paid in cash or
reinvested.
Redemptions of shares needed to make withdrawal payments will
be made at the net asset value per share determined on the
redemption date. Checks or AccountLink payments of the proceeds of
Plan withdrawals will normally be transmitted three business days
prior to the date selected for receipt of the payment (receipt of
payment on the date selected cannot be guaranteed), according to
the choice specified in writing by the Planholder.
The amount and the interval of disbursement payments and the
address to which checks are to be mailed or AccountLink payments
are to be sent may be changed at any time by the Planholder by
writing to the Transfer Agent. The Planholder should allow at
least two weeks' time in mailing such notification for the
requested change to be put in effect. The Planholder may, at any
time, instruct the Transfer Agent by written notice (in proper form
in accordance with the requirements of the then-current Prospectus
of the Fund) to redeem all, or any part of, the shares held under
the Plan. In that case, the Transfer Agent will redeem the number
of shares requested at the net asset value per share in effect in
accordance with the Fund's usual redemption procedures and will
mail a check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by
writing to the Transfer Agent. A Plan may also be terminated at
any time by the Transfer Agent upon receiving directions to that
effect from the Fund. The Transfer Agent will also terminate a
Plan upon receipt of evidence satisfactory to it of the death or
legal incapacity of the Planholder. Upon termination of a Plan by
the Transfer Agent or the Fund, shares that have not been redeemed
from the account will be held in uncertificated form in the name of
the Planholder, and the account will continue as a dividend-
reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder or his or her
executor or guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt,
the Planholder may request issuance of a portion of the shares in
certificated form. Upon written request from the Planholder, the
Transfer Agent will determine the number of shares for which a
certificate may be issued without causing the withdrawal checks to
stop because of exhaustion of uncertificated shares needed to
continue payments. However, should such uncertificated shares
become exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the
Fund, the Planholder will be deemed to have appointed any successor
transfer agent to act as agent in administering the Plan.
How To Exchange Shares
As stated in the Prospectus, shares of a particular class of
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 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
Money Market 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 other Oppenheimer funds or through
OppenheimerFunds sponsored 401(k) plans). A list showing which
funds offer which class can be obtained by calling the distribution
at 1-800-525-7048.
Class A shares of Oppenheimer funds may be exchanged at net
asset value for shares of any Money Market Fund. Shares of any
Money Market Fund purchased without a sales charge may be exchanged
for shares of Oppenheimer funds offered with a sales charge upon
payment of the sales charge (or, if applicable, may be used to
purchase shares of Oppenheimer funds subject to a contingent
deferred sales charge). However, shares of Oppenheimer Money
Market Fund, Inc. purchased with the redemption proceeds of shares
of other mutual funds (other than funds managed by the Manager or
its subsidiaries) redeemed within the 12 months prior to that
purchase may subsequently be exchanged for shares of other
Oppenheimer funds without being subject to an initial or contingent
deferred sales charge, whichever is applicable. To qualify for
that privilege, the investor or the investor's dealer must notify
the Distributor of eligibility for this privilege at the time the
shares of Oppenheimer Money Market Fund, Inc. are purchased, and,
if requested, must supply proof of entitlement to this privilege.
Shares of this Fund acquired by reinvestment of dividends or
distribution from any other of the Oppenheimer funds or from any
unit investment trust for which reinvestment arrangements have been
made with the Distributor may be exchanged at net asset value for
shares of any of the Oppenheimer funds.
No contingent deferred sales charge is imposed on exchanges
of shares of any class purchased subject to a contingent deferred
sales charge. However, when Class A shares acquired by exchange of
Class A shares of other Oppenheimer funds purchased subject to a
Class A contingent deferred sales charge are redeemed within 18
months of the end of the calendar month of the initial purchase of
the exchanged Class A shares, the Class A contingent deferred sales
charge is imposed on the redeemed shares (see "Class A Contingent
Deferred Sales Charge" in the Prospectus). The Class B contingent
deferred sales charge is imposed on Class B shares acquired by
exchange if they are redeemed within 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.
When Class B or Class C shares are redeemed to effect an
exchange, the priorities described in "How To Buy Shares" in the
Prospectus for the imposition of the Class B or the Class C
contingent deferred sales charge will be followed in determining
the order in which the shares are exchanged. Shareholders should
take into account the effect of any exchange on the applicability
and rate of any contingent deferred sales charge that might be
imposed in the subsequent redemption of remaining shares.
The Fund reserves the right to reject telephone or written
exchange requests submitted in bulk by anyone on behalf of 10 or
more accounts. The Fund may accept requests for exchanges of up to
50 accounts per day from representatives of authorized dealers that
qualify for this privilege. In connection with any exchange
request, the number of shares exchanged may be less than the number
requested if the exchange or the number requested would include
shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information or would include shares covered
by a share certificate that is not tendered with the request. In
those cases, only the shares available for exchange without
restriction will be exchanged.
When exchanging shares by telephone, a shareholder must
either have an existing account in, or obtain and acknowledge
receipt of a prospectus of, the fund to which the exchange is to be
made. For full or partial exchanges of an account made by
telephone, any special account features such as Asset Builder
Plans, Automatic Withdrawal Plans, Checkwriting, if available, and
retirement plan contributions will be switched to the new account
unless the Transfer Agent is instructed otherwise. If all
telephone lines are busy (which might occur, for example, during
periods of substantial market fluctuations), shareholders might not
be able to request exchanges by telephone and would have to submit
written exchange requests.
Shares to be exchanged are redeemed on the regular business
day the Transfer Agent receives an exchange request in proper form
(the "Redemption Date"). Normally, shares of the fund to be
acquired are purchased on the Redemption Date, but such purchases
may be delayed by either fund up to five business days if it
determines that it would be disadvantaged by an immediate transfer
of the redemption proceeds. The Fund reserves the right, in its
discretion, to refuse any exchange request that may disadvantage it
(for example, if the receipt of multiple exchange requests from a
dealer might require the disposition of portfolio securities at a
time or at a price that might be disadvantageous to the Fund).
The different Oppenheimer funds available for exchange have
different investment objectives, policies and risks, and a
shareholder should assure that the Fund selected is appropriate for
his or her investment and should be aware of the tax consequences
of an exchange. For federal income tax purposes, an exchange
transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. "Reinvestment Privilege," above,
discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and
the Transfer Agent are unable to provide investment, tax or legal
advice to a shareholder in connection with an exchange request or
any other investment transaction.
Dividends, Capital Gains and Taxes
Tax Status of the Fund's Dividends and Distributions. The Federal
tax treatment of the Fund's dividends and capital gains
distributions is explained in the Prospectus under the caption
"Dividends, Capital Gains and Taxes." Special provisions of the
Internal Revenue Code govern the eligibility of the Fund's
dividends for the dividends-received deduction for corporate
shareholders. Long-term capital gains distributions are not
eligible for the deduction. In addition, the amount of dividends
paid by the Fund which may qualify for the deduction is limited to
the aggregate amount of qualifying dividends that the Fund derives
from its portfolio investments that the Fund has held for a minimum
period, usually 46 days. A corporate shareholder will not be
eligible for the deduction on dividends paid on Fund shares held
for 45 days or less. To the extent the Fund's dividends are
derived from gross income from option premiums, interest income or
short-term gains from the sale of securities or dividends from
foreign corporations, those dividends will not qualify for the
deduction.
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, in order to
enable the investor to earn a return on otherwise idle funds.
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.
Under the Internal Revenue Code, by December 31 each year,
the Fund must distribute 98% of its taxable investment income
earned from January 1 through December 31 of that year and 98% of
its capital gains realized in the period from November 1 of the
prior year through October 31 of the current year, or else the Fund
must pay an excise tax on the amounts not distributed. While it is
presently anticipated that the Fund will meet those requirements,
the Fund's Board of Directors 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.
If the Fund qualifies as a "regulated investment company"
under the Internal Revenue Code, it will not be liable for Federal
income taxes on amounts paid by it as dividends and distributions.
The Fund qualified as a regulated investment company in its last
fiscal year, and intends to qualify in future years, but reserves
the right not to qualify. The Internal Revenue Code contains a
number of complex tests relating to qualification which the Fund
might not meet in any particular year. For example, if the Fund
derives 30% or more of its gross income from the sale of securities
held less than three months, it may fail to qualify. If it did not
so qualify, the Fund would be treated for tax purposes as an
ordinary corporation and receive no tax deduction for payments made
to shareholders.
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, a
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
Distributor to establish an account. The investment will be made
at the net asset value per share in effect at the close of business
on the payable date of the dividend or distribution. Dividends
and/or distributions from shares of other Oppenheimer funds may be
invested in shares of this Fund on the same basis.
Additional Information About the Fund
The Custodian. The Bank of New York is the Custodian of the Fund's
assets. The Custodian's responsibilities include safeguarding and
controlling the Fund's portfolio securities and handling the
delivery of such securities to and from the Fund. The Manager has
represented to the Fund that the banking relationships with the
Custodian have been and will continue to be unrelated to and
unaffected by the relationship between the Fund and the Custodian.
It will be the practice of the Fund to deal with the Custodian in
a manner uninfluenced by any banking relationship the Custodian may
have with the Manager and its affiliates. The Fund's cash balances
with the Custodian in excess of $100,000 are not protected by
Federal deposit insurance. Those uninsured balances at times may be
substantial.
Independent Auditors. The independent auditors of the Fund audit
the Fund's financial statements and perform other related audit
services. They also act as auditors for the Manager and certain
other funds advised by the Manager and its affiliates.
