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. 80 / X /
--
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 37 / X /
OPPENHEIMER TOTAL RETURN FUND, INC.
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(Exact Name of Registrant as Specified in Charter)
6803 South Tucson Way, Englewood, Colorado 80112
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(Address of Principal Executive Offices)
303-768-3200
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(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
Oppenheimer Management Corporation, Suite 3400
Two World Trade Center, New York, New York 10048-0203
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
/ / Immediately upon filing pursuant to paragraph (b)
/ / On ______________ pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ X / On April 30, 1998 pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / On ________________ pursuant to paragraph (a)(2) of Rule 485
<PAGE>
FORM N-1A
OPPENHEIMER TOTAL RETURN FUND, INC.
Cross Reference Sheet
Part A of
Form N-1A
Item No. Prospectus Heading
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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
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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 *
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* Not applicable or negative answer.
<PAGE>
OPPENHEIMER TOTAL RETURN FUND, INC.
Prospectus dated April 30, 1998
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. Please refer to "Investment Objective and Policies" for more information
on the types of securities the Fund invests in and refer to "Investment Risks"
for a discussion of the risks of investing in the Fund.
This Prospectus explains concisely what you should know before investing
in the Fund. Please read this Prospectus carefully and keep it for future
reference. You can find more detailed information about the Fund in the April
30, 1998 Statement of Additional Information. For a free copy, call
OppenheimerFunds Services, the Fund's Transfer Agent, at 1-800-525-7048, or
write to the Transfer Agent at the address on the back cover. The Statement of
Additional Information has been filed with the Securities and Exchange
Commission 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, are not insured by the F.D.I.C. or any other agency, and
involve investment risks, including the possible loss of the principal amount
invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
Contents
ABOUT THE FUND
Expenses
A Brief Overview of the Fund
Financial Highlights
Investment Objective and Policies
Investment Risks
Investment Techniques and Strategies
How the Fund is Managed
Performance of the Fund
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Class Y Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
A-1 Appendix A: 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 numbers below are
based on the Fund's expenses during its last fiscal year ended December 31,
1997.
o Shareholder Transaction Expenses are charges you pay when you buy or sell
shares of the Fund. Please refer to "About Your Account," starting on pages 24,
for an explanation of how and when these charges apply.
Class A Class B Class C Class Y
Shares Shares Shares Shares
Maximum Sales Charge on 5.75% None None None
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Purchases (as a % of offering price)
Maximum Deferred Sales None(1) 5% in the 1% if shares None
Charge as a % of the lower of the first year, are redeemed
original offering price or declining to within 12
redemption proceeds) 1% in the months of
sixth year purchase(2)
and
eliminated
thereafter(2)
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Maximum Sales Charge On None None None None
Reinvested Dividends
Exchange Fee None None None None
Redemption Fee None(3) None(3) None(3) None(3)
(1) If you invest $1 million or more ($500,000 or more for purchases "Retirement
Plans" as defined in "Class a Contingent Deferred Sales Charge" on page __), in
Class A shares, you may have to pay a sales charge of up to 1% if you sell your
shares within 12 calendar months (18 months for shares purchased prior to May 1,
1997) from the end of the calendar month during which you purchased those
shares. See "How to Buy Shares -- Buying Class A Shares," below.
(2) See "How to Buy Shares - Buying Class B Shares" and "How to Buy Shares
Buying Class C Shares," below, for more information on 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.
o Annual Fund Operating Expenses are paid out of the Fund's assets and
represent the Fund's expenses in operating its business. For example, the Fund
pays management fees to its investment adviser, OppenheimerFunds, Inc. (which is
referred to in this Prospectus as the "Manager"). The rates of the Manager's
fees are set forth in "How the Fund is Managed," below. The Fund has other
regular expenses for services, such as transfer agent fees, custodial fees paid
to the bank that holds the Fund's portfolio securities, audit fees and legal
expenses. Those expenses are detailed in the Fund's Financial Statements in the
Statement of Additional Information.
Annual Fund Operating Expenses (as a Percentage of Average Net Assets):
Class A Class B Class C Class Y
Shares Shares Shares Shares
Average Net Assets
Management Fees ___% ___% ___% ___%
12b-1 Plan Fees ___% ___% ___% ___%
Other Expenses ___% ___% ___% ___%
Total Fund Operating
Expenses ___% ___% ___% ___%
The numbers in the table above are based upon the Fund's expenses in its last
fiscal year ended December 31, 1997. These amounts are shown as a percentage of
the average net assets of each class of the Fund's shares for that year. The
12b-1 Plan Fees for Class A shares are the service fees. The maximum is 0.25% of
average net assets of that class. For Class B and Class C shares, the 12b-1 Plan
fees are the service plan fees (the maximum fee for each class is 0.25% of
average annual net assets of the respective class) and the asset-based sales
charge of 0.75% of the average annual net assets of the respective class. These
plans are described in greater detail in "How to Buy Shares," below. The actual
expenses for each class of shares in future years may be more or less than the
numbers in the table, depending on a number of factors, including charges in the
actual value of the Fund's assets represented by each class of shares.
o Examples. To try to show the effect of these expenses on an investment
over time, we have created the hypothetical examples shown below. Assume that
you make a $1,000 investment in each class of shares of the Fund, and 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 $__ $__ $___ $___
Class B Shares $__ $__ $___ $___
Class C Shares $__ $__ $__ $___
Class Y Shares $ __ $__ $__ $__
If you did not redeem your investment, it would incur the following expenses:
1 year 3 years 5 years 10 years*
Class A Shares $__ $__ $___ $___
Class B Shares $__ $__ $__ $___
Class C Shares $__ $__ $__ $___
Class Y Shares $__ $__ $__ $__
*In the first example, expenses include the Class A initial sales charge and the
applicable Class B or Class C contingent deferred sales charge. In the second
example, Class A expenses include the initial sales charge but Class B and Class
C expenses do not include contingent deferred sales charges. The Class B
expenses in years 7 through 10 are based on the Class A expenses shown above,
because the Fund automatically converts your Class B shares into Class A shares
after 6 years. Because of the effect of the asset-based sales charge and the
contingent deferred sales charge on Class B and Class C shares, long-term Class
B and Class C shareholders could pay the economic equivalent of 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.
o What Is The Fund's Investment Objective? The Fund's investment objective
is to seek high total return.
o 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 that 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 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 __.
o Who Manages the Fund? The Fund's investment adviser is OppenheimerFunds,
Inc (the "Manager"). The Manager (including subsidiaries) manages investment
company portfolios having over $75 billion in assets. The Fund's portfolio
managers are Bruce Bartlett and John Doney, 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.
o How Risky is the Fund? All investments carry risks to some degree. The
Fund's investments in stocks and bonds are subject to changes in their value
from a number of factors such as changes in general stock and bond 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" and "Investment Risks"
starting on page __ for a more complete discussion of the Fund's investment
risks.
o How Can I Buy Shares? You can buy shares through your dealer or financial
institution, or you can purchase shares directly through the Distributor by
completing an Application or by using an Automatic Investment Plan under
AccountLink. Please refer to "How to Buy Shares" on page __ for more details.
o Will I Pay a Sales Charge to Buy Shares? The Fund offers the individual
investor three classes of shares. All classes have the same investment portfolio
but different expenses. Class A shares are offered with a front-end sales
charge, starting at 5.75%, and reduced for larger purchases.
Class B shares are offered without a front-end sales charge, but may be subject
to a contingent deferred sales charge (starting at 5% and declining as shares
are held longer) if redeemed within 6 years purchase. Class C shares are offered
without a front-end sales charge, but may be subject to a contingent deferred
sales charge of 1% if redeemed within 2 months of purchase. There is also an
annual asset-based sales charges on Class B and Class C shares. Please review
"How To Buy Shares" starting on page __ for more details, including a discussion
about factors you and your financial advisor should consider in determining
which class may be appropriate for you.
o How Can I Sell My Shares? Shares can be redeemed by mail or by telephone
call to the Transfer Agent on any business day, or through your dealer. Please
refer to "How to Sell Shares" starting on page __. The Fund also offers exchange
privileges to other Oppenheimer funds, described in "How To Exchange Shares" on
page __.
o How Has the Fund Performed? The Fund measures its performance by quoting
its total returns, average annual total returns and cumulative total returns,
which measure historical performance. Those returns can be compared to the
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-based market index, which we have done on pages
__ and __. 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, 1997 is included in
the Statement of Additional Information.
Investment Objective and Policies
Objective. The Fund's investment objective is to seek high total return. Total
return is the change in value of an investment in shares of the Fund over time,
taking into account changes in share price from reinvested income and capital
appreciation.
Investment Policies and Strategies. In seeking its objective, the Fund may at
times emphasize seeking income and at other times seeking capital appreciation,
or it may do both. The Fund's investment advisor, OppenheimerFunds, Inc. ( "the
Manager"), does not allocate the Fund's assets between investments to seek
income and capital appreciation according to a formula or fixed ratio. However,
normally the Fund holds investments to seek both capital appreciation and
income.
The Fund's investments are not limited to any specific types of securities.
The principal types of securities the Fund invests in, and the risks of those
investments, are described in the sections of this Prospectus that follow. In
general, when seeking capital appreciation, the Fund emphasizes investments in
common stocks of companies of different ranges of market capitalization
(focusing more on medium to large capitalization companies), but does not invest
substantially in speculative securities or stocks that the manager believes
involve undue risk.
To seek income, the Fund may purchase a variety of income producing
securities such as debentures, preferred stock, convertible bonds and notes and
U.S. Government and foreign government securities. While the Fund seeks to pay
dividends, the amount of dividends paid will fluctuate over time. The Fund may
also hold commercial paper and other short-term U.S. Government securities or
other cash equivalents for certain purposes including liquidity, pending the
purchase of other securities, or when the portfolio manager believes that the
market is unfavorable for other types of investments.
In selecting securities for the Fund, the portfolio managers of the Fund may
employ a variety of investment techniques or "styles" such as "value investing"
(searching for what the portfolio manger believes are undervalued stocks, or
out-of-favor stocks) and "growth investing" (searching for stocks of companies
the portfolio manger believes have potential for growth in earnings or other
factors affecting their stock price). The use of a particular method in
selecting securities for the Fund may change over time.
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. Additional Information about the types of securities the Fund invests in
and the strategies used by the manager in selecting them is contained in the
Statement of Additional Information under the same headings used in this
Prospectus.
The Fund is designed for investors seeking total return over the long term.
Because investing in the different types of securities involves different risks,
discussed below, there can be no assurances the Fund will be successful in
meeting its objective.
o Can the Fund's Investment Objective and Policies Change? The Fund has an
investment objective, described above, as well as investment policies it follows
to try to achieve its objective. Additionally, the Fund uses certain investment
techniques and strategies in carrying out those investment policies. The Fund's
investment policies and 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.
o Portfolio Turnover. "Portfolio turnover" describes that rate at which the
Fund traded its portfolio securities during its last fiscal year. For example,
if a fund sold all of its securities during the year, its portfolio turnover
rate would have been 100%. Portfolio turnover affects brokerage costs the Fund
pays. The Fund ordinarily does not engage in short-term trading to try to
achieve its objectives. As a result, the Fund's portfolio turnover is not
expected to be more than 150% each year. The "Financial Highlights table" above,
shows the Fund's portfolio turnover rate during past fiscal years.
Investment Risks
All investments carry risks to some degree, whether they are risks that market
prices of the investment will fluctuate (this is known as "market risk") or that
the underlying issuer will experience financial difficulties and may default on
its obligation under a fixed-income investment to pay interest and repay
principal (this is referred to as "credit risk"). These general investment
risks, and the special risks of certain types of investments that the Fund may
hold are described below. They affect the value of the Fund's investments, its
investment performance, and the prices of its shares. These risks collectively
form the risk profile of the Fund.
Because of the types of securities the Fund invests in and the investment
techniques the Fund uses, some of which may be speculative, the Fund is designed
for those investors who are investing for the long-term and who are willing to
accept greater risks of loss of their capital in the hope of achieving capital
appreciation. The Fund is not intended for investors whose principal objective
is assured income and conservation of capital. Investing for capital
appreciation entails the risk of loss of all or part of your principal. 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, and when you redeem
your shares, they may be worth more or less than what you paid for them.
o Stock Investment Risks. Because the Fund invests a substantial portion of
its assets in stocks, the value of the Fund's portfolio will be affected by
changes in the stock markets. At times, the stock markets can be volatile and
stock prices can change substantially. This market risk will affect the Fund's
net asset 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 not all stock markets move in the same direction at the same time.
Other factors can affect a particular stock's prices such as poor earnings
reports by an issuer, loss of major customers, major litigation against an
issuer or changes in government regulations affecting an industry. Not all of
these factors can be predicted.
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.
o Interest Rate Risks. In addition to credit risks, described below, 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 values of already-issued debt securities generally rise. When interest
rates rise, the values of already-issued debt securities generally decline. The
magnitude of these fluctuations will often be greater for longer-term debt
securities than shorter-term debt securities. Changes in the value of securities
held by the Fund mean that the Fund's share prices can go up or down when
interest rates change because of the effect of the change on the value of the
Fund's portfolio of debt securities.
o Special Risks of Lower-Grade Securities. The Manager may select high-yield,
below investment grade debt securities (including both rated and unrated
securities). These "lower-grade" securities are commonly known as "junk bonds."
All corporate debt securities (whether foreign or domestic) are subject to some
degree of credit risk. Credit risk relates to the ability of the issuer to meet
interest or principal payments on a security as they become due. Generally,
higher yielding lower-grade securities whether rated or unrated, often have
speculative characteristics and special risks that make them riskier investments
than investment grade securities and are subject to greater credit risks than
higher-rated 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
and principal due on the bonds and the issuer's low creditworthiness may
increase the potential for its insolvency. A decline in their values is also
likely during a general economic downturn. An economic downturn or an increase
in interest rates could severely disrupt the market for high yield bonds and
adversely affect the value of outstanding bonds and the ability of the issuers
to repay principal and interest. For foreign lower-grade debt securities, these
risks are in addition to the risks of investing in foreign securities, described
below. These risks mean that 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, the Fund's
limitations on investments in these types of securities may reduce some of the
risk, as will the Fund's policy of diversifying its investments. Also,
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 other risk factors.
o Foreign Securities have Special Risks. The Fund may invest in foreign
securities. While foreign securities offer special investment opportunities,
there are also 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. The Fund can invest in
securities in any country, developed or undeveloped, including "emerging"
markets. In general, "emerging" markets may offer special investment
opportunities because their securities markets, industries, capital structure
and consumer consumption are growing rapidly, but these countries involve
special risks not present in mature foreign markets. More information about the
risks and potential rewards of investing in foreign securities is contained in
the Statement of Additional Information.
o 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 attempts
to limit 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.
o 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 on which the
derivative is based, and the derivative itself, 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."
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.
o 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.
o Investments in Convertible Securities. A convertible security is a bond,
debenture, note, preferred stock or other security that may be converted into or
exchanged for a prescribed amount of common stock within a particular period of
time at a specified price or formula. A convertible security entitles the holder
to receive interest paid or accrued on debt or dividends paid on preferred stock
until the convertible security matures or is redeemed, converted or exchanged.
When investing in convertible securities, the Manager looks to the conversion
feature and treats the securities as "equity equivalents" because of the
conversion feature.
o 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. "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. While securities rated "Baa" by Moody's or "BBB" by Standard & Poor's
or Duff & Phelps are investment grade and are not regarded as "junk bonds,"
those securities may be subject to special risks as described in "Investment
Risks," above.
o 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.
o Hedging. The Fund may buy 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.
o Futures. The Fund may buy and sell futures contracts that relate to (1)
broadly-based stock indices (these are referred to as "Stock Index Futures"),
(2) interest rates (these are referred to as "Interest Rate Futures") (3) other
securities indexes (these are referred to as "Financial Futures"), and (4)
commodities (these are referred to as "Commodities Futures"). All of these
Futures are described in the Statement of Additional Information.
o Put and Call Options. The Fund may buy and sell exchange-traded and
over-the-counter put and call options, including index options, securities
options, currency options, commodities options, and options on the other types
of futures described in "Futures," above. A call or put may be purchased only
if, after the purchase, the value of all call and put options held by the Fund
will not exceed 5% of the Fund's total assets.
If the Fund sells (that is, writes) a call option, it must be "covered." That
means the Fund must own the security subject to the call while the call is
outstanding, or, for other types of written calls, the Fund must segregate
liquid assets to enable it to satisfy its obligations if the call is exercised.
Up to 25% of the Fund's total assets may be subject to calls.
The Fund may buy puts whether or not it holds the underlying investment in
the portfolio. If the Fund writes a put, the put must be covered by segregated
liquid assets. The Fund will not write puts if more than 50% of the Fund's net
assets would have to be segregated to cover put options.
o Forward Contracts. Forward Contracts are foreign currency exchange
contracts. They are used to buy or sell foreign currency for future delivery at
a fixed price. The Fund 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.
Other Investment Techniques and Strategies. The Fund may also use the following
investment techniques and strategies. These techniques involve certain risks.
The Statement of Additional Information contains more information about these
practices, including limitations on their use that may help to reduce some of
the risks.
o 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
(the Board may increase that limit to 15%). The Fund's percentage limitation on
these investments does not apply to certain restricted securities that are
eligible for resale to qualified institutional purchasers. Illiquid securities
include repurchase agreements maturing in more than seven days, or certain
participation interests other than those with puts exercisable within seven
days. The Manager monitors holdings of illiquid securities on an ongoing basis
and at times the Fund may be required to sell some holdings to maintain adequate
liquidity. See "Restricted and Illiquid Securities" in the Statement of
Additional Information for further details.
o 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
causes more than 10% of its net assets to be subject to repurchase agreements
having a maturity beyond seven days. There is no limit on the amount of the
Fund's net assets that may be subject to repurchase agreements having maturities
of seven days or less. See the Statement of Additional Information for more
details.
o Real Estate Investment Trusts. The Fund cannot invest in real estate or in
interests in real estate, the Fund may purchase securities of companies holding
real estate or interests therein, including real estate investment trusts
("REITs") and real estate limited partnerships. REITs and real estate limited
partnerships seek to earn profits for investors by managing income-producing
real estate or lending money to developers. Assets are generally managed by one
or more trustees (in the case of a REIT) or general partners (in the case of a
real estate limited partnership) who control acquisitions and investments. There
are special risks associated with these type of investments. The value of the
Fund's investments in REITs or real estate limited partnerships will be affected
by changes in the values of the underlying real estate investments as well as
changes in interest rates. At times, the real estate market can be volatile and
prices can changes substantially. These risks may affect the Fund's net asset
values per share.
o 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:
o The Fund cannot borrow money, except for temporary, emergency purposes or
under other unusual circumstances.
o The Fund cannot make loans, except that the Fund may purchase debt
securities and enter into repurchase agreements or when-issued, delayed
delivery or similar securities transactions, and may lend its portfolio
securities.
o The Fund cannot buy securities issued or guaranteed by any one issuer
(except the U.S. Government or any of its agencies or instrumentalities)
if, with respect to 75% of its total assets, more than 5% of the Fund's
total assets would be invested in securities of that issuer, or the Fund
would then own more than 10% of that issuer's voting securities.
o 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 total assets would consist of securities of companies in
that industry.
o The Fund may not mortgage, pledge or hypothecate securities; however, the
Fund may enter into the escrow arrangements contemplated by the writing of
covered call options or other collateral or margin arrangements in
connection with any investments.
Unless the prospectus states that a percentage restriction applies on an
ongoing basis, it applies only at the time that Fund makes an investment and the
Fund need not sell securities to meet the percentage limits if the value of the
investment increases in proportion to the size of the Fund. Other investment
restrictions are listed in "Investment Restrictions" in the Statement of
Additional Information.
