Registration No. 2-33043
File No. 811-1512
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. 46 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
AMENDMENT NO. 31 / X /
OPPENHEIMER EQUITY INCOME FUND
- -----------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
3410 South Galena Street
Denver, Colorado 80231
- -----------------------------------------------------------------------
(Address of Principal Executive Offices)
(303) 671-3200
- -----------------------------------------------------------------------
(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
Oppenheimer Management Corporation
Two World Trade Center, New York, New York 10048-0203
- -----------------------------------------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check
appropriate box):
/ / Immediately upon filing pursuant to paragraph (b)
/ x / On November 1, 1996, pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / On _____________, pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / On ________________, pursuant to paragraph (a)(2)
of Rule 485.
- -----------------------------------------------------------------------
The Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 promulgated under the
Investment Company Act of 1940. A Rule 24f-2 Notice for the
Registrant's fiscal year ended June 30, 1996, was filed on August 23,
1996.
<PAGE>
FORM N-1A
OPPENHEIMER EQUITY INCOME FUND
Cross Reference Sheet
Part A of
Form N-1A
Item No. Prospectus Heading
1 Front Cover Page
2 Expenses; Overview of the Fund
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; 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 Objective and Policies-Portfolio Turnover
7 Shareholder Account Rules and Policies; How To Buy Shares;
How to Exchange Shares; Special Investor Services; Service
Plan for Class A Shares; Distribution and Service Plan for
Class B Shares; Distribution and Service Plan for Class C
Shares; How to Sell Shares
8 How to Sell Shares; Special Investor Services
9 *
Part B of
Form N-1A
Item No. Heading In Statement of Additional Information
10 Cover Page
11 Cover Page
12 *
13 Investment Objectives and Policies; Other Investment
Techniques and Strategies; Additional Investment
Restrictions
14 How the Fund is Managed - Trustees and Officers of the Fund
15 How the Fund is Managed - Major Shareholders
16 How the Fund is Managed; Distribution and Service Plans
17 Brokerage Policies of the Fund
18 Additional Information About the Fund
19 Your Investment Account - How to Buy Shares; How to Sell
Shares; How to Exchange Shares
20 Dividends, Capital Gains and Taxes
21 How the Fund is Managed; Brokerage Policies of the Fund
22 Performance of the Fund
23 *
- ----------------
* Not applicable or negative answer.
<PAGE>
Oppenheimer Equity Income Fund
Prospectus dated November 1, 1996
Oppenheimer Equity Income Fund is a mutual fund with the primary
investment objective of seeking as much current income as is compatible
with prudent investment. Its secondary objective is to conserve
principal while providing an opportunity for capital appreciation. To
seek current income, the Fund invests primarily in common stocks that
pay dividends, but the Fund also invests in bonds, preferred stocks
(including convertible stocks), debentures, zero-coupon securities
issued by the U.S. Government or corporations, and other debt
securities. The Fund also uses hedging instruments to try to reduce
the risks of market fluctuations that affect the value of the
securities the Fund holds. To seek its secondary objective, the Fund
primarily invests in stocks that the portfolio manager believes have
growth possibilities. The securities the Fund invests in are described
more completely in "Investment Objectives and Policies." That section
of the Prospectus also explains some of the risks of those investments.
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 November 1, 1996 Statement of Additional Information.
For a free copy, call OppenheimerFunds Services, the Fund's Transfer
Agent, at 1-800-525-7048, or write to the Transfer Agent at the address
on the back cover. The Statement of Additional Information has been
filed with the Securities and Exchange Commission and is incorporated
into this Prospectus by reference (which means that it is legally part
of this Prospectus).
(OppenheimerFunds logo)
Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the F.D.I.C. or any other
agency, and involve investment risks, including the possible loss of
the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents
ABOUT THE FUND
Expenses
A Brief Overview of the Fund
Financial Highlights
Investment Objectives and Policies
Investment Risks
Investment Techniques and Strategies
How the Fund is Managed
Performance of the Fund
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
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 fiscal year ended June 30, 1996.
- Shareholder Transaction Expenses are charges you pay when you buy
or sell shares of the Fund. Please refer to "About Your Account," from
pages 27 through 49, for an explanation of how and when these charges
apply.
<TABLE>
<CAPTION>
Class Class Class
A Shares B Shares C Shares
<S> <C> <C> <C>
Maximum Sales Charge
on Purchases
(as a % of
offering price) 5.75% None None
Maximum Deferred Sales Charge
(as a % of the
lower of the
original offering
price or redemption
proceeds) None(1) 5% in the first 1% if
year, declining redeemed
to 1% in the within 12
sixth year months of
and eliminated purchase(2)
thereafter(2)
Maximum Sales Charge on
Reinvested Dividends None None None
Redemption Fee None(3) None(3) None(3)
Exchange Fee None None None
</TABLE>
(1) If you invest $1 million or more ($500,000 or more for purchases by
"Retirement Plans," as defined in "Class A Contingent Deferred Sales
Charge" on page 32) in Class A shares, you may have to pay a sales
charge of up to 1% if you sell your shares within 18 calendar months
from the end of the calendar month during which you purchased those
shares. See "How to Buy Shares - Buying Class A Shares," below.
(2) See "How to Buy Shares - Buying Class B Shares" and "How to Buy
Shares - Buying Class C Shares" below, for more information on the
contingent deferred sales charge.
(3) There is a $10 transaction fee for redemptions paid by Federal
funds wire, but not for redemptions paid by check or by ACH transfer
through AccountLink. See "How to Sell Shares" below.
- Annual Fund Operating Expenses are paid out of the Fund's
assets and represent the Fund's expenses in operating its business.
For example, the Fund pays management fees to its investment adviser,
OppenheimerFunds, Inc. (which is referred to in this Prospectus as the
"Manager"). The rates of the Manager's fees are set forth in "How the
Fund is Managed," below. The Fund has other regular expenses for
services, such as transfer agent fees, custodial fees paid to the bank
that holds its portfolio securities, audit fees and legal expenses.
Those expenses are detailed in the Fund's Financial Statements in the
Statement of Additional Information.
Annual Fund Operating Expenses (as a Percentage of Average Net Assets)
<TABLE>
<CAPTION>
Class Class Class
A Shares B Shares C Shares
<S> <C> <C> <C>
Management Fees 0.53% 0.53% 0.53%
12b-1 Plan Fees 0.19% 1.00% 1.00%
Other Expenses 0.17% 0.19% 0.28%
----- ----- -----
Total Fund Operating
Expenses 0.89% 1.72% 1.81%
</TABLE>
The numbers in the chart above are based on the Fund's expenses in
its fiscal year ended June 30, 1996. 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 Service Plan Fees for Class A shares are
service fees (the maximum fee is 0.25% of average annual net assets of
that class). Currently, the Board of Trustees has set the maximum fee
at 0.15% for assets representing shares sold before April 1, 1991, and
0.25% for assets representing shares sold on or after that date. For
Class B and Class C shares, the 12b-1 Distribution and Service Plan
Fees are the service fees (the maximum fee is 0.25%) and the annual
asset-based sales charges of 0.75%. These plans are described in
greater detail in "How to Buy Shares."