<PAGE>
Independent Auditors' Report
================================================================
The Board of Directors and Shareholders of Oppenheimer Total Return Fund, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Total Return Fund, Inc. as of
December 31, 1995, the related statement of operations for the year then ended,
the statements of changes in net assets for the years ended December 31, 1995
and 1994, and the financial highlights for the period January 1, 1986 to
December 31, 1995. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at December
31, 1995 by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Oppenheimer Total
Return Fund, Inc. at December 31, 1995, the results of its operations, the
changes in its net assets, and the financial highlights for the respective
stated periods, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
January 22, 1996
<PAGE>
Statement of Investments December 31, 1995
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Government Obligations--1.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Treasury--1.1% U.S. Treasury Nts.:
7.50%, 12/31/96 $ 6,670,000 $ 6,820,075
7.75%, 11/30/99 10,000,000 10,837,500
7.75%, 12/31/99 5,000,000 5,429,684
-----------
Total U.S. Government Obligations (Cost $21,660,941) 23,087,259
==================================================================================
Convertible Corporate Bonds and Notes--3.8%
- -----------------------------------------------------------------------------------------------------------------------------------
ADT Operations, Inc., Zero Coupon Cv. Sub. Nts., 6.50%, 7/6/10(1) 10,000,000 4,750,000
---------------------------------------------------------------------------------------------------------------
AMR Corp., 6.125% Cv. Sub. Debs., 11/1/24 8,000,000 8,320,000
---------------------------------------------------------------------------------------------------------------
Danka Business Systems PLC, 6.75% Cv. Sub. Nts., 4/1/02 4,500,000 6,311,250
---------------------------------------------------------------------------------------------------------------
Delta Air Lines, Inc., 3.23% Cv. Sub. Nts., 6/15/03 4,000,000 3,810,000
---------------------------------------------------------------------------------------------------------------
Dovatron International Inc., 6% Cv. Sub. Nts., 10/15/02(2) 5,000,000 5,200,000
---------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc., 5% Cv. Sub. Nts., 10/1/03 3,200,000 3,236,000
---------------------------------------------------------------------------------------------------------------
First Financial Management Corp., 5% Cv. Debs., 12/15/99 5,000,000 7,806,250
---------------------------------------------------------------------------------------------------------------
HEALTHSOUTH Corp., 5% Cv. Sub. Debs., 4/1/01 4,000,000 6,410,000
---------------------------------------------------------------------------------------------------------------
Physicians Clinical Laboratory, Inc., 7.50% Cv. Sub. Debs., 8/15/00(2)(3)(7) 3,000,000 855,000
---------------------------------------------------------------------------------------------------------------
Staples, Inc., 4.50% Cv. Nts., 10/1/00(2) 2,500,000 2,512,500
---------------------------------------------------------------------------------------------------------------
Telxon Corp., 5.75% Cv. Debs., 1/1/03(2) 3,500,000 3,797,500
---------------------------------------------------------------------------------------------------------------
Thermo Electron Corp., 4.25% Cv. Sub. Nts., 1/1/03(2) 4,000,000 4,305,000
---------------------------------------------------------------------------------------------------------------
Thermo Electron Corp., 5% Cv. Debs., 4/15/01 5,000,000 8,225,000
---------------------------------------------------------------------------------------------------------------
Time Warner, Inc., 8.75% Cv. Sr. Nts., 1/10/15 6,598,850 6,829,810
---------------------------------------------------------------------------------------------------------------
U.S. Cellular Corp., Zero Coupon Cv. Liquid Yield Option Nts., 5.92%, 6/15/15(1) 17,644,000 6,263,620
---------------------------------------------------------------------------------------------------------------
U.S. Filter Corp., 6% Cv. Sub. Nts., 9/15/05(2) 2,500,000 2,859,375
-----------
Total Convertible Corporate Bonds and Notes (Cost $68,645,260) 81,491,305
Shares
============================================================================================
Common Stocks--79.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Basic Materials--4.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Chemicals--2.5% Du Pont (E.I.) De Nemours & Co. 135,000 9,433,125
---------------------------------------------------------------------------------------------------------------
Ethyl Corp. 720,000 9,000,000
---------------------------------------------------------------------------------------------------------------
Monsanto Co. 75,000 9,187,500
---------------------------------------------------------------------------------------------------------------
Morton International, Inc. 370,000 13,273,750
---------------------------------------------------------------------------------------------------------------
PPG Industries, Inc. 130,000 5,947,500
---------------------------------------------------------------------------------------------------------------
W.R. Grace & Co. 110,000 6,503,750
-----------
53,345,625
- -----------------------------------------------------------------------------------------------------------------------------------
Gold--0.4% Newmont Mining Corp. 180,000 8,145,000
- -----------------------------------------------------------------------------------------------------------------------------------
Metals--1.7% Aluminum Co. of America 345,500 18,268,312
---------------------------------------------------------------------------------------------------------------
Cyprus Amax Minerals Co. 370,000 9,666,250
---------------------------------------------------------------------------------------------------------------
Freeport-McMoRan Copper & Gold, Inc., Cl. B 300,000 8,437,500
-----------
36,372,062
</TABLE>
<PAGE>
Statement of Investments (Continued)
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Paper--0.3% Weyerhaeuser Co. 100,000 $ 4,325,000
--------------------------------------------------------------------------------------------------
Willamette Industries, Inc. 65,000 3,656,250
-----------
7,981,250
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals--14.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Autos & Housing--0.6% Clayton Homes, Inc. 308,375 6,591,516
- -----------------------------------------------------------------------------------------------------------------------------------
General Motors Corp. 120,000 6,345,000
-----------
12,936,516
- -----------------------------------------------------------------------------------------------------------------------------------
Leisure & Entertainment--4.6% Applebee's International, Inc. 200,000 4,550,000
--------------------------------------------------------------------------------------------------
Carnival Corp., Cl. A 195,000 4,753,125
--------------------------------------------------------------------------------------------------
Eastman Kodak Co. 110,000 7,370,000
--------------------------------------------------------------------------------------------------
Hasbro, Inc. 120,000 3,720,000
--------------------------------------------------------------------------------------------------
Landry's Seafood Restaurants, Inc.(4) 450,000 7,678,125
--------------------------------------------------------------------------------------------------
McDonald's Corp. 620,000 27,977,500
--------------------------------------------------------------------------------------------------
Regal Cinemas, Inc.(4) 68,000 2,023,000
--------------------------------------------------------------------------------------------------
Starbucks Corp.(4) 50,000 1,050,000
--------------------------------------------------------------------------------------------------
US West Media Group(4) 785,000 14,915,000
--------------------------------------------------------------------------------------------------
Walt Disney Co. 250,000 14,750,000
--------------------------------------------------------------------------------------------------
Wendy's International, Inc. 500,000 10,625,000
-----------
99,411,750
- -----------------------------------------------------------------------------------------------------------------------------------
Media--0.8% Belo (A.H.) Corp., Series A 131,900 4,583,525
--------------------------------------------------------------------------------------------------
Dun & Bradstreet Corp. 200,000 12,950,000
-----------
17,533,525
- -----------------------------------------------------------------------------------------------------------------------------------
Retail: General--2.9% Authentic Fitness Corp. 242,000 5,021,500
--------------------------------------------------------------------------------------------------
Jones Apparel Group, Inc.(4) 75,000 2,953,125
--------------------------------------------------------------------------------------------------
Kohl's Corp.(4) 165,000 8,662,500
--------------------------------------------------------------------------------------------------
May Department Stores Co. 290,000 12,252,500
--------------------------------------------------------------------------------------------------
Nordstrom, Inc. 90,000 3,645,000
--------------------------------------------------------------------------------------------------
Revco D.S., Inc.(4) 220,000 6,215,000
--------------------------------------------------------------------------------------------------
Sears, Roebuck & Co. 115,000 4,485,000
--------------------------------------------------------------------------------------------------
Warnaco Group, Inc. (The), Cl. A 752,600 18,815,000
-----------
62,049,625
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Retail: Specialty--5.1% adidas AG, ADS(4) 76,000 $ 2,018,750
--------------------------------------------------------------------------------------------------
Alco Standard Corp. 390,000 17,793,750
--------------------------------------------------------------------------------------------------
CompUSA, Inc.(4) 200,000 6,225,000
--------------------------------------------------------------------------------------------------
General Nutrition Cos., Inc.(4) 455,000 10,465,000
--------------------------------------------------------------------------------------------------
Men's Wearhouse, Inc.(4) 297,400 7,658,050
--------------------------------------------------------------------------------------------------
Nike, Inc., Cl. B 248,500 17,301,812
--------------------------------------------------------------------------------------------------
Nine West Group, Inc.(4) 350,000 13,125,000
--------------------------------------------------------------------------------------------------
OfficeMax, Inc.(4) 244,000 5,459,500
--------------------------------------------------------------------------------------------------
Rite Aid Corp. 325,000 11,131,250
--------------------------------------------------------------------------------------------------
Staples, Inc. 25,000 609,375
--------------------------------------------------------------------------------------------------
Tandy Corp. 110,000 4,565,000
--------------------------------------------------------------------------------------------------
The Limited, Inc. 200,000 3,475,000
--------------------------------------------------------------------------------------------------
TJX Cos., Inc. 360,000 6,795,000
--------------------------------------------------------------------------------------------------
Walgreen Co. 85,000 2,539,375
------------
109,161,862
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclicals--11.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Food--0.6% CPC International, Inc. 120,000 8,235,000
--------------------------------------------------------------------------------------------------
Quaker Oats Co. 130,000 4,485,000
------------
12,720,000
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare/Drugs--5.9% Abbott Laboratories 505,000 21,083,750
--------------------------------------------------------------------------------------------------
American Home Products Corp. 85,000 8,245,000
--------------------------------------------------------------------------------------------------
Astra AB Free, Series A 700,000 27,990,680
--------------------------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 245,000 21,039,375
--------------------------------------------------------------------------------------------------
Johnson & Johnson 120,000 10,275,000
--------------------------------------------------------------------------------------------------
Lilly (Eli) & Co. 300,000 16,875,000
--------------------------------------------------------------------------------------------------
Smithkline Beecham PLC, ADR Equity Units (one ADR represents
five equity units; each unit consists of one cl. B ordinary share
and one share of cumulative participating preferred stock)(5) 275,000 15,262,500
--------------------------------------------------------------------------------------------------
Teva Pharmaceutical Industries Ltd., ADR 150,000 6,956,250
------------
127,727,555
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare/Supplies & Baxter International, Inc. 275,000 11,515,625
Services--2.2% --------------------------------------------------------------------------------------------------
Guidant Corp. 115,000 4,858,750
--------------------------------------------------------------------------------------------------
HEALTHSOUTH Corp. 365,000 10,630,625
--------------------------------------------------------------------------------------------------
Lynx Therapeutics, Inc.(4)(6) 153,900 30,780
--------------------------------------------------------------------------------------------------
Medtronic, Inc. 300,000 16,762,500
--------------------------------------------------------------------------------------------------
Molecular Devices Corp.(4) 265,000 2,782,500
------------
46,580,780
- -----------------------------------------------------------------------------------------------------------------------------------
Household Goods--0.6% Kimberly-Clark Corp. 160,000 13,240,000
- -----------------------------------------------------------------------------------------------------------------------------------
Tobacco--1.7% Philip Morris Cos., Inc. 400,000 36,200,000
</TABLE>
<PAGE>
Statement of Investments (Continued)
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Energy--7.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Energy Services & Coastal Corp. 200,000 $ 7,450,000
Producers--3.9% --------------------------------------------------------------------------------------------------
Coflexip SA, Sponsored ADR 227,000 4,284,625
--------------------------------------------------------------------------------------------------
Dresser Industries, Inc. 500,000 12,187,500
--------------------------------------------------------------------------------------------------
Halliburton Co. 220,000 11,137,500
--------------------------------------------------------------------------------------------------
Kerr-McGee Corp. 260,000 16,510,000
--------------------------------------------------------------------------------------------------
Schlumberger Ltd. 270,000 18,697,500
--------------------------------------------------------------------------------------------------
Weatherford Enterra, Inc.(4) 170,000 4,908,750
--------------------------------------------------------------------------------------------------
Western Atlas, Inc.(4) 180,000 9,090,000
------------
84,265,875
- -----------------------------------------------------------------------------------------------------------------------------------
Oil-Integrated--3.9% Atlantic Richfield Co. 190,000 21,042,500
--------------------------------------------------------------------------------------------------
MAPCO, Inc. 50,000 2,731,250
--------------------------------------------------------------------------------------------------
Mobil Corp. 113,000 12,656,000
--------------------------------------------------------------------------------------------------
Occidental Petroleum Corp. 850,000 18,168,750
--------------------------------------------------------------------------------------------------
Royal Dutch Petroleum Co. 115,000 16,229,375
--------------------------------------------------------------------------------------------------
Sun Co., Inc. 137,500 3,764,063
--------------------------------------------------------------------------------------------------
Unocal Corp. 350,000 10,193,750
------------
84,785,688
- -----------------------------------------------------------------------------------------------------------------------------------
Financial--8.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Banks--4.7% Bank of New York Co., Inc. (The) 250,000 12,187,500
--------------------------------------------------------------------------------------------------
Chase Manhattan Corp. 130,000 7,881,250
--------------------------------------------------------------------------------------------------
CoreStates Financial Corp. 500,000 18,937,500
--------------------------------------------------------------------------------------------------
First Bank System, Inc. 200,000 9,925,000