How the Fund is Managed
Organization and History. The Fund 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 to call a shareholder meeting 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, which is
responsible for selecting the Fund's investments and handling 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 subsidiaries) currently manages investment companies, including other
Oppenheimer funds, with assets of more than $75 billion, held in more than 3.5
million shareholder accounts as of December 31, 1997. The Manager is owned by
Oppenheimer Acquisition Corp., a holding company that is owned in part by senior
officers of the Manager and controlled by Massachusetts Mutual Life Insurance
Company.
The management services provided to the Fund by the Manager, and the services
provided by the Distributor and the Transfer Agent to shareholders, depend on
the smooth functioning of their computer systems. Many computer software systems
in use today cannot distinguish the year 2000 from the year 1900 because of the
way dates are encoded and calculated. That failure could have a negative impact
on handling securities trades, pricing and account services. The Manager, the
Distributor and Transfer Agent have been actively working on necessary changes
to their computer systems to deal with the year 2000 and expect that their
systems will be adapted in time for that event, although there cannot be
assurance of success.
o Portfolio Managers. The portfolio managers of the Fund are Bruce Bartlett
and John Doney. Since July 5, 1995 and July 1997, respectively, they have been
the individuals primarily responsible for the day-to-day management of the
Fund's portfolio. Prior to joining the Manager in April 1995, Mr. Bartlett was a
Vice President and Senior Portfolio Manager with First of America Investment
Corporation. Mr. Doney has been a Vice President of the Manager since June 1992
and is a Portfolio Manager of other Oppenheimer Funds. For more information
about the Fund's other officers and Directors, see "Directors and Officers of
the Fund" in the Statement of Additional Information.
o 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 during its last
fiscal year was ____% 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, certain Directors' fees, transfer agency fees, legal and auditing costs.
Those expenses are paid out of the Fund's assets and are not paid directly by
shareholders. However, those expenses reduce the net asset value of shares, and
therefore are indirectly borne by shareholders through their investment. More
information about the investment advisory agreement and the other expenses paid
by the Fund is contained in the Statement of Additional Information.
There is also information about the Fund's brokerage policies and practices
in "Brokerage Policies of the Fund" in the Statement of Additional Information.
That section discusses how brokers and dealers are selected for the Fund's
portfolio transactions. When deciding which brokers to use, the Manager is
permitted by the investment advisory agreement to consider whether brokers have
sold shares of the Fund or any other funds for which the Manager serves as
investment adviser.
o The Distributor. The Fund's shares are sold through dealers, brokers and
other financial institutions that have a sales agreement with OppenheimerFunds
Distributor, Inc., a subsidiary of the Manager that acts as the Fund's
Distributor. The Distributor also distributes the shares of the other
Oppenheimer funds managed by the Manager and is sub-distributor for funds
managed by a subsidiary of the Manager.
o The Transfer Agent. The Fund's transfer agent is OppenheimerFunds Services,
a division of the Manager, which acts as the shareholder servicing agent for the
Fund on an "at-cost" basis. It also acts as the shareholder servicing agent for
other Oppenheimer funds. Shareholders should direct inquiries about their
accounts to the Transfer Agent at the address and toll-free number shown below
in this Prospectus and on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms "total return"
and "average annual total return" to illustrate its performance. The performance
of each class of shares is shown separately, because the performance of each
class of shares will usually be different as a result of the different kinds of
expenses each class bears. These returns measure the performance of a
hypothetical investment in the Fund over various periods, and do not show the
performance of each shareholder's investment (which will vary if dividends and
distributions are received in cash or shares are sold or additional shares are
purchased). This performance information may be useful to help you see how well
your investment has done and to compare it to other funds or a market index, as
we have done below.
It is important to understand that the Fund's total returns represent past
performance and should not be considered to be predictions of future returns or
performance. 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.
o Total Returns. There are different types of total returns used to measure
the Fund's performance. Total return is the change in value of a hypothetical
investment in the Fund over a given period, assuming that all dividends and
capital gains distributions are reinvested in additional shares. The cumulative
total return measures the change in value over the entire period (for example,
ten years). An average annual total return shows the average rate of return for
each year in a period that would produce the cumulative total return over the
entire period. However, average annual total returns do not show the Fund's
actual year-by-year performance.
When total returns are quoted for Class A shares, normally the current
maximum initial sales charge has been deducted. When total returns are shown for
Class B or Class C shares, normally the contingent deferred sales charge that
applies to the period for which total return is shown has been deducted. When
total returns are quoted for Class Y shares, there is no sales charge which is
deducted. However, total returns for Class A, Class B and Class C shares may
also be quoted "at net asset value," without considering the effect of the sales
charge, and those returns would be less if sales charges were deducted.
How Has the Fund Performed? Below is a discussion by the Manager of the Fund's
performance during its last fiscal year ended December 31, 1997, followed by a
graphical comparison of the Fund's performance to an appropriate broad-based
market index.
o Management's Discussion of Performance. During the Fund's fiscal year ended
December 31, 1997, The Fund's portfolio holdings, allocations and strategies are
subject to change.
o Comparing the Fund's Performance to the Market. The graphs below show the
performance of a hypothetical $10,000 investment in Class A, Class B, Class C
and Class Y shares of the Fund held until December 31, 1997. In the case of
Class A shares, performance is measured 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 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
of the Fund at 12/31/97 (1) of the Fund at 12/31/97(2)
- ---------------------------- ------------------------
A Shares 1-Year 5-Years 10 Years
----% ----% ----%
B Shares 1-Year Life (2)
----% ----%
C Shares 1-Year Life
----% ----%
Y Shares 1-Year Life
----% ----%
- ---------------------
Total returns and the ending account value in the graph show change in share
value and include the reinvestment of all dividends and capital gains
distributions. (1) Class A returns are shown net of the applicable 5.75% maximum
initial sales charge. (2) Class B shares of the Fund were first publicly offered
on May 1, 1993. 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 June
1, 1994 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.
o Class A Shares. If you buy Class A shares, you may pay an initial sales
charge on investments up to $1 million (up to $500,000 for purchases by
"Retirement Plans," as defined in "Class A Contingent Deferred Sales Charge").
If you purchase Class A shares as part of an investment of at least $1 million
($500,000 for Retirement Plans) in shares of one or more Oppenheimer funds, you
will not pay an initial sales charge, but if you sell any of those shares within
12 months of buying them (18 months for shares purchased prior to May 1, 1997),
you may pay a contingent deferred sales charge. Sales charge rates are described
in "Buying Class A Shares," below.
o Class B Shares. If you buy Class B shares, you pay no sales charge at the
time of purchase, but if you sell your shares within six years of buying them,
you will normally pay a contingent deferred sales charge. That sales charge
varies depending on how long you own your shares, as described in "Buying Class
B Shares," below.
o Class C Shares. If you buy Class C shares, you pay no sales charge at the
time of purchase, but if you sell your shares within 12 months of buying them,
you will normally pay a contingent deferred sales charge of 1% as discussed in
"Buying Class C Shares," below.
o Class Y Shares. Class Y shares are offered only to certain institutional
investors that have special agreements with the Distributor. Please refer to
"Buying Class Y Shares," below.
Which Class of Shares Should You Choose? Once you decide that the Fund is an
appropriate investment for you, the decision as to which class of shares is
better suited to your needs depends on a number of factors which you should
discuss with your financial advisor. The Fund's operating costs that apply to a
class of shares and the effect of the different types of sales charges on your
investment will vary your investment results over time. The most important
factors are how much you plan to invest and how long you plan to hold your
investment. If your goals and objectives change over time and you plan to
purchase additional shares, you should re-evaluate those factors to see if you
should consider another class of shares.
In the following discussion, to help provide you and your financial advisor
with a framework in which to choose a class, we have made some assumptions using
a hypothetical investment in the Fund. We assumed you are an individual
investor, and therefore ineligible to purchase Class Y shares. We used the sales
charge rates that apply to Class A, Class B and Class C shares and considered
the effect of the annual asset-based sales charge on Class B and Class C
expenses (which, like all expenses, will affect your investment return). For the
sake of comparison, we have assumed that there is a 10% rate of appreciation in
your investment each year. Of course, the actual performance of your investment
cannot be predicted and will vary, based on the Fund's actual investment
returns, and the operating expenses borne by 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.
o How Long Do You Expect to Hold Your Investment? While future financial
needs cannot be predicted with certainty, knowing how long you expect to hold
your investment will assist you in selecting the appropriate class of shares.
Because of the effect of class-based expenses, your choice will also depend on
how much you 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 Class C
for which no initial sales charge is paid.
o Investing for the Short Term. If you have a short-term investment horizon
(that is, you plan to hold your shares for not more than six years), you should
probably consider purchasing Class A or Class C shares rather than Class B
shares, because of the effect of the Class B contingent deferred sales charge if
you redeem in less than 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 Class B). If
investing $500,000 or more, Class A may be more advantageous as your investment
horizon approaches 3 years or more.
For investors who invest $1 million or more, in most cases Class A shares
will be the most advantageous choice, no matter how long you intend to hold your
shares. For that reason, the Distributor normally will not accept purchase
orders of $500,000 or more for Class B shares or $1 million or more of Class C
shares, from a single investor.
o Investing for the Longer Term. If you are investing for the longer-term,
for example, for retirement, and do not expect to need access to your money for
seven years or more, Class B shares may be an appropriate consideration, if you
plan to invest less than $100,000. If you plan to invest more than $100,000 over
the long term, Class A shares will likely be more advantageous than Class B
shares or 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.
o Are There Differences in Account Features That Matter to You? Because some
account features may not be available to or advisable for 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.
o How Does It Affect Payments to My Broker? A salesperson, such as a broker,
or any other person who is entitled to receive compensation for selling Fund
shares may receive different compensation for selling one class of shares than
for selling another class. It is important that investors understand that the
purpose of the Class B and Class C contingent deferred sales charge and
asset-based sales charge is 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.
The Distributor may pay additional periodic compensation from its own resources
to securities dealers or financial institutions based upon the value of shares
of the Fund owned by the dealer or financial institution for its own account or
for its customers.
How Much Must You Invest? You can open a Fund account with a minimum initial
investment of $1,000 and make additional investments at any time with as little
as $25. There are reduced minimum investments under special investment plans:
o With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7) custodial
plans and military allotment plans, you can make initial and subsequent
investments for as little as $25; and subsequent purchases of at least $25 can
be made by telephone through AccountLink.
o Under pension, profit-sharing, 401(k) plans and Individual Retirement
Accounts (IRAs), you can make an initial investment of as little as $250 (if
your IRA is established under an Asset Builder Plan, the $25 minimum applies),
and subsequent investments may be as little as $25.
o There is no minimum investment requirement if you are buying shares by
reinvesting dividends from the Fund or other Oppenheimer funds (a list of them
appears in the Statement of Additional Information, or you can ask your dealer
or call the Transfer Agent), or by reinvesting distributions from unit
investment trusts that have made arrangements with the Distributor.
o How Are Shares Purchased? You can buy shares several ways -- through any
dealer, broker or financial institution that has a sales agreement with the
Distributor, or directly through the Distributor, or automatically from your
bank account through an Asset Builder Plan under the OppenheimerFunds
AccountLink service. The distributor may appoint certain servicing agent to
accept purchase and redemption orders. When you buy shares, be sure to specify
Class A, Class B or Class C shares. If you do not choose, your investment will
be made in Class A shares.
o Buying Shares Through Your Dealer. Your dealer will place your order with
the Distributor on your behalf.
o Buying Shares Through the Distributor. Complete an OppenheimerFunds New
Account Application and return it with a check payable to "OppenheimerFunds
Distributor, Inc." Mail it to P.O. Box 5270, Denver, Colorado 80217. If you
don't list a dealer on the application, the Distributor will act as your agent
in buying the shares. However, we recommend that you discuss your investment
first with a financial advisor, to be sure it is appropriate for you.
o Payments by Federal Funds Wire. Shares may be purchased by Federal Funds
wire. The minimum investment is $2,500. You must first call the Distributor's
Wire Department at 1-800-525- ----- 7041 to notify the Distributor of the wire,
and receive further instructions.
o Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or other
financial institution that is an Automated Clearing House (ACH) member. You can
then transmit funds electronically to purchase shares, to have the Transfer
Agent send redemption proceeds, or to transmit dividends and distributions to
your bank account.
Shares are purchased for your account on AccountLink on the regular business
day the Distributor is instructed by you to initiate the ACH transfer to buy
shares. You can provide those instructions automatically, under an Asset Builder
Plan, described below, or by telephone instructions using OppenheimerFunds
PhoneLink, also described below. You should request AccountLink privileges on
the application or dealer settlement instructions used to establish your
account. Please refer to "AccountLink" below for more details.
o Asset Builder Plans. You may purchase shares of the Fund (and up to four
other Oppenheimer funds) automatically each month from your account at a bank or
other financial institution under an Asset Builder Plan with AccountLink.
Details are in the Statement of Additional Information.
o At What 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,
Colorado, or the order is received and transmitted to the Distributor by an
entity authorized by the Fund to accept purchase or redemption orders. The Fund
has authorized the Distributor, certain broker-dealers and agents or
intermediaries designated by the Distributor or those broker-dealers to accept
orders. In most cases, to enable you to receive that day's offering price, the
Distributor or an authorized entity must receive your order by the time of day
The New York Stock Exchange closes, which is normally 4:00 P.M., New York time,
but may be earlier on some days (all references to time in this Prospectus mean
"New York time"). The net asset value of each class of shares is determined as
of that time on each day The New York Stock Exchange is open (which is a
"regular business day").
If you buy shares through a dealer, normally your order must be transmitted
to the Distributor so that it is received before the Distributor's close of
business that day, which is normally 5:00 P.M. The Distributor, in its sole
discretion, may reject any purchase order for the Fund's shares.
Special Sales Charge Arrangements for Certain Persons. Appendix A to this
Prospectus sets forth conditions for the waiver of, or exemption from, sales
charges or the special sales charge rates that apply to purchases of shares of
the Fund (including purchases by exchange) by a person who was a shareholder of
one of the Former Quest for Value Funds (as defined in that Appendix).
Buying Class A Shares. Class A shares are sold at their offering price, which is
normally net asset value plus an initial sales charge. However, in some cases,
described below, purchases are not subject to an initial sales charge, and the
offering price will be the net asset value. In some cases, reduced sales charges
may be available, as described below. Out of the amount you invest, the Fund
receives the net asset value to invest for your account. The sales charge varies
depending on the amount of your purchase. A portion of the sales charge may be
retained by the Distributor and allocated to your dealer as a commission. The
current sales charge rates and commissions paid to dealers and brokers are as
follows:
Front-End Front-End
Sales Charge Sales Charge
as a as a Commission as
Percentage of Percentage of Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
Less than $25,000 5.75% 6.10% 4.75%
- --------------------------------------------------------------------------------
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
- --------------------------------------------------------------------------------
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
- --------------------------------------------------------------------------------
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
- --------------------------------------------------------------------------------
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
- --------------------------------------------------------------------------------
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
The Distributor reserves the right to reallow the entire commission to dealers.
If that occurs, the dealer may be considered an "underwriter" under Federal
securities laws.
o Class A Contingent Deferred Sales Charge. There is no initial sales
charge on purchases of Class A shares of any one or more of the Oppenheimer
funds in the following cases:
o Purchases by a Retirement Plan qualified under section 401(a) if the
Retirement Plan has total plan assets of $500,000 or more;
o Purchases aggregating $1 million or more;
o Purchases by a Retirement Plan qualified under sections 401(a) or 401(k) of
the Internal Revenue Code, by a non-qualified deferred compensation plan,
employee benefit plan, group retirement plan (see "How to Buy Shares Retirement
Plans" in the Statement of Additional Information for further details), an
employee's 403(b)(7) custodial plan account, SEP-IRA, SARSEP, or SIMPLE plan
(all of these plans are collectively referred to as "Retirement Plans")that, (1)
buys shares costing $500,000 or more or (2) has, at the time of purchase, 100 or
more eligible participants, or (3) certifies that it projects to have annual
plan purchases of $200,000 or more; or
o Purchases by an OppenheimerFunds-sponsored Rollover IRA if the purchases
are made (1) through a broker, dealer, bank or registered investment adviser
that has made special arrangements with the Distributor for these purchases, or
(2) by a direct rollover of a distribution from a qualified Retirement Plan if
the administrator of that plan has made special arrangements with the
Distributor for those purchases.
The Distributor pays dealers of record commissions on those purchases in an
amount equal to (i) 1.0% for non-retirement plan accounts, and (ii) for
Retirement Plan accounts, 1.0% of the first $2.5 million, plus 0.50% of the next
$2.5 million, plus 0.25% of purchases over $5 million, calculated on a calendar
year basis. That commission will be paid only on those purchases that were not
previously subject to a front-end sales charge and dealer commission. No sales
commission will be paid to the dealer, broker or financial institution on sales
of Class A shares purchased with the redemption proceeds of shares of a mutual
fund offered as an investment option in a Retirement Plan in which Oppenheimer
funds are also offered as investment options under a special arrangement with
the Distributor if the purchase occurs more than 30 days after the addition of
the Oppenheimer funds as an investment option to the Retirement Plan.
If you redeem any of those shares purchased prior to May 1, 1997 within 18
months of the end of the calendar month of their purchase, a contingent deferred
sales charge (called the "Class A contingent deferred sales charge") may be
deducted from the redemption proceeds. A Class A contingent deferred sales
charge may be deducted from the redemption proceeds of any of those shares
purchased on or after May 1, 1997 that are redeemed within 12 months of the end
of the calendar month of their purchase. That sales charge may be equal to 1.0%
of the lesser of (1) the aggregate net asset value of the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original offering price (which is the original net
asset value) of the redeemed shares. However, the Class A contingent deferred
sales charge will not exceed the aggregate amount of the commissions the
Distributor paid to your dealer on all Class A shares of all Oppenheimer funds
you purchased subject to the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is payable, the
Fund will first redeem shares that are not subject to the sales charge,
including shares purchased by reinvestment of dividends and capital gains, and
then will redeem other shares in the order that you purchased them. The Class A
contingent deferred sales charge is waived in certain cases described in
"Waivers of Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges of shares
under the Fund's exchange privilege (described below). However, if the shares
acquired by exchange are redeemed within 12 months (18 months for shares
purchased prior to May, 1997) of the end of the calendar month of the purchase
of the exchanged shares, the contingent deferred sales charge will apply.
o Special Arrangements With Dealers. The Distributor may advance up to 13
months' commissions to dealers that have established special arrangements with
the Distributor for Asset Builder Plans for their clients.
Reduced Sales Charges for Class A Share Purchases. You may be eligible to buy
Class A shares at reduced sales charge rates in one or more of the following
ways:
o Right of Accumulation. To qualify for the lower sales charge rates that
apply to larger purchases of Class A shares, you and your spouse can add
together Class A and Class B shares you purchase for your individual accounts,
or jointly, or for trust or custodial accounts on behalf of your children who
are minors. A fiduciary can count all shares purchased for a trust, estate or
other fiduciary account (including one or more employee benefit plans of the
same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class A and Class B
shares of the Fund and other Oppenheimer funds to reduce the sales charge rate
that applies to current purchases of Class A shares. You can also count Class A
and Class B shares of Oppenheimer funds you previously purchased subject to an
initial or contingent deferred sales charge to reduce the sales charge rate for
current purchases of Class A shares, provided that you still hold your
investment in one of the Oppenheimer funds. The Distributor will add the value,
at current offering price, of the shares you previously purchased and currently
own to the value of current purchases to determine the sales charge rate that
applies for current purchases. The Oppenheimer funds are listed in "Reduced
Sales Charges" in the Statement of Additional Information, or a list can be
obtained from the Distributor. The reduced sales charge will apply only to
current purchases and must be requested when you buy your shares.
o Letter of Intent. Under a Letter of Intent, if you purchase Class A shares
or Class A 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.
o Waivers of Class A Sales Charges. The Class A sales charges are not imposed
in the circumstances described below. There is an explanation of this policy in
"Reduced Sales Charges" in the Statement of Additional Information. In order to
receive a waiver of the Class A contingent deferred sales charge, you must
notify the Transfer Agent which conditions apply.