The actual expenses for each class of shares in future years may be
more or less than the numbers in the table, depending on a number of
factors, including changes in the actual value of the Fund's assets
represented by each class of shares. Class C shares were not publicly
sold before November 1, 1995. Therefore, the Annual Fund Operating
Expenses for Class C shares are based on amounts that would have been
payable in that period assuming that Class C shares were outstanding
during the entire fiscal year. These plans are described in greater
detail in "How to Buy Shares."
- Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples shown
below. Assume that you make a $1,000 investment in each class of
shares of the Fund, and the Fund's annual return is 5%, and that its
operating expenses for each class are the ones shown in the Annual Fund
Operating Expenses table above. If you were to redeem your shares at
the end of each period shown below, your investment would incur the
following expenses by the end of 1, 3, 5 and 10 years:
1 year 3 years 5 years 10 years*
Class A Shares $66 $84 $104 $161
Class B Shares $67 $84 $113 $161
Class C Shares $28 $57 $98 $213
If you did not redeem your investment, it would incur the following
expenses:
Class A Shares $66 $84 $104 $161
Class B Shares $17 $54 $93 $161
Class C Shares $18 $57 $98 $213
*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 asset-based sales charge and the
contingent deferred sales charge on Class B and Class C shares, long
term Class B and Class C shareholders could pay the economic equivalent
of more than the maximum front-end sales charge allowed under
applicable regulations. For Class B shareholders, the automatic
conversion of Class B shares to Class A shares is designed to minimize
the likelihood that this will occur. Please refer to "How to Buy
Shares - Buying Class B Shares" for more information.
These examples show the effect of expenses on an investment, but are
not meant to state or predict actual or expected costs or investment
returns of the Fund, all of which may be more or less than those shown.
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized below, with
references to the section of this Prospectus where more complete
information can be found. You should carefully read the entire
Prospectus before making a decision about investing in the Fund. Keep
the Prospectus for reference after you invest, particularly for
information about your account, such as how to sell or exchange shares.
- What are the Fund's Investment Objectives? The Fund's primary
investment objective is to seek as much current income as is compatible
with prudent investment. It has a secondary objective to conserve
principal while providing an opportunity for capital appreciation.
- What Does the Fund Invest in? To seek current income, the Fund
primarily invests in dividend-paying common and preferred stocks (these
are called "equity" securities). The Fund may invest in U.S. companies
or foreign companies and foreign government securities. The Fund can
also invest in debt securities, such as corporate bonds and U.S.
Government securities. To seek its secondary objective, the Fund's
manager may choose common stocks that have growth potential. The Fund
may also use hedging instruments and some derivative investments to try
to manage investment risks. These investments are more fully explained
in "Investment Objectives and Policies," starting on page 11.
- Who Manages the Fund? The Fund's investment adviser (the
"Manager") is OppenheimerFunds, Inc. The Manager (including a
subsidiary) manages investment company portfolios having over $50
billion in assets. The Manager is paid an advisory fee by the Fund,
based on its net assets. The Fund's portfolio manager, John Doney, is
employed by the Manager and is primarily responsible for the selection
of the Fund's securities. The Fund's Board of Trustees, elected by
shareholders, oversees the investment adviser and the portfolio
manager. Please refer to "How the Fund is Managed," starting on page
21 for more information about the Manager and its fees.
- How Risky is the Fund? All investments carry risks to some
degree. The Fund's investments in stocks and bonds are subject to
changes in their value from a number of factors such as changes in
general bond and stock market movements, the change in value of
particular stocks or bonds because of an event affecting the issuer, or
changes in interest rates that can affect bond prices. These changes
affect the value of the Fund's investments and its price per share. In
the Oppenheimer funds spectrum, the Fund is generally more conservative
than aggressive growth funds, but more aggressive than investment grade
bond funds. 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
Objectives and Policies" starting on page 11 for a more complete
discussion of the Fund's investment risks.
- How Can I Buy Shares? You can buy shares through your dealer or
financial institution, or you can purchase shares directly through the
Distributor by completing an Application or by using an Automatic
Investment Plan under AccountLink. Please refer to "How to Buy Shares"
on page 27 for more details.
- Will I Pay a Sales Charge to Buy Shares? The Fund offers three
classes of shares. Each class has the same investment portfolio but
different expenses. Class A shares are offered with a front-end sales
charge, starting at 5.75%, and reduced for larger purchases. Class B
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 of 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
one year of buying them. There is also an annual asset-based sales
charge on Class B and Class C shares. Please review "How To Buy
Shares" starting on page 27 for more details, including a discussion
about factors you and your financial advisor should consider in
determining which class may be appropriate for you.
- How Can I Sell My Shares? Shares can be redeemed by mail or by
telephone call to the Transfer Agent on any business day, or through
your dealer. Please refer to "How to Sell Shares" on page 42. The
Fund also offers exchange privileges to other Oppenheimer funds,
described in "How to Exchange Shares" on page 44.
- How Has the Fund Performed? The Fund measures its performance by
quoting its average annual total return and cumulative total return,
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 broad market indices,
which we have done on pages 25 and 26. 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, expense ratios
and other data based on the Fund's average net assets. The Fund
recently changed its fiscal year end from June 30 to August 31 and
information for both the fiscal year ended June 30, 1996 and the fiscal
period ended August 31, 1996 is included in that table. This
information has been audited by Deloitte & Touche LLP, the Fund's
independent auditors, whose reports on the Fund's financial statements
for the fiscal years ended June 30, 1996 and August 31, 1996 are
included in the Statement of Additional Information. Class C shares
were only offered during a portion of the fiscal years ended June 30,
1996 and August 31, 1996, commencing November 1, 1995.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
Financial Highlights
Class A
-------------------------------------------------------------------------
Two Months
Ended
August 31, Year Ended June 30,
1996(2) 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------
- ------------------
<S> <C> <C> <C> <C>
<C>
Per Share Operating Data:
Net asset value, beginning of period $11.39 $10.25 $9.44 $10.01
$9.15
- ------------------------------------------------------------------------------------------------------------------
- ------------------
Income from investment operations:
Net investment income .09 .50 .50 .47
.50
Net realized and unrealized gain (loss) (.12) 1.36 .92 (.39)
.99
- ------------------------------------------------------------------------------------------------------------------
- ------------------
Total income (loss) from investment
operations (.03) 1.86 1.42 .08 1.49
- ------------------------------------------------------------------------------------------------------------------
- ------------------
Dividends and distributions to shareholders:
Dividends from net investment income -- (.48) (.48) (.47)
(.48)
Dividends in excess of net investment
income -- -- -- (.01) --
Distributions from net realized gain (.24) (.13) (.12)
(.15)
Distributions in excess of net realized gain -- -- -- (.05)
--
- ------------------------------------------------------------------------------------------------------------------
- ------------------
Total dividends and distributions
to shareholders -- (.72) (.61) (.65) (.63)
- ------------------------------------------------------------------------------------------------------------------
- ------------------
Net asset value, end of period $11.36 $11.39 $10.25 $9.44
$10.01
==========================================================
===========
=====
- ------------------------------------------------------------------------------------------------------------------
- ------------------
Total Return, at Net Asset Value(4) (0.26)% 18.61% 15.66%
0.65% 16.76%
- ------------------------------------------------------------------------------------------------------------------
- ------------------
Ratios/Supplemental Data:
Net assets, end of period (in millions) $2,110 $2,141 $1,893 $1,773
$1,790