--------------------------------------------------------------------------------------------------
Firstar Corp. 370,000 14,661,250
--------------------------------------------------------------------------------------------------
J.P. Morgan & Co., Inc. 105,000 8,426,250
--------------------------------------------------------------------------------------------------
TCF Financial Corp. 410,000 13,581,250
--------------------------------------------------------------------------------------------------
UJB Financial Corp. 250,000 8,937,500
--------------------------------------------------------------------------------------------------
Washington Mutual, Inc. 200,000 5,775,000
------------
100,312,500
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified Financial--2.3% H & R Block, Inc. 300,000 12,150,000
--------------------------------------------------------------------------------------------------
Household International, Inc. 250,000 14,781,250
--------------------------------------------------------------------------------------------------
MBNA Corp. 175,000 6,453,125
--------------------------------------------------------------------------------------------------
Travelers Group, Inc. 270,000 16,976,250
------------
50,360,625
- -----------------------------------------------------------------------------------------------------------------------------------
Insurance--1.0% Chubb Corp. 110,000 10,642,500
--------------------------------------------------------------------------------------------------
MGIC Investment Corp. 120,000 6,510,000
--------------------------------------------------------------------------------------------------
Prudential Reinsurance Holdings, Inc. 137,400 3,211,725
------------
20,364,225
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial--10.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Electrical Equipment--3.6% Emerson Electric Co. 280,000 $22,890,000
--------------------------------------------------------------------------------------------------
General Electric Co. 450,000 32,400,000
--------------------------------------------------------------------------------------------------
Honeywell, Inc. 365,000 17,748,125
--------------------------------------------------------------------------------------------------
Westinghouse Electric Corp. 250,000 4,125,000
-----------
77,163,125
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial Materials--0.5% Corning, Inc. 195,000 6,240,000
--------------------------------------------------------------------------------------------------
Rayonier, Inc. 150,000 5,006,250
-----------
11,246,250
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial Services--2.1% Browning-Ferris Industries, Inc. 300,000 8,850,000
--------------------------------------------------------------------------------------------------
Danka Business System PLC, Sponsored ADR 200,000 7,400,000
--------------------------------------------------------------------------------------------------
Reynolds & Reynolds Co., Cl. A 250,000 9,718,750
--------------------------------------------------------------------------------------------------
Service Corp. International 400,000 17,600,000
--------------------------------------------------------------------------------------------------
USA Waste Services, Inc.(4) 100,000 1,887,500
-----------
45,456,250
- -----------------------------------------------------------------------------------------------------------------------------------
Manufacturing--2.9% American Standard Cos., Inc.(4) 146,500 4,102,000
--------------------------------------------------------------------------------------------------
Hanson PLC, ADR 1,115,000 17,003,750
--------------------------------------------------------------------------------------------------
Tenneco, Inc. 420,000 20,842,500
--------------------------------------------------------------------------------------------------
Tyco International Ltd. 590,000 21,018,750
-----------
62,967,000
-----------
- -----------------------------------------------------------------------------------------------------------------------------------
Transportation--1.3% Burlington Northern Santa Fe Corp. 180,000 14,040,000
--------------------------------------------------------------------------------------------------
Union Pacific Corp. 190,000 12,540,000
-----------
26,580,000
- -----------------------------------------------------------------------------------------------------------------------------------
Technology--13.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Aerospace/Defense--0.7% Boeing Co. 190,000 14,891,250
- -----------------------------------------------------------------------------------------------------------------------------------
Computer Hardware--3.7% Bay Networks, Inc.(4) 225,000 9,253,125
--------------------------------------------------------------------------------------------------
Cisco Systems, Inc.(4) 235,000 17,536,875
--------------------------------------------------------------------------------------------------
International Business Machines Corp. 70,000 6,422,500
--------------------------------------------------------------------------------------------------
Lexmark International Group, Inc., Cl. A(4) 293,400 5,354,550
--------------------------------------------------------------------------------------------------
Objective Systems Integrators, Inc.(4) 12,000 657,000
--------------------------------------------------------------------------------------------------
Xerox Corp. 300,000 41,100,000
-----------
80,324,050
- -----------------------------------------------------------------------------------------------------------------------------------
Computer Software--1.7% Adobe Systems, Inc. 215,000 13,330,000
--------------------------------------------------------------------------------------------------
General Motors Corp., Cl. E 100,000 5,200,000
--------------------------------------------------------------------------------------------------
Nintendo Co. Ltd. 197,300 15,014,830
--------------------------------------------------------------------------------------------------
Oracle Corp.(4) 70,000 2,966,250
-----------
36,511,080
</TABLE>
Statement of Investments (Continued)
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Electronics--3.5% ADT Ltd.(4) 900,000 $ 13,500,000
--------------------------------------------------------------------------------------------------
General Motors Corp., Cl. H 335,000 16,456,875
--------------------------------------------------------------------------------------------------
Hewlett-Packard Co. 200,000 16,750,000
--------------------------------------------------------------------------------------------------
Intel Corp. 220,000 12,485,000
--------------------------------------------------------------------------------------------------
LSI Logic Corp.(4) 114,500 3,749,875
--------------------------------------------------------------------------------------------------
Motorola, Inc. 135,000 7,695,000
--------------------------------------------------------------------------------------------------
Texas Instruments, Inc. 75,000 3,881,250
--------------
74,518,000
- -----------------------------------------------------------------------------------------------------------------------------------
Telecommunications- AT&T Corp. 420,000 27,195,000
Technology--3.8% --------------------------------------------------------------------------------------------------
L.M. Ericsson Telephone Co., Cl. B, ADR 315,000 6,142,500
--------------------------------------------------------------------------------------------------
LCI International, Inc.(4) 825,000 16,912,500
--------------------------------------------------------------------------------------------------
Millicom, Inc.(4) 400,000 --
--------------------------------------------------------------------------------------------------
WorldCom, Inc.(4) 863,300 30,431,325
--------------
80,681,325
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities--9.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Electric Utilities--6.0% Allegheny Power System, Inc. 450,000 12,881,250
--------------------------------------------------------------------------------------------------
Baltimore Gas & Electric Co. 500,000 14,250,000
--------------------------------------------------------------------------------------------------
Carolina Power & Light Co. 250,000 8,625,000
--------------------------------------------------------------------------------------------------
Detroit Edison Co. 340,000 11,730,000
--------------------------------------------------------------------------------------------------
Dominion Resources, Inc. 300,000 12,375,000
--------------------------------------------------------------------------------------------------
FPL Group, Inc. 200,000 9,275,000
--------------------------------------------------------------------------------------------------
Houston Industries, Inc. 1,000,000 24,250,000
--------------------------------------------------------------------------------------------------
Pacific Gas & Electric Co. 300,000 8,512,500
--------------------------------------------------------------------------------------------------
SCEcorp 300,000 5,325,000
--------------------------------------------------------------------------------------------------
The Southern Company 446,000 10,982,750
--------------------------------------------------------------------------------------------------
Unicom Corp. 340,000 11,135,000
--------------
129,341,500
- -----------------------------------------------------------------------------------------------------------------------------------
Gas Utilities--0.8% Panhandle Eastern Corp. 202,500 5,644,688
--------------------------------------------------------------------------------------------------
Sonat, Inc. 335,000 11,934,375
--------------
17,579,063
- -----------------------------------------------------------------------------------------------------------------------------------
Telephone Utilities--2.7% GTE Corp. 725,000 31,900,000
--------------------------------------------------------------------------------------------------
US West Communications Group 710,000 25,382,500
--------------
57,282,500
--------------
Total Common Stocks (Cost $1,355,415,484) 1,698,035,856
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
============================================================================
Preferred Stocks--4.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Alco Standard Corp., $5.04 Depositary Shares each
representing 1/100 of a share of Conversion Preferred Stock,
Series BB, Automatically Convertible Equity Securities 30,000 $ 2,565,000
--------------------------------------------------------------------------------------------------
American Express Co., Debt Exchangeable for
Common Stock of First Data Corp., 6.25%, 10/15/96 140,000 7,770,000
--------------------------------------------------------------------------------------------------
Boise Cascade Corp., $1.58 Cum. Cv., Series G 200,000 5,725,000
--------------------------------------------------------------------------------------------------
Cooper Industries, Inc., Debt Exchangeable for
Common Stock, 6% Exchangeable Nts., 1/1/99(4) 455,000 6,256,250
--------------------------------------------------------------------------------------------------
Delta Air Lines, Inc., $3.50 Cv. Depositary Shares, Series C 95,000 5,640,625
--------------------------------------------------------------------------------------------------
Enron Corp., 6.25% Cv. Automatic Common Exchangeable Securities 145,000 3,480,000
--------------------------------------------------------------------------------------------------
Freeport-McMoRan Copper & Gold, Inc., Cv. Depositary Shares 270,000 7,357,500
--------------------------------------------------------------------------------------------------
General Motors Corp., $3.25 Cv., Series C 150,000 10,987,500
--------------------------------------------------------------------------------------------------
James River Corp. of Virginia, $3.375 Cum. Cv. Exchangeable,
Series K 112,000 5,152,000
--------------------------------------------------------------------------------------------------
James River Corp. of Virginia, Depositary Shares each
representing a one-hundredth interest in a share of Series P,
9% Cum. Cv. Preferred Stock, Dividend Enhanced Convertible Stock 200,000 4,675,000
--------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 6.50% Cv. Structured Yield
Enhanced Product Exchangeable for Stock due 8/15/98 110,000 5,706,250
--------------------------------------------------------------------------------------------------
Noble Drilling Corp., $1.50 Cv. Exchangeable 150,000 3,862,500
--------------------------------------------------------------------------------------------------
Occidental Petroleum Corp., $3.00 Cum. Cv.
Canadian Occidental Petroleum Ltd.-Indexed 210,000 13,046,250
--------------------------------------------------------------------------------------------------
Olympic Financial Ltd., $2.00 Cum. Cv. Exchangeable 26,000 1,950,000
--------------------------------------------------------------------------------------------------
Owens-Corni ng Capital LLC, 6.50% Cv. Monthly Income
Preferred Securities(2) 50,000 2,993,750
--------------------------------------------------------------------------------------------------
Reynolds Metals Co., 7% Preferred Redeemable Increased
Dividend Equity Securities, $3.31 Cv., 12/31/97 112,500 5,695,312
-----------
Total Preferred Stocks (Cost $80,143,596) 92,862,937
Units
==============================================================================
Rights, Warrants and Certificates--0.0%
- -----------------------------------------------------------------------------------------------------------------------------------
American Satellite Network, Inc. Wts., Exp. 6/99 100,000 --
--------------------------------------------------------------------------------------------------
Morgan Stanley Group Inc., Japanese Index Call Wts., Exp. 5/96 59,400 70,538
--------------------------------------------------------------------------------------------------
Windmere Corp. Wts., Exp. 1/98 5,815 --
-----------
Total Rights, Warrants and Certificates (Cost $356,479) 70,538
</TABLE>
<PAGE>
Statement of Investments (Continued)
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
<S> <C> <C>
===================================================================================================================================
Repurchase Agreement--12.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets, 5.90%,
dated 12/29/95, to be repurchased at $269,176,344 on 1/2/96,
collateralized by U.S. Treasury Nts., 5.125%--8.75%,
12/31/96--11/5/04, with a value of $146,015,148, U.S. Treasury
Bonds, 6.25%--11.25%, 8/15/03--8/15/23, with a
value of $88,488,691 and U.S. Treasury Bills maturing 11/14/96,
with a value of $40,128,351 (Cost $269,000,000) $269,000,000 $ 269,000,000
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $1,795,221,760) 100.7% 2,164,547,895
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (0.7) (15,670,770)
------------ --------------
Net Assets 100.0% $2,148,877,125
============ ==============
</TABLE>
1. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
2. Represents a security sold under Rule 144A, which is exempt from registration
under the Securities Act of 1933, as amended. This security has been determined
to be liquid under guidelines established by the Board of Directors. These
securities amount to $22,523,125 or 1.05% of the Fund's net assets, at December
31, 1995.
3. Non-income producing--issuer is in default of interest payment.
4. Non-income producing security.
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. Identifies issues considered to be illiquid--See Note 6 of Notes to Financial
Statements.
7. Affiliated company. Represents ownership of at least 5% of the voting
securities of the issuer and is or was an affiliate, as defined in the
Investment Company Act of 1940, at or during the period ended December 31, 1995.
Transactions during the period in which the issuer was an affiliate are as
follows:
<TABLE>
<CAPTION>
Balance December 31, 1994 Gross Additions Gross Reductions Balance December 31, 1995 Dividend/
------------------------------ ---------------- ------------------ ------------------------- Interest
Stocks Shares/Face Cost Shares/Face Cost Shares/Face Cost Shares/Face Cost Income
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Angeion Corp. 500,000 $ 1,187,500 -- $ -- 500,000 $ 1,187,500 -- $ -- $ --
- -----------------------------------------------------------------------------------------------------------------------------------
Angeion Corp.
Wts. 500,000 -- -- -- 500,000 -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Iwerks
Entertainment
Inc. 540,000 15,476,580 -- -- 540,000 15,476,580 -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Regis Corp. of
Minnesota 700,000 7,670,613 -- -- 700,000 7,670,613 -- -- --
Bonds and Notes
- -----------------------------------------------------------------------------------------------------------------------------------
Physician's Clinical
Laboratory, Inc.,
7.50% Cv. Sub.
Debs., 8/15/00(8) 4,000,000 4,000,000 -- -- 1,000,000 950,663 3,000,000 3,049,337 102,064
----------- -------- ----------- ---------- --------
$28,334,693 $ -- $25,285,356 $3,049,337 $102,064
=========== ======== =========== ========== ========
</TABLE>
8. Not an affiliate as of December 31, 1995. See accompanying Notes to Financial
Statements.