Waivers of Initial and Contingent Deferred Sales Charges for Certain
Purchasers. Class A shares purchased by the following investors are not subject
to any Class A sales charges:
o the Manager or its affiliates;
o present or former officers, directors, trustees and employees (and their
"immediate families" as defined in "Reduced Sales Charges" in the Statement of
Additional Information) of the Fund, the Manager and its affiliates, and
Retirement Plans established by them for their employees;
o registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the Distributor for
that purpose;
o dealers or brokers that have a sales agreement with the Distributor, if
they purchase shares for their own accounts or for Retirement Plans for their
employees;
o employees and registered representatives (and their spouses) of dealers or
brokers described above or financial institutions that have entered into sales
arrangements with such dealers or brokers (and are identified to the
Distributor) or with the Distributor, the purchaser must certify to the
Distributor at the time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor children);
o dealers, brokers, banks or registered investment advisers that have entered
into an agreement with the Distributor (1) providing specifically for the use of
shares of the Fund in particular investment products or employee benefit plans
made available to their clients (those clients may be charged a transaction fee
by their dealer, broker, bank or adviser 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 administration services;
|_|(1) investment advisors and financial planners who have entered into an
agreement for this purpose with the Distributor and who charge an advisory,
consulting or other fee for their services and buy shares for their own accounts
or the accounts of their clients, (2) Retirement Plans and deferred compensation
plans and trusts used to fund those Plans (including, for example, plans
qualified or created under sections 401(a), 403(b) or 457 of the Internal
Revenue Code), and "rabbi trusts" that buy shares for their own accounts, in
each case if those purchases are made through a broker or agent or other
financial intermediary that has made special arrangements with the Distributor
for those purchases; and (3) clients of such investment advisors or financial
planners (that have entered into an agreement for this purpose with the
Distributor) who buy shares for their own accounts may also purchase shares
without sales charge but only if their accounts are linked to a master account
of their investment advisor or financial planner on the books and records of the
broker, agent or financial intermediary with which the Distributor has made such
special arrangements (each of these investors may be charged a fee by the
broker, agent or financial intermediary for purchasing shares);
o directors, trustees, officers or full-time employees of OpCap Advisors or
its affiliates, their relatives or any trust, pension, profit sharing or other
benefit plan which beneficially owns shares for those persons;
o accounts for which Oppenheimer Capital is the investment adviser (the
Distributor must be advised of this arrangement) and persons who are directors
or trustees of the company or trust which is the beneficial owner of such
accounts;
o any unit investment trust that has entered into an appropriate agreement
with the Distributor;
o 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
o qualified Retirement Plans that had agreed with the former Quest for Value
Advisors to purchase shares of any of the Former Quest for Value Funds at net
asset value, with such shares to be held through DCXchange, a sub-transfer
agency mutual fund clearinghouse, provided that such arrangements were
consummated and share purchases commenced by December 31, 1996.
Waivers of Initial and Contingent Deferred Sales Charges in Certain
Transactions. Class A shares issued or purchased in the following transactions
are not subject to Class A sales charges:
o shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party;
o shares purchased by the reinvestment of loan repayments by a participant
in a Retirement Plan for which the Manager or its affiliates acts as sponsor;
o shares purchased by the reinvestment of dividends or other distributions
reinvested from the Fund or other Oppenheimer funds (other than Oppenheimer Cash
Reserves) or unit investment trusts for which reinvestment arrangements have
been made with the Distributor;
o shares purchased and paid for with the proceeds of shares redeemed in the
past 30 days from a mutual fund (other than a fund managed by the Manager or any
of its subsidiaries) on which an initial sales charge or contingent deferred
sales charge was paid (this waiver also applies to shares purchased by exchange
of shares of Oppenheimer Money Market Fund, Inc. that were purchased and paid
for in this manner), this waiver must be requested when the purchase order is
placed for your shares of the Fund, and the Distributor may require evidence of
your qualification for this waiver; or
o shares purchased with the proceeds of maturing principal of units of any
Qualified Unit Investment Liquid Trust Series.
Waivers of the Class A Contingent Deferred Sales Charge for Certain
Redemptions. The Class A contingent deferred sales charge is also waived if
shares that would otherwise be subject to the contingent deferred sales charge
are redeemed in the following cases:
o to make Automatic Withdrawal Plan payments that are limited annually to
no more than 12% of the original account value;
o involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (see "Shareholder Account Rules and Policies,"
below);
o if, at the time of purchase of shares (if purchased prior to May 1, 1997)
he dealer agreed in writing to accept the dealer's portion of the sales
commission in installments of 1/18th of the commission per month (and no further
commission will be payable if the shares are redeemed within 18 months of
purchase);
o if, at the time of purchase of shares (if purchased during the period May
1, 1997 through December 31, 1997) the dealer agreed in writing to accept the
dealer's portion of the sales commission in installments of 1/12th of the
commission per month (and no further commission will be payable if the shares
are redeemed within 12 months of purchase);
o for distributions from a TRAC-2000 401(k) plan sponsored by the
Distributor due to the termination of the TRAC-2000 program;
o for distributions from Retirement Plans, deferred compensation plans or
other employee benefit plans for any of the following purposes: (1) following
the death or disability (as defined in the Internal Revenue Code) of the
participant or beneficiary (the death or disability must occur after the
participant's account was established); (2) to return excess contributions; (3)
to return contributions made due to a mistake of fact; (4) hardship withdrawals,
as defined in the plan; (5) under a Qualified Domestic Relations Order, as
defined in the Internal Revenue Code; (6) to meet the minimum distribution
requirements of the Internal Revenue Code; (7) to establish "substantially equal
periodic payments" as described in Section 72(t) of the Internal Revenue Code;
(8) for retirement distributions or loans to participants or beneficiaries; (9)
separation from service; (10) participant-directed redemptions to purchase
shares of a mutual fund (other than a fund managed by the Manager or its
subsidiary) offered as an investment option in a Retirement Plan in which
Oppenheimer funds are also offered as investment options under a special
arrangement with the Distributor; or (11) plan termination or "in-service
distributions," if the redemption proceeds are rolled over directly to an
OppenheimerFunds-sponsored IRA;
o for distributions from Retirement Plans having 500 or more eligible
participants, except distributions due to termination of all of the Oppenheimer
funds as an investment option under the Plan; and
o for distributions from 401(k) plans sponsored by broker-dealers that have
entered into a special agreement with the Distributor allowing this waiver.
o Service Plan for Class A Shares. The Fund has adopted a Service Plan for
Class A shares to reimburse the Distributor for a portion of its costs incurred
in connection with the personal service and maintenance of 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 assets
of Class A shares held in accounts of the dealer provider or their 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
contingent deferred sales charge will be based on the lesser of the net asset
value of the redeemed shares at the time of redemption or the original offering
price (which is the original net asset value). The contingent deferred sales
charge is not imposed on the amount of your account value represented by the
increase in net asset value over the initial purchase price. The Class B
contingent deferred sales charge is paid to compensate the Distributor for 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.
o Automatic Conversion of Class B Shares. 72 months after you purchase Class
B shares, those shares will automatically convert to Class A shares. This
conversion feature relieves Class B shareholders of the asset-based sales charge
that applies to Class B shares under the Class B Distribution and Service Plan,
described below. The conversion is based on the relative net asset value of the
two classes, and no sales load or other charge is imposed. When Class B shares
convert, any other Class B shares that were acquired by the reinvestment of
dividends and distributions on the converted shares will also convert to Class A
shares. The conversion feature is subject to the continued availability of a tax
ruling described in "Alternative Sales Arrangements - Class A, Class B and Class
C Shares" in the Statement of Additional Information.
Buying Class C Shares. Class C shares are sold at net asset value per share
without an initial sales charge. However, if 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 contingent deferred sales charge will be based on the lesser
of the net asset value of the shares at the time of redemption or the original
offering 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 C contingent deferred sales charge is paid
to compensate the Distributor for its expenses of providing distribution-related
services to the Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order: (1) shares acquired
by reinvestment of dividends and capital gains distributions, (2) shares held
for over 12 months, and (3) shares held the longest during the 12- month period.
Distribution and Service Plans for Class B and Class C Shares. The Fund has
adopted Distribution and Service Plans for Class B and Class C shares to
compensate the Distributor for its services 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 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 Fund pays the asset-based sales charge to the
Distributor for its services rendered in distributing Class B shares.
Asset-based sales charge payments are at a fixed rate that is not related to the
Distributor's expenses. The Distributor retains the asset-based sales charge to
recoup the sales commissions it pays, the advances of service fee payments it
makes, and its financing costs of distributing and selling Class B shares. The
Distributor may pay the Class B service fee and the asset-based sales charge to
the dealer quarterly in lieu of paying the sales commission and service fee
advance at the time of purchase.
The Distributor currently pays sales commissions of 0.75% of the purchase
price of Class C shares to dealers from its own resources at the time of sale.
Including the advance of the service fee, the total amount paid by the
Distributor to the dealer at the time of sale of Class C shares is therefore
1.00% of the purchase price. Those payments, retained by the Distributor during
the first year Class C shares are outstanding, are at a fixed rate that is not
related to the Distributor's expenses. The Distributor plans to pay the
asset-based sales charge as an ongoing commission to the dealer on Class C
shares that have been outstanding for a year or more. The Distributor may pay
the Class C service fee and asset-based sales charge to the dealer quarterly in
lieu of paying the sales commission and service fee advance at the time of
purchase.
The Distributor's actual expenses in selling Class B and Class C shares may
be more than the payments it receives from contingent deferred sales charges
collected on redeemed shares and from the Fund under the Distribution and
Service Plans for Class B and Class C shares. At December 31, 1997, the end of
the Class B Plan year, the Distributor had incurred unreimbursed expenses in
connection with the sale of Class B shares of $________ (equal to____% of the
Fund's net assets represented by Class B shares on that date). At December 31,
1997, the end of the Class C Plan Year, the Distributor had incurred
unreimbursed expenses in connection with the sale of Class C shares of $________
(equal to ____% of the Fund's net assets represented by Class C shares on that
date). 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 charges will not be applied to shares purchased in certain types
of transactions nor will it apply to Class B and Class C shares redeemed in
certain circumstances as described below. The reasons for this policy are
discussed in "Reduced Sales Charges" in the Statement of Additional Information.
In order to receive a waiver of the Class B or Class C contingent deferred sales
charge, you must notify the Transfer Agent which conditions apply.
Waivers for Redemptions of Shares in Certain Cases. The Class B and Class C
contingent deferred sales charges will be waived for redemptions of shares in
the following cases:
o distributions to participants or beneficiaries from Retirement Plans, if
the distributions are made (a) under an Automatic Withdrawal Plan after the
participant reaches age 59 1/2, as long as the payments are no more than 10% of
the account value annually (measured from the date the Transfer Agent receives
the request), or (b) following the death or disability (as defined in the
Internal Revenue Code) of the participant or beneficiary (the death or
disability must have occurred after the account was established);
o redemptions from accounts other than Retirement Plans following the death
or disability of the last surviving shareholder including a trustee of a
"grantor" trust or revocable living trust for which the trustee is also the sole
beneficiary (the death or disability must have occurred after the account was
established, and for disability you must provide evidence of a determination of
disability by the Social Security Administration);
o returns of excess contributions to Retirement Plans;
o distributions from Retirement Plans to make "substantially equal periodic
payments" as permitted in Section 72(t) of the Internal Revenue Code that do not
exceed 10% of the account value annually measured from the date the Transfer
Agent receives the request;
o shares redeemed involuntarily, as described in "Shareholder Account Rules
and Policies," below;
o distributions from OppenheimerFunds prototype 401(k) plans and from certain
Massachusetts Mutual Life Insurance Company prototype 401(k) plans (1) for
hardship withdrawals; (2) under a Qualified Domestic Relations Order, as defined
in the Internal Revenue Code; (3) to meet minimum distribution requirements as
defined in the Internal Revenue Code; (4) to make "substantially equal periodic
payments" as described in Section 72(t) of the Internal Revenue Code; (5) for
separation from service; or (6) for loans to participants or beneficiaries; or
o distributions from 401(k) plans sponsored by broker-dealers that have
entered into a special agreement with the Distributor allowing this waiver.
Waivers for Shares Sold or Issued in Certain Transactions. The contingent
deferred sales charge is also waived on Class B and Class C shares sold or
issued in the following cases:
o shares sold to the Manager or its affiliates;
o shares sold to registered management investment companies or separate
accounts of insurance companies having an agreement with the Manager or the
Distributor for that purpose; or
o shares issued in plans of reorganization to which the Fund is a party.
Buying Class Y Shares. Class Y shares are sold at net asset value per share
without sales charge directly to certain institutional investors, such as
insurance companies, registered investment companies and employee benefit plans,
that have special agreements with the Distributor for this purpose. These
include Massachusetts Mutual Life Insurance Company, an affiliate of the
Manager, which may purchase Class Y shares of the Fund and other Oppenheimer
funds (as well as Class Y shares of funds advised by MassMutual) for asset
allocation programs, investment companies or separate investment accounts it
sponsors and offers to its customers. Individual investors are not able to
invest in Class Y shares directly.
While Class Y shares are not subject to initial or contingent deferred sales
charges or asset-based sales charges, an institutional investor buying the
shares for its customers' accounts may impose charges on those accounts. The
procedures for purchasing, redeeming, exchanging, or transferring the Fund's
other classes of shares (other than the time those orders must be received by
the Distributor or Transfer Agent) and the special account features available to
purchasers of those other classes of shares described elsewhere in this
Prospectus do not apply to Class Y shares. Instructions for purchasing,
redeeming, exchanging or transferring Class Y shares must be submitted by the
institutional investor, not by its customers for whose benefit the shares are
held.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account to your
account at your bank or other financial institution to enable you to send money
electronically between those accounts to perform a number of types of account
transactions. These include purchases of shares by telephone (either through a
service representative or by PhoneLink, described below), automatic investments
under Asset Builder Plans, and sending dividends and distributions or Automatic
Withdrawal Plan payments directly to your bank account. Please call the Transfer
Agent for more information.
AccountLink privileges should be requested on your dealer's settlement
instructions if you buy your shares through your dealer. After your account is
established, you can request AccountLink privileges by sending
signature-guaranteed instructions to the Transfer Agent. AccountLink privileges
will apply to each shareholder listed in the registration on your account as
well as to your dealer representative of record unless and until the Transfer
Agent receives written instructions terminating or changing those privileges.
After you establish AccountLink for your account, any change of bank account
information must be made by signature-guaranteed instructions to the Transfer
Agent signed by all shareholders who own the account.
o Using AccountLink to Buy Shares. Purchases may be made by telephone only
after your account has been established. To purchase shares in amounts up to
$250,000 through a telephone representative, call the Distributor at
1-800-852-8457. The purchase payment will be debited from your bank account.
o PhoneLink. PhoneLink is the OppenheimerFunds automated telephone system
that enables shareholders to perform a number of account transactions
automatically using a touch-tone phone. PhoneLink may be used on
already-established Fund accounts after you obtain a Personal Identification
Number (PIN), by calling the special PhoneLink number: 1-800-533-3310.
o Purchasing Shares. You may purchase shares in amounts up to $100,000 by
phone, by calling 1-800-533-3310. You must have established AccountLink
privileges to link your bank account with the Fund, to pay for these purchases.
o Exchanging Shares. With the OppenheimerFunds exchange privilege, described
below, you can exchange shares automatically by phone from your Fund account to
another Oppenheimer funds account you have already established by calling the
special PhoneLink number. Please refer to "How to Exchange Shares," below, for
details.
o Selling Shares. You can redeem shares by telephone automatically by
calling the PhoneLink number and the Fund will send the proceeds directly to
your AccountLink bank account. Please refer to "How to Sell Shares," below, for
details.
Shareholder Transactions by Fax. Requests for certain account transactions may
be sent to the Transfer Agent by fax (telecopier). Please call 1-800-525-7048
for information about which transactions are included. Transaction requests
submitted by fax are subject to the same rules and restrictions as written and
telephone requests described in this Prospectus.
OppenheimerFunds Internet Web Site. Information about the Fund, including your
account balance, daily share prices, market and Fund portfolio information, may
be obtained by visiting the OppenheimerFunds Internet Web Site at the following
Internet address: http://www.oppenheimerfunds.com. In 1998, the Transfer Agent
anticipates offering certain account transactions through the Internet Web Site.
To find out more information about those transactions and procedures, please
visit the Web Site.
Automatic Withdrawal and Exchange Plans. The Fund has several plans that enable
you to sell shares automatically or exchange them to another Oppenheimer funds
account on a regular basis:
o Automatic Withdrawal Plans. If your Fund account is worth $5,000 or more,
you can establish an Automatic Withdrawal Plan to receive payments of at least
$50 on a monthly, quarterly, semi-annual or annual basis. The checks may be sent
to you or sent automatically to your bank account through AccountLink. You may
even set up certain types of withdrawals of up to $1,500 per month by telephone.
You should consult the Statement of Additional Information for more details.
o Automatic Exchange Plans. You can authorize the Transfer Agent to exchange
an amount you establish in advance automatically for shares of up to five other
Oppenheimer funds on a monthly, quarterly, semi-annual or annual basis under an
Automatic Exchange Plan. The minimum purchase for each Oppenheimer funds account
is $25. These exchanges are subject to the terms of the exchange privilege,
described below.
Reinvestment Privilege. If you redeem some or all of your Class A or Class B
shares of 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 Class B shares on
which you paid a contingent deferred sales charge when you redeemed them. This
privilege does not apply to Class C shares. You must be sure to ask the
Distributor for this privilege when you send your payment. Please consult the
Statement of Additional Information for more details.
Retirement Plans. Fund shares are available as an investment for your retirement
plans. If you participate in a plan sponsored by your employer, the plan trustee
or administrator must make the purchase of shares for your retirement plan
account. The Distributor offers a number of different retirement plans that can
be used by individuals and employers:
o Individual Retirement Accounts including rollover IRAs, for individuals and
their spouses ans SIMPLE IRAs offered by employers
o 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
o SEP-IRAs (Simplified Employee Pension Plans) for small business owners or
people with income from self-employment
o Pension and Profit-Sharing Plans for self-employed persons and other
employers
o 401(k) prototype retirement plans for businesses
Please call the Distributor for the OppenheimerFunds plan documents, which
contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account by selling (redeeming)
some or all of your shares on any regular business day. Your shares will be sold
at the next net asset value calculated after your order is received and accepted
by the Transfer Agent. The Fund offers you a number of ways to sell your shares:
in writing or by telephone. You can also set up Automatic Withdrawal Plans to
redeem shares on a regular basis, as described above. If you have questions
about any of these procedures, and especially if you are redeeming shares in a
special situation, such as due to the death of the owner, or from a retirement
plan, please call the Transfer Agent first, at 1-800-525- 7048, for assistance.
o Retirement Accounts. To sell shares in an OppenheimerFunds-sponsored
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.
o Certain Requests Require a Signature Guarantee. To protect you and the Fund
from fraud, certain redemption requests must be in writing and must include a
signature guarantee in the following situations (there may be other situations
also requiring a signature guarantee):
o You wish to redeem more than $50,000 worth of shares and receive a check
o The redemption check is not payable to all shareholders listed on the
account statement o The redemption check is not sent to the address of record on
your account statement
o Shares are being transferred to a Fund account with a different owner or
name
o Shares are redeemed by someone other than the owner(s)
(such as an Executor)
o Where Can I Have My Signature Guaranteed? The Transfer Agent will accept
a guarantee of your signature by a number of financial institutions, including:
a U.S. bank, trust company, credit union or savings association, a foreign bank
that has a U.S. correspondent bank, 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:
o Your name
o The Fund's name
o Your Fund account number (from your account statement) o The dollar
amount or number of shares to be redeemed o Any special payment
instructions o Any share certificates for the shares you are selling o The
signatures of all registered owners exactly as the account is
registered, and
o Any special requirements or documents requested by the Transfer Agent to
assure proper authorization of the person asking to sell shares.