- ------------------------------------------------------------------------------------------------------------------
- ------------------
Average net assets (in millions) $2,109 $2,054 $1,798 $1,832
$1,658
- ------------------------------------------------------------------------------------------------------------------
- ------------------
Ratios to average net assets:
Net investment income 3.28%(5) 4.51% 5.15% 4.72%
5.12%
Expenses 0.94%(5) 0.89% 0.96% 0.90%
0.79%
- ------------------------------------------------------------------------------------------------------------------
- ------------------
Portfolio turnover rate(6) 13.5% 42.9% 45.7% 30.4%
59.0%
Average brokerage commission rate(7) $0.0587 $0.0592 -- --
--
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
[Table Restubbed]
-------------------------------------------------------------------------
-------------------------------------------------------------------------
1992 1991 1990 1989 1988 1987
- ------------------------------------------------------------------------------------------------------------------
- ------------------
<S> <C> <C> <C> <C> <C>
<C>
Per Share Operating Data:
Net asset value, beginning of period $8.86 $9.18 $9.11 $8.51
$9.85 $9.26
- ------------------------------------------------------------------------------------------------------------------
- ------------------
Income from investment operations:
Net investment income .50 .48 .48 .52 .48
.46
Net realized and unrealized gain (loss) .39 (.17) .33 .58 (.35)
1.22
- ------------------------------------------------------------------------------------------------------------------
- ------------------
Total income (loss) from investment
operations .89 .31 .81 1.10 .13 1.68
- ------------------------------------------------------------------------------------------------------------------
- ------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.48) (.48) (.50) (.48)
(.60) (.48)
Dividends in excess of net investment
income -- -- -- -- -- --
Distributions from net realized gain (.12) (.15) (.24) (.02) (.87)
(.61)
Distributions in excess of net realized gain -- -- -- -- --
--
- ------------------------------------------------------------------------------------------------------------------
- ------------------
Total dividends and distributions
to shareholders (.60) (.63) (.74) (.50) (1.47)
(1.09)
- ------------------------------------------------------------------------------------------------------------------
- ------------------
Net asset value, end of period $9.15 $8.86 $9.18 $9.11 $8.51
$9.85
==========================================================
===========
==========
- ------------------------------------------------------------------------------------------------------------------
- ------------------
Total Return, at Net Asset Value(4) 10.26% 3.68% 9.07% 13.30%
2.04% 20.45%
- ------------------------------------------------------------------------------------------------------------------
- ------------------
Ratios/Supplemental Data:
Net assets, end of period (in millions) $1,556 $1,393 $1,330 $1,017
$807 $731
- ------------------------------------------------------------------------------------------------------------------
- ------------------
Average net assets (in millions) $1,526 $1,324 $1,180 $885
$743 $527
- ------------------------------------------------------------------------------------------------------------------
- ------------------
Ratios to average net assets:
Net investment income 5.33% 5.31% 5.10% 5.89%
5.48% 5.08%
Expenses 0.82% 0.79% 0.79% 0.85% 0.83%
0.91%
- ------------------------------------------------------------------------------------------------------------------
- ------------------
Portfolio turnover rate(6) 37.0% 64.0% 122.0% 91.4%
124.1% 94.7%
Average brokerage commission rate(7) -- -- -- -- --
--
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
[Table Restubbed]
-------------------------------------------------------------------
Class B
--------------------------------------------------------------------
Two Months
Ended
August 31, Year Ended June 30,
1996(2) 1996 1995 1994(3)
- ------------------------------------------------------------------------------------------------------------------
- -------
<S> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $11.33 $10.21 $9.40 $10.22
- ------------------------------------------------------------------------------------------------------------------
- -------
Income from investment operations:
Net investment income .07 .41 .43 .36
Net realized and unrealized gain (loss) (.11) 1.35 .91 (.58)
- ------------------------------------------------------------------------------------------------------------------
- -------
Total income (loss) from investment
operations (.04) 1.76 1.34 (.22)
- ------------------------------------------------------------------------------------------------------------------
- -------
Dividends and distributions to shareholders:
Dividends from net investment income -- (.40) (.40) (.42)
Dividends in excess of net investment
income -- -- -- (.01)
Distributions from net realized gain (.24) (.13) (.12)
Distributions in excess of net realized gain -- -- -- (.05)
- ------------------------------------------------------------------------------------------------------------------
- -------
Total dividends and distributions
to shareholders -- (.64) (.53) (.60)
- ------------------------------------------------------------------------------------------------------------------
- -------
Net asset value, end of period $11.29 $11.33 $10.21 $9.40
==========================================================
==========
- ------------------------------------------------------------------------------------------------------------------
- -------
Total Return, at Net Asset Value(4) (0.35)% 17.58% 14.87%
(2.35)%
- ------------------------------------------------------------------------------------------------------------------
- -------
Ratios/Supplemental Data:
Net assets, end of period (in millions) $260 $252 $161 $88
- ------------------------------------------------------------------------------------------------------------------
- -------
Average net assets (in millions) $255 $208 $122 $47
- ------------------------------------------------------------------------------------------------------------------
- -------
Ratios to average net assets:
Net investment income 2.48%(5) 3.68% 4.34%
3.99%(5)
Expenses 1.76%(5) 1.72% 1.79% 1.82%(5)
- ------------------------------------------------------------------------------------------------------------------
- -------
Portfolio turnover rate(6) 13.5% 42.9% 45.7% 30.4%
Average brokerage commission rate(7) $0.0587 $0.0592 -- --
</TABLE>
<PAGE>
[End Restubbed Table]
<TABLE>
<CAPTION>
-----------------------------------------
Class C
------------------------------------
Two Months
Ended Period Ended
August 31, June 30,
1996(2) 1996(1)
- ------------------------------------------------------------------------------------------------------------------
- -------------
<S> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $11.35 $10.76
- ------------------------------------------------------------------------------------------------------------------
- -------------
Income from investment operations:
Net investment income .07 .28
Net realized and unrealized gain (loss) (.12) .88
- ------------------------------------------------------------------------------------------------------------------
- -------------
Total income (loss) from investment
operations (.05) 1.16
- ------------------------------------------------------------------------------------------------------------------
- -------------
Dividends and distributions to shareholders:
Dividends from net investment income -- (.33)
Dividends in excess of net investment
income -- --
Distributions from net realized gain (.24)
Distributions in excess of net realized gain -- --
- ------------------------------------------------------------------------------------------------------------------
- -------------
Total dividends and distributions
to shareholders -- (.57)
- ------------------------------------------------------------------------------------------------------------------
- -------------
Net asset value, end of period $11.30 $11.35
=====================================
- ------------------------------------------------------------------------------------------------------------------
- -------------
Total Return, at Net Asset Value(4) (0.44)%
10.50%
- ------------------------------------------------------------------------------------------------------------------
- -------------
Ratios/Supplemental Data:
Net assets, end of period (in millions) $7 $6
- ------------------------------------------------------------------------------------------------------------------
- -------------
Average net assets (in millions) $7 $3
- ------------------------------------------------------------------------------------------------------------------
- -------------
Ratios to average net assets:
Net investment income 2.55%(5)
3.53%(5)
Expenses 1.79%(5) 1.81%(5)
- ------------------------------------------------------------------------------------------------------------------
- -------------
Portfolio turnover rate(6) 13.5% 42.9%
Average brokerage commission rate(7) $0.0587
$0.0592
</TABLE>
<PAGE>
1. For the period from November 1, 1995 (inception of offering) to June
30, 1996.