<PAGE>
Statement of Assets and Liabilities December 31, 1995
<TABLE>
<CAPTION>
====================================================================================
<S> <C>
Assets Investments, at value (including repurchase agreement of $269,000,000)
(cost $1,795,221,760)--see accompanying statement $2,164,547,895
--------------------------------------------------------------------------------------------------
Cash 603,529
--------------------------------------------------------------------------------------------------
Receivables:
Investments sold 13,152,993
Interest and dividends 5,980,940
Shares of capital stock sold 4,827,689
--------------------------------------------------------------------------------------------------
Other 62,042
--------------
Total assets 2,189,175,088
==========================================================================================
Liabilities Payables and other liabilities:
Investments purchased 30,940,597
Dividends 3,892,085
Shares of capital stock redeemed 3,474,228
Distribution and service plan fees 1,041,460
Transfer and shareholder servicing agent fees 166,991
Other 782,602
-------------
Total liabilities 40,297,963
===========================================================================================
Net Assets $2,148,877,125
==============
===========================================================================================
Composition of Par value of shares of capital stock $ 23,024,708
Net Assets --------------------------------------------------------------------------------------------------
Additional paid-in capital 1,764,793,058
--------------------------------------------------------------------------------------------------
Overdistributed net investment income (1,164,352)
--------------------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (7,102,424)
--------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 369,326,135
--------------
Net assets $2,148,877,125
--------------
=========================================================================================
Net Asset Value Class A Shares:
Per Share Net asset value and redemption price per share (based on net assets of
$1,550,709,986 and 165,838,320 shares of capital stock outstanding) $9.35
Maximum offering price per share (net asset value plus sales charge of
5.75% of offering price) $9.92
--------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $589,803,565 and 63,513,824 shares of capital stock outstanding) $9.29
--------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $1,654,870 and 177,427 shares of capital stock outstanding) $9.33
--------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $6,708,704 and 717,512 shares of capital stock outstanding) $9.35
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Statement of Operations For the Year Ended December 31, 1995
<TABLE>
<CAPTION>
========================================================================
<S> <C>
Investment Income Dividends (net of foreign withholding taxes of $464,690) $ 45,617,587
--------------------------------------------------------------------------------------------------
Interest:
Unaffiliated companies 20,247,858
Affiliated companies 102,064
------------
Total income 65,967,509
============================================================================
Expenses Management fees--Note 5 10,289,397
--------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 5:
Class A 2,439,398
Class B 5,101,553
Class C 2,582
--------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 5 2,377,275
--------------------------------------------------------------------------------------------------
Shareholder reports 1,115,661
--------------------------------------------------------------------------------------------------
Custodian fees and expenses 180,855
--------------------------------------------------------------------------------------------------
Legal and auditing fees 46,421
--------------------------------------------------------------------------------------------------
Insurance expenses 43,168
--------------------------------------------------------------------------------------------------
Directors' fees and expenses 34,014
--------------------------------------------------------------------------------------------------
Registration and filing fees:
Class B 31,950
Class C 548
Class Y 1,347
--------------------------------------------------------------------------------------------------
Other 183,020
------------
Total expenses 21,847,189
=====================================================================================
Net Investment Income 44,120,320
===========================================================================
Realized and Unrealized Net realized gain (loss) on:
Gain (Loss) Investments:
Unaffiliated companies 144,804,260
Affiliated companies (7,738,343)
Closing and expiration of option contracts written--Note 4 6,574
Foreign currency transactions 494,774
------------
Net realized gain 137,567,265
--------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 314,314,802
Translation of assets and liabilities denominated in foreign currencies 466,759
------------
Net change 314,781,561
------------
Net realized and unrealized gain 452,348,826
===================================================================================
Net Increase in Net Assets Resulting From Operations $496,469,146
============
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994
<S> <C> <C>
================================================================================
Operations Net investment income $ 44,120,320 $ 43,933,939
--------------------------------------------------------------------------------------------------
Net realized gain (loss) 137,567,265 (22,943,925)
--------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 314,781,561 (159,658,425)
--------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 496,469,146 (138,668,411)
==================================================================================
Dividends and Dividends from net investment income:
Distributions to Class A (35,374,788) (32,935,100)
Shareholders Class B (9,099,459) (7,410,674)
Class C (11,241) --
Class Y (121,199) (9,979)
--------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (85,267,758) --
Class B (32,692,902) --
Class C (84,903) --
Class Y (366,754) --
==================================================================================
Capital Stock Net increase in net assets resulting from capital stock transactions--Note 2:
Transactions Class A 69,917,082 150,027,163
Class B 72,588,581 251,910,438
Class C 1,689,246 --
Class Y 5,093,914 1,113,774
=============================================================================================
Net Assets Total increase 482,738,965 224,027,211
--------------------------------------------------------------------------------------------------
Beginning of period 1,666,138,160 1,442,110,949
-------------- --------------
End of period [including undistributed (overdistributed) net
investment income of ($1,164,352) and $1,960,766, respectively] $2,148,877,125 $1,666,138,160
============== ==============
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------------
Year Ended December 31,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
========================================================================
Per Share Operating Data:
Net asset value, beginning of period $7.80 $8.69 $7.84 $7.49 $6.13
- --------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .23 .23 .18 .17 .24
Net realized and unrealized gain (loss) 2.09 (.91) 1.45 .75 1.91
---------- ---------- --------- -------- ---------
Total income (loss) from investment operations 2.32 (.68) 1.63 .92 2.15
- --------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.22) (.21) (.20) (.20) (.23)
Distributions from net realized gain (.55) -- (.58) (.37) (.56)
---------- ---------- --------- -------- ---------
Total dividends and distributions
to shareholders (.77) (.21) (.78) (.57) (.79)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $9.35 $7.80 $8.69 $7.84 $7.49
========== ========== ========= ======== =========
=======================================================================================
Total Return, at Net Asset Value(4) 30.12% (7.86)% 21.24% 12.83% 36.26%
=======================================================================================
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $1,550,710 $1,235,637 $1,223,395 $795,474 $555,865
- --------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,394,245 $1,261,729 $992,381 $662,917 $475,741
- --------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 2.53% 2.88% 2.21% 2.68% 3.26%
Expenses .92% 1.01% .93% .96% .95%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 84.8% 117.2% 143.9% 143.5% 161.5%
Average brokerage commission rate(7) $0.08 -- -- -- --
</TABLE>
1. For the period from June 1, 1994 (inception of offering) to December 31,
1994.
2. For the period from August 29, 1995 (inception of offering) to December 31,
1995.
3. For the period from May 1, 1993 (inception of offering) to December 31, 1993.
4. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions reinvested
in additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Sales charges
are not reflected in the total returns. Total returns are not annualized for
periods of less than one full year.
<PAGE>
<TABLE>
<CAPTION>
Class B Class C Class Y
- ---------------------------------------------------------- ------------------------------- -------- ---------------
Period
Ended Year Ended
Year Ended December 31, Dec. 31, December 31,
1990 1989 1988 1987 1986 1995 1994 1993(3) 1995(2) 1995 1994(1)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
===============================================================================
$6.68 $6.35 $5.95 $6.76 $6.81 $7.76 $8.66 $8.23 $9.19 $7.80 $8.23
- --------------------------------------------------------------------------------------------------------------------------------
.24 .27 .26 .25 .35 .15 .17 .09 .07 .20 .15
(.49) .93 .53 .63 1.00 2.08 (.91) 1.03 .73 2.13 (.41)
- --------- ------- -------- -------- -------- -------- -------- ------- -------- ------ -----
(.25) 1.20 .79 .88 1.35 2.23 (.74) 1.12 .80 2.33 (.26)
- --------------------------------------------------------------------------------------------------------------------------------
(.24) (.28) (.27) (.32) (.37) (.15) (.16) (.11) (.11) (.23) (.17)
(.06) (.59) (.12) (1.37) (1.03) (.55) -- (.58) (.55) (.55) --
-------- ------ ------- ------- ------- -------- -------- ------- ------- ------ ------
(.30) (.87) (.39) (1.69) (1.40) (.70) (.16) (.69) (.66) (.78) (.17)
- --------------------------------------------------------------------------------------------------------------------------------
$6.13 $6.68 $6.35 $5.95 $6.76 $9.29 $7.76 $8.66 $9.33 $9.35 $7.80
========= ======== ======== ======= ======== ======== ======== ======= ====== ====== ======
======================================================================================================
(3.86)% 19.25% 13.35% 12.35% 19.70% 29.03% (8.64)% 13.91% 8.82% 30.23% (3.15)%
======================================================================================================
$396,240 $389,413 $314,039 $274,068 $234,674 $589,804 $429,427 $218,716 $1,655 $6,709 $1,074
- --------------------------------------------------------------------------------------------------------------------------------
$394,903 $356,994 $298,509 $277,877 $246,530 $510,744 $360,773 $ 90,952 $ 784 $3,944 $ 320
- --------------------------------------------------------------------------------------------------------------------------------
3.87% 3.96% 4.22% 3.42% 4.37% 1.70% 2.11% 1.09%(5) 1.42%(5) 2.51% 4.07%(5)
.98% .98% .94% .88% .85% 1.75% 1.87% 1.87%(5) 1.77%(5) .87% .96%(5)
- --------------------------------------------------------------------------------------------------------------------------------
114.1% 151.6% 127.3% 173.4% 88.3% 84.8% 117.2% 143.9% 84.8% 84.8% 117.2%
-- -- -- -- -- $0.08 -- -- $0.08 $0.08 --
</TABLE>
5. Annualized.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the period ended December 31, 1995 were $1,485,059,143 and $1,650,904,965,
respectively.
7. Total brokerage commissions paid on 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.
<PAGE>
Notes to Financial Statements
=====================================================================
1. Significant
Accounting Policies
Oppenheimer Total Return Fund, Inc. (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's investment objective is to seek high
total return through invest ments which are expected to provide opportunities
for growth or to produce income, or both. 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
a particular class and exclusive voting rights with respect to matters affecting
a single class. Class A, Class B and Class C have separate distribution 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
asked price or the last sale price on the prior trading day. Long-term and
short-term "non-money market" debt securities are valued by a portfolio pricing
service approved by the Board of 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. Options are valued based upon the last sale
price on the principal exchange on which the option is traded or, in the absence
of any transactions that day, the value is based upon the last sale price on the
prior trading date if it is within the spread between the closing bid and asked
prices. If the last sale price is outside the spread, the closing bid or asked
price closest to the last reported sale price is used.
- -------------------------------------------------------------------------------
Foreign Currency Translation. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of securities and investment income are translated at
the rate of exchange prevailing on the respective dates of such transactions.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- -------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- -------------------------------------------------------------------------------
Allocation of Income, Expenses, and Gains and Losses. Income, expenses (other
than those attributable to a specific class) and gains and losses are allocated
daily to each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- -------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required.
- -------------------------------------------------------------------------------
Distributions to Shareholders. Dividends and distributions to shareholders are
recorded on the ex-dividend date.
<PAGE>
===========================================================
1. Significant
Accounting Policies
(continued)
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 the recognition of certain foreign currency gains (losses)
as ordinary income (loss) for tax purposes. The character of the distributions
made during the year from net investment income or net realized gains may differ
from their ultimate characterization for federal income tax purposes. Also, due
to timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized gain (loss) was
recorded by the Fund.
During the year ended December 31, 1995, the Fund changed the
classification of distributions to shareholders to better disclose the
differences between financial statement amounts and distributions determined in
accordance with income tax regulations. Accordingly, during the year ended
December 31, 1995, amounts have been reclassified to reflect a decrease in
undistributed net investment income of $2,638,751. Accumulated net realized loss
on investments 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. Discount on securities purchased is amortized over the life of
the respective securities, in accordance with federal income tax requirements.
Realized gains and losses on investments and options written and unrealized
appreciation and depreciation are determined on an identified cost basis, which
is the same basis used for federal income tax purposes.
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. Capital Stock
The Fund has authorized 450,000,000, 200,000,000, 200,000,000 and 10,000,000
shares of $.10 par value Class A, Class B, Class C and Class Y capital stock,
respectively. Transactions in shares of capital stock were as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1995(2) Year Ended December 31, 1994(1)
--------------------------------- --------------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Class A:
Sold 18,844,314 $166,165,690 36,009,865 $302,062,255
Dividends and distributions reinvested 12,296,649 112,950,173 3,725,296 30,098,615
Redeemed (23,719,242) (209,198,781) (22,029,323) (182,133,707)
------------ ------------ ---------- ------------
Net increase 7,421,721 $ 69,917,082 17,705,838 $150,027,163
============ ============ ========== ============
- -------------------------------------------------------------------------------------------------------------
Class B:
Sold 13,740,203 $120,055,138 35,786,510 $297,977,920
Dividends and distributions reinvested 4,344,180 39,709,825 864,830 6,912,262
Redeemed (9,944,572) (87,176,382) (6,537,842) (52,979,744)
------------ ------------ ---------- ------------
Net increase 8,139,811 $ 72,588,581 30,113,498 $251,910,438
============ ============ ========== ============
- -------------------------------------------------------------------------------------------------------------
Class C:
Sold 172,793 $ 1,648,892 -- $ --
Dividends and distributions reinvested 10,117 93,507 -- --
Redeemed (5,483) (53,153) -- --
----------- ------------ --------- ------------
Net increase 177,427 $ 1,689,246 -- $ --
=========== ============ ========== ============
- -------------------------------------------------------------------------------------------------------------
Class Y:
Sold 635,605 $ 5,604,059 144,607 $ 1,168,840
Dividends and distributions reinvested 52,875 487,953 1,275 9,979
Redeemed (108,744) (998,098) (8,106) (65,045)
----------- ------------ --------- ------------
Net increase 579,736 $ 5,093,914 137,776 $ 1,113,774
=========== ============ ========= ============
</TABLE>
1. For the year ended December 31, 1994 for Class A and Class B shares and for
the period from June 1, 1994 (inception of offering) to December 31, 1994 for
Class Y shares.
2. For the year ended December 31, 1995 for Class A, Class B and Class Y shares
and for the period from August 29, 1995 (inception of offering) to December 31,
1995 for Class C shares.
<PAGE>
Notes to Financial Statements (Continued)
==========================================================
3. Unrealized Gains and
Losses on Investments
At December 31, 1995, net unrealized appreciation on investments of $369,326,135
was composed of gross appreciation of $389,468,272, and gross depreciation of
$20,142,137.
======================================================
4. Option Activity
The Fund may buy and sell put and call options, or write covered put and call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered call options to
hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call options are noted in the
Statement of Investments where applicable. Shares subject to call, expiration
date, exercise price, premium received and market value are detailed in a
footnote to the Statement of Investments. Options written are reported as a
liability in the Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the opportunity
for profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Fund may incur a loss if
the market price of the security decreases and the option is exercised. The risk
in buying an option is that the Fund pays a premium whether or not the option is
exercised. The Fund also has the additional risk of not being able to enter into
a closing transaction if a liquid secondary market does not exist.