Use the following address for requests by mail:
OppenheimerFunds Services
P.O. Box 5270, Denver, Colorado 80217
Send courier or Express Mail requests to:
OppenheimerFunds Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of record may
also sell your shares by telephone. To receive the redemption price on a regular
business day, your request must be received by the Transfer Agent or its 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.
o To redeem shares through a service representative, call 1-800-852-8457; or
o To redeem shares automatically on PhoneLink, call 1-800-533-3310.
Whichever method you use, you may have a check sent to the address on the
account statement, or, if you have linked your Fund account to your bank account
through AccountLink, you may have the proceeds transferred to that bank account.
o Telephone Redemptions Paid by Check. You may redeem up to $50,000 by
telephone once, in any 7-day period. The check must be payable to all owners of
record of the shares and must be sent to the address on the account statement.
This service is not available within 30 days of changing the address on an
account.
o Telephone Redemptions Through AccountLink or By Wire. There are no dollar
limits on telephone redemption proceeds sent to a bank account designated when
you establish AccountLink. Normally the ACH transfer to your bank is initiated
on the business day after the redemption. You do not receive dividends on the
proceeds of the shares you redeemed while they are waiting to be transferred.
You may also have the Transfer Agent send redemption proceeds of $2,500 or
more by Federal Funds wire to a designated commercial bank account. The bank
must be a member of the Federal Reserve wire system. There is a $10 fee for each
Federal Funds wire. To place a wire redemption request, call the Transfer Agent
at 1-800-852-8457. The wire will normally be transmitted on the next bank
business day after the shares are redeemed. There is a possibility that the wire
may be delayed up to seven days to enable the Fund to sell securities to pay the
redemption proceeds. No dividends are accrued or paid on the proceeds of shares
that have been redeemed and are awaiting transmittal by wire. To establish wire
redemption privileges on an account that is already established, please contact
the Transfer Agent for instructions.
Selling Shares Through Your Dealer. The Distributor has made arrangements to
repurchase Fund shares from dealers and brokers on behalf of their customers.
Brokers or dealers may charge for that service. Please call your dealer for more
information about this procedure. Please refer to "Special Arrangements for
Repurchase of Shares from Dealers and Brokers" in the Statement of Additional
Information for more details.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain Oppenheimer funds at
net asset value per share at the time of exchange, without sales charge. To
exchange shares, you must meet several conditions:
o Shares of the fund selected for exchange must be available for sale in your
state of residence; o The prospectuses of this Fund and the fund whose shares
you want to buy must offer the exchange privilege; o You must hold the shares
you buy when you establish your account for at least 7 days before you can
exchange them; after the account is open 7 days, you can exchange shares
every regular business day; o You must meet the minimum purchase requirements
for the fund you purchase by exchange; and o Before exchanging into a fund,
you should obtain and read its Prospectus
Shares of a particular class of the Fund may be exchanged only for shares
of the same class in the other Oppenheimer funds. For example, you can exchange
Class A shares of 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:
o Written Exchange Requests. Submit an OppenheimerFunds Exchange Request
form, signed by all owners of the account. Send it to the Transfer Agent at the
addresses listed in "How to Sell Shares."
o Telephone Exchange Requests. Telephone exchange requests may be made either
by calling a service representative at 1-800-852-8457 or by using PhoneLink for
automated exchanges, by calling 1-800-533-3310. Telephone exchanges may be made
only between accounts that are registered with the same name(s) and address.
Shares held under certificates may not be exchanged by telephone.
You can find a list of Oppenheimer funds currently available for exchanges
in the Statement of Additional Information or obtain one by calling a service
representative at 1-800-525-7048. That list can change from time to time.
There are certain exchange policies you should be aware of:
o Shares are normally redeemed from one fund and purchased into 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.
o Because excessive trading can hurt fund performance and harm shareholders,
the Fund reserves the right to refuse any exchange request that will
disadvantage it, or to refuse multiple exchange requests submitted by a
shareholder or dealer.
o The Fund may amend, suspend or terminate the exchange privilege at any
time. Although the Fund will attempt to provide you notice whenever it is
reasonably able to do so, it may impose these changes at any time.
o For tax purposes, exchanges of shares involve a redemption of the shares
of the Fund you own and a purchase of the shares of the other fund, which may
result in a capital gain or loss. For more information about taxes affecting
exchanges, please refer to "How to Exchange Shares" in the Statement of
Additional Information.
o If the Transfer Agent cannot exchange all the shares you request because
of a restriction cited above, only the shares eligible for exchange will be
exchanged.
The Distributor has entered into agreements with certain dealers and
investment advisers permitting them to exchange their clients' shares by
telephone. These privileges are limited under those agreements and the
Distributor has the right to reject or suspend those privileges. As a result,
those exchanges may be subject to notice requirements, delays and other
limitations that do not apply to shareholders who exchange their shares directly
by calling or writing to the Transfer Agent.
Shareholder Account Rules and Policies
o Net Asset Value Per Share is determined for each class of shares as of the
close of The New York Stock Exchange, which is normally 4:00 P.M., but may be
earlier on some days, on each day the Exchange is open by dividing the value of
the Fund's net assets attributable to a class by the number of shares of that
class that are outstanding. The Fund's Board of Directors has established
procedures to value the Fund's securities to determine net asset value. In
general, securities values are based on market value. There are special
procedures for valuing illiquid and restricted securities and for obligations
for which market values cannot be readily obtained. These procedures are
described more completely in the Statement of Additional Information.
o The offering of shares may be suspended during any period in which the
determination of net asset value is suspended, and the offering may be suspended
by the Board of Directors at any time the Board believes it is in the Fund's
best interest to do so.
o Telephone Transaction Privileges for purchases, redemptions or exchanges
may be modified, suspended or terminated by the Fund at any time. If an account
has more than one owner, the Fund and the Transfer Agent may rely on the
instructions of any one owner. Telephone privileges apply to each owner of the
account and the dealer representative of record for the account unless and until
the Transfer Agent receives cancellation instructions from an owner of the
account.
o The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not use
reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise neither the Transfer Agent nor the Fund will be
liable for losses or expenses arising out of telephone instructions reasonably
believed to be genuine. If you are unable to reach the Transfer Agent during
periods of unusual market activity, you may not be able to complete a telephone
transaction and should consider placing your order by mail.
o Redemption or transfer requests will not be honored until the Transfer
Agent receives all required documents in proper form. From time to time, the
Transfer Agent in its discretion may waive certain of the requirements for
redemptions stated in this Prospectus.
o Dealers that can perform account transactions for their clients by
participating in NETWORKING through the National Securities Clearing Corporation
are responsible for obtaining their clients' permission to perform those
transactions and are responsible to their clients who are shareholders of the
Fund if the dealer performs any transaction erroneously or improperly.
o The redemption price for shares will vary from day to day because the 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.
o Payment for redeemed shares is made ordinarily in cash and forwarded by
check or through AccountLink (as elected by the shareholder under the redemption
procedures described above) within 7 days after the Transfer Agent receives
redemption instructions in proper form, except under unusual circumstances
determined by the Securities and Exchange Commission delaying or suspending such
payments. For accounts registered in the name of a broker-dealer, payment will
be forwarded within 3 business days. The Transfer Agent may delay forwarding a
check or processing a payment via AccountLink for recently purchased shares, but
only until the purchase payment has cleared. That delay may be as much as 10
days from the date the shares were purchased. That delay may be avoided if you
purchase shares by federal funds wire, certified check or arrange to have your
bank provide telephone or written assurance to the Transfer Agent that your
purchase payment has cleared.
o Involuntary redemptions of small accounts may be made by the Fund if the
account 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.
o Under unusual circumstances, shares of the Fund may be redeemed "in kind,"
which means that the redemption proceeds will be paid with securities from the
Fund's portfolio. Please refer to "How to Sell Shares" in the Statement of
Additional Information for more details.
o "Backup Withholding" of Federal income tax may be applied at the rate of
31% from dividends, distributions and redemption proceeds (including exchanges)
if you fail to furnish the Fund a correct and properly certified Social Security
or Employer Identification Number when you sign your application, or if you
under report your income to the Internal Revenue Service.
o The Fund does not charge a redemption fee, but if your dealer or broker
handles your redemption, they may charge a fee. That fee can be avoided by
redeeming your Fund shares directly through the Transfer Agent. Under the
circumstances described in "How To Buy Shares," you may be subject to a
contingent deferred sales charges when redeeming certain Class A, Class B and
Class C shares.
o To avoid sending duplicate copies of materials to households, the Fund will
mail only one copy of each annual and semi-annual report to shareholders having
the same last name and address on the Fund's records. However, each shareholder
may call the Transfer Agent at 1-800-525-7048 to ask that copies of those
materials be sent personally to that shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A, Class B, Class C
and Class Y shares from net investment income on a quarterly basis and normally
pays those dividends to shareholders in March, June, September and December on a
date set by the Fund's Board of Directors. Dividends paid on Class A and Class Y
shares are generally expected to be higher than for Class B and Class C shares
because expenses allocable to Class B and Class C shares will generally be
higher. During the Fund's fiscal year ended December 31, 1997, the Fund
maintained the practice, to the extent consistent with the Fund's net investment
income and other distributable income, of attempting to pay dividends on Class A
shares at a constant level, although the amount of such dividends was subject to
change from time to time depending on market conditions, the composition of the
Fund's portfolio and expenses borne by the Fund. The Board of Directors may
change the level of dividends at any time without notice to shareholders 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-sponsored
retirement accounts, all distributions are reinvested. For other accounts, you
have four options:
o Reinvest All Distributions in the Fund. You can elect to reinvest all
dividends and long- term capital gains distributions in additional shares of the
Fund.
o Reinvest Long-Term Capital Gains Only. You can elect to reinvest
long-term capital gains in the Fund while receiving dividends by check or you
can have them sent to your bank account through AccountLink.
o Receive All Distributions in Cash. You can elect to receive a check for
all dividends and long-term capital gains distributions or have them sent to
your bank on AccountLink.
o Reinvest Your Distributions in Another Oppenheimer Fund Account. You can
reinvest all distributions in the same class of shares of another Oppenheimer
fund account you have established.
Taxes. If your account is not a tax-deferred retirement account, you should be
aware of the following tax implications of investing in the Fund. 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. So that the Fund will
not have to pay taxes on the amounts it distributes to shareholders as dividends
and capital gains, the Fund intends to manage its investments so that it will
qualify as a "regulated investment company" under the Internal Revenue Code;
although the Fund reserves the right not to qualify in a particular year.
o "Buying a Dividend:" If you buy shares on or just before the ex-dividend
date, or just before the Fund declares a capital gains distribution, you will
pay the full price for the shares and then receive a portion of the price back
as a taxable dividend or capital gain, respectively.
o 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.
o 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 advisor about the
effect of an investment in the Fund on your particular tax situation.
1
<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, 1997,(iii) Class C shares of the Fund for the period August 29,
1995 (inception of class) to December 31, 1997, and (iv) Class Y shares of the
Fund for the period from June 1, 1994 through December 31, 1997, 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
12/31/87 $9,425 $10,000(1) 12/31/88
$10,683 $11,656
12/31/89 $12,738 $15,343
12/31/90 $12,248 $14,866
12/31/91 $16,687 $19,386
12/31/92 $18,828 $20,861
12/31/93 $22,827 $22,958
12/31/94 $21,034 $23,261
12/31/95 $27,370 $31,991
12/31/96 $32,769 $39,331
12/31/97 $41,743 $52,449
Fiscal Oppenheimer Total Return S&P 500
Period Ended Fund, Inc. Class B Shares Index
05/01/93 $10,000 $10,000(2)
12/31/93 $11,391 $10,807
12/31/94 $10,407 $10,949
12/31/95 $13,429 $15,058
12/31/96 $15,950 $18,513
12/31/97 $19,924 $24,688
(1) Index value as of December 31, 1987 (2) Index value as of April 30, 1993
Fiscal Oppenheimer Total Return S & P 500
Year Ended Fund, Inc. Class C Shares Index
8/29/95 $10,000 $10,000(3)
12/31/95 $10,882 11,049
12/31/96 $12,915 $13,584
12/31/97 $16,302 $18,114
Fiscal Oppenheimer Total Return S & P 500
Period Ended Fund, Inc. Class Y Shares Index
6/1/94 $10,000 $10,000(4)
12/31/94 $9,686 $10,230
12/31/95 $12,613 $14,069
12/31/96 $15,120 $17,297
12/31/97 $19,283 $23,066
(3) Index value as of August 31, 195
(4) Index value as of May 31, 1994
Note: Index performance plotting point are calculated from month end values.
2
<PAGE>
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 advisor to those funds, and (ii) Quest for Value U.S. Government
Income Fund, Quest for Value Investment Quality Income Fund, Quest for Value
Global Income Fund, Quest for Value New York Tax-Exempt Fund, Quest for Value
National Tax-Exempt Fund and Quest for Value California Tax- Exempt Fund when
those funds merged into various Oppenheimer funds on November 24, 1995. The
funds listed above are referred to in this Prospectus as the "Former Quest for
Value Funds." The waivers of initial and contingent deferred sales charges
described in this Appendix apply to shares of the Fund (i) acquired by such
shareholder pursuant to an exchange of shares of one of the Oppenheimer funds
that was one of the Former Quest for Value Funds or (ii) 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
o Reduced Class A Initial Sales Charge Rates for Certain Former Quest
Shareholders
o Purchases by Groups, Associations and Certain Qualified Retirement Plans. The
following table sets forth the initial sales charge rates for Class A shares
purchased by a "Qualified Retirement Plan" through a single broker, dealer or
financial institution, or by members of "Associations" formed for any purpose
other than the purchase of securities if that Qualified Retirement Plan or that
Association purchased shares of any of the Former Quest for Value Funds or
received a proposal to purchase such shares from OCC Distributors prior to
November 24, 1995. For this purpose only, a "Qualified Retirement Plan" includes
any 401(k) plan, 403(b) plan, and SEP/IRA or IRA plan for employees of a single
employer.
A-1
<PAGE>
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 pages __ to __ of this Prospectus.
Purchases made under this arrangement qualify for the lower of the sales
charge rate in the table based on the number of eligible employees in a
Qualified Retirement Plan or members of an Association or the sales charge rate
that applies under the Rights of Accumulation described above in the Prospectus.
In addition, purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they qualified to
purchase shares of any of the Former Quest For Value Funds by virtue of
projected contributions or investments of $1 million or more each year.
Individuals who qualify under this arrangement for reduced sales charge rates as
members of Associations, or as eligible employees in Qualified Retirement Plans
also may purchase shares for their individual or custodial accounts at these
reduced sales charge rates, upon request to the Fund's Distributor.
o Waiver of Class A Sales Charges for Certain Shareholders. Class A shares
of the Fund purchased by the following investors are not subject to any Class A
initial or contingent deferred sales charges:
o Shareholders of the Fund who were shareholders of the AMA Family of
Funds on February 28, 1991 and who acquired shares of any of the Former Quest
for Value Funds by merger of a portfolio of the AMA Family of Funds.
o Shareholders of the Fund who acquired shares of any Former Quest for
Value Fund by merger of any of the portfolios of the Unified Funds.
o Waiver of Class A Contingent Deferred Sales Charge in Certain Transactions.
The Class A contingent deferred sales charge will not apply to redemptions of
Class A shares of the Fund purchased by the following investors who were
shareholders of any Former Quest for Value Fund:
o Investors who purchased Class A shares from a dealer that is or was not
permitted to receive a sales load or redemption fee imposed on a shareholder
with whom that dealer has a fiduciary relationship under the Employee Retirement
Income Security Act of 1974 and regulations adopted under that law.
o Participants in Qualified Retirement Plans that purchased shares of any
of the Former Quest For Value Funds pursuant to a special "strategic alliance"
with the distributor of those funds. The Fund's Distributor will pay a
commission to the dealer for purchases of Fund shares as described above in
"Class A Contingent Deferred Sales Charge."
Class A, Class B and Class C Contingent Deferred Sales Charge Waivers
o Waivers for Redemptions of Shares Purchased Prior to March 6, 1995. In the
following cases, the contingent deferred sales charge will be waived for
redemptions of Class A, B or C shares of the Fund acquired by merger of a Former
Quest for Value Fund into the Fund or by exchange from an Oppenheimer fund that
was a Former Quest for Value Fund or into which such fund merged, if those
shares were purchased prior to March 6, 1995: in connection with (i)
distributions to participants or beneficiaries of plans qualified under Section
401(a) of the Internal Revenue Code or from custodial accounts under Section
403(b)(7) of the Code, Individual Retirement Accounts, deferred compensation
plans under Section 457 of the Code, and other employee benefit plans, and
returns of excess contributions made to each type of plan, (ii) withdrawals
under an automatic withdrawal plan holding only either Class B or C shares if
the annual withdrawal does not exceed 10% of the initial value of the account,
and (iii) liquidation of a shareholder's account if the aggregate net asset
value of shares held in the account is less than the required minimum value of
such accounts.
o Waivers for Redemptions of Shares Purchased on or After March 6, 1995 but
Prior to November 24, 1995. In the following cases, the contingent deferred
sales charge will be waived for redemptions of Class A, B or C shares of the
Fund acquired by merger of a Former Quest for Value Fund into the Fund or by
exchange from an Oppenheimer fund that was a Former Quest For Value Fund or into
which such fund merged, if those shares were purchased on or after March 6,
1995, but prior to November 24, 1995: (1) distributions to participants or
beneficiaries from Individual Retirement Accounts under Section 408(a) of the
Internal Revenue Code or retirement plans under Section 401(a), 401(k), 403(b)
and 457 of the Code, if those distributions are made either (a) to an individual
participant as a result of separation from service or (b) following the death or
disability (as defined in the Code) of the participant or beneficiary; (2)
returns of excess contributions to such retirement plans; (3) redemptions other
than from retirement plans following the death or disability of the
shareholder(s) (as evidenced by a determination of total disability by the U.S.
Social Security Administration); (4) withdrawals under an automatic withdrawal
plan (but only for Class B or 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.
A-3
<PAGE>
Oppenheimer Total Return Fund, Inc.
6803 South Tucson Way
Englewood, Colorado 80112
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
OppenheimerFunds Internet Web Site
http://www.oppenheimerfunds.com
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
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. PRO420.001.0498 Printed on recycled paper
A-4
<PAGE>
Oppenheimer Total Return Fund, Inc.
6803 South Tucson Way, Englewood, Colorado 80112
1-800-525-7048
Statement of Additional Information dated April 30, 1998
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 30, 1998. It should be read together
with the Prospectus which may be obtained by writing to the Fund's Transfer
Agent, OppenheimerFunds Services, at P.O. Box 5270, Denver, Colorado 80217, or
by calling the Transfer Agent at the toll-free number shown above.
TABLE OF CONTENTS
Page
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
Financial Statements..........................................................
Independent Auditors' Report..................................................
Appendix A: Corporate Industry Classifications.............................A-1
-1-
<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.
o Foreign Securities. As stated in the Prospectus, the Fund may invest in
equity or debt securities (which may be dominated in U.S. dollars or non-U.S.
currencies) issued or guaranteed by foreign corporations, certain supranational
entities (described below) and foreign governments or their agencies or
instrumentalities, and in securities issued by U.S. corporations denominated in
non- U.S. currencies. 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.
o 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.
o Convertible Securities. While convertible securities are a form of debt
security in many cases, their conversion feature (allowing conversion into
equity securities) causes them to be regarded more as "equity equivalents." As a
result, the rating assigned to the security has less impact on the Manager's
investment decision with respect to convertible securities than in the case of
non-convertible fixed income securities. To determine whether convertible
securities should be regarded as "equity equivalents," the Manager examines the
following factors: (1) whether, at the option of the investor, the convertible
security can be exchanged for a fixed number of shares of common stock of the
issuer, (2) whether the issuer of the convertible securities has restated its
earnings per share of common stock on a fully diluted basis (considering the
effect of conversion of the convertible securities), and (3) the extent to which
the convertible security may be a defensive "equity substitute," providing the
ability to participate in any appreciation in the price of the issuer's common
stock.