2. The Fund changed its fiscal year end from June 30 to August 31.
3. For the period from August 17, 1993 (inception of offering) to June
30, 1994.
4. Assumes a hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the
reinvestment date, and redemption at the net asset value calculated on
the last business day of the fiscal period. Sales charges are not
reflected in the total returns. Total returns are not annualized for
periods of less than one full year.
5. Annualized.
6. The lesser of purchases or sales of portfolio securities for a
period, divided by the monthly average of the market value of portfolio
securities owned during the period. Securities with a maturity or
expiration date at the time of acquisition of one year or less are
excluded from the calculation. Purchases and sales of investment
securities (excluding short-term securities) for the period ended
August 31, 1996 were $293,833,873 and $502,985,239, respectively.
7. Total brokerage commissions paid on applicable purchases and sales
of portfolio securities for the period divided by the total number of
related shares purchased and sold.
<PAGE>
Investment Objectives and Policies
Objectives. The Fund has primary and secondary objectives. The Fund's
primary investment objective is to seek as much current income as is
compatible with prudent investment. Its secondary investment objective
is to conserve principal while providing an opportunity for capital
appreciation.
Investment Policies and Strategies. The Fund seeks current income
principally by investing in common stocks that pay dividend income.
The Fund may also seek income by investing in bonds, preferred stocks
(including convertible stocks), debentures, zero-coupon securities
issued by the U.S. Government or companies, and other debt securities,
such as notes. In its stock investments the Fund primarily focuses on
stocks of larger, more established companies with an established
history of operations. To seek its secondary objective the Fund may
invest in stocks of companies that the Manager believes offer growth
potential without excessive volatility.
Under normal conditions (when the Manager believes that the
securities markets are not in a volatile or unstable period), the Fund
will invest at least 65% of its total assets in income-producing equity
securities (common stocks, preferred stocks, and securities convertible
into common stocks). When market conditions are unstable, the Fund may
invest substantial amounts of its assets in debt securities, such as
money market instruments or government securities, as described in
"Temporary Defensive Investments," below.
When investing the Fund's assets, the Manager considers many factors,
including the financial condition of particular companies as well as
general economic conditions in the U.S. relative to foreign economies,
and the trends in domestic and foreign stock markets. In evaluating the
potential for income from particular securities, the Manager examines
many factors, such as the consistency of the company's earnings, the
industry group the company is in (and the prospects for that industry
in the overall economy), how well the company is managed, and the size
of the company's capitalization. While the Fund focuses on large or
mid-size companies which tend to be more stable investments, the Fund
may invest in smaller issuers as well.
The Fund may try to hedge against losses in the value of its
portfolio of securities by using hedging strategies and derivative
investments described below. The Fund's portfolio manager may employ
special investment techniques in selecting securities for the Fund.
These are also described below. Additional information may be found
about them under the same headings in the Statement of Additional
Information.
- Can the Fund's Investment Objectives and Policies Change? The
Fund has investment objectives, which are described above, as well as
investment policies it follows to try to achieve its objectives.
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 objectives
are fundamental policies.
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 Trustees may change non-fundamental policies without
shareholder approval, although significant changes will be described in
amendments to this Prospectus.
- Portfolio Turnover. A change in the securities held by the Fund is
known as "portfolio turnover." The Fund ordinarily does not engage in
short-term trading to try to achieve its objectives. As a result, the
Fund's portfolio turnover is not expected to be more than 100% each
year. The "Financial Highlights table" above, shows the Fund's
portfolio turnover rate during past fiscal years. Portfolio turnover
affects brokerage costs, dealer markups and other transaction costs,
and results in the Fund's realization of capital gains or losses for
tax purposes. It may also affect the Fund's ability to qualify as a
"regulated investment company" under the Internal Revenue Code for tax
deductions for dividends and capital gains distributions the Fund pays
to shareholders. The Fund qualified in its last fiscal years and
intends to do so in the coming year, although it reserves the right not
to qualify.
Investment Risks.
All investments carry risks to some degree, whether they are risks that
market prices of the investment will fluctuate (this is known as
"market risk") or that the underlying issuer will experience financial
difficulties and may default on its obligation under a fixed-income
investment to pay interest and repay principal (this is referred to as
"credit risk"). These general investment risks, and the special risks
of certain types of investments that the Fund may hold are described
below. They affect the value of the Fund's investments, its investment
performance, and the prices of its shares. These risks collectively
form the risk profile of the Fund.
Because of the types of securities the Fund invests in and the
investment techniques the Fund uses, the Fund is designed for investors
who are investing for the long term. It is not intended for investors
seeking assured income or preservation of capital. While the Manager
tries to reduce risks by diversifying investments, by carefully
researching securities before they are purchased, and in some cases by
using hedging techniques, changes in overall market prices can occur at
any time, and because the income earned on securities is subject to
change, there is no assurance that the Fund will achieve its investment
objectives. When you redeem your shares, they may be worth more or
less than what you paid for them.
- Stock Investment Risks. Because the Fund invests a substantial
portion of its assets in stocks, the value of the Fund's portfolio will
be affected by changes in the stock markets. At times, the stock
markets can be volatile and stock prices can change substantially.
This market risk will affect the Fund's net asset 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.
The Fund attempts to limit market risks by diversifying its
investments, that is, by not holding a substantial amount of stock of
any one company and by not investing too great a percentage of the
Fund's assets in any one company. Also, the Fund does not concentrate
its investments in any one industry or group of industries.
- Foreign Securities Have Special Risks. While foreign securities
offer special investment opportunities, there are also special risks.
The change in value of a foreign currency against the U.S. dollar will
result in a change in the U.S. dollar value of securities denominated
in that foreign currency. Foreign issuers are not subject to the same
accounting and disclosure requirements that U.S. companies are subject
to. The value of foreign investments may be affected by exchange
control regulations, expropriation or nationalization of a company's
assets, foreign taxes, delays in settlement of transactions, changes in
governmental economic or monetary policy in the U.S. or abroad, or
other political and economic factors. Securities of companies in
emerging market countries may be more difficult to sell and their
prices may be more volatile. More information about the risks and
potential rewards of investing in foreign securities is contained in
the Statement of Additional Information.
- Interest Rate Risks. In addition to credit risks, described
below, debt securities are subject to changes in their value due to
changes in prevailing interest rates. When prevailing interest rates
fall, the value of already-issued debt securities generally rise. When
interest rates rise, the values of already-issued debt securities
generally decline. The magnitude of these fluctuations will often be
greater for longer-term debt securities than shorter-term debt
securities. Changes in the value of securities held by the Fund mean
that the Fund's share prices can go up or down when interest rates
change because of the effect of the change on the value of the Fund's
portfolio of debt securities.