Written option activity for the year ended December 31, 1995 was as
follows:
<TABLE>
<CAPTION>
Call Options
---------------------------
Number of Amount of
Options Premiums
<S> <C> <C>
- ----------------------------------------------------------------------------------------------
Options outstanding at December 31, 1994 500 $ 36,499
- ----------------------------------------------------------------------------------------------
Options written 1,350 272,066
- ----------------------------------------------------------------------------------------------
Options closed or expired (50) (19,225)
- ----------------------------------------------------------------------------------------------
Options exercised (1,800) (289,340)
----- --------
-- $ --
Options outstanding at December 31, 1995 ===== ========
</TABLE>
<PAGE>
======================================================
5. Management Fees and
Other Transactions
With Affiliates
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of .75% on the first
$100 million of average annual net assets with a reduction of .05% on each $100
million thereafter, to .50% on net assets in excess of $500 million. The Manager
has agreed to reimburse the Fund if aggregate expenses (with specified
exceptions) exceed the most stringent state regulatory limit on Fund expenses.
For the year ended December 31, 1995, commissions (sales charges paid by
investors) on sales of Class A shares totaled $4,061,349, of which $1,236,003
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 $2,949,198 and $13,076, of which $240,339 was paid to an
affiliated broker/dealer. During the year ended December 31, 1995, OFDI received
contingent deferred sales charges of $1,488,860 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.
Under separate approved plans, each class may expend up to .25% of its net
assets annually to compensate OFDI for costs incurred in connection with the
personal service and maintenance of accounts that hold shares of the Fund,
including amounts paid to brokers, dealers, banks and other institutions. In
addition, Class B and Class C shares are subject to an asset-based sales charge
of .75% of net assets annually, to compensate OFDI for sales commissions paid
from its own resources at the time of sale and associated financing costs. In
the event of termination or discontinuance of the Class B or Class C plan, the
Board of Directors may allow the Fund to continue payment of the asset-based
sales charge to OFDI for distribution expenses incurred on Class B or Class C
shares sold prior to termination or discontinuance of the plan. At December 31,
1995, OFDI had incurred unreimbursed expenses of $18,856,726 for Class B and
$22,302 for Class C. During the year ended December 31, 1995, OFDI paid $176,017
and $52,749, respectively, to an affiliated broker/dealer as compensation for
Class A and Class B personal service and maintenance expenses, and retained
$4,233,886 and $2,325, respectively, as compensation for Class B and Class C
sales commissions and service fee advances, as well as financing costs,
respectively.
==========================================================
6. Illiquid and Restricted
Securities
At December 31, 1995, investments in securities included issues that are
illiquid or restricted. The securities are often purchased in private placement
transactions, are not registered under the Securities Act of 1933, may have
contractual restrictions on resale, and are valued under methods approved by the
Board of Directors as reflecting fair value. The Fund intends to invest no more
than 10% of its net assets (determined at the time of purchase) in illiquid and
restricted securities. The aggregate value of these securities subject to this
limitation at December 31, 1995 was $30,780 which represents less than .01% of
the Fund's net assets. Information concerning these securities is as follows:
<TABLE>
<CAPTION>
Valuation Per Unit as
Security Acquisition Date Cost Per Unit of Dec. 31, 1995
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
Lynx Therapeutics, Inc. 10/19/92 $.67 $.20
</TABLE>
Pursuant to guidelines adopted by the Board of Directors, certain unregistered
securities are determined to be liquid and are not included within the 10%
limitation specified above.
<PAGE>
Appendix A
Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
Food
Gas Transmission*
Gas Utilities*
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking<PAGE>
- -----------------
* For purposes of the Fund's investment policy not to
concentrate in securities of issuers in the same industry, gas
utilities and gas transmission utilities each will be considered a
separate industry.
<PAGE>
Oppenheimer Total Return Fund, Inc.
3410 South Galena Street
Denver, Colorado 80231
1-800-525-7048
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
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
Deloitte & Touche LLP
555 Seventeenth Street, Suite 3600
Denver, Colorado 80202
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202
PXO420.001.0496 Printed on recycled paper
<PAGE>
OPPENHEIMER TOTAL RETURN 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: Filed
herewith.
(2) Independent Auditors' Report - See Part B: Filed
herewith.
(3) Statement of Investments - See Part B: Filed
herewith.
(4) Statement of Assets and Liabilities - See Part B:
Filed herewith.
(5) Statement of Operations - See Part B: Filed
herewith.
(6) Statement of Changes in Net Assets - See Part B:
Filed herewith.
(7) Notes to Financial Statements - See Part B: Filed
herewith.
(b) Exhibits
--------
(1) (i) Articles of Incorporation dated 12/5/79:
Previously filed with Registrant's Post-Effective Amendment No. 48,
8/19/80, and refiled with Registrant's Post-Effective Amendment No.
75, 4/27/95, pursuant to Item 102 of Regulation S-T and
incorporated herein by reference.
(ii) Articles of Incorporation, amended as of
8/24/81: Previously filed with Registrant's Post-Effective
Amendment No. 50, 4/23/82, and refiled with Registrant's Post-
Effective Amendment No. 75, 4/27/95, pursuant to Item 102 of
Regulation S-T and incorporated herein by reference.
(iii) Articles of Amendment dated 4/28/87 to
Articles of Incorporation, changing Registrant's name from
"Hamilton Funds, Inc." to Oppenheimer Total Return Fund, Inc.":
Previously filed with Registrant's Post-Effective Amendment No. 62,
4/27/87, and refiled with Registrant's Post-Effective Amendment No.
75,4/27/95, pursuant to Item 102 of Regulation S-T and incorporated
herein by reference.
(iv) Articles of Amendment dated 3/23/93 to
Articles of Incorporation: Previously filed with Registrant's Post-
Effective Amendment No. 72, 4/28/93, refiled with Registrant's
Post-Effective Amendment No. 75, 4/27/95, pursuant to Item 102 of
Regulation S-T, and incorporated herein by reference.
(v) Articles Supplementary dated 4/14/93 to
Articles of Incorporation: Previously filed with Registrant's Post-
Effective Amendment No. 72, 4/28/93, refiled with Registrant's
Post-Effective Amendment No. 75, 4/27/95, pursuant to Item 102 of
Regulation S-T, and incorporated herein by reference.
(vi) Articles Supplementary dated 3/30/94 to
Articles of Incorporation: Filed herewith pursuant to Item 102 of
Regulation S-T.
(vii) Articles Supplementary dated 7/13/95 to
Articles of Incorporation: Filed with Registrant s Post-Effective
Amendment No. 77, 8/25/95, and incorporated herein by reference.
(2) By-Laws, as amended through 4/18/95: Filed with
Registrant s Post-Effective Amendment No. 77, 8/25/95, and
incorporated herein by reference..
(3) Not applicable.
(4) (i) Specimen Class A Share Certificate:
Previously filed with Registrant's Post-Effective Amendment No. 74,
3/29/94, and incorporated herein by reference.
(ii) Specimen Class B Share Certificate:
Previously filed with Registrant's Post-Effective Amendment No. 74,
3/29/94, and incorporated herein by reference.
(iii) Specimen Class C Share Certificate:
Previously filed with Registrant's Post-Effective Amendment No. 76,
6/24/95, and incorporated herein by reference.
(iv) Specimen Class Y Share Certificate:
Previously filed with Registrant Post-Effective Amendment No. 74,
3/29/94, and incorporated herein by reference.
(5) Investment Advisory Agreement between Registrant and
Oppenheimer Management Corporation dated 10/22/90: Previously filed
with Post-Effective Amendment No. 68, 2/28/91, refiled with
Registrant's Post-Effective Amendment No. 75, 4/27/95, pursuant to
Item 102 of Regulation S-T, and incorporated herein by reference.
(6) (i) General Distributor's Agreement between
Registrant and Oppenheimer Fund Management, Inc. dated 10/13/92:
Previously filed with Registrant's Post-Effective Amendment No. 71,
2/26/93, refiled with Registrant's Post-Effective Amendment No. 75,
4/27/95, pursuant to Item 102 of Regulation S-T and incorporated
herein by reference.
(ii) Form of Oppenheimer Funds Distributor, Inc.
Dealer Agreement: Filed with Post-Effective Amendment No. 12 to the
Registration Statement of Oppenheimer Main Street Funds, Inc. (Reg.
No. 33-17850), 9/30/94, and incorporated herein by reference.
(iii) Form of Oppenheimer Funds Distributor, Inc.
Broker Agreement: Filed with Post-Effective Amendment No. 12 to the
Registration Statement of Oppenheimer Main Street Funds, Inc. (Reg.
No. 33-17850), 9/30/94, and incorporated herein by reference.
(iv) Form of Oppenheimer Funds Distributor, Inc.
Agency Agreement: Filed with Post-Effective Amendment No. 12 to the
Registration Statement of Oppenheimer Main Street Funds (File No.
33-17850), 9/30/94, and incorporated herein by reference.
(v) Broker Agreement between Oppenheimer Fund
Management, Inc. and Newbridge Securities, Inc. dated 10/1/86:
Previously filed with Post-Effective Amendment No. 25 to the
Registration Statement of Oppenheimer Special Fund (Reg. No. 2-
45272), 11/1/86, and refiled with Post-Effective Amendment No. 45
of Oppenheimer Growth Fund (Reg. No. 2-45272), 8/22/94, and
incorporated herein by reference.
(7) Not applicable.
(8) Custody Agreement with The Bank of New York dated
10/6/92: Previously filed with Registrant's Post-Effective
Amendment No. 71, 2/26/93, and refiled with Post-Effective
Amendment No. 75, 4/27/95, and incorporated herein by reference.
(9) Not applicable.
(10) Opinion and Consent of Counsel dated 1/30/81:
Previously filed with Registrant's Post-Effective Amendment No. 57,
4/25/85, refiled with Post-Effective Amendment No. 75, 4/27/95,
pursuant to Item 102 of Regulation S-T, and incorporated herein by
reference.
(11) Independent Auditors' Consent: Filed herewith.
(12) Not applicable.
(13) Not applicable.
(14) (i) Form of Individual Retirement Account (IRA)
Trust Agreement: Filed with Post-Effective Amendment No. 21 to the
Registration Statement of Oppenheimer U.S. Government Trust (File
No. 2-76645), 8/25/93, and incorporated herein by reference.
(ii) Form of Tax Sheltered Retirement Plan and
Custody Agreement for employees of public schools and tax-exempt
organizations: Previously filed with Post-Effective Amendment No.
47 to the Registration Statement of Oppenheimer Growth Fund (File
No. 2-45272), 10/21/94, and incorporated herein by reference.
(iii) Form of Prototype 401(k) Plan: Filed with
Post-Effective Amendment No. 7 to the Registration Statement of
Oppenheimer Strategic Income & Growth Fund (Reg. No. 33-47378),
9/28/95, and incorporated herein by reference.
(iv) 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. 15 to the Registration Statement of
Oppenheimer Mortgage Income Fund (Reg. No. 33-6614), 1/19/95, and
incorporated herein by reference.
(v) Form of SAR-SEP Simplified Employee Pension
IRA: Filed with Post-Effective Amendment No. 15 to the Registration
Statement of Oppenheimer Mortgage Income Fund (Filed No. 33-7714),
1/19/95, and incorporated herein by reference.
(15) (i) Service Plan and Agreement for Class A Shares
dated 7/1/94, pursuant to Rule 12b-1 of the Investment Company Act
of 1940: Filed with Post-Effective Amendment No. 75, 4/27/95 and
incorporated herein by reference.
(ii) Distribution and Service Plan and Agreement
for Class B Shares dated 7/19/95, pursuant to Rule 12b-1 of the
Investment Company Act of 1940: Filed with Registrant s Post-
Effective Amendment No. 77, 8/25/95, and incorporated herein by
reference.
(iii) Distribution and Service Plan and Agreement
for Class C Shares dated 8/29/95, pursuant to Rule 12b-1 of the
Investment Company Act of 1940: Filed with Post-Effective Amendment
No. 76, 6/26/95, and incorporated herein by reference.
(16) Performance Calculations: Filed herewith.
(17) (i) Financial Data Schedule for Class A shares
for fiscal year ended 12/31/95: Filed herewith.
(ii) Financial Data Schedule for Class B shares
for fiscal year ended 12/31/95: Filed herewith.
(iii) Financial Data Schedule for Class C shares
for the period 8/29/95 (inception of class) to 12/31/95: Filed
herewith.
(iv) Financial Data Schedule for Class Y shares
for fiscal year ended 12/31/95: Filed herewith.
-- Powers of Attorney: Filed herewith (Bridget A.
Macaskill), previously filed (all other Directors) with
Registrant's Post-Effective Amendment No. 73, 1/28/94, and
incorporated herein by reference.
(18) Oppenheimer Funds Multiple Class Plan under Rule
18f-3, dated 10/24/95: filed with Post-effective Amendment No. 12
to the Registration Statement of Oppenheimer California Tax-Exempt
Fund (Reg. No. 33-23566), 11/1/95, and incorporated herein by
reference.