Other Investment Techniques and Strategies
o 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. 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.
o 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.
o 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.
o 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 may 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.
o 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, liquid assets of any type, including equity
and debt securities of any grade, 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.
o 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, or another currency that is also subject of the hedge. The Fund,
however, in order to avoid excess transactions and transaction costs, may
maintain a net exposure to Forward Contracts in excess of the value of the
Fund's portfolio securities or other assets denominated in these currencies
provided the excess amount is "covered" by liquid, high-grade debt securities,
denominated in any currency, at least equal at all times to the amount of such
excess. 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.
o 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 that master
agreement shall be regarded as parts of an integral agreement. If on any date
amounts are payable in the same currency in respect of one or more swap
transactions, the net amount payable on that date in that currency shall be
paid. In addition, the master netting agreement may provide that if one party
defaults generally or on one swap, the counterparty may terminate the swaps with
that party. Under such agreements, if there is a default resulting in a loss to
one party, the measure of that party's damages is calculated by reference to the
average cost of a replacement swap with respect to each swap (i.e., the
mark-to-market value at the time of the termination of each swap). The gains and
losses on all swaps are then netted, and the result is the counterparty's gain
or loss on termination. The termination of all swaps and the netting of gains
and losses on termination is generally referred to as "aggregation".
o Additional Information About Hedging Instruments and Their Use. The
Fund's Custodian, or a securities depository acting for the Custodian, will act
as the Fund's escrow agent, through the facilities of the Options Clearing
Corporation ("OCC"), as to the investments on which the Fund has written options
traded on exchanges or as to other acceptable escrow securities, so that no
margin will be required for such transactions. OCC will release the securities
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 unless subject to a buy-back agreement with the
executing broker. 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 unless subject to a buy-back
agreement with the executing broker. 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.
o Regulatory Aspects of Hedging Instruments. The Fund is required to
operate within certain guidelines and restrictions with respect to its use of
Futures and options 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.
o Tax Aspects of Covered Calls and Hedging Instruments. The Fund intends
to qualify as a "regulated investment company" under the Internal Revenue Code
(although it reserves the right not to qualify). That qualification enables the
Fund to "pass through" its income and realized capital gains to shareholders
without the Fund having to pay tax on them. This avoids a "double tax" on that
income and capital gains, since shareholders normally will be taxed on the
dividends and capital gains they receive from the Fund (unless the Fund's shares
are held in a retirement account or the shareholder is otherwise exempt from
tax).
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
timing and the timing and character of gains or losses recognized by the Fund on
straddle positions. Generally, a loss sustained on the disposition of a
position(s) making up a straddle is allowed only to the extent such loss exceeds
any unrecognized gain in the offsetting positions making up the straddle.
Disallowed loss is generally allowed at the point where there is no unrecognized
gain in the offsetting positions making up the straddle, or the offsetting
position is disposed of. The straddle rules generally result in deferral of
losses.
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.
o 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.
o 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. Illiquid securities include
repurchase agreement maturing in more than seven days, or certain participation
interests other than those with puts exercisable within seven days.
o Repurchase Agreements. The Fund may acquire securities subject to
repurchase agreements for liquidity purposes to meet anticipated redemptions, or
pending the investment of the proceeds from sales of Fund shares, or pending the
settlement of purchases of portfolio securities.
In a repurchase transaction, the Fund 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.
o 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.
o When-Issued and Delayed Delivery Transactions. As stated in the
Prospectus, the Fund may invest in securities on a "when-issued" or "delayed
delivery" basis. Payment for and delivery of the securities generally settles
within 45 days of the date the offer is accepted. The purchase price and yield
are fixed at the time the buyer enters into the commitment. During the period
between purchase and settlement, no payment is made by the Fund to the issuer
and no interest accrues to the Fund from the investment. However, the Fund
intends to be as fully invested as possible and will not invest in when-issued
securities if its income or net asset value will be materially adversely
affected. At the time the Fund makes the commitment to purchase a security on a
when-issued basis, it will record the transaction on its books and reflect the
value of the security in determining its net asset value. It will also segregate
liquid assets of any type including equity and debt securities of any grade
equal in value to the commitment for the when-issued securities. While
when-issued securities may be sold prior to settlement date, the Fund intends to
acquire the securities upon settlement unless a prior sale appears desirable for
investment reasons. There is a risk that the yield available in the market when
delivery occurs may be higher than the yield on the security acquired.
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 do any of the
following:
o The Fund cannot purchase securities on margin or sell securities short;
however, the Fund may make margin deposits in connection with any of its
permitted investments; o The Fund cannot invest in other companies for the
purpose of exercising control or management; o The Fund cannot invest in real
estate or in interests in real estate, but may purchase securities of issuers
holding real estate or interests therein; o The Fund cannot invest in physical
commodities or physical commodity contracts, or purchase securities for
speculative short-term purposes; however, the Fund may: (i) buy and sell hedging
instruments permitted by any of its other investment policies, and (ii) buy and
sell options, futures, securities or other instruments backed by, or the
investment return from which is linked to changes in the price of, physical
commodities;
o The Fund cannot accept the purchase price for any of its shares without
immediately thereafter issuing an appropriate number of shares; or
o 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.
As a non-fundamental policy, the Fund cannot invest in securities of any
corporation which has a record of operations of less than three years, including
operations of any predecessors.
Previously, in connection with the qualification of its shares in certain
states, the Fund made certain undertakings as non-fundamental policies because
of certain state regulations. Due to changes in federal securities laws, such
state regulations no longer apply and the undertakings are therefore
inapplicable and have been withdrawn. For purposes of the Fund's policy not to
concentrate described in 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.
Directors and Officers of the Fund. The Fund's Directors and officers and their
principal occupations and business affiliations and occupations during the past
five years are listed below. All of the Directors are also trustees, directors
or managing general partners of Oppenheimer Total Return Fund, Inc., Oppenheimer
Real Asset Fund, Oppenheimer Equity Income Fund, Oppenheimer High Yield Fund,
Oppenheimer Cash Reserves, Oppenheimer Strategic Income Fund, Centennial America
Fund, L.P., The New York Tax-Exempt Income Fund, Inc., Oppenheimer Variable
Account Funds, Oppenheimer Champion Income Fund, Oppenheimer International Bond
Fund, Oppenheimer Main Street Funds, Inc., Oppenheimer Integrity Funds,
Oppenheimer Limited-Term Government Fund, Oppenheimer Municipal Fund, Panorama
Series Fund, Inc., Centennial Money Market Trust, Centennial Government Trust,
Centennial New York Tax Exempt Trust, Centennial California Tax Exempt Trust and
Centennial Tax Exempt Trust (all of the foregoing funds are collectively
referred to as the "Denver-based Oppenheimer funds") except for Ms. Macaskill
and Mr. Bower, who are Trustees, Directors nor Managing General Partners of all
the Denver-based Oppenheimer funds except Oppenheimer Integrity Funds, Panorama
Series Fund, Inc., Oppenheimer Strategic Income Fund, Oppenheimer Variable
Account Funds, Centennial New York tax=Exempt Fund and Centennial America Fund,
L.P. In addition, Mr. Fossel is not a Trustee of Centennial New York Tax-Exempt
Trust or a Managing General Partner of Centennial America Fund, L.P. 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 the
Denver-based Oppenheimer funds. As of March __, 1998 the Directors and officers
of the Fund as a group owned less than 1% of its outstanding shares, not
including shares held of record by an employee benefit plan of the Manager (for
which two of the officers listed below, Ms. Macaskill and Mr. Donohue, are
trustees) other than shares beneficially owned under that plan by the officers
of the Fund listed above.
Robert G. Avis, Director*; Age 66
One North Jefferson Ave., St. Louis, Missouri 63103
Vice Chairman of A.G. Edwards & Sons, Inc. (a broker-dealer) and A.G. Edwards,
Inc. (its parent holding company); Chairman of A.G.E. Asset Management and A.G.
Edwards Trust Company (its affiliated investment adviser and trust company,
respectively).
William A. Baker, Director; Age 82
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
George C. Bowen, Vice President, Assistant Secretary, Treasurer and Director*#;
Age 61 6803 South Tucson Way, Englewood, Colorado 80112 Senior Vice President
(since September 1987) and Treasurer (since March 1985) of the Manager; Vice
President (since June 1983) and Treasurer (since March 1985) of the Distributor;
Vice President (since October 1989) and Treasurer (since April 1986) of
HarbourView; Senior Vice President (since February 1992), Treasurer (since July
1991) and a director (since December 1991) of Centennial; President, Treasurer
and a director of Centennial Capital Corporation (since June 1989); Vice
President and Treasurer (since August 1978) and Secretary (since April 1981) of
SSI; Vice President, Treasurer and Secretary of SFSI (since November 1989);
Treasurer of OAC (since June 1990); Treasurer of Oppenheimer Partnership
Holdings, Inc. (since November 1989); Vice President and Treasurer of
Oppenheimer Real Asset Management, Inc. (since July 1996); Chief Executive
Officer, Treasurer and a director of MultiSource Services, Inc., a broker-dealer
(since December 1995); an officer of other Oppenheimer funds.
------------------------
* A Director who is an "interested person" of the Fund and the Adviser. # Not a
Trustee or Director of Oppenheimer Strategic Income Fund, Oppenheimer Variable
Account Funds, Oppenheimer Bond Fund (a series of Oppenheimer Integrity Funds),
Panorama Series Fund, Inc., Centennial New York Tax-Exempt Trust nor a Managing
General Partner of Centennial America Fund, L.P..
Charles Conrad, Jr., Director; Age 67
1501 Quail Street, Newport Beach, CA 92660
Chairman and CEO of Universal Space Lines, Inc. (a space services management
company); formerly Vice President of McDonnell Douglas Space Systems Co. and
associated with the National Aeronautics and Space Administration.
Jon S. Fossel, Director+; Age 56
P.O. Box 44, Mead Street, Waccabuc, New York 10597
Formerly Chairman and a director of the Manager, President and a director of
Oppenheimer Acquisition Corp. ("OAC"), the Manager's parent holding company, and
Shareholder Services, Inc. ("SSI") and Shareholder Financial Services, Inc.
("SFSI"), transfer agent subsidiaries of the Manager.
Sam Freedman, Director; Age: 57
4975 Lakeshore Drive, Littleton, Colorado 80123
Formerly Chairman and Chief Executive Officer of OppenheimerFunds Services,
Chairman, Chief Executive Officer and a director of SSI, Chairman, Chief
Executive and Officer and director of SFSI, Vice President and director of OAC
and a director of OppenheimerFunds, Inc.
Raymond J. Kalinowski, Director; Age 68
44 Portland Drive, St. Louis, Missouri 63131
Director of Wave Technologies International, Inc. (a computer products training
company).
C. Howard Kast, Director; Age 76
2552 East Alameda, Denver, Colorado 80209
Formerly Managing Partner of Deloitte, Haskins & Sells (an accounting firm)..
Robert M. Kirchner, Director; Age 76
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
Bridget A. Macaskill, President and Director*#; Age: 49
President (since June 1991), Chief Executive Officer (since September 1995) and
a director (since December 1994) of the Manager; President and Director (since
June 1991) of HarbourView; Chairman and a director of SSI (since August 1994),
and SFSI (since September 1995); President (since September 1995) and a director
(since October 1990) of OAC; President (since September 1995) and a director
(since November 1989) of Oppenheimer Partnership Holdings, Inc., a holding
company subsidiary of the Manager; a director of Oppenheimer Real Asset
Management, Inc. (since July 1996); President and a director (since October
1997) of OppenheimerFunds International Ltd.,
------------------------
* A Director who is an "interested person" of the Fund and the Adviser.
+ Not a Trustee of Centennial New York Tax-Exempt Trust nor a managing General
Partner of Centennial America Fund, L.P.
# Not a Trustee or Director of Oppenheimer Strategic Income Fund, Oppenheimer
Variable Account Funds, Oppenheimer Bond Fund (a series of Oppenheimer Integrity
Funds), Panorama Series Fund, Inc., Centennial New York Tax-Exempt Trust nor a
Managing General Partner of Centennial America Fund, L.P..
an offshore fund manager subsidiary of the Manager ("OFIL") and Oppenheimer
Millennium Funds plc (since October 1997); President and a director of other
Oppenheimer funds; a director of the NASDAQ Stock Market, Inc. and of Hillsdown
Holdings plc (a U.K. food company); formerly an Executive Vice President of the
Manager.
Ned M. Steel, Director; Age 82
3416 South Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; a director of Visiting Nurse
Corporation of Colorado.
James C. Swain, Chairman, Chief Executive Officer and Director;* Age 64 6803
South Tucson Way, Englewood, Colorado 80112 Vice Chairman of the Manager (since
September 1988); 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.
Bruce Bartlett, Vice President and Portfolio Manager; Age 48
Two World Trade Center, New York, New York 10048-0203
Vice President of the manager (April 1995); an officer of other Oppenheimer
funds, formerly a Vice President and Senior Portfolio Manager of First of
America Investment Corp.
John P. Doney, Vice President and Portfolio Manager; Age: 68
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager (since June 1992); formerly Senior Vice President
and Chief Investment Officer - Equities of National Securities & Research
Corporation (mutual fund adviser) and Vice President of the National Affiliated
Investment Companies.
Andrew J. Donohue, Vice President and Secretary; Age 47
Two World Trade Center, New York, New York 10048
Executive Vice President (since January 1993), General Counsel (since October
1991) and a director (since September 1995) of the Manager; Executive Vice
President and General Counsel (since September 1993) and a director (since
January 1992) of the Distributor; Executive Vice President, General Counsel and
a director of HarbourView, SSI, SFSI and Oppenheimer Partnership Holdings, Inc.
(since September 1995) and MultiSource Services, Inc. (a broker-dealer) (since
December 1995); President and a director of Centennial (since September 1995);
President, General Counsel and a director of Oppenheimer Real Asset Management,
Inc. (since July 1996); General Counsel (since May 1996) and Secretary (since
April 1997) of OAC; a director of OFIL and Oppenheimer Millennium Funds plc
(since October 1997); an officer of other Oppenheimer funds.
------------------------
* A Director who is an "interested person" of the Fund and the Adviser.
Robert J. Bishop, Assistant Treasurer; Age 39
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); an
officer of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for
the Manager.
Scott Farrar, Assistant Treasurer; Age 32
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); Assistant
Treasurer of Oppenheimer Millennium Funds plc (since October 1997); an officer
of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for
the Manager.
Robert G. Zack, Assistant Secretary; Age 49
Two World Trade Center, New York, New York 10048-0203
Senior Vice President (since May 1985) and Associate General Counsel (since May
1981) of the Manager, Assistant Secretary of SSI (since May 1985), and SFSI
(since November 1989); Assistant Secretary of Oppenheimer Millennium Funds plc
(since October 1997); an officer of other Oppenheimer funds.
o Remuneration of Directors. The officers of the Fund and certain Directors
of the Fund (Ms. Macaskill and Messrs. Swain and Bowen) who are affiliated with
the Manager receive no salary or fee from the Fund. The remaining Directors of
the Fund received the compensation shown below. The compensation from the Fund
was paid during its fiscal year ended December 31, 1998. The compensation from
all of the Denver-based Oppenheimer funds includes the Fund and is compensation
received as a director, trustee, managing general partner or member of a
committee of the Board during the calendar year 1997.
Total Compensation
Aggregate From All
Compensation Denver-based
Name and Position from Fund Oppenheimer funds(1)
Robert G. Avis $63,501.00
Director
William A. Baker $77,502.00
Audit and Review
Committee
Ex-Officio Member(2)
and Director
- ----------------------
(1) For the 1997 calendar year. (2) Committee positions effective July 1, 1997.
Total Compensation
Aggregate From All
Compensation Denver-based
Name and Position from Fund Oppenheimer funds(1)
Charles Conrad, Jr. $72,000.00
Director(3)
Jon S. Fossel $63,277.18
Director
Sam Freedman $66,501.00
Audit and Review Committee
Member(2) and Director
Raymond J. Kalinowski $71,561.00
Audit and Review Committee
Member(2) and Director
C. Howard Kast $76,503.00
Audit and Review Committee
Chairman(2) and Director
Robert M. Kirchner $72,000.00
Director(3)
Ned M. Steel $63,501.00
Director
- ----------------------
(1) For the 1997 calendar year. (2) Committee positions effective July 1, 1997.
(3) Prior to July 1, 1997, Messrs. Conrad and Kirchner were also members of
the Audit and Review Committee.
o Deferred Compensation Plan. The Board of Directors has adopted a
Deferred Compensation Plan for disinterested Directors that enables them to
elect to defer receipt of all or a portion of the annual fees they are entitled
to receive from the Fund. Under the plan, the compensation deferred by a
Director is periodically adjusted as though an equivalent amount had been
invested in shares of one or more Oppenheimer funds selected by the Director.
The amount paid to the Director under the plan will be determined based upon the
performance of the selected funds. Deferral of Directors' fees under the plan
will not materially affect the Fund's assets, liabilities or net income per
share. The plan will not obligate the Fund to retain the services of any
Director or to pay any particular level of compensation to any Director.
Pursuant to an Order issued by the Securities and Exchange Commission, the Fund
may invest in the funds selected by the Director under the plan without
shareholder approval for the limited purpose of determining the value of the
Director's deferred fee account.
o Major Shareholders. As of March __, 1998, 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 __________
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 two
of whom (Ms. Macaskill and Mr. Swain) serve as Directors of the Fund.
The Portfolio Managers of the Fund are Bruce Bartlett and John Doney, who
are principally responsible for the day to day management of the Fund's
portfolio. Messrs. Bartlett and Doney's backgrounds are described in the
Prospectus under "Portfolio Manager." Other members of the Adviser's Equity and
Fixed Income Portfolio Departments provide the portfolio managers with counsel
and support in managing the Fund's portfolio.
The Manager and the Fund have a Code of Ethics. It is designed to detect
and prevent improper personal trading by certain employees, including portfolio
managers, that would compete with or take advantage of the Fund's portfolio
transactions. Compliance with the Code of Ethics is carefully monitored and
strictly enforced by the Manager.
o 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, 1995, 1996 and 1997 the management fees paid by the Fund to
the Manager were $10,289,397, $12,631,975 and $________, respectively.
The Investment Advisory Agreement contains no expense limitation. However,
because of state regulations limiting fund expenses that previously applied, the
Manager had voluntarily undertaken that the Fund's total expenses in any fiscal
year (including the management fee but exclusive of taxes, interest, brokerage
commissions, distribution plan payments and any extraordinary non-recurring
expenses, including litigation) would not exceed the most stringent state
regulatory limitation applicable to the Fund. Due to changes in federal
securities laws, such state regulations no longer apply and the Manager's
undertaking is therefore inapplicable and the Manager reserves the right to
terminate or amend the undertaking at any time. During the Fund's last fiscal
year, the Fund's expenses did not exceed the most stringent state regulatory
limit and the voluntary undertaking was not invoked.
The advisory agreement provides that 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.
o The Distributor. Under its General Distributor's Agreement with the
Fund, the Distributor acts as the Fund's principal underwriter in the continuous
public offering of the Fund's 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 years ended December 31, 1995, 1996 and 1997, the aggregate
amounts of sales charges on sales of the Fund's Class A shares were $4,061,349,
$4,329,798 and $________, respectively, of which the Distributor and an
affiliated broker retained $1,236,003, $934,605 and $________, in those
respective periods. During the Fund's fiscal years ended December 31, 1995, 1996
and 1997, the contingent deferred sales charges on the Fund's Class B shares
totaled $1,488,860, $1,054,974 and $________, all of which the Distributor
retained. During the fiscal years ended 1995, 1996 and 1997 the contingent
deferred sales charges on Class C shares were $20 and $3,567 and $_____,
respectively. 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.
o The Transfer Agent. OppenheimerFunds Services, the Fund's Transfer Agent,
is responsible for maintaining the Fund's shareholder registry and shareholder
accounting records, and for shareholder servicing and administrative functions.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of the duties of
the Manager under the 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. In connection with transactions
on foreign exchanges, the Fund may be required to pay fixed brokerage
commissions and thereby forego the benefit of negotiated commissions available
in U.S. markets. 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. Option commissions may be
relatively higher than those which would apply to direct purchases and sales of
portfolio securities.