- Special Risks of Lower-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 bonds whether rated or unrated, often have speculative
characteristics and special risks that make them riskier investments
than investment grade securities and are subject to credit risks. 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. The issuer's low
creditworthiness may increase the potential for its insolvency. A
decline in their values is also likely in the high yield bond market
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 above. These risks mean
that the Fund may not achieve the expected income from lower-grade
securities, and that the Fund's net asset value per share may be
affected by declines in value of these securities. 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.
- Hedging instruments can be volatile investments and may involve
special risks. The Fund may invest in a variety of hedging
instruments. The use of hedging instruments requires special skills
and knowledge of investment techniques that are different than what is
required for normal portfolio management. If the Manager uses a
hedging instrument at the wrong time or judges market conditions
incorrectly, hedging strategies may reduce the Fund's return. The Fund
could also experience losses if the prices of its futures and options
positions were not correlated with its other investments or if it could
not close out a position because of an illiquid market for the future
or option.
Options trading involves the payment of premiums, and options,
futures and forward contracts are subject to special tax rules that may
affect the amount, timing and character of the Fund's income for
distributions. There are also special risks in particular hedging
strategies. For example, if a covered call written by the Fund is
exercised on a security that has increased in value, the Fund will be
required to sell the security at the call price and will not be able to
realize any profit if the security has increased in value above the
call price. The use of forward contracts may reduce the gain that
would otherwise result from a change in the relationship between the
U.S. dollar and a foreign currency. To limit its exposure in foreign
currency exchange contracts, the Fund limits its exposure to the amount
of its assets denominated in the foreign currency. Interest rate swaps
are subject to the risk that the other party will fail to meet its
obligations (or that the underlying issuer will fail to pay on time) as
well as interest rate risks. The Fund could be obligated to pay more
under its swap agreements than it receives under them, as a result of
interest rate changes. These risks are described in greater detail in
the Statement of Additional Information.
- There are special risks in investing in derivative investments.
The Fund can invest in a number of different kinds of "derivative"
investment. In general, a "derivative investment" is a specially
designed investment whose performance is linked to the performance of
another investment or security, such as an option, future, index,
currency or commodity. The company issuing the instrument may fail to
pay the amount due on the maturity of the instrument. Also, the
underlying investment or security might not perform the way the Manager
expected it to perform. Markets, underlying securities and indices may
move in a direction not anticipated by the Manager. Performance of
derivative investments may also be influenced by interest rate and
stock market changes in the U.S. and abroad. All of this can mean that
the Fund will realize less principal or income from the investment than
expected. Certain derivative investments held by the Fund may be
illiquid. Please refer to "Illiquid and Restricted Securities."
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.
- Warrants and Rights. Warrants basically are options to purchase
stock at set prices that are valid for a limited period of time.
Rights are similar to warrants but normally have a short duration and
are distributed directly by the issuer to its shareholders. The Fund
may invest up to 5% of its total assets in warrants or rights. That 5%
limitation does not apply to warrants and rights the Fund acquired as
part of units with other securities or that are attached to other
securities. No more than 2% of the Fund's total assets may be invested
in warrants that are not listed on either The New York Stock Exchange
or The American Stock Exchange. These percentage limitations are
fundamental policies. For further details about these investments,
please refer to "Warrants and Rights" in the Statement of Additional
Information.
- Investment in Bonds and Convertible Securities. The Fund also
invests in bonds, debentures and other fixed-income securities to help
seek its primary objective. While the Fund will normally limit its
investments in fixed-income securities to no more than 35% of its total
assets (during normal market conditions), the Fund may invest in a
variety of different types of income-producing securities.
Convertible securities are bonds, preferred stocks and other
securities that normally pay a fixed rate of interest or dividends and
give the owner the option to convert the security into common stock.
While the value of convertible securities depends in part on interest
rate changes and the credit quality of the issuer, the price will also
change based on the price of the underlying stock. While convertible
securities generally have less potential for gain than common stock,
their income provides a cushion against the stock price declines. They
generally pay less income than non-convertible bonds. The Manager
generally analyzes these investment from the perspective of the growth
potential of the underlying stock and treats them as "equity
substitutes."
- Lower-Grade Debt Securities. Subject to the limits described
above, the Fund may invest in "lower grade" debt securities commonly
known as "junk bonds." "Lower-grade" debt securities are those rated
below "investment grade," which means they have a rating lower than
"Baa" by Moody's or lower than "BBB" by Standard & Poor's or Duff &
Phelps or similar ratings by other rating organizations, or if unrated,
are determined by the Manager to be of comparable quality to debt
securities rated below investment grade. The Fund may invest in
securities rated as low as "C" or "D" or which may be in default at the
time the Fund buys them. 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
greater market fluctuation and risks of loss of income and principal
than higher-grade securities and may be considered to have certain
speculative risks. The Fund may not invest more than 25% of its total
assets in "lower-grade" debt securities and no more than 10% of its
total assets may be invested in lower-grade debt securities that are
not convertible. For a description of these securities ratings, please
refer to the Appendix in the Statement of Additional information.
- Zero Coupon Securities. The Fund may invest in zero coupon
securities issued by the U.S. Treasury or by private issuers. In
general, zero coupon U.S. Treasury securities include (1) U.S. Treasury
notes or bonds that have been "stripped" of their interest coupons, (2)
U.S. Treasury bills issued without interest coupons, or (3)
certificates representing an interest in stripped securities. A zero
coupon Treasury security pays no current interest and trades at a deep
discount from its face value. It will be subject to greater market
fluctuations from changes in interest rates than interest-paying
securities. The Fund accrues interest on zero coupon securities
without receiving the actual cash. As a result of holding these
securities, the Fund could possibly be forced to sell portfolio
securities to pay cash dividends or meet redemptions. Zero coupon
securities issued by non-government issuers are similar to U.S.
Government zero coupon securities. They have an additional risk that
the issuing company may fail to pay interest or repay the principal on
the obligation.
- Preferred Stock. The Fund may invest in preferred stock.
Generally, preferred stock is an equity security that has a specified
dividend and ranks after bonds and before common stocks in its claim on
income for dividend payments and on assets should the issuing company
be liquidated or enter bankruptcy proceedings. While most preferred
stocks pay a dividend, the Fund may purchase preferred stock where the
issuer has omitted, or is in danger of omitting, payment of its
dividend. Such investments would be made primarily for their capital
appreciation potential. Certain preferred stock may be convertible
into or exchangeable for a given number of common shares. Such
preferred stock tends to be more volatile than nonconvertible preferred
stock, which behaves more like a fixed-income security.
- Derivative Investments. Derivative investments may be used by the
Fund for hedging purposes or in other cases to attempt to seek income.
In the broadest sense, exchange-traded options and futures contracts
(discussed in "Hedging," below) may be considered "derivative
investments." The Fund may not purchase or sell commodities (other
than hedging instruments deemed to be commodities); however, the Fund
may purchase and sell foreign currency in hedging transactions. This
shall not prevent the Fund from buying or selling options and futures
contracts.
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 interest payments and/or to pay a fixed sum on the
maturity of the note. Principal and/or interest payments on an index-
linked note depend on the performance of one or more market indices,
such as the S&P 500 Index or a weighted index of commodity futures,
such as crude oil, gasoline and natural gas. The Fund may invest in
"debt exchangeable for common stock" of an issuer or "equity-linked"
debt securities of an issuer. At maturity, the principal amount of the
debt security is exchanged for common stock of the issuer or is payable
in an amount based on the issuer's common stock price at the time of
maturity. In either case there is a risk that the amount payable at
maturity will be less than the expected principal amount of the debt.