Item 25. Persons Controlled by or Under Common Control
with Registrant
- -------- ---------------------------------------------
None.
Item 26. Number of Holders of Securities
- -------- --------------------------------
Number of Record
Holders as of
Title of Class March 5, 1996
- -------------- ----------------
Class A Common Stock, Par Value $.10 103,147
Class B Common Stock, Par Value $.10 53,134
Class C Common Stock, Par Value $.10 319
Class Y Common Stock, Par Value $.10 1
Item 27. Indemnification
- -------- ---------------
Reference is made to Section 7(c) of Article SEVENTH of
Registrant's Articles of Incorporation filed as Exhibit 24(b)(1) to
this Registration Statement, and to Section 2-418 of the Maryland
General Corporation Law.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of Registrant pursuant to the foregoing
provisions or otherwise, Registrant has been advised that in the
opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by Registrant of expenses incurred or paid
by a director, officer or controlling person of Registrant in the
successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person, Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933
and will be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
- -------- ----------------------------------------------------
(a) OppenheimerFunds, Inc. is the investment adviser of the
Registrant; it and certain subsidiaries and affiliates act in the
same capacity to other registered investment companies as described
in Parts A and B hereof and listed in Item 28(b) below.
(b) There is set forth below information as to any other
business, profession, vocation or employment of a substantial
nature in which each officer and director of OppenheimerFunds, Inc.
is, or at any time during the past two fiscal years has been,
engaged for his/her own account or in the capacity of director,
officer, employee, partner or trustee.
<TABLE>
<CAPTION>
Name & Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- ------------------------------
<S> <C>
Mark Anson,
Vice President Formerly Vice President of
Equity Derivatives at Salomon
Brothers, Inc.
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
Robert J. Bishop,
Assistant Vice President Treasurer of the Oppenheimer
Funds (listed below);
previously a Fund Controller
for OppenheimerFunds, Inc.
(the "Manager").
Bruce Bartlett,
Vice President Vice President and Portfolio
Manager of Oppenheimer Total
Return Fund, Inc.,
Oppenheimer Main Street
Funds, Inc. and Oppenheimer
Variable Account Funds;
formerly a Vice President and
Senior Portfolio Manager at
First of America Investment
Corp.
Susan Burton,
Assistant Vice President None.
George Bowen,
Senior Vice President & Treasurer Treasurer of the New York-
based Oppenheimer Funds; Vice
President, Secretary and
Treasurer of the Denver-based
Oppenheimer Funds. Vice
President and Treasurer of
OppenheimerFunds Distributor,
Inc. (the "Distributor") and
HarbourView Asset Management
Corporation ("HarbourView"),
an investment adviser
subsidiary of the Manager;
Senior Vice President,
Treasurer, Assistant
Secretary and a director of
Centennial Asset Management
Corporation ("Centennial"),
an investment adviser
subsidiary of the Manager;
Vice President, Treasurer and
Secretary of Shareholder
Services, Inc. ("SSI") and
Shareholder Financial
Services, Inc. ("SFSI"),
transfer agent subsidiaries
of the Manager; President,
Treasurer and Director of
Centennial Capital
Corporation; Vice President
and Treasurer of Main Street
Advisers.
Michael A. Carbuto,
Vice President Vice President and Portfolio
Manager of Centennial
California Tax Exempt Trust,
Centennial New York Tax
Exempt Trust and Centennial
Tax Exempt Trust; Vice
President of Centennial.
Ruxandra Chivu,
Assistant Vice President None.
Lynn Coluccy,
Vice President Formerly Vice President /
Director of Internal Audit of
the Manager.
O. Leonard Darling,
Executive Vice President Formerly Co-Director of Fixed
Income for State Street
Research & Management Co.
Robert A. Densen,
Senior Vice President None.
Robert Doll, Jr.,
Executive Vice President Vice President and Portfolio
Manager of Oppenheimer Growth
Fund, Oppenheimer Variable
Account Funds; Senior Vice
President and Portfolio
Manager of Oppenheimer
Strategic Income & Growth
Fund; Vice President of
Oppenheimer Quest Value Fund,
Inc., Oppenheimer Quest
Officers Value Fund,
Oppenheimer Quest For Value
Funds and Oppenheimer Quest
Global Value Fund, Inc.
John Doney,
Vice President Vice President and Portfolio
Manager of Oppenheimer Equity
Income Fund.
Andrew J. Donohue,
Executive Vice President
& General Counsel Secretary of the New York-
based Oppenheimer Funds; Vice
President of the Denver-based
Oppenheimer Funds; Executive
Vice President, Director and
General Counsel of the
Distributor; President and a
Director of Cetennial;
formerly Senior Vice
President and Associate
General Counsel of the
Manager and the Distributor.
George Evans,
Vice President Vice President and Portfolio
Manager of Oppenheimer Global
Emerging Growth Fund.
Scott Farrar,
Assistant Vice President Assistant Treasurer of the
Oppenheimer Funds; previously
a Fund Controller for the
Manager.
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary
of OppenheimerFunds
Distributor, Inc.; Secretary
of HarbourView, Main Street
Advisers, Inc. and
Centennial; Secretary, Vice
President and Director of
Centennial Capital Corp.
Ronald H. Fielding,
Senior Vice President 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");
President and Director of
Rochester Fund Services, Inc.
("RFS"); President and
Director of Rochester Tax
Managed Fund, Inc.; Vice
President and Portfolio
Manager of Rochester Fund
Municipals and Rochester
Portfolio Series - Limited
Term New York Municipal Fund.
Jon S. Fossel,
Chairman of the Board and Director Director of OAC, the
Manager's parent holding
company; President, CEO and
a director of HarbourView; a
director of SSI and SFSI;
President, Director, Trustee,
and Managing General Partner
of the Denver-based
Oppenheimer Funds; President
and Chairman of the Board of
Main Street Advisers, Inc.;
formerly Chief Executive
Officer of the Manager.
John Fortuna,
Assistant Vice President None.
Robert G. Galli,
Vice Chairman Trustee of the New York-based
Oppenheimer Funds; Vice
President and Counsel of OAC;
formerly he held the
following positions: a
director of the Distributor,
Vice President and a director
of HarbourView and
Centennial, a director of
SFSI and SSI, an officer of
other Oppenheimer Funds and
Executive Vice President &
General Counsel of the
Manager and the Distributor.
Linda Gardner,
Assistant Vice President None.
Ginger Gonzalez,
Vice President Formerly 1st Vice President
/ Director of Creative
Services for Shearson Lehman
Brothers.
Mildred Gottlieb,
Assistant Vice President Formerly served as a Strategy
Consultant for the Private
Client Division of Merrill
Lynch.
Caryn Halbrecht,
Vice President Vice President and Portfolio
Manager of Oppenheimer
Insured Tax-Exempt Fund and
Oppenheimer Intermediate Tax
Exempt Fund; an officer of
other Oppenheimer Funds;
formerly Vice President of
Fixed Income Portfolio
Management at Bankers Trust.
Barbara Hennigar,
President and Chief Executive
Officer of OppenheimerFunds
Services, a division of the Manager President and Director of
SFSI.
Dorothy Hirshman,
Assistant Vice President None.
Alan Hoden,
Vice President None.
Merryl Hoffman,
Vice President None.
Scott T. Huebl,
Assistant Vice President None.
Jane Ingalls,
Assistant Vice President Formerly a Senior Associate
with Robinson, Lake/Sawyer
Miller.
Bennett Inkeles,
Assistant Vice President Formerly employed by Doremus
& Company, an advertising
agency.
Ronald Jamison,
Vice President Formerly Vice President and
Associate General Counsel at
Prudential Securities, Inc.
Frank Jennings,
Vice President Portfolio Manager of
Oppenheimer Global Growth &
Income Fund. Formerly a
Managing Director of Global
Equities at Paine Webber's
Mitchell Hutchins division.
Stephen Jobe,
Vice President None.
Heidi Kagan,
Assistant Vice President None.
Avram Kornberg,
Vice President Formerly a Vice President
with Bankers Trust.
Paul LaRocco,
Assistant Vice President Portfolio Manager of
Oppenheimer Variable Account
Funds; Associate Portfolio
Manager of Oppenheimer
Discovery Fund. Formerly a
Securities Analyst for
Columbus Circle Investors.
Mitchell J. Lindauer,
Vice President None.
Loretta McCarthy,
Executive Vice President None.
Bridget Macaskill,
President, Chief Executive Officer
and Director President, Director and
Trustee of the New York-based
and the Denver-based
Oppenheimer funds; President
and a Director of OAC,
HarbourView and Oppenheimer
Partnership Holdings, Inc.;
Director of Main Street
Advisers, Inc.; Chairman and
Director of SSI.
Timothy Martin,
Assistant Vice President Formerly Vice President,
Mortgage Trading, at S.N.
Phelps & Co.,
Salomon Brothers, and Kidder
Peabody.
Sally Marzouk,
Vice President None.
Marilyn Miller,
Vice President Formerly a Director of
marketing for TransAmerica
Fund Management Company.
Robert J. Milnamow,
Vice President Vice President and Portfolio
Manager of Oppenheimer Main
Street Funds, Inc. Formerly
a Portfolio Manager with
Phoenix Securities Group.
Denis R. Molleur,
Vice President None.
Kenneth Nadler,
Vice President None.
David Negri,
Vice President Vice President and Portfolio
Manager of Oppenheimer
Variable Account Funds,
Oppenheimer Strategic Income
Fund, Oppenheimer Strategic
Income & Growth Fund; an
officer of other Oppenheimer
Funds.
Barbara Niederbrach,
Assistant Vice President None.
Robert A. Nowaczyk,
Vice President None.
Robert E. Patterson,
Senior Vice President Vice President and Portfolio
Manager of Oppenheimer Main
Street Funds, Inc.,
Oppenheimer Multi-State Tax-
Exempt Trust, Oppenheimer
Tax-Exempt Fund, Oppenheimer
California Tax-Exempt Fund,
Oppenheimer New York Tax-
Exempt Fund and Oppenheimer
Tax-Free Bond Fund; Vice
President of The New York
Tax-Exempt Income Fund, Inc.;
Vice President of Oppenheimer
Multi-Sector Income Trust.
Tilghman G. Pitts III,
Executive Vice President
and Director Chairman and Director of the
Distributor.
Jane Putnam,
Vice President Associate Portfolio Manager
of Oppenheimer Growth Fund;
Vice President and Portfolio
Manager of Oppenheimer Target
Fund and Oppenheimer Variable
Account Funds. Formerly
Senior Investment Officer and
Portfolio Manager with
Chemical Bank.
Russell Read,
Vice President Formerly an International
Finance Consultant for Dow
Chemical.
Thomas Reedy,
Vice President Vice President of Oppenheimer
Multi-Sector Income Trust and
Oppenheimer Multi-Government
Trust; an officer of other
Oppenheimer Funds; formerly
a Securities Analyst for the
Manager.
David Robertson,
Vice President None.
Adam Rochlin,
Vice President Formerly a Product Manager
for Metropolitan Life
Insurance Company.
Michael S. Rosen
Vice President Vice President of RFS;
President and Director of
RFD; Vice President and
Director of FMC; Vice
President and director of
RCAI; General Partner of RCA;
Vice President and Director
of Rochester Tax Managed Fund
Inc.; Vice President and
Portfolio Manager of
Rochester Fund Series - The
Bond Fund For Growth.
David Rosenberg,
Vice President Vice President and Portfolio
Manager of Oppenheimer
Limited-Term Government Fund,
Oppenheimer U.S. Government
Trust and Oppenheimer
Integrity Funds. Formerly
Vice President and Senior
Portfolio Manager for
Delaware Investment Advisors.
Richard H. Rubinstein,
Vice President Vice President and Portfolio
Manager of Oppenheimer Asset
Allocation Fund, Oppenheimer
Fund and Oppenheimer Variable
Account Funds; an officer of
other Oppenheimer Funds;
formerly Vice President and
Portfolio Manager/Security
Analyst for Oppenheimer
Capital Corp., an investment
adviser.
Lawrence Rudnick,
Vice President Formerly Vice President of
Dollar Dry Dock Bank.
James Ruff,
Executive Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Diane Sobin,
Vice President Vice President and Portfolio
Manager of Oppenheimer Gold
& Special Minerals Fund,
Oppenheimer Total Return
Fund, Inc. Oppenheimer Main
Street Funds, Inc. and
Oppenheimer Variable Account
Funds; formerly a Vice
President and Senior
Portfolio Manager for Dean
Witter InterCapital, Inc.
Nancy Sperte,
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.
Arthur Steinmetz,
Senior Vice President Vice President and Portfolio
Manager of Oppenheimer
Strategic Income Fund,
Oppenheimer Strategic Income
& Growth Fund; an officer of
other Oppenheimer Funds.
Ralph Stellmacher,
Senior Vice President Vice President and Portfolio
Manager of Oppenheimer
Champion Income Fund and
Oppenheimer High Yield Fund;
an officer of other
Oppenheimer Funds.