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, 1995, 1996 and 1997,
total brokerage commissions paid by the Fund were $8,172,905, $4,700,205 and
$________, respectively. Of that amount, during the fiscal year ended December
31, 1997, $________ was paid to brokers as commissions in return for research
services; the aggregate dollar amount of those transactions was $_________. The
transactions giving rise to those commissions were allocated in accordance with
the Manager's internal allocation procedures.
Performance of the Fund
Total Return Information. As described in the Prospectus, from time to time the
"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 advertisement of its performance data must, under applicable
rules of the Securities and Exchange Commission, include the average annual
total returns for each advertised class of shares of the Fund for the 1, 5, and
10-year periods (or the life of the class, if less) ending as of the most
recently-ended calendar quarter prior to the publication of the advertisement.
This enables an investor to compare the Fund's performance to the performance of
other funds for the same periods. However, a number of factors should be
considered before using such information as a basis for comparison with other
investments. An investment in the Fund is not insured; its returns and share
prices are not guaranteed and normally will fluctuate on a daily basis. When
redeemed, an investor's shares may be worth more or less than their original
cost. Returns for any given past period are not a prediction or representation
by the Fund of future returns. The returns of 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.
o Average Annual Total Returns
The "average annual total return" of each class is an average annual
compounded rate of return for each year in a specified number of years. It is
the rate of return based on the change in value of a hypothetical initial
investment of $1,000 ("P" in the formula below) held for a number of years ("n")
to achieve an Ending Redeemable Value ("ERV") of that investment, according to
the following formula:
( ERV ) 1/n
(-----) -1 = Average Annual Total Return ( P )
The average annual total returns on an investment in Class A shares for
the one, five and ten-year periods ended December 31, 1997 were _____% ,_____%;
and_____%, respectively. The average annual total returns on an investment in
Class B shares for the fiscal year ended December 31, 1997, and for the period
May 1, 1993 (inception of the class) to December 31, 1997 were_____% and_____%,
respectively. The average annual total returns on an investment in Class C
shares for the fiscal year ended December 31, 1997, and for the period August
29, 1995 (inception of the class) to December 31, 1997 were_____% and _____%,
respectively. The average annual total returns on an investment in Class Y
shares for the fiscal year ended December 31, 1997, and for the period June 1,
1994 (inception of the class) to December 31, 1997 were_____% and _____%,
respectively.
o Cumulative Total Returns. The cumulative "total return" calculation
measures the change in value of a hypothetical investment of $1,000 over an
entire period of years. Its calculation uses some of the same factors as average
annual total return but it does not average the rate of return on an annual
basis. Cumulative total return is determined as follows:
ERV - P
------- = Total Return
P
In calculating total returns for Class A shares, the current maximum sales
charge of 5.75% (as a percentage of the offering price) is deducted from the
initial investment ("P") (unless the return is shown at net asset value, as
described below). For Class B shares, the payment of the applicable
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% in
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
buy additional shares, at net asset value per share, and that the investment is
redeemed at the end of the period. The cumulative total return on Class A shares
for the ten-year period ended December 31, 1997, was _____%. The cumulative
total return on Class B shares for the period May 19, 1993 through December 31,
1997 was _____%. The cumulative total return on Class C shares for the period
August 29, 1995 through December 31, 1997 was _____%. The cumulative total
return on Class Y shares for the period June 1, 1994 through December 31, 1997
was _____%.
o Total Returns At Net Asset Value. From time to time the Fund may also
quote an "average annual total return at net asset value" or a "cumulative total
return at net asset value" for Class A, Class B, Class C or Class Y shares. Each
is based on the difference in net asset value per share at the beginning and the
end of the period for a hypothetical investment in that class of shares (without
considering front-end or contingent deferred sales charges) and takes into
consideration the reinvestment of dividends and capital gains distributions.
The "average annual total returns at net asset value" for Class A shares
for the fiscal year ended December 31, 1997 and for the 10-year period ended
December 31, 1997, were _____% and ___%, respectively. The "cumulative total
return at net asset value" on Class A shares for the 10- year period ended
December 31, 1997, was _____%.
The "average annual total returns at net asset value" for Class B shares
for the fiscal year ended December 31, 1997 and for the period May 1, 1993
(inception of that class) to December 31, 1997 were _____% and _____%,
respectively. The "cumulative total return at net asset value" on Class B shares
for the period May 1, 1993 (inception of the class) to December 31, 1997 was
- -----%.
The "average annual total returns at net asset value " for Class C shares
for the fiscal year ended December 31, 1997 and for the period August 29, 1995
(inception of the class) to December 31, 1997 were _____% and _____%,
respectively. The "cumulative total return at net asset value" on Class C shares
for the period August 29, 1995 (inception of the class) to December 31, 1997 was
- -----%.
The "average annual total return at net asset value" for Class Y shares for
the fiscal year ended December 31, 1997 and for the period June 1, 1994
(inception of the class) to December 31, 1997 were _____% and _____%,
respectively. The "cumulative total return at net asset value" for Class Y
shares for the period from June 1, 1994 (inception of the class) to December 31,
1997 was _____%.
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. The Fund's returns and share price are not
guaranteed by the FDIC or any other agency and will fluctuate daily, while bank
depository obligations may be insured by the FDIC and may provide fixed rates of
return, and Treasury bills are guaranteed as to principal and interest by the
U.S. government.
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.
Morningstar ranks mutual funds, including the Fund, monthly in broad investment
categories (domestic stock funds, international stock funds, taxable bond funds,
municipal bond and hybrid) based on risk-adjusted investment return. Investment
return measures a fund's or class' 1- 3-, 5- and 10-year average annual total
returns (depending on the inception of the Fund or class) in excess of 90-day
U.S. Treasury bill returns after considering 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 Fund may also compare its performance to that of other funds in its
Morningstar Category. In addition to its star ranking, Morningstar also
categorizes and compares a fund's 3-year performance based on Morningstar's
classification of the fund's investments and investment style, rather than how a
fund defines its investment objective. Morningstar's four broad categories
(domestic equity, international equity, municipal bond and taxable bond) are
each further subdivided into categories based on types of investments and
investment styles. Those comparisons by Morningstar are based on the same risk
and return measurements as its star rankings but do not consider the effect of
sales charges.
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.
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
by a Securities and Exchange Commission Rule to obtain the approval of Class B
as well as Class A shareholders for a proposed amendment to the Class A Plan
that would materially increase 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.
The Board of Directors has set the fees at the maximum rate and set no minimum
amount.
For the fiscal year ended December 31, 1997, payments under the Plan for
Class A shares totaled $________, all of which was paid by the Distributor to
Recipients including $______ 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, 1997 totaled
$________, of which $________ was retained by the Distributor and $______ was
paid to a dealer affiliated with the Distributor. Payments made under the Class
C plan for the fiscal year ended December 31, 1997 amounted to $______, of which
$______ was retained by the Distributor and $________ was paid to a dealer
affiliated with 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. 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 Conduct Rules of the National
Association of Securities Dealers, Inc. on payments of asset-based sales charges
and service fees.
The Distributor's actual distribution expenses for any given year
may exceed the aggregate of payments received pursuant to the Class B and Class
C Plans and from contingent deferred sales charges. The asset-based sales charge
paid to the Distributor by the Fund under the Class B and Class C Plans are
intended to allow the Distributor to recoup the cost of sales commissions paid
to authorized brokers and dealers at the time of sale, plus financing costs, as
described in the Prospectus. 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, 1997, the
Distributor has incurred unreimbursed expenses under the Class B Plan of
$________ (equal to _____% of the Fund's net asset represented by Class B shares
on that date) and under the Class C Plan of $______ (equal to _____% 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 normally will not accept any order for $500,000
or more of Class B shares or $1 million or more of Class C shares on behalf of a
single investor (not including dealer "street name" or omnibus accounts) because
generally it will be more advantageous for that investor to purchase Class A
shares of the Fund instead. A fourth class of shares, may be purchased only by
certain institutional investors at net asset value per share (the "Class Y
Shares").
The four classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different shareholder
privileges and features. The net income attributable to Class B and Class C
shares and the dividends payable on 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 Value 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, Martin Luther King Jr.
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), or after the close of the Exchange on a
regular business day. The Fund may invest a substantial portion of its assets in
foreign securities primarily listed on foreign exchanges or in foreign
over-the-counter markets that may trade on Saturdays or customary U.S. business
holidays on which the Exchange is closed. Because the Fund's net asset value
will not be calculated 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 the Automated Quotation System ("NASDAQ") of
the Nasdaq Stock Market, Inc. for which last sale information is regularly
reported are valued at the last reported sale price on the principal exchange
for such security or NASDAQ that day (the "Valuation Date") or, in the absence
of sales that day, at the last reported sale price preceding the Valuation Date
if it is within the spread of the closing "bid" and "asked" prices on the
Valuation Date or, if not, the closing "bid" price on the Valuation Date; (ii)
equity securities traded on a foreign securities exchange are valued generally
at the last sales price available to the pricing service approved by the Fund's
Board of Directors or to the Manager as reported by the principal exchange on
which the security is traded at its last trading session on or immediately
preceding the Valuation Date, or, if unavailable, at the mean between "bid" and
"asked" prices obtained from the principal exchange or two active market makers
in the security on the basis of reasonable inquiry; (iii) a non-money market
fund will value (x) debt instruments that had a maturity of more than 397 days
when issued, (y) debt instruments that had a maturity of 397 days or less when
issued and have a remaining maturity in excess of 60 days, and (z) non-money
market type debt instruments that had a maturity of 397 days or less when issued
and have a remaining maturity of sixty days or less, at the mean between "bid"
and "asked" prices determined by a pricing service approved by the Fund's Board
of Directors or, if unavailable, obtained by the Manager from two active market
makers in the security on the basis of reasonable inquiry; (iv) money
market-type debt securities held by a non-money market fund that had a maturity
of less than 397 days when issued and have a remaining maturity of 60 days or
less, and debt instruments held by a money market fund that have a remaining
maturity of 397 days or less, shall be valued at cost, adjusted for amortization
of premiums and accretion of discount; and (v) securities (including restricted
securities) not having readily-available market quotations are valued at fair
value determined under the Board's procedures. If the Manager is unable to
locate two market makers willing to give quotes (see (ii) and (iii) above), the
security may be priced at the mean between the "bid" and "asked" prices provided
by a single active market maker (which in certain cases may be the "bid" price
if no "asked" price is available) provided that the Manager is satisfied that
the firm rendering the quotes is reliable and that the quotes reflect the
current market value.
Trading in securities on European and Asian exchanges and over-the-counter
markets is normally completed before the close of The New York Stock Exchange.
Events affecting the values of foreign securities traded in securities markets
that occur between the time their prices are determined and the close of the
Exchange will not be reflected in the Fund's calculation of net asset value
unless the Board of Directors or the Manager, under procedures established by
the Board of Directors, determines that the particular event is likely to effect
a material change in the value of such security and may affect the Fund's net
asset value per share. Foreign currency, including forward contracts, will be
valued at the closing price in the London foreign exchange market that day as
provided by a reliable bank, dealer or pricing service. The values of securities
denominated in foreign currency will be converted to U.S. dollars at the closing
price in the London foreign exchange market closing price that day, as provided
by a reliable bank, dealer or pricing service.
In the case of U.S. Government Securities and mortgage-backed securities,
where last sale information is not generally available, such pricing procedure
may include "matrix" comparisons to the prices for comparable instruments on the
basis of quality, yield, maturity and other special factors involved. The
Manager may use pricing services approved by the Board of Directors to price
U.S. Government Securities or mortgage-backed securities for which last sale
information is not generally available. The Manager will monitor the accuracy of
such pricing services, which may include comparing prices for portfolio
evaluation to actual sales prices of selected services.
Calls, puts 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. If there were no sales that day, the value shall be
the last sale price on the preceding trading day if it is within the spread of
the closing bid and asked prices on the principal exchange or on NASDAQ on the
valuation date, or, if not, the value shall be the closing bid price on the
principal exchange or on NASDAQ on the valuation date. If the put, call or
future is not traded on an exchange or on NASDAQ, it shall be valued at the mean
between bid and asked prices obtained by the Manager from two active market
makers (which in certain cases may be the bid price if no asked price is
available).
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 on a business day after the close of the
Exchange, the shares will be purchased and dividends will begin to accrue on the
next regular business day. The proceeds of ACH transfers are normally received
by the Fund 3 days after the transfers are initiated. The Distributor and the
Fund are not responsible for any delays in purchasing shares resulting from
delays in ACH transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced sales charge
rate may be obtained for Class A shares under Right of Accumulation and Letters
of Intent because of the economies of sales efforts and 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, aunts,
uncles, nieces and nephews, parents, parents-in-law, sons- and daughters-in-law,
siblings, a sibling's spouse and a spouse's siblings. Relations by virtue of a
remarriage (step-children, step-parents, etc.) are included.
o The Oppenheimer Funds. The Oppenheimer funds are those mutual funds for
which the Distributor acts as the distributor or the sub-distributor and include
the following:
Oppenheimer Bond Fund
Oppenheimer Bond Fund for Growth
Oppenheimer Capital
Appreciation Fund
Oppenheimer Champion Income Fund
Oppenheimer California Municipal Fund
Oppenheimer Developing Markets Fund
Oppenheimer Discovery Fund
Oppenheimer Disciplined Value Fund
Oppenheimer Disciplined Allocation Fund
Oppenheimer Enterprise Fund
Oppenheimer Equity Income Fund
Oppenheimer Florida Municipal Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer Insured Municipal Fund
Oppenheimer International Bond Fund
Oppenheimer International Growth Fund
Oppenheimer International Small Company
Fund
Oppenheimer Life Span Balanced Fund
Oppenheimer Life Span Growth Fund
Oppenheimer Life Span Income Fund
Limited Term New York Municipal Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Municipal Bond Fund
Oppenheimer Mid-Cap Fund
Oppenheimer Main Street California Municipal
Fund
Oppenheimer Main Street Income & Growth
Fund
Oppenheimer Multiple Strategies Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer New York Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Growth & Income Value
Fund
Rochester Fund Municipals
Oppenheimer Real Asset Fund
Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer U.S. Government Trust
and the following "Money Market Funds:"
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Oppenheimer Cash Reserves
Oppenheimer Money Market Fund, Inc.
There is an initial sales charge on the purchase of Class A shares of each
of the Oppenheimer funds except Money Market Funds (under certain circumstances
described herein, redemption proceeds of Money Market Fund shares may be subject
to a contingent deferred sales charge).
o Letters of Intent. A Letter of Intent (referred to as a "Letter") is an
investor's statement in writing to the Distributor of the intention to purchase
Class A shares or Class A and Class B shares of the Fund (and other Oppenheimer
funds) during a 13-month period (the "Letter of Intent period"), which may, at
the investor's request, include purchases made up to 90 days prior to the date
of the Letter. The Letter states the investor's intention to make the aggregate
amount of purchases of shares which, when added to the investor's holdings of
shares of those funds, will equal or exceed the amount specified in the Letter.
Purchases made by reinvestment of dividends or distributions of capital gains
and purchases made at net asset value without sales charge do not count toward
satisfying the amount of the Letter. A Letter enables an investor to count the
Class A and Class B shares purchased under the Letter to obtain the reduced
sales charge rate on purchases of Class A shares of the Fund (and other
Oppenheimer funds) that applies under the Right of Accumulation to current
purchases of Class A shares. Each purchase of Class A shares under the Letter
will be made at the public offering price (including the sales charge) that
applies to a single lump-sum purchase of shares in the amount intended to be
purchased under the Letter.
In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of Intent
period, when added to the value (at offering price) of the investor's holdings
of shares on the last day of that period, do not equal or exceed the intended
purchase amount, the investor agrees to pay the additional amount of sales
charge applicable to such purchases, as set forth in "Terms of Escrow," below
(as those terms may be amended from time to time). The investor agrees that
shares equal in value to 5% of the intended purchase amount will be held in
escrow by the Transfer Agent subject to the Terms of Escrow. Also, the investor
agrees to be bound by the terms of the Prospectus, this Statement of Additional
Information and the Application used for such Letter of Intent, and if such
terms are amended, as they may be from time to time by the Fund, that those
amendments will apply automatically to existing Letters of Intent.
For purchases of shares of the Fund and other Oppenheimer funds by
OppenheimerFunds prototype 401(k) plans under a Letter of Intent, the Transfer
Agent will not hold shares in escrow. If the intended purchase amount under the
Letter entered into by an OppenheimerFunds prototype 401(k) plan is not
purchased by the plan by the end of the Letter of Intent period, there will be
no adjustment of commissions paid to the broker-dealer or financial institution
of record for accounts held in the name of that plan.
If the total eligible purchases made during the Letter of Intent period do
not equal or exceed the intended purchase amount, the commissions previously
paid to the dealer of record for the account and the amount of sales charge
retained by the Distributor will be adjusted to the rates applicable to actual
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.
o Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if necessary) made
pursuant to a Letter, shares of the Fund equal in value 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 Class B shares acquired in exchange for either (i)
Class A shares of one of the other Oppenheimer funds that were acquired subject
to a Class A initial or contingent deferred sales charge or (ii) Class B shares
of one of the other Oppenheimer funds that were acquired subject to a contingent
deferred sales charge.
6. Shares held in escrow hereunder will automatically be exchanged for
shares of another fund to which an exchange is requested, as described in the
section of the Prospectus entitled "How to Exchange Shares," and the escrow will
be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a bank account, a
check (minimum $25) for the initial purchase must accompany the application.
Shares purchased by Asset Builder Plan payments from bank accounts are subject
to the redemption restrictions for recent purchases described in "How to Sell
Shares," in the Prospectus. Asset Builder Plans also enable shareholders of
Oppenheimer Cash Reserves to use those accounts for monthly automatic purchases
of shares of up to four other Oppenheimer funds. If payments are made from the
bank account to purchase shares of the fund, the bank account will be
automatically debited normally four to five days prior to the investment dates
selected in the Account Application. Neither the Distributor, the Transfer Agent
nor the Fund shall be responsible for any delays in purchasing shares resulting
from delays in ACH transmissions.
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.
Retirement Plans. In describing certain types of employee benefit plans that may
purchase Class A shares without being subject to the Class A contingent deferred
sales charge, the term "employee benefit plan" means any plan or arrangement,
whether or not "qualified" under the Internal Revenue Code, including, medical
savings accounts, payroll deduction plans or similar plans in which Class A
shares are purchased by a fiduciary or other person for the account of
participants who are employees of a single employer or of affiliated employers,
if the Fund account is registered in the name of the fiduciary or other person
for the benefit of participants in the plan.
The term "group retirement plan" means any qualified or non-qualified
retirement plan (including 457 plans, SEPs, SARSEPs, 403(b) plans other than
public school 403(b) plans, and SIMPLE plans) for employees of a corporation or
a sole proprietorship, members and employees of a partnership or association or
other organized group of persons (the members of which may include other
groups), if the group or association has made special arrangements with the
Distributor and all members of the group or association participating in or who
are eligible to participate in the plan(s) purchase Class A shares of the Fund
through a single investment dealer, broker, or other financial institution
designated by the group. "Group retirement plan" also includes qualified
retirement plans and non-qualified deferred compensation plans and IRAs that
purchase Class A shares of the Fund through a single investment dealer, broker,
or other financial institution, if that broker-dealer has made special
arrangements with the Distributor enabling those plans to purchase Class A
shares of the Fund at net asset value but subject to a contingent deferred sales
charge.