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.
- Investing in Small, Unseasoned Companies. The Fund may invest in
securities of small, unseasoned companies. These are companies that
have been in operation for less than three years, counting the
operations of any predecessors. Securities of these companies may have
limited liquidity (which means that the Fund may have difficulty
selling them at an acceptable price when it wants to) and the prices of
these securities may be volatile. The Fund may not invest more than 5%
of its net assets in securities of small, unseasoned issuers. That
limit is a fundamental policy. See "Investing in Small, Unseasoned
Companies" in the Statement of Additional Information for a further
discussion of the risks involved in such investments.
- Foreign Securities. To broaden its opportunities to seek income or
capital growth, the Fund may purchase equity and debt securities issued
or guaranteed by foreign companies or foreign governments, including
foreign government agencies. Foreign securities also include securities
that are traded primarily on a foreign securities exchange or over-the-
counter market, as well as securities of companies that derive a
significant portion of their revenue or profits from foreign business,
investments or sales or have a significant portion of their assets
abroad. Foreign securities may include securities of foreign issuers
represented in the U.S. markets by American Depository Receipts (ADRs)
or other similar arrangements. 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. However,
the Fund normally does not expect to have more than 35% of its assets
invested in foreign securities. The Fund will hold foreign currency
only in connection with the purchase or sale of foreign securities.
- Hedging. As described below, the Fund may purchase and sell
certain kinds of futures contracts, put and call options, forward
contracts, and options on futures, broadly-based stock indices and
foreign currencies, and engage in interest rate swap transactions.
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 "Other Investment
Techniques and Strategies" 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 on its portfolio securities may
decline, or to establish a position in the equity securities market as
a temporary substitute for purchasing individual securities. 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
contracts 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 to distribute to shareholders, for liquidity
purposes or for defensive reasons.
-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 (Interest Rate Futures), and (3) other
securities indexes (Financial Futures). All of these Futures are
described in the Statement of Additional Information.
-Put and Call Options. The Fund may buy and sell certain kinds of
put options (puts) and call options (calls). A call or put option may
not be purchased if the value of all of the Fund's put and call options
would exceed 5% of the Fund's total assets.
The Fund can buy only those puts that relate to (1) securities the
Fund owns, (2) Stock Index Futures (whether or not the Fund owns that
particular security in its portfolio), (3) broadly-based stock indices
or (4) foreign currencies. The Fund may not sell a put other than a
put that it previously purchased.
The Fund may purchase calls only on securities, broadly-based stock
indices, Stock Index Futures and foreign currencies, or to terminate
its obligation on a call the Fund previously wrote. The Fund may write
(that is, sell) call options. Each call the Fund writes must be
"covered" while it is outstanding. That means the Fund owns the
investment on which the call was written or the Fund owns and
segregates liquid assets to satisfy its obligation if the call is
exercised. After the Fund writes a call, not more than 25% of the
Fund's total assets may be subject to calls. Covered call options sold
by the Fund must be listed on a domestic securities exchange or quoted
on the National Association of Securities Dealers' Automated Quotation
System (NASDAQ) of the Nasdaq Stock Market, Inc.
The Fund may buy or sell foreign currency puts and calls only if they
are traded on a securities or commodities exchange or over-the-counter
market, or are quoted by recognized dealers in those options. 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
increases in the dollar cost of buying foreign securities.
-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 bought or sold, or to protect against possible losses from
changes in the relative values of the U.S. dollar and foreign currency.
The Fund limits its net exposure under forward contracts in a
particular foreign currency to the amount of its assets denominated in
that currency or denominated in a closely-correlated currency. The
Fund may also use cross-hedging where the Fund hedges against changes
in currencies other than the currency in which a security it holds is
denominated.
-Interest Rate Swaps. In an interest rate swap, the Fund and another
party exchange their right to receive or their obligation to pay
interest on a security. For example, they may swap a right to receive
floating rate payments for fixed rate payments. The Fund enters into
swaps only on securities it owns. The Fund may not enter into swaps
with respect to more than 25% of its total assets. Also, the Fund will
segregate liquid assets of any type, including equity and debt
securities of any grade, to cover any amounts it could owe under swaps
that exceed the amounts it is entitled to receive, and it will adjust
that amount daily, as needed.
- Illiquid and Restricted Securities. Under the policies and
procedures established by the Fund's Board of Trustees, 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 Fund's percentage limitation on these investments does
not apply to certain restricted securities that are eligible for resale
to qualified institutional purchasers.
- 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 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 its total assets in
the coming year.
- Repurchase Agreements. The Fund may enter into repurchase
agreements. In a repurchase transaction, the Fund buys a security and
simultaneously sells it to the vendor for delivery at a future date.
They are used primarily for cash liquidity purposes. 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 of seven days or less.
- "When-Issued" and Delayed Delivery Transactions. The Fund may
purchase securities on a "when-issued" basis and may purchase or sell
securities on a "delayed delivery" basis. These terms refer to
securities that have been created and for which a market exists, but
which are not available for immediate delivery. There may be a risk of
loss to the Fund if the value of the security declines prior to the
settlement date.
- Temporary Defensive Investments. When stock market conditions are
unfavorable or in unusual economic or business circumstances, the Fund
may invest all or a portion of its assets in defensive securities.
Securities selected for defensive purposes usually will include debt
securities, such as (1) U.S. Treasury Bills and other obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, (2) commercial paper rated "A-3" or better by
Standard & Poor's Corporation or "P-3" or better by Moody's Investors
Service, Inc., or (3) certificates of deposit, bankers' acceptances or
other bank obligations.
Other Investment Restrictions. The Fund has other investment
restrictions which are fundamental policies. Under these fundamental
policies, the Fund cannot do any of the following:
- - 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 if the Fund would then own more than 10% of that
issuer's voting securities;
- - The Fund cannot engage in short sales or purchase securities on
margin; however, the Fund may make margin deposits in connection with
any of the hedging instruments it may use;
- - The Fund cannot borrow money or mortgage, pledge or hypothecate the
Fund's assets; the escrow, collateral and margin arrangements involved
with hedging instruments are not considered to involve a mortgage,
hypothecation or pledge;
- - The Fund cannot concentrate more than 25% of the Fund's assets in
any one industry; or
- - The Fund cannot buy or sell commodities or commodity contracts other
than those hedging instruments which are considered commodities.
All of the percentage restrictions described above and elsewhere in
this Prospectus apply only at the time the Fund purchases a security,
and the Fund need not dispose of a security merely because the size of
the Fund's assets has changed or the security has increased in value
relative to the size of the Fund. There are other fundamental policies
discussed in the Statement of Additional Information.
How the Fund is Managed
Organization and History. The Fund was originally incorporated in 1967
but was reorganized in 1986 as a Massachusetts business trust. The Fund
is an open-end, diversified management investment company, with an
unlimited number of authorized shares of beneficial interest.