John Stoma,
Vice President Formerly Vice President of
Pension Marketing with
Manulife Financial.
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee,
Director or Managing Partner
of the Denver-based
Oppenheimer Funds; President
and a Director
of Centennial; formerly
President and Director of
OAMC, and Chairman of the
Board of SSI.
James Tobin,
Vice President None.
Jay Tracey,
Vice President Vice President of the
Manager; Vice President and
Portfolio Manager of
Oppenheimer Discovery Fund,
Oppenheimer Global Emerging
Growth Fund and Oppenheimer
Enterprise Fund. Formerly
Managing Director of
Buckingham Capital
Management.
Gary Tyc,
Vice President, Assistant
Secretary and Assistant Treasurer Assistant Treasurer of the
Distributor and SFSI.
Jeffrey Van Giesen,
Vice President Formerly employed by Kidder
Peabody Asset Management.
Ashwin Vasan,
Vice President Vice President and Portfolio
Manager of Oppenheimer Multi-
Sector Income Trust,
Oppenheimer Multi-Government
Trust and Oppenheimer
International Bond Fund; an
officer of other Oppenheimer
Funds.
Valerie Victorson,
Vice President None.
Dorothy Warmack,
Vice President Vice President and Portfolio
Manager of Daily Cash
Accumulation Fund, Inc.,
Oppenheimer Cash Reserves,
Oppenheimer Variable Account
Funds, Centennial America
Fund, L.P., Centennial
Government Trust and
Centennial Money Market
Trust; Vice President of
Centennial.
Jerry Webman, Director of New York-based
Senior Vice President tax-exempt fixed income
Oppenheimer Funds; Formerly
Managing Director and Chief
Fixed Income Strategist at
Prudential Mutual Funds.
Christine Wells,
Vice President None.
William L. Wilby,
Senior Vice President Vice President and Portfolio
Manager of Oppenheimer
Variable Account Funds,
Oppenheimer Global Fund and
Oppenheimer Global Growth &
Income Fund; Vice President
of HarbourView; an officer of
other Oppenheimer Funds.
Carol Wolf,
Vice President Vice President and Portfolio
Manager of Oppenheimer Money
Market Fund, Inc., Centennial
America Fund, L.P.,
Centennial Government Trust,
Centennial Money Market Trust
and Daily Cash Accumulation
Fund, Inc.; Vice President of
Oppenheimer Multi-Sector
Income Trust; Vice President
of Centennial.
Robert G. Zack,
Senior Vice President and
Assistant Secretary Associate General Counsel of
the Manager; Assistant
Secretary of the Oppenheimer
Funds; Assistant Secretary of
SSI, SFSI; an officer of
other Oppenheimer Funds.
Eva A. Zeff,
Assistant Vice President An officer of certain
Oppenheimer Funds; formerly
a Securities Analyst for the
Manager.
Arthur J. Zimmer,
Vice President Vice President and Portfolio
Manager of Oppenheimer
Variable Account Funds,
Centennial America Fund,
L.P., Centennial Government
Trust, Centennial Money
Market Trust and Daily Cash
Accumulation Fund, Inc.; Vice
President of Oppenheimer
Multi-Sector Income Trust;
Vice President of Centennial;
an officer of other
Oppenheimer Funds.
</TABLE>
The Oppenheimer Funds include the New York-based
Oppenheimer Funds and the Denver-based Oppenheimer Funds set forth
below:
New York-based Oppenheimer Funds
- --------------------------------
Oppenheimer Asset Allocation Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Government Trust
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Tax-Exempt Trust
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest for Value Funds
Oppenheimer Target Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer U.S. Government Trust
Denver-based Oppenheimer Funds
- ------------------------------
Oppenheimer Cash Reserves
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Funds Trust
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Tax-Exempt Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Rochester-based Funds
- ---------------------
Bond Fund Series - Oppenheimer Bond Fund For
Growth
Rochester Fund Municipals
Rochester Portfolio Series - Limited Term
New York Municipal Fund
The address of OppenheimerFunds, Inc., the New York-based
Oppenheimer Funds, OppenheimerFunds Distributor, Inc., HarbourView
Asset Management Corp., Oppenheimer Partnership Holdings, Inc., and
Oppenheimer Acquisition Corp. is Two World Trade Center, New York,
New York 10048-0203.
The address of the Denver-based Oppenheimer Funds,
Shareholder Financial Services, Inc., Shareholder Services, Inc.,
OppenheimerFunds Services, Centennial Asset Management Corporation,
Centennial Capital Corp., and Main Street Advisers, Inc. is 3410
South Galena Street, Denver, Colorado 80231.
The address of the Rochester-based funds is 350 Linden
Oaks, Rochester, New York 14625-2807.
Item 29. Principal Underwriter
- -------- ---------------------
(a) OppenheimerFunds Distributor, Inc. is the Distributor of
Registrant's shares. It is also the Distributor of each of the
other registered open-end investment companies for which
OppenheimerFunds, Inc. is the investment adviser, as described in
Part A and B of this Registration Statement and listed in Item
28(b) above.
(b) The directors and officers of the Registrant's principal
underwriter are:
<TABLE>
<CAPTION>
Positions and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- -------------
<S> <C> <C>
Christopher Blunt Vice President None
6 Baker Avenue
Westport, CT 06880
George Clarence Bowen+ Vice President & Treasurer Vice President and
Treasurer of the
NY-based
Oppenheimer funds
/ Vice President,
Secretary and
Treasurer of the
Denver-based
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
Mary Ann Bruce* Senior Vice President - None
Financial Institution Div.
Robert Coli Vice President None
12 Whitetail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce DeLeon Ave.
Decatur, GA 30030
Bill Coughlin Vice President None
1400 Laurel Avenue
Apt. W710
Minneapolis, MN 55403
Mary Crooks+ Vice President None
Paul Delli-Bovi Vice President None
750 West Broadway
Apt. 5M
Long Beach, NY 11561
Andrew John Donohue* Executive Vice Secretary of
President & Director the New York-
based Oppen-heimer
funds / Vice
President of the
Denver-based
Oppen-heimer funds
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
Katherine P. Feld* Vice President & Secretary None
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding++ Vice President None
Reed F. Finley Vice President - None
1657 Graefield Financial Institution Div.
Birmingham, MI 48009
Wendy Fishler* Vice President - None
Financial Institution Div.
Ronald R. Foster Senior Vice President - None
11339 Avant Lane Eastern Division Manager
Cincinnati, OH 45249
Patricia Gadecki Vice President None
6026 First Ave. South,
Apt. 10
St. Petersburg, FL 33707
Luiggino Galleto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President - None
5506 Bryn Mawr Financial Institution Div.
Dallas, TX 75209
Ralph Grant* Vice President/National None
Sales Manager - Financial
Institution Div.
Sharon Hamilton Vice President None
720 N. Juanita Ave. - #1
Redondo Beach, CA 90277
Carla Jiminez Vice President None
609 Chimney Bluff Drive
Mt. Pleasant, SC 29464
Mark D. Johnson Vice President None
7512 Cromwell Dr. Apt 1
Clayton, MO 63105
Michael Keogh* Vice President None
Richard Klein Vice President None
4011 Queen Avenue South
Minneapolis, MN 55410
Ilene Kutno* Assistant Vice President None
Wayne A. LeBlang Senior Vice President - None
23 Fox Trail Director Eastern Div.
Lincolnshire, IL 60069
Dawn Lind Vice President - None
7 Maize Court Financial Institution Div.
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
Laura Mulhall* Senior Vice President - None
Director of Key Accounts
Charles Murray Vice President None
50 Deerwood Drive
Littleton, CO 80127
Joseph Norton Vice President None
1550 Bryant Street
San Francisco, CA 94103
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Randall Payne Vice President - None
1307 Wandering Way Dr. Financial Institution Div.
Charlotte, NC 28226
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice President None
19 Spinnaker Way
Portsmouth, NH 03801
Tilghman G. Pitts, III* Chairman & Director None
Elaine Puleo* Vice President - None
Financial Institution Div.
Minnie Ra Vice President - None
109 Peach Street Financial Institution Div.
Avenel, NJ 07001
Ian Robertson Vice President None
4204 Summit Wa
Marietta, GA 30066
Michael S. Rosen++ Vice President None
James Ruff* President None
Timothy Schoeffler Vice President None
3118 N. Military Road
Arlington, VA 22207
Mark Schon Vice President None
10483 E. Corrine Dr.
Scottsdale, AZ 85259
Michael Sciortino Vice President None
785 Beau Chene Dr.
Mandeville, LA 70448
James A. Shaw Vice President - None
5155 West Fair Place Financial Institution Div.
Littleton, CO 80123
Robert Shore Vice President - None
26 Baroness Lane Financial Institution Div.
Laguna Niguel, CA 92677
Peggy Spilker Vice President - None
2017 N. Cleveland, #2 Financial Institution Div.
Chicago, IL 60614
Michael Stenger Vice President None
C/O America Building
30 East Central Pkwy
Suite 1008
Cincinnati, OH 45202
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
David G. Thomas Vice President - None
111 South Joliet Circle Financial Institution Div.
#304
Aurora, CO 80112
Philip St. John Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Gary Paul Tyc+ Assistant Treasurer None
Mark Stephen Vandehey+ Vice President None
Gregory K. Wilson Vice President None
2 Side Hill Road
Westport, CT 06880
* Two World Trade Center, New York, NY 10048-0203
+ 3410 South Galena St., Denver, CO 80231
++ 350 Linden Oaks, Rochester, NY 14625-2807
</TABLE>
(c) Not applicable.
Item 30. Location of Accounts and Records
- -------- --------------------------------
The accounts, books and other documents required to be
maintained by Registrant pursuant to Section 31(a) of the
Investment Company Act of 1940 and rules promulgated thereunder are
in the possession of Oppenheimer Management Corporation, at its
offices at 3410 South Galena Street, Denver, Colorado 80231.
Item 31. Management Services
- -------- -------------------
Not applicable.
Item 32. Undertakings
- -------- ------------
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or
the Investment Company Act of 1940, the Registrant certifies that
it meets all of the requirements for the effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities
Act of 1933 has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Denver and State of Colorado on the 28th day of
March, 1996.
OPPENHEIMER TOTAL RETURN FUND, INC.
By: /s/ James C. Swain
-----------------------------------
James C. Swain, Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
Chairman of the Board of March 28, 1996
/s/ James C. Swain* Directors and Principal
- ------------------------ Executive Officer
James C. Swain
/s/ Bridget A. Macaskill* President and Director March 28, 1996
- ------------------------
Bridget A. Macaskill
/s/ George Bowen* Treasurer and Principal March 28, 1996
- ------------------ Financial and Accounting
George Bowen Officer
/s/ Robert G. Avis*
- -------------------- Director March 28, 1996
Robert G. Avis
/s/ Jon S. Fossel*
- -------------------- Director March 28, 1996
Jon S. Fossel
/s/ William A. Baker*
- --------------------- Director March 28, 1996
William A. Baker
/s/ Charles Conrad, Jr.*
- ----------------------- Director March 28, 1996
Charles Conrad, Jr.
/s/ Raymond J. Kalinowski*
- -------------------------- Director March 28, 1996
Raymond J. Kalinowski
/s/ C. Howard Kast* Director March 28, 1996
- -------------------
C. Howard Kast
/s/ Robert M. Kirchner*
- ------------------------ Director March 28, 1996
Robert M. Kirchner
/s/ Ned M. Steel*
- ----------------- Director March 28, 1996
Ned M. Steel
*By: /s/ Robert G. Zack
--------------------------------
Robert G. Zack, Attorney-in-Fact
<PAGE>
OPPENHEIMER TOTAL RETURN FUND, INC.
Post-Effective Amendment No. 78
EXHIBIT INDEX
Form N-1A
Item No. Description
- --------- -----------
24(b)(1)(vi) Articles Supplementary to Articles of
Incorporation dated 3/30/94
24(b)(11) Independent Auditors' Consent
24(b)(16) Performance Calculations
24(b)(17)(i) Financial Data Schedules for Class A Shares
24(b)(17)(ii) Financial Data Schedules for Class B Shares
24(b(17(iii) Financial Data Schedules for Class C Shares
24(b)(17)(iv) Financial Date Schedules For Class Y Shares
- -- Power of Attorney of Bridget A. Macaskill
</TABLE>
Exhibit 24(b)(1)(vi)
OPPENHEIMER TOTAL RETURN FUND, INC.