In addition to the discussion in the Prospectus relating to the ability of
Retirement Plans to purchase Class A shares at net asset value in certain
circumstances, there is no initial sales charge on purchases of Class A shares
of any one or more of the Oppenheimer funds by a Retirement Plan in the
following cases:
(i) the record keeping for the Retirement Plan is performed on a daily
valuation basis by Merrill Lynch Pierce Fenner & Smith, Inc. ("Merrill Lynch")
and, on the date the plan sponsor signs the Merrill Lynch record keeping service
agreement, the Retirement Plan has $3 million or more in assets invested in
mutual funds other than those advised or managed by Merrill Lynch Asset
Management, L.P. ("MLAM") that are made available pursuant to a Service
Agreement between Merrill Lynch and the mutual fund's principal underwriter or
distributor and in funds advised or managed by MLAM (collectively, the
"Applicable Investments"); or
(ii) the record keeping for the Retirement Plan is performed on a daily
valuation basis by an independent record keeper whose services are provided
under a contract or arrangement between the Retirement Plan and Merrill Lynch.
On the date the plan sponsor signs the Merrill Lynch record keeping service
agreement, the Plan must have $3 million or more is assets, excluding assets
held in money market funds, invested in Applicable Investments; or
(iii) the Plan has 500 or more eligible employees, as determined by the
Merrill Lynch plan conversion manager on the date the plan sponsor signs the
Merrill Lynch record keeping service agreement.
If a Retirement Plan's records are maintained on a daily valuation basis
by Merrill Lynch or an independent record keeper under a contract or alliance
arrangement with Merrill Lynch, and if on the date the plan sponsor signs the
Merrill Lynch record keeping service agreement the Retirement Plan has less the
$3 million in assets, excluding money market funds, invested in Applicable
Investments, then the Retirement Plan may purchase only Class B shares of one or
more of the Oppenheimer funds. Otherwise, the Retirement Plan will be permitted
to purchase Class A shares of one or more of the Oppenheimer funds. Any of those
Retirement Plans that currently invest in Class B shares of the Fund will have
their Class B shares converted to Class A shares of the Fund once the Plan's
Applicable Investments have reached $5 million.
Any redemptions of shares of the Fund held by Retirement Plans whose
records are maintained on a daily valuation basis by Merrill Lynch or an
independent record keeper under a contract with Merrill Lynch that are currently
invested in Class B shares of the Fund shall not be subject to the Class B
contingent deferred sales charge.
How To Sell Shares
Information on how to sell shares of the Fund is stated in the Prospectus.
The information below supplements the terms and conditions for redemptions set
forth in the Prospectus.
o Involuntary Redemptions. The Fund's Board of Directors has the right to
cause the involuntary redemption of the shares held in any account if the
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.
o 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 which were purchased subject to
the Class A share contingent deferred 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.
Transfers 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 "Director,
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
Director and the Transfer Agent assume no responsibility to determine whether a
distribution satisfies the conditions of applicable tax laws and will not be
responsible for any tax penalties assessed in connection with a distribution.
Special Arrangements for Repurchase of Shares from Dealers and Brokers. The
Distributor is the Fund's agent to repurchase its shares from authorized dealers
or brokers on behalf of their customers. The shareholder should contact the
broker or dealer to arrange this type of redemption. The repurchase price per
share will be the net asset value next computed after the Distributor receives
the order placed by the dealer or broker, except that if the Distributor
receives a repurchase order from a dealer or broker after the close of The New
York Stock Exchange on a regular business day, it will be processed at that
day's net asset value if the order was received by the dealer or broker from its
customers prior to the time the Exchange closes (normally, that is 4:00 P.M.,
but may be earlier on some days) and the order was transmitted to and received
by the Distributor prior to its close of business that day (normally 5:00 P.M.).
Ordinarily, for accounts redeemed by a broker-dealer under this procedure,
payment will be made within three business days after the shares have been
redeemed upon the Distributor's receipt of the required redemption documents in
proper form, with the signature(s) of the registered owners guaranteed on the
redemption document as described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of the Fund
valued at $5,000 or more can authorize the Transfer Agent to redeem shares
(minimum $50) automatically on a monthly, quarterly, semi-annual or annual basis
under an Automatic Withdrawal Plan. Shares will be redeemed three business days
prior to the date requested by the shareholder for receipt of the payment.
Automatic withdrawals of up to $1,500 per month may be requested by telephone if
payments are to be made by check payable to all shareholders of record and sent
to the address of record for the account (and if the address has not been
changed within the prior 30 days). Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on this basis.
Payments are normally made by check, but shareholders having AccountLink
privileges (see "How To Buy Shares") may arrange to have Automatic Withdrawal
Plan payments transferred to the bank account designated on the OppenheimerFunds
New Account Application or signature-guaranteed instructions. Shares are
normally redeemed pursuant to an Automatic Withdrawal Plan three business days
before the date selected in the Account Application. If a contingent deferred
sales charge applies to the redemption, the amount of the check or payment will
be reduced accordingly. The Fund cannot guarantee receipt of a payment on the
date requested and reserves the right to amend, suspend or discontinue offering
such plans at any time without prior notice. Because of the sales charge
assessed on Class A share purchases, shareholders should not make regular
additional Class A share purchases while participating in an Automatic
Withdrawal Plan. Class B and Class C shareholders should not establish
withdrawal plans because of the imposition of the contingent deferred sales
charge on such withdrawals (except where the Class B or the Class C contingent
deferred sales charge is waived as described in the Prospectus under "Waivers of
Class B and Class C Contingent Deferred Sales Charge").
By requesting an Automatic Withdrawal or Exchange Plan, the shareholder
agrees to the terms and conditions applicable to such plans, as stated below and
in the Prospectus. These provisions may be amended from time to time by the Fund
and/or the Distributor. When adopted, such amendments will automatically apply
to existing Plans.
o Automatic Exchange Plans. Shareholders can authorize the Transfer Agent
(on the OppenheimerFunds Application or signature-guaranteed instructions) to
exchange a pre-determined amount of shares of the Fund for shares (of the same
class) of other Oppenheimer funds automatically on a monthly, quarterly,
semi-annual or annual basis under an Automatic Exchange Plan. The minimum amount
that may be exchanged to each other fund account is $25. Exchanges made under
these plans are subject to the restrictions that apply to exchanges as set forth
in "How to Exchange Shares" in the Prospectus and below in this Statement of
Additional Information.
o Automatic Withdrawal Plans. Fund shares will be redeemed as necessary to
meet withdrawal payments. Shares acquired without a sales charge will be
redeemed first and thereafter shares acquired with reinvested dividends and
capital gains distributions will be redeemed next, followed by shares acquired
with a sales charge, to the extent necessary to make withdrawal payments.
Depending upon the amount withdrawn, the investor's principal may be depleted.
Payments made under withdrawal plans should not be considered as a yield or
income on your investment.
The Transfer Agent will administer the investor's Automatic Withdrawal
Plan (the "Plan") as agent for the investor (the "Planholder") who executed the
Plan authorization and application submitted to the Transfer Agent. The Transfer
Agent and the Fund shall incur no liability to the Planholder for any action
taken or omitted by the Transfer Agent 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 Money Market Trust, Centennial
Tax Exempt Trust, Centennial Government Trust, Centennial New York Tax Exempt
Trust, Centennial California Tax Exempt Trust and Centennial America Fund, L.P.
which only offer Class A shares and Oppenheimer Main Street California Municipal
Fund which only offers Class A and Class B shares (Class B and Class C shares of
Oppenheimer Cash Reserves are generally available only by exchange from the same
class of shares of other Oppenheimer funds or through OppenheimerFunds-sponsored
401(k) plans). A current list showing which funds offer which class can be
obtained by calling the distributor at 1-800-525-7048.
For accounts established on or before March 8, 1996 holding Class M shares
of Oppenheimer Bond Fund for Growth, Class M shares can be exchanged only for
Class A shares of other Oppenheimer funds. Exchanges to Class M shares of
Oppenheimer Bond Fund for Growth are permitted from Class A shares of
Oppenheimer Money Market Fund, Inc. or Oppenheimer Cash Reserves that were
acquired by exchange from Class M shares. Otherwise no exchanges of any class of
any Oppenheimer fund into Class M shares are permitted.
Class A shares of Oppenheimer funds may be exchanged at net asset value for
shares of any money market fund. Shares of any money market fund purchased
without a sales charge may be exchanged for shares of Oppenheimer funds offered
with a sales charge upon payment of the sales charge (or, if applicable, may be
used to purchase shares of Oppenheimer funds subject to a contingent deferred
sales charge). However, shares of Oppenheimer Money Market Fund, Inc.purchased
with the redemption proceeds of shares of other mutual funds (other than funds
managed by the Manager or its subsidiaries) redeemed within the 30 days prior to
that purchase may subsequently be exchanged for shares of other Oppenheimer
funds without being subject to an initial or contingent deferred sales charge,
whichever is applicable. To qualify for that privilege, the investor or the
investor's dealer must notify the Distributor of eligibility for this privilege
at the time the shares of Oppenheimer Money Market Fund, Inc. are purchased,
and, if requested, must supply proof of entitlement to this privilege. Shares of
this Fund acquired by reinvestment of dividends or distribution from any other
of the Oppenheimer funds (except Oppenheimer Cash Reserves) or from any unit
investment trust for which reinvestment arrangements have been made with the
Distributor may be exchanged at net asset value for shares of any of the
Oppenheimer funds.
No contingent deferred sales charge is imposed on exchanges of shares of
any class purchased subject to a contingent deferred sales charge. However, when
Class A shares acquired by exchange of Class A shares of other Oppenheimer funds
purchased subject to a Class A contingent deferred sales charge are redeemed
within 12 months of the end of the calendar month of the initial purchase of the
exchanged Class A shares (18 months for shares purchased prior to May 1, 1997),
the Class A contingent deferred sales charge is imposed on the redeemed shares
(see "Class A
Contingent Deferred Sales Charge" in the Prospectus). The Class B contingent
deferred sales charge is imposed on Class B shares acquired by exchange if they
are redeemed within 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 A, 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 A, Class B or the Class C contingent deferred sales
charge will be followed in determining the order in which the shares are
exchanged. Shareholders should take into account the effect of any exchange on
the applicability and rate of any contingent deferred sales charge that might be
imposed in the subsequent redemption of remaining shares. Shareholders owning
shares of more than one class must specify whether they intend to exchange Class
A, Class B or Class C shares.
The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of more than one account. The
Fund may accept requests for exchanges of up to 50 accounts per day from
representatives of authorized dealers that qualify for this privilege. In
connection with any exchange request, the number of shares exchanged may be less
than the number requested if the exchange or the number requested would include
shares subject to a restriction cited in the Prospectus or this Statement of
Additional Information or would include shares covered by a share certificate
that is not tendered with the request. In those cases, only the shares available
for exchange without restriction will be exchanged.
When exchanging shares by telephone, a shareholder must either have an
existing account in, or obtain and acknowledge receipt of a prospectus of, the
fund to which the exchange is to be made. For full or partial exchanges of an
account made by telephone, any special account features such as Asset Builder
Plans, Automatic Withdrawal Plans, 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.
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. 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.
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.
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.
-2-
<PAGE>
Appendix A
Corporate Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consume Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
Food
Gas Utilities
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Information Technology
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
Wireless Services
A-1
<PAGE>
Oppenheimer Total Return Fund, Inc.
6803 South Tucson Way
Englewood, Colorado 80112
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
Denver, Colorado 80202
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202
<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: To be filed with
amendment.
(2) Independent Auditors' Report - See Part B: To be filed with
amendment.
(3) Statement of Investments - See Part B: TO be filed with
amendment.
(4) Statement of Assets and Liabilities - See Part B: To be filed
with amendment.
(5) Statement of Operations - See Part B: TO be filed with
amendment.
(6) Statement of Changes in Net Assets - See Part B: To be filed
with amendment.
(7) Notes to Financial Statements - See Part B: TO be filed with
amendment.
(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 pursuant to Item 102 of Regulation S-T, and incorporated
herein by reference.
(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. 79, 4/17/97 and incorporated herein by
reference.
(ii) Specimen Class B Share Certificate: Previously filed
with Registrant's Post-Effective Amendment No. 79, 4/17/97 and incorporated
herein by reference.
(iii) Specimen Class C Share Certificate: Previously filed
with Registrant's Post-Effective Amendment No. 79, 4/17/97 and incorporated
herein by reference.
(iv) Specimen Class Y Share Certificate: Previously filed with
Registrant's Post-Effective Amendment No. 79, 4/17/97 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: To be filed with amendment.
(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 NonStandardized
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.
(vi) Form of Simplified Employee Pension IRA: Filed with
Post-Effective Amendment No. 42 of Oppenheimer Equity Income Fund (Reg. No.
2-33043), 10/28/94, 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) Amended and Restated 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: Previously filed with Registrant's
Post-Effective Amendment No. 77, 8/25/95, and to be refiled with amendment.
(iii) Amended and Restated 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: Previously filed with Post-Effective Amendment
No. 76, 6/26/95, and to be filed with amendment.
(16) Performance Calculations: To be filed with amendment.
(17) (i) Financial Data Schedule for Class A shares for fiscal year
ended 12/31/95: To be filed with amendment.
(ii) Financial Data Schedule for Class B shares for fiscal
year ended 12/31/95: To be filed with amendment.
(iii) Financial Data Schedule for Class C shares for the
period 8/29/95 (inception of class) to 12/31/95: To be filed with amendment.
(iv) Financial Data Schedule for Class Y shares for fiscal
year ended 12/31/95: To be filed with amendment.
(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.
-- Powers of Attorney: For all Directors except, Sam Freedman,
their respective Power of Attorney and Certified Board Resolution were
previously filed with Registrant's Post-Effective Amendment No. 73, 1/28/94,
and incorporated herein by reference. For Sam Freedman, previously filed with
Registrant's Post-Effective Amendment No. 79, 4/17/97, and incorporated herein
by reference. For George Bowen, filed herewith.
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 __________
- -------------- ----------------
Shares of Class A Common Stock,
Par Value $.10 ______
Shares of Class B Common Stock,
Par Value $.10 ______
Shares of Class C Common Stock,
Par Value $.10 ______
Shares of Class Y Common Stock,
Par Value $.10 ______
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>
<S> <C>
Name & Current Position Other Business and Connections with
OppenheimerFundDuring the Past Two
Years
- --------------------------- ------------------------------
Mark J.P. Anson,
Vice President Vice President of Oppenheimer Real Asset Management, Inc.
("ORAMI"); formerly Vice
President of Equity
Derivatives at Salomon
Brothers, Inc.
Peter M. Antos,
Senior Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; a
Chartered Financial Analyst;
Senior Vice President of
HarbourView Asset Management
Corporation ("HarbourView");
prior to March, 1996 he was
the senior equity portfolio
manager for the Panorama
Series Fund, Inc. (the
"Company") and other mutual
funds and pension funds
managed by G.R. Phelps & Co.
Inc. ("G.R. Phelps"), the
Company's former investment
adviser, which was a
subsidiary of Connecticut
Mutual Life Insurance
Company; was also responsible
for managing the common stock
department and common stock
investments of Connecticut
Mutual Life Insurance Co.
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
Bruce Bartlett,
Vice President An officer and/or
portfolio manager of certain
Oppenheimer funds. Formerly a Vice
President and Senior Portfolio
Manager at First of America
Investment Corp.
Beichert, Kathleen None.
Vice President
Rajeev Bhaman,
Vice President Formerly Vice President (January 1992 - February,
1996) of Asian Equities for
Barclays de Zoete Wedd, Inc.
Robert J. Bishop,
Vice President Vice President of Mutual Fund Accounting (since May 1996);
an officer of other
Oppenheimer funds; formerly
an Assistant Vice President
of OFI/Mutual Fund Accounting
(April 1994-May 1996), and a
Fund Controller for OFI.
George C. Bowen,
Senior Vice President & Treasurer Vice President (since June 1983) and Treasurer (since
March 1985) of
OppenheimerFunds Distributor,
Inc. (the "Distributor");
Vice President (since
October 1989) and Treasurer
(since April 1986) of
HarbourView; Senior Vice
President (since February
1992), Treasurer (since July
1991)and a director (since
December 1991) of Centennial;
President, Treasurer and a
director of Centennial
Capital Corporation (since
June 1989); Vice President
and Treasurer (since August
1978) and Secretary (since
April 1981) of Shareholder
Services, Inc. ("SSI"); Vice
President, Treasurer and
Secretary of Shareholder
Financial Services, Inc.
("SFSI") (since November
1989); Treasurer of
Oppenheimer Acquisition Corp.
("OAC") (since June 1990);
Treasurer of Oppenheimer
Partnership Holdings, Inc.
(since November 1989); Vice
President and Treasurer of
ORAMI (since July 1996);
Chief Executive Officer, Treasurer and a director of
MultiSource Services, Inc.,
a broker-dealer (since
December 1995); A Trustee of
the Denver-based Oppenheimer
funds (since December 1997);
an officer of other
Oppenheimer funds.
Scott Brooks,
Vice President None.
Susan Burton,
Assistant Vice President None.
Adele Campbell,
Assistant Vice President & Assistant
Treasurer: Rochester Division Formerly Assistant Vice President of Rochester Fund
Services, Inc.
Michael Carbuto,
Vice President An officer and/or
portfolio manager of certain
Oppenheimer funds; Vice President
of Centennial.
Ruxandra Chivu,
Assistant Vice President None.
H.D. Digby Clements,
Assistant Vice President:
Rochester Division None.
O. Leonard Darling,
Executive Vice President Trustee (1993 - present) of Awhtolia College - Greece.
Robert A. Densen,
Senior Vice President None.
Sheri Devereux,
Assistant Vice President None.
Robert Doll, Jr.,
Executive Vice President &
Director An officer and/or portfolio manager
of certain Oppenheimer funds.
John Doney,
Vice President An officer and/or
portfolio manager of certain
Oppenheimer funds.
Andrew J. Donohue,
Executive Vice President,
General Counsel and Director Executive Vice President (since September 1993), and
a director (since January
1992) of the Distributor;
Executive Vice President,
General Counsel and a
director of HarbourView,
SSI, SFSI and Oppenheimer
Partnership Holdings, Inc.
since (September 1995) and
MultiSource Services, Inc. (a
broker-dealer) (since December
1995); President and a director of
Centennial (since September 1995);
President and a director of ORAMI
(since July 1996); General Counsel
(since May 1996) and Secretary
(since April 1997) of OAC; Vice
President of OppenheimerFunds
International, Ltd. ("OFIL") and
Oppenheimer Millennium Funds plc
(since October 1997); an officer of
other Oppenheimer funds.
George Evans,
Vice President An officer and/or
portfolio manager of certain
Oppenheimer funds.
Edward Everett,
Assistant Vice President None.
Scott Farrar,
Vice President Assistant Treasurer of Oppenheimer Millennium Funds
plc (since October 1997); an
officer of other Oppenheimer
funds; formerly an
Assistant Vice President of
OFI/Mutual Fund Accounting
(April 1994-May 1996), and a
Fund Controller for OFI.
Leslie A. Falconio,
Assistant Vice President None.
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary of the Distributor; Secretary
of HarbourView, MultiSource
and Centennial; Secretary,
Vice President and Director
of Centennial Capital
Corporation; Vice President
and Secretary of ORAMI.
Ronald H. Fielding,
Senior Vice President; Chairman:
Rochester Division An officer, Director and/or portfolio manager of certain
Oppenheimer funds; Presently
he holds the following other
positions: Director (since
1995) of ICI Mutual Insurance
Company; Governor (since
1994) of St. John's College;
Director (since 1994 -present) of International
Museum of Photography at
George Eastman House;
Director (since 1986) of GeVa
Theatre. Formerly he held the
following positions:
formerly, Chairman of the
Board and Director of
Rochester Fund Distributors,
Inc. ("RFD"); President and
Director of Fielding
Management Company, Inc.
("FMC"); President and
Director of Rochester Capital
Advisors, Inc. ("RCAI");
Managing Partner of Rochester
Capital Advisors, L.P.,
President and Director of
Rochester Fund Services, Inc.
("RFS"); President and
Director of Rochester Tax
Managed Fund, Inc.; Director
(1993 - 1997) of VehiCare
Corp.; Director (1993 - 1996)
of VoiceMode.
John Fortuna,
Vice President None.