The Fund is governed by a Board of Trustees, which is responsible for
protecting the interests of shareholders under Massachusetts law. The
Trustees meet periodically throughout the year to oversee the Fund's
activities, review its performance, and review the actions of the
Manager. "Trustees and Officers of the Fund" in the Statement of
Additional Information names the Trustees and officers of the Fund and
provides more information about them. Although the Fund will not
normally hold annual meetings of its shareholders, it may hold
shareholder meetings from time to time on important matters, and
shareholders have the right to call a meeting to remove a Trustee or to
take other action described in the Fund's Declaration of Trust.
The Board of Trustees has the power, without shareholder approval, to
divide unissued shares of the Fund into two or more classes. The Board
has done so, and the Fund currently has three classes of shares, Class
A, Class B and Class C. All classes invest in the same investment
portfolio. Each class has its own dividends and distributions and pays
certain expenses which may be different for the different classes.
Each class may have a different net asset value. Each share has one
vote at shareholder meetings, with fractional shares voting
proportionally. Only shares of a particular class vote as a class on
matters that affect that class alone. Shares are freely transferrable.
The Manager and Its Affiliates. The Fund is managed by the Manager,
OppenheimerFunds, Inc. which is responsible for selecting the Fund's
investments and handles its day-to-day business. The Manager carries
out its duties, subject to the policies established by the Board of
Trustees, under an Investment Advisory Agreement which states the
Manager's responsibilities. The Agreement sets forth the fees paid by
the Fund to the Manager and describes the expenses that the Fund is
responsible to pay to conduct its business.
The Manager has operated as an investment adviser since 1959. The
Manager (including a subsidiary) currently manages investment
companies, including other Oppenheimer funds, with assets of more than
$55 billion as of September 30, 1996 and with more than 3 million
shareholder accounts. The Manager is owned by Oppenheimer Acquisition
Corp., a holding company that is owned in part by senior officers of
the Manager and controlled by Massachusetts Mutual Life Insurance
Company.
- Portfolio Manager. The Portfolio Manager of the Fund is John P.
Doney. He is a Vice President of the Manager. He has been the person
principally responsible for the day-to-day management of the Fund's
portfolio since June 22, 1992. During the past five years, and prior
to joining the Manager, Mr. Doney served as Senior Vice President and
Chief Investment Officer of Equities of National Securities & Research
Corporation (a mutual fund investment adviser) and was a Vice President
of the National Affiliated Investment Companies.
- 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 average annual 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 annual net assets in excess of $500
million. The Fund's management fee for its fiscal years ended June 30,
1996 and August 31, 1996 was 0.53% of average annual net assets.
The Fund pays expenses related to its daily operations, such as
custodian fees, Trustees' fees, transfer agency fees, legal fees and
auditing costs. Those expenses are paid out of the Fund's assets and
are not paid directly by shareholders. However, those expenses reduce
the net asset value of shares, and therefore are indirectly borne by
shareholders through their investment. More information about the
Investment Advisory Agreement and the other expenses paid by the Fund
is contained in the Statement of Additional Information.
There is also information about the Fund's brokerage policies and
practices in "Brokerage Policies of the Fund" in the Statement of
Additional Information. That section discusses how brokers and dealers
are selected for the Fund's portfolio transactions. When deciding
which brokers to use, the Manager is permitted by the Investment
Advisory Agreement to consider whether brokers have sold shares of the
Fund or any other funds for which the Manager serves as investment
adviser.
- The Distributor. The Fund's shares are sold through brokers,
dealers 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.
- The Transfer Agent. The Fund's transfer agent is OppenheimerFunds
Services, a division of the Manager, which acts as the shareholder
servicing agent for the Fund on an "at-cost" basis. It also acts as the
shareholder servicing agent for the other Oppenheimer funds.
Shareholders should direct inquiries about their accounts to the
Transfer Agent at the address and toll-free number shown below in this
Prospectus 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 will usually be
different as a result of the different kinds of expenses each class
bears. These returns measure the performance of a hypothetical account
in the Fund over various periods, and do not show the performance of
each shareholder's account (which will vary if dividends and
distributions are received in cash, or shares are sold or purchased).
The Fund's performance information may help you see how well your Fund
has done over time and to compare it to other funds or market indices.
It is important to understand that the Fund's total returns represent
past performance and should not be considered to be predictions of
future returns or performance. This performance data is described
below, but more detailed information about how total returns are
calculated is contained in the Statement of Additional Information,
which also contains information about other ways to measure and compare
the Fund's performance. The Fund's investment performance will vary
over time, depending on market conditions, the composition of the
portfolio, expenses and which class of shares you purchase.
- Total Returns. There are different types of total returns used to
measure the Fund's performance. Total return is the change in value of
a hypothetical investment in the Fund over a given period, assuming
that all dividends and capital gains distributions are reinvested in
additional shares. The cumulative total return measures the change in
value over the entire period (for example, ten years). An average
annual total return shows the average rate of return for each year in a
period that would produce the cumulative total return over the entire
period. However, average annual total returns do not show the Fund's
actual year-by-year performance.
When total returns are quoted for Class A shares, they normally
include the payment of the current maximum initial sales charge. When
total returns are shown for Class B and Class C shares, normally the
contingent deferred sales charge that applies to the period for which
total return is shown has been deducted. However total returns may
also be quoted at "net asset value," without including the effect of
either a front-end or the appropriate contingent deferred sales charge,
as applicable, and those returns would be reduced if sales charges were
deducted.
How Has the Fund Performed? Below is a discussion by the Manager of the
Fund's performance during its fiscal years ended June 30, 1996 and
August 31, 1996, followed by a graphical comparison of the Fund's
performance to an appropriate broad-based market index.
- Management's Discussion of Performance. During the fiscal year
ended June 30, 1996 and the fiscal period ended August 31, 1996, the
Fund's performance was positively affected by the strong performance of
the U.S. stock market. The Fund's investments in bank, airline,
machinery and auto stocks helped the Fund's performance.
The bond market was more volatile than the stock market during the
Fund's last fiscal year because, in the view of the Manager, of
investor fears that renewed U.S. economic growth would spur inflation.
The Fund's policy of attempting to maintain a constant dividend for its
Class A shares was aided by the Fund's investments in convertible
stocks and bonds. Additionally, the Fund increased its holdings in
longer term Treasury bonds to seek higher yields and possible price
appreciation if general interest rates decline.
- Comparing the Fund's Performance to the Market. The graphs below
show the performance of a hypothetical $10,000 investment in Class A ,
Class B and Class C shares of the Fund held until June 30, 1996 and
August 31, 1996. In the case of Class A shares, performance is
measured over a ten-year period, and in the case of Class B shares,
performance is measured from the inception of the class on August 17,
1993. In the case of Class C shares, performance is measured from the
inception of the class on November 1, 1995.
The Fund's performance is compared to the performance of the S&P 500
Index, a broad-based index of equity securities widely regarded as a
general measurement of the performance of the U.S. equity securities
market. Index performance reflects the reinvestment of dividends but
does not consider the effect of capital gains or transaction costs, and
none of the data below shows the effect of taxes. Also, the Fund's
performance reflects the effect of Fund business and operating
expenses. While index comparisons may be useful to provide a benchmark
for the Fund's performance, it must be noted that the Fund's
investments are not limited to the securities in the S&P 500 index,
which does not include debt securities. Moreover, the index
performance data does not reflect any assessment of the risk of the
investments included in the index.