ARTICLES SUPPLEMENTARY
OPPENHEIMER TOTAL RETURN FUND, INC., an open-end investment
company registered under the Investment Company Act of 1940,
organized as a Maryland corporation having its principal office in
Maryland in the City of Baltimore (hereinafter called the
"Corporation"), hereby certifies that:
FIRST: Pursuant to authority contained in the charter of the
Corporation, as amended, and under Sections 2-208 and 2-208.1 of
the Maryland Corporation Code, fifty million (50,000,000) shares of
authorized but unissued Class A shares have been duly reclassified
by the Board of Directors as authorized but unissued Class Y
shares, par value ten (10) cents per share. Upon such
reclassification, the Corporation will have four hundred fifty
million (450,000,00) Class A shares, two hundred million
(200,000,000) Class B shares and fifty million (50,000,000) Class
Y shares authorized, each with a par value of ten (10) cents per
share and with an aggregate par value of $70,000,000. These
Articles Supplementary do not increase the number of authorized
shares of the Corporation, which remains at seven hundred million
(700,000,000) shares, par value ten (10) cents per share.
SECOND: Acting pursuant to paragraph (8) of Article IX of the
Articles of Incorporation as amended, the Board of Directors has
set the following preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of redemption of Class Y stock, together
with those set forth in other provisions of the Articles of
Incorporation relating to stock of the Corporation generally:
(1) As more fully set forth hereinafter, the liabilities
and the expenses of the Class Y shares shall be determined
separately from those of the Class A and Class B shares and
from those of any other class of the Corporation's stock and,
accordingly, the net asset value, the dividends and
distributions payable to holders, and the amounts
distributable in the event of liquidation of the Corporation
to holders of shares of the Corporation's stock may vary from
class to class. Article VIII of the Articles of
Incorporation, as amended, shall be construed in such manner
as to reflect the provisions of the immediately prior sentence
and of these Articles Supplementary generally. Except for
these differences and certain other differences hereinafter
set forth, the Class Y shares shall have the same preferences,
conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and
conditions of, and rights to require redemption as the Class
A and Class B shares and any other class of the Corporation's
stock that represents an interest in the same portfolio of
investments as the Class Y shares.
(2) The Class Y shares shall represent interests in the
same portfolio of investments as the Class A and Class B
shares.
(3) The dividends and distributions of investment income
and capital gains to holders of the Class Y shares shall be in
such amounts as may be declared from time to time by the Board
of Directors, and such dividends and distributions may vary
from the dividends and distributions of investment income and
capital gains to holders of the Class A and Class B shares and
any other class of the Corporation's stock to reflect
differing allocations of the liabilities and expenses of the
Corporation among the classes of shares and any resultant
differences among the net asset values per share of the
classes of shares, to such extent and for such purposes as the
Board of Directors may deem appropriate. The allocation of
investment income, capital gains, expenses and liabilities of
the Corporation among the Class A shares, the Class B shares,
the Class Y shares and any other class of the Corporation's
stock that represents an interest in the same portfolio of
investments as the Class Y shares shall be determined by the
Board of Directors in a manner that is consistent with the
order dated 11/23/93 (Investment Company Act of 1940 Release
No. 19821) issued by the Securities and Exchange Commission in
connection with the application for exemption filed by
Oppenheimer Management Corp., et al., and any existing or
future amendment to such order or any rule or interpretation
under the Investment Company Act of 1940 or its successor that
modifies or supersedes such order.
(4) Except as may otherwise be required by law pursuant
to any applicable order, rule or interpretation issued by the
Securities and Exchange Commission, or otherwise, the holders
of the Class Y shares shall have exclusive voting rights with
respect to any matter submitted to a vote of stockholders that
affects only holders of the Class Y shares and no voting
rights with respect to any matter submitted to a vote of
stockholders that does not affect holders of the Class Y
shares.
THIRD: The Class A shares aforesaid have been duly
reclassified by the Corporation's Board of Directors pursuant to
authority and power contained in the Corporation's Articles of
Incorporation, as amended.
IN WITNESS WHEREOF, Oppenheimer Total Return Fund, Inc. has
caused these Articles Supplementary to be executed by its Vice
President and witnessed by its Assistant Secretary on this 30th day
of March, 1994. The Vice President of the Corporation who signed
these Articles Supplementary acknowledges them to be the act of the
Corporation and states under the penalties of perjury that, to the
best of his knowledge, information and belief, the matters and
facts set forth herein relating to authorization and approval
hereof are true in all material respects.
OPPENHEIMER TOTAL RETURN FUND, INC.
By: /s/ Andrew J. Donohue (SEAL)
----------------------------------
Andrew J. Donohue
Vice President
WITNESS:
/s/ Robert G. Zack
- ------------------
Robert G. Zack
Assistant Secretary
MINUTES\420#4
Exhibit 24(b)(11)
INDEPENDENT AUDITORS' CONSENT
Oppenheimer Total Return Fund, Inc.:
We consent to the use in this Post-Effective Amendment No. 78 to
Registration Statement No. 2-11052 of Oppenheimer Total Return
Fund, Inc. of our report dated January 22, 1996 appearing in the
Statement of Additional Information, which is a part of such
Registration Statement, and to the reference to us under the
caption "Financial Highlights" appearing in the Prospectus, which
is also a part of such Registration Statement.
/s/ Deloitte & Touche
- --------------------------
DELOITTE & TOUCHE LLP
Denver, Colorado
March 27, 1996
Oppenheimer Total Return Fund, Inc.
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
03/31/86 0.0550 0.0000 7.880
06/30/86 0.0700 0.0000 8.060
09/29/86 0.0700 0.0000 7.700
12/29/86 0.1700 1.0300 6.800
03/30/87 0.0700 0.0000 7.930
06/26/87 0.0700 0.0950 8.010
09/25/87 0.0700 0.0000 8.520
12/24/87 0.1050 1.2750 6.010
03/25/88 0.0600 0.0000 6.220
06/24/88 0.0600 0.0100 6.570
09/23/88 0.0600 0.0000 6.360
12/23/88 0.0850 0.1100 6.270
03/23/89 0.0600 0.0000 6.520
06/23/89 0.0600 0.0000 6.990
09/22/89 0.0600 0.0000 7.300
12/22/89 0.0950 0.5900 6.550
03/23/90 0.0600 0.0000 6.600
06/22/90 0.0600 0.0450 6.710
09/21/90 0.0600 0.0000 6.100
12/21/90 0.0600 0.0150 6.110
03/22/91 0.0600 0.0000 6.900
06/21/91 0.0600 0.0000 7.000
09/20/91 0.0600 0.0000 7.600
12/20/91 0.0500 0.5550 6.910
03/27/92 0.0600 0.0000 7.580
06/26/92 0.0500 0.0150 6.960
09/25/92 0.0500 0.0000 7.260
12/21/92 0.0410 0.3580 7.630
03/26/93 0.0500 0.0000 8.180
06/25/93 0.0500 0.0150 8.450
09/24/93 0.0500 0.0000 9.000
12/23/93 0.0500 0.5684 8.480
03/25/94 0.0500 0.0000 8.740
06/24/94 0.0500 0.0000 7.780
09/23/94 0.0500 0.0000 8.120
12/27/94 0.0622 0.0000 7.790
03/24/95 0.0500 0.0000 8.260
06/23/95 0.0500 0.0000 8.920
09/22/95 0.0500 0.0000 9.440
12/26/95 0.0762 0.5478 9.270
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class B Shares
06/25/93 0.0460 0.0150 8.420
09/24/93 0.0400 0.0000 8.960
12/23/93 0.0231 0.5684 8.450
03/25/94 0.0410 0.0000 8.690
06/24/94 0.0350 0.0000 7.740
09/23/94 0.0350 0.0000 8.080
12/27/94 0.0453 0.0000 7.740
03/24/95 0.0350 0.0000 8.210
06/23/95 0.0320 0.0000 8.860
09/22/95 0.0320 0.0000 9.380
12/26/95 0.0567 0.5478 9.200
Class C Shares
09/22/95 0.0500 0.0000 9.430
12/26/95 0.0645 0.5478 9.240
Class Y Shares
06/24/94 0.0500 0.0000 7.780
09/23/94 0.0570 0.0000 8.120
12/27/94 0.0649 0.0000 7.780
03/24/95 0.0510 0.0000 8.260
06/22/95 0.0530 0.0000 8.920
09/22/95 0.0520 0.0000 9.440
12/26/95 0.0774 0.5478 9.270
1. Average Annual Total Returns for the Periods Ended 12/31/95:
The formula for calculating average annual total return is as follows:
1 ERV n
--------------- = n (---) - 1 = average annual total return
number of years P
Where: ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year
$1,226.38 1 $2,106.22 .2
(---------) - 1 = 22.64% (---------) - 1 = 16.06%
$1,000 $1,000
Ten Year
$3,680.62 .1
(---------) - 1 = 13.92%
$1,000
1. Average Annual Total Returns for the Periods Ended 12/31/95 (Continued):
Class B Shares
Example assuming a maximum contingent deferred sales charge of 5.00% for the
first year, and 3.00% for the inception year:
One Year Inception
$1,240.28 1 $1,312.71 .3750
(---------) - 1 = 24.03% (---------) - 1 = 10.74%
$1,000 $1,000
Class C Shares
Example assuming a maximum contingent deferred sales charge of 1.00% for the
inception year:
Inception
$1,078.24 2.9508
(---------) - 1 = 24.89%
$1,000
Class Y Shares
Example assuming a maximum contingent deferred sales charge of 0.00% for the
first year and 0.00% for the inception year:
One Year Inception
$1,302.26 1 $1,261.30 .6316
(---------) - 1 = 30.23% (---------) - 1 = 15.79%
$1,000 $1,000
Examples at NAV:
Class A Shares
One Year Five Year
$1,301.23 1 $2,234.73 .2
(---------) - 1 = 30.12% (---------) - 1 = 17.45%
$1,000 $1,000
Ten Year
$3,905.21 .1
(---------) - 1 = 14.59%
$1,000
Class B Shares
One Year Inception
$1,290.28 1 $1,342.71 .3750
(---------) - 1 = 29.03% (---------) - 1 = 11.68%
$1,000 $1,000
1. Average Annual Total Returns for the Periods Ended 12/31/95 (Continued):
Examples at NAV:
Class C Shares
Inception
$1,088.24 2.9508
(---------) - 1 = 28.34%
$1,000
Class Y Shares
One Year Inception
$1,302.26 1 $1,261.30 .6316
(---------) - 1 = 30.23% (---------) - 1 = 15.79%
$1,000 $1,000
2. Cumulative Total Returns for the Periods Ended 12/31/95:
The formula for calculating cumulative total return is as follows:
ERV - P
------- = Cumulative Total Return
P
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year
$1,226.38 - $1,000 $2,106.22 - $1,000
------------------ = 22.64% ------------------ = 110.62%
$1,000 $1,000
Ten Year
$3,680.62 - $1,000
------------------ = 268.06%
$1,000
Class B Shares
Example assuming a maximum contingent deferred sales charge of 5.00% for the
first year, and 3.00% for the inception year:
One Year Inception Year
$1,240.28 - $1,000 $1,312.71 - $1,000
------------------ = 24.03% ------------------ = 31.27%
$1,000 $1,000
2. Cumulative Total Returns for the Periods Ended 12/31/95 (Continued):
Class C Shares
Example assuming a maximum contingent deferred sales charge of 1.00% for the
inception year:
Inception
$1,078.24 - $1,000
------------------ = 7.82%
$1,000
Class Y Shares
Example assuming a maximum contingent deferred sales charge of 0.00% for the
first year, and 0.00% for the inception year:
One Year Inception
$1,302.26 - $1,000 $1,261.30 - $1,000
------------------ = 30.23% ------------------ = 26.13%
$1,000 $1,000
Examples at NAV:
Class A Shares
One Year Five Year
$1,301.23 - $1,000 $2,234.73 - $1,000
------------------ = 30.12% ------------------ = 123.47%
$1,000 $1,000
Ten Year
$3,905.21 - $1,000
------------------ = 290.52%
$1,000
Class B Shares
One Year Inception
$1,290.28 - $1,000 $1,342.71 - $1,000
------------------ = 29.03% ------------------ = 34.27%
$1,000 $1,000
Class C Shares
Inception
$1,088.24 - $1,000
------------------ = 8.82%
$1,000
2. Cumulative Total Returns for the Periods Ended 12/31/95 (Continued):
Examples at NAV:
Class Y Shares
One Year Inception
$1,302.26 - $1,000 $1,261.30 - $1,000
------------------ = 30.23% ------------------ = 26.13%
$1,000 $1,000
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
constitutes and appoints Andrew J. Donohue or Robert G. Zack, and
each of them, her true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for her and in
her capacity as a trustee of OPPENHEIMER TOTAL RETURN FUND, INC.,
a Maryland corporation (the "Fund"), to sign on her behalf any and
all Registration Statements (including any post-effective
amendments to Registration Statements) under the Securities Act of
1933, the Investment Company Act of 1940 and any amendments and
supplements thereto, and other documents in connection thereunder,
and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about
the premises, as fully as to all intents and purposes as she might
or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, and each of them, may lawfully
do or cause to be done by virtue hereof.
Dated this 24th day of October, 1995.
/s/ Bridget A. Macaskill
- ---------------------------------
Bridget A. Macaskill
POWERS\BAMDEN.POA