Patricia Foster,
Vice President Formerly she held the following positions: An
officer of certain
Oppenheimer funds (May, 1993
- January, 1996); Secretary
of Rochester Capital
Advisors, Inc. and General
Counsel (June, 1993 - January
1996) of Rochester Capital
Advisors, L.P.
Jennifer Foxson,
Assistant Vice President None.
Paula C. Gabriele,
Executive Vice President Formerly, Managing Director (1990-1996) for Bankers Trust
Co.
Linda Gardner,
Vice President None.
Alan Gilston,
Vice President Formerly Vice President for Schroder Capital Management
International.
Jill Glazerman,
Assistant Vice President None.
Jeremy Griffiths,
Chief Financial Officer Currently a Member and Fellow of the Institute of Chartered
Accountants; formerly an
accountant for Arthur Young
(London, U.K.).
Robert Grill,
Vice President Formerly Marketing Vice President for Bankers Trust
Company (1993-1996); Steering
Committee Member,
Subcommittee Chairman for
American Savings Education
Council (1995-1996).
Caryn Halbrecht,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; formerly
Vice President of Fixed
Income Portfolio Management
at Bankers Trust.
Elaine T. Hamann,
Vice President Formerly Vice President (September, 1989 - January,
1997) of Bankers Trust
Company.
Glenna Hale,
Director of Investor Marketing Formerly, Vice President (1994-1997) of Retirement
Plans Services for
OppenheimerFunds Services.
Thomas B. Hayes,
Assistant Vice President None.
Barbara Hennigar,
Executive Vice President and
Chief Executive Officer of
OppenheimerFunds Services,
a division of the Manager President
and Director of SFSI; President and
Chief executive Officer of SSI.
Dorothy Hirshman, None.
Assistant Vice President
Alan Hoden,
Vice President None.
Merryl Hoffman,
Vice President None.
Nicholas Horsley,
Vice President Formerly a Senior Vice President and Portfolio
Manager for Warburg, Pincus
Counsellors, Inc. (1993-
1997), Co-manager of Warburg,
Pincus Emerging Markets Fund
(12/94 - 10/97), Co-manager
Warburg, Pincus Institutional
Emerging Markets Fund -Emerging Markets Portfolio
(8/96 - 10/97), Warburg
Pincus Japan OTC Fund,
Associate Portfolio Manager
of Warburg Pincus
International Equity Fund,
Warburg Pincus Institutional
Fund - Intermediate Equity
Portfolio, and Warburg Pincus
EAFE Fund.
Scott T. Huebl,
Assistant Vice President None.
Richard Hymes,
Assistant Vice President None.
Jane Ingalls,
Vice President None.
Byron Ingram,
Assistant Vice President None.
Ronald Jamison,
Vice President Formerly Vice President and Associate General Counsel at
Prudential Securities, Inc.
Frank Jennings,
Vice President An officer and/or
portfolio manager of certain
Oppenheimer funds; formerly, a
Managing Director of Global
Equities at Paine Webber's Mitchell
Hutchins division.
Thomas W. Keffer,
Senior Vice President Formerly Senior Managing Director (1994 - 1996) of Van
Eck Global.
Avram Kornberg,
Vice President None.
Joseph Krist,
Assistant Vice President None.
Paul LaRocco,
Vice President An officer and/or
portfolio manager of certain
Oppenheimer funds; formerly, a
Securities Analyst for Columbus
Circle Investors.
Michael Levine,
Assistant Vice President None.
Shanquan Li,
Vice President Director of Board (since 2/96), Chinese Finance
Society; formerly, Chairman
(11/94-2/96), Chinese Finance
Society; and Director (6/94-
6/95), Greater China Business
Networks.
Stephen F. Libera,
Vice President An officer and/or portfolio manager for certain
Oppenheimer funds; a
Chartered Financial Analyst;
a Vice President of
HarbourView; prior to March 1996, the senior bond
portfolio manager for
Panorama Series Fund Inc.,
other mutual funds and
pension accounts managed by
G.R. Phelps; also responsible
for managing the public
fixed-income securities
department at Connecticut
Mutual Life Insurance Co.
Mitchell J. Lindauer,
Vice President None.
David Mabry,
Assistant Vice President None.
Steve Macchia,
Assistant Vice President None.
Bridget Macaskill,
President, Chief Executive Officer
and Director Chief Executive Officer (since September 1995);
President and director (since
June 1991) of HarbourView;
Chairman and a director of
SSI (since August 1994), and
SFSI (September 1995);
President (since September
1995) and a director (since
October 1990) of OAC;
President (since September
1995) and a director (since
November 1989) of
Oppenheimer Partnership
Holdings, Inc., a holding
company subsidiary of OFI;
a director of ORAMI (since
July 1996) ; President and a
director (since October 1997)
of OFIL, an offshore fund
manager subsidiary of OFI and
Oppenheimer Millennium Funds
plc (since October 1997);
President and a director of
other Oppenheimer funds; a
director of the NASDAQ Stock
Market, Inc. and of Hillsdown
Holdings plc (a U.K. food
company); formerly an
Executive Vice President of
OFI.
Wesley Mayer,
Vice President Formerly Vice President (January, 1995 - June, 1996)
of Manufacturers Life
Insurance Company.
Loretta McCarthy,
Executive Vice President None.
Kevin McNeil,
Vice President Treasurer (September, 1994 -present) for the Martin
Luther King Multi-Purpose
Center (non-profit community
organization); Formerly Vice
President (January, 1995 -April, 1996) for Lockheed
Martin IMS.
Lisa Migan,
Assistant Vice President None.
Robert J. Milnamow,
Vice President An officer and/or
portfolio manager of certain
Oppenheimer funds; formerly a
Portfolio Manager (August, 1989
August, 1995) with Phoenix
Securities Group.
Denis R. Molleur,
Vice President None.
Linda Moore,
Vice President Formerly, Marketing Manager (July 1995-November 1996) for
Chase Investment Services
Corp.
Tanya Mrva,
Assistant Vice President None.
Kenneth Nadler,
Vice President None.
David Negri,
Vice President An officer and/or
portfolio manager of certain
Oppenheimer funds.
Barbara Niederbrach,
Assistant Vice President None.
Robert A. Nowaczyk,
Vice President None.
Richard M. O'Shaugnessy,
Assistant Vice President:
Rochester Division None.
Gina M. Palmieri,
Assistant Vice President None.
Robert E. Patterson,
Senior Vice President An officer and/or
portfolio manager of certain
Oppenheimer funds.
John Pirie,
Assistant Vice President Formerly, a Vice President with Cohane Rafferty
Securities, Inc.
Jane Putnam,
Vice President An officer and/or
portfolio manager of certain
Oppenheimer funds.
Russell Read,
Senior Vice President Formerly a consultant for Prudential Insurance on
behalf of the General Motors
Pension Plan.
Thomas Reedy,
Vice President An officer and/or
portfolio manager of certain
Oppenheimer funds; formerly, a
Securities Analyst for the Manager.
David Robertson,
Vice President None.
Adam Rochlin,
Vice President None.
Michael S. Rosen
Vice President; President,
Rochester Division An officer and/or portfolio manager of certain
Oppenheimer funds; Formerly,
Vice President (June, 1983 -January, 1996) of RFS,
President and Director of
RFD; Vice President and
Director of FMC; Vice
President and director of
RCAI; General Partner of RCA;
Vice President and Director
of Rochester Tax Managed Fund
Inc.
Richard H. Rubinstein,
Senior Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; formerly
Vice President and Portfolio
Manager/Security Analyst for
Oppenheimer Capital Corp., an
investment adviser.
Lawrence Rudnick,
Assistant Vice President None.
James Ruff,
Executive Vice President None.
Valerie Sanders,
Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Stephanie Seminara,
Vice President Formerly, Vice President of Citicorp Investment Services
Richard Soper,
Vice President None.
Nancy Sperte,
Executive Vice President None.
Donald W. Spiro,
Chairman Emeritus and Director Vice Chairman and Trustee of the New York-based
Oppenheimer Funds; formerly
Chairman of the Manager and
the Distributor.
Richard A. Stein,
Vice President: Rochester Division Assistant Vice President (since 1995) of Rochester
Capitol Advisors, L.P.
Arthur Steinmetz,
Senior Vice President An officer and/or
portfolio manager of certain
Oppenheimer funds.
Ralph Stellmacher,
Senior Vice President An officer and/or
portfolio manager of certain
Oppenheimer funds.
John Stoma,
Senior Vice President, Director
Retirement Plans Formerly Vice President of U.S. Group Pension Strategy
and Marketing for Manulife
Financial.
Michael C. Strathearn,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; a
Chartered Financial Analyst;
a Vice President of
HarbourView; prior to March
1996, an equity portfolio
manager for Panorama Series
Fund, Inc. and other mutual
funds and pension accounts
managed by G.R. Phelps.
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee, Director or Managing Partner
of the Denver-based
Oppenheimer Funds; President
and a Director of Centennial;
formerly President and
Director of OAMC, and
Chairman of the Board of SSI.
James Tobin,
Vice President None.
Jay Tracey,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; formerly
Managing Director of
Buckingham Capital
Management.
Gary Tyc,
Vice President, Assistant
Secretary and Assistant Treasurer Assistant Treasurer of the Distributor and SFSI.
Ashwin Vasan,
Vice President An officer and/or
portfolio manager of certain
Oppenheimer funds.
Dorothy Warmack,
Vice President An officer and/or
portfolio manager of certain
Oppenheimer funds.
Jerry Webman,
Senior Vice President Director of New
York-based tax-exempt fixed income
Oppenheimer funds; Formerly,
Managing Director and Chief Fixed
Income Strategist at Prudential
Mutual Funds.
Christine Wells,
Vice President None.
Joseph Welsh,
Assistant Vice President None.
Kenneth B. White,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; a
Chartered Financial Analyst;
Vice President of
HarbourView; prior to March
1996, an equity portfolio
manager for Panorama Series
Fund, Inc. and other mutual
funds and pension funds
managed by G.R. Phelps.
William L. Wilby,
Senior Vice President An officer and/or
portfolio manager of certain
Oppenheimer funds; Vice President
of HarbourView.
Carol Wolf,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; Vice
President of Centennial; Vice
President, Finance and
Accounting and member of the
Board of Directors of the
Junior League of Denver,
Inc.; Point of Contact:
Finance Supporters of
Children; Member of the
Oncology Advisory Board of
the Childrens Hospital;
Member of the Board of
Directors of the Colorado
Museum of Contemporary Art.
Caleb Wong,
Assistant Vice President None.
Robert G. Zack,
Senior Vice President and
Assistant Secretary, Associate
General Counsel Assistant Secretary of SSI (since May 1985), and SFSI
(since November 1989);
Assistant Secretary of
Oppenheimer Millennium Funds
plc (since October 1997); an
officer of other Oppenheimer
funds.
Jill Zachman,
Assistant Vice President:
Rochester Division None.
Arthur J. Zimmer,
Senior Vice President An officer and/or
portfolio manager of certain
Oppenheimer funds; Vice President
of Centennial.
</TABLE>
The Oppenheimer Funds include the New York-based Oppenheimer Funds,
the Denver-based Oppenheimer Funds and the Oppenheimer/Quest Rochester Funds, as
set forth below:
New York-based Oppenheimer Funds
- --------------------------------
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Developing Markets Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer International Small Company Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Mid-Cap Fund
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Municipal Trust
Oppenheimer Multiple Strategies Fund
Oppenheimer Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer Series Fund, Inc.
Oppenheimer U.S. Government Trust
Oppenheimer World Bond Fund
Quest/Rochester Funds
- ---------------------
Limited Term New York Municipal Fund
Oppenheimer Bond Fund For Growth
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest For Value Funds
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Rochester Fund Municipals
Denver-based Oppenheimer Funds
- ------------------------------
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Municipal Funds
Oppenheimer Real Asset Fund
Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
The address of OppenheimerFunds, Inc., the New York-based Oppenheimer
Funds, Quest funds, OppenheimerFunds Distributor, Inc., HarbourView Asset
Management Corp., Oppenheimer Partnership Holdings, Inc., and Oppenheimer
Acquisition Corp. is Two World Trade Center, New York, New York 10048-0203.
The address of the Denver-based Oppenheimer Funds, Shareholder Financial
Services, Inc., Shareholder Services, Inc., OppenheimerFunds Services,
Centennial Asset Management Corporation, Centennial Capital Corp., and
Oppenheimer Real Asset Management, Inc. is 6803 South Tucson Way, Englewood,
Colorado 80112.
The address of MultiSource Services, Inc. is 1700 Lincoln
Street, Denver, Colorado 80203.
The address of Oppenheimer Bond Fund For Growth, Rochester
Fund Municipals and Limited Term New York Municipal Fund 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>
<S> <C> <C>
Name & Principal Positions & Offices Positions & Offices
Business Address with Underwriter with Registrant
- ---------------- ------------------- -----------
- ----
George C. Bowen(1) Vice President and Vice President
Treasurer and Treasurer
of the
Oppenheim
er funds.
Julie Bowers Vice President None
21 Dreamwold Road
Scituate, MA 02066
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Maryann Bruce(2) Senior Vice President; None
Director: Financial
Institution Division
Robert Coli Vice President None
12 White Tail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce de Leon Ave.
Decatur, GA 30030
William Coughlin Vice President None
542 West Surf - #2N
Chicago, IL 60657
Mary Crooks(1) Vice President None
E. Drew Devereaux(3) Assistant Vice
President None
Rhonda Dixon-Gunner(1) Assistant Vice
President None
Andrew John Donohue(2) Executive Vice Secretary of President & Director the Oppenheim
er funds.
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
Todd Ermenio Vice President None
11011 South Darlington
Tulsa, OK 74137
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
George Fahey Vice President None
201 E. Rund Grove Rd.
#26-22
Lewisville, TX 75067
Katherine P. Feld(2) Vice President None
& Secretary
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding(3) Vice President None
Reed F. Finley Vice President None
1657 Graefield
Birmingham, MI 48009
Wendy Fishler(2) Vice President None
Ronald R. Foster Senior Vice President None
11339 Avant Lane
Cincinnati, OH 45249
Patricia Gadecki Vice President None
950 First St., S.
Suite 204
Winter Haven, FL 33880
Luiggino Galleto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President None
5506 Bryn Mawr
Dallas, TX 75209
Ralph Grant(2) Vice President
/National None
Sales Manager
Sharon Hamilton Vice President None
720 N. Juanita Ave.,#1
Redondo Beach, CA 90277
Byron Ingram(2) Assistant Vice
President None
Mark D. Johnson Vice President None
129 Girard Place
Kirkwood, MO 63105
Michael Keogh(2) Vice President None
Richard Klein Vice President None
4820 Fremont Avenue So.
Minneapolis, MN 55409
Daniel Krause Vice President None
13416 Larchmere Square
Shaker Heights, OH 44120
Ilene Kutno(2) Assistant Vice
President None
Todd Lawson Vice President None
3333 E. Bayaud Avenue
Unit 714
Denver, CO 80209
Wayne a. LeBlang Senior Vice President None
23 Fox Trail
Lincolnshire, IL 60069
Dawn Lind Vice President None
7 Maize Court
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
Todd Marion Vice President None
21 N. Passaic Avenue
Chatham,N.J. 07928
Marie Masters Vice President None
520 E. 76th Street
New York, NY 10021
John McDonough Vice President None
P.O. Box 760
50 Riverview Road
New Castle, NH 03854
Tanya Mrva(2) Assistant Vice
President None
Laura Mulhall(2) Senior Vice President None
Charles Murray Vice President None
18 Spring Lake Drive
Far Hills, NJ 07931
Wendy Murray Vice President None
32 Carolin Road
Upper Montclair, NJ 07043
Chad V. Noel Vice President None
3238 W. Taro Lane
Phoenix, AZ 85027
Joseph Norton Vice President None
2518 Fillmore Street
San Francisco, CA 94115
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Kevin Parchinski Vice President None
1105 Harney St., #310
Omaha, NE 68102
Randall Payne Vice President None
3530 Providence Plantation Way
Charlotte, NC 28270
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice President None
1777 Larimer St. #807
Denver, CO 80202
Elaine Puleo(2) Vice President None
Minnie Ra Vice President None
895 Thirty-First Ave.
San Francisco, CA 94121
Michael Raso Vice President None
16 N. Chatsworth Ave.
Apt. 301
Larchmont, NY 10538
John C. Reinhardt(3) Vice President None
Douglas Rentschler Vice President None
867 Pemberton
Grosse Pointe Park, MI
48230
Ian Robertson Vice President None
4204 Summit Wa
Marietta, GA 30066
Michael S. Rosen(3) Vice President None
Kenneth Rosenson Vice President None
3802 Knickerbocker Place
Apt. #3D
Indianapolis, IN 46240
James Ruff(2) President None
Timothy Schoeffler Vice President None
1717 Fox Hall Road
Washington, DC 77479
Michael Sciortino Vice President None
785 Beau Chene Drive
Mandeville, LA 70471
Robert Shore Vice President None
26 Baroness Lane
Laguna Niguel, CA 92677
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Andrew Sweeny Vice President None
5967 Bayberry Drive
Cincinnati, OH 45242
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
David G. Thomas Vice President None
8116 Arlingon Blvd.
#123
Falls Church, VA 22042
Philip St. John Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Sarah Turpin Vice President None
2735 Dover Road
Atlanta,GA 30327
Gary Paul Tyc(1) Assistant Treasurer None
Mark Stephen Vandehey(1) Vice President None
Marjorie Williams Vice President None
6930 East Ranch Road
Cave Creek, AZ 85331
(1) 6803 South Tucson Way, Englewood, Colorado 80112
(2) Two World Trade Center, New York, NY 10048-0203
(3) 350 Linden Oaks, Rochester, NY 14625-2807
</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 6803 South Tucson Way, Englewood, Colorado 80122
Item 31. Management Services
- -------- -------------------
Not applicable.
Item 32. Undertakings
- -------- ------------
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
C-1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for 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 County of Arapahoe and State of Colorado on the 27th day of
February, 1998
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>
<S> <C> <C>
Signatures Title Date
- ---------- ----- ----
Chairman of the Board February 27, 1998
/s/ James C. Swain* of Directors and
- ------------------------ Principal Executive
James C. Swain Officer
/s/ Bridget A. Macaskill* President and Director February 27, 1998
- ------------------------
Bridget A. Macaskill
/s/ George Bowen* Vice President, February 27, 1998
- ------------------ Treasurer, Assistant
George Bowen Secretary and Director
/s/ Robert G. Avis*
- -------------------- Director February 27, 1998
Robert G. Avis
/s/ Jon S. Fossel*
- -------------------- Director February 27, 1998
Jon S. Fossel
/s/ Sam Freedman*
- -------------------- Director February 27, 1998
Sam Freedman
/s/ William A. Baker*
- --------------------- Director February 27, 1998
William A. Baker
/s/ Charles Conrad, Jr.*
- ----------------------- Director February 27, 1998
Charles Conrad, Jr.
/s/ Raymond J. Kalinowski*
- --------------------- Director February 27, 1998
Raymond J. Kalinowski
/s/ C. Howard Kast* Director February 27, 1998
- -------------------
C. Howard Kast
/s/ Robert M. Kirchner*
- --------------------- Director February 27, 1998
Robert M. Kirchner
/s/ Ned M. Steel*
- ----------------- Director February 27, 1998
Ned M. Steel
*By: /s/ Robert G. Zack
--------------------------------
Robert G. Zack, Attorney-in-Fact
</TABLE>
C-2
<PAGE>
OPPENHEIMER TOTAL RETURN FUND, INC.
Post-Effective Amendment No. 80
EXHIBIT INDEX
Form N-1A
Item No. Description
- --------- -----------
- -- Power of Attorney of George Bowen
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, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his capacity as Director and/or as Treasurer
(Principal Financial and Accounting Officer) of OPPENHEIMER TOTAL RETURN FUND,
INC. a Maryland corporation (the "Fund"), to sign on his 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
he 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 16th day of December, 1997.
/s/ George C. Bowen
- ------------------
George C. Bowen
C-4