Oppenheimer Equity Income Fund
Comparison of Change in Value
of $10,000 Hypothetical Investments
in Oppenheimer Equity Income Fund and
the S&P 500 Index
(Graph)
Past performance is not predictive of future performance.
Oppenheimer Equity Income Fund
Average Annual Total Returns of the Fund at 6/30/96
Class A Shares(1)
1-Year 5-Year 10-Year
11.79% 10.87% 10.19%
Class B Shares(2)
1-Year Life
12.58% 9.24%
Cumulative Total Return of Class C Shares (3)
Life
9.50%
Average Annual Total Returns of the Fund at 8/31/96
Class A Shares(1)
1-Year 5-Year 10-Year
6.51% 9.70% 10.15%
Class B Shares(2)
1-Year Life
7.11% 8.86%
Cumulative Total Return of Class C Shares (3)
Life
9.01%
___________________
1. The inception date of the Fund (Class A shares) was 12/01/70. The
average annual total returns and the ending account value in the graph
show change in share value and include reinvestment of all dividends
and capital gains distributions and are shown net of the applicable
5.75% maximum sales charge. The Fund's fiscal year end has changed
from 6/30 to 8/31.
2. Class B shares of the Fund first publicly offered on 8/17/93. The
average annual total return reflect reinvestment of all dividends and
capital gains distributions and are shown net of the applicable 5% and
3% contingent deferred sales charge the one year period and the life of
the class, respectively. The ending account value in the graph is net
of the applicable 3% contingent deferred sales charge.
3. Class C shares of the Fund were first publicly offered on November
1, 1995. The one year return is shown net of the applicable 1%
contingent deferred sales charge.
Past performance is not predictive of future performance.
Graphs are not drawn to same scale.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors three different classes of
shares. The different classes of shares represent investments in the
same portfolio of securities but are subject to different expenses and
will likely have different share prices.
- Class A Shares. If you buy Class A shares, you may pay an initial
sales charge on investments up to $1 million (up to $500,000 for
purchases by "Retirement Plans," as defined in "Class A Contingent
Deferred Sales Charge" on page 32). If you purchase Class A shares as
part of an investment of at least $1 million ($500,000 for Retirement
Plans) in shares of one or more Oppenheimer funds, you will not pay an
initial sales charge, but if you sell any of those shares within 18
months of buying them, you may pay a contingent deferred sales charge.
The amount of that sales charge will vary depending on the amount you
invested. Sales charge rates are described in "Buying Class A Shares"
below.
- Class B Shares. If you buy Class B shares, you pay no sales
charge at the time of purchase, but if you sell your shares within six
years of buying them, you will normally pay a contingent deferred sales
charge. That sales charge varies depending on how long you own your
shares, as described in "Buying Class B Shares" below.
- Class C Shares. If you buy Class C shares, you pay no sales
charge at the time of purchase, but if you sell your shares within 12
months of buying them, you will normally pay a contingent deferred
sales charge of 1%, as discussed in "Buying Class C Shares" below.
Which Class of Shares Should You Choose? Once you decide that the Fund
is an appropriate investment for you, the decision as to which class of
shares is better suited to your needs depends on a number of factors
which you should discuss with your financial advisor. The Fund's
operating costs that apply to a class of shares and the effect of the
different types of sales charges on your investment will vary your
investment results over time. The most important factors to consider
are how much you plan to invest and how long you plan to hold your
investment. If your goals and objectives change over time and you plan
to purchase additional shares, you should re-evaluate those factors to
see if you should consider another class of shares.
In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund. We used the
sales charge rates that apply to each class, considering 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 the investment each year. Of course, the actual
performance of your investment cannot be predicted and will vary, based
on the Fund's actual investment returns and the operating expenses
borne by each class of shares, and which class of shares you invest in.
The factors discussed below are not intended to be investment advice
or recommendations, because each investor's financial considerations
are different. The discussion below of the factors to consider in
purchasing a particular class of shares assumes that you will purchase
only one class of shares and not a combination of shares of different
classes.
- How Long Do You Expect to Hold Your Investment? While future
financial needs cannot be predicted with certainty, knowing how long
you expect to hold your investment will assist you in selecting the
appropriate class of shares. 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 Class B or
Class C shares, for which no initial sales charge is paid.
- Investing for the Short Term. If you have a short-term investment
horizon (that is, you plan to hold your shares for not more than six
years), you should probably consider purchasing Class A or Class C
shares rather than Class B shares, because of the effect of the Class B
contingent deferred sales charge if you redeem in less than 7 years, as
well as the effect of the Class B asset-based sales charge on the
investment return for that class in the short-term. Class C shares
might be the appropriate choice (especially for investments of less
than $100,000), because there is no initial sales charge on Class C
shares, and the contingent deferred sales charge does not apply to
amounts you sell after holding them one year.
However, if you plan to invest more than $100,000 for the shorter
term, then the more you invest and the more your investment horizon
increases toward six years, Class C shares might not be as advantageous
as Class A shares. That is because the annual asset-based sales charge
on Class C shares will have a greater 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 shares might
be more advantageous than Class C shares (as well as Class B shares)
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 shares (and Class B shares). If investing $500,000 or more,
Class A shares may be more advantageous as your investment horizon
approaches 3 years or more.
And for most investors who invest $1 million or more, in most cases
Class A shares will be the most advantageous choice, no matter how long
you intend to hold your shares. For that reason, the Distributor
normally will not accept purchase orders of $500,000 or more of Class B
shares or $1 million or more of Class C shares, from a single investor.
- Investing for the Longer Term. If you are investing for the longer
term, for example, for retirement, and do not expect to need access to
your money for seven years or more, Class B shares may be an
appropriate consideration, if you plan to invest less than $100,000. If
you plan to invest more than $100,000 over the long term, Class A
shares will likely be more advantageous than Class B shares or Class C
shares, as discussed above, because of the effect of the expected lower
expenses for Class A shares and the reduced initial sales 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 assumed annual performance return stated above, and
therefore, you should analyze your options carefully.
- Are There Differences in Account Features That Matter to You?
Because some account features may not be available to Class B or Class
C shareholders, or other features (such as Automatic Withdrawal Plans)
might not be advisable (because of the effect of the contingent
deferred sales charge) 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 is better for you 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 that class, such as the asset-based sales
charge, as described below and in the Statement of Additional
Information.
- How Does It Affect Payments to My Broker? A salesperson, such as
a broker, or any other person who is entitled to receive compensation
for selling Fund shares may receive different compensation for selling
one class than for selling another class. It is important that
investors understand that the purpose of the Class B and Class C
contingent deferred sales charges and asset-based sales charges 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.
How Much Must You Invest? You can open a Fund account with a minimum
initial investment of $1,000 and make additional investments at any
time with as little as $25. There are reduced minimum investments under
special investment plans:
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7)
custodial plans and military allotment plans, you can make initial and
subsequent investments of as little as $25; and subsequent purchases of
at least $25 can be made by telephone through AccountLink.
Under pension and profit-sharing plans, 401(k) plans and
Individual Retirement Accounts (IRAs), you can make an initial
investment of as little as $250 (if your IRA is established under an
Asset Builder Plan, the $25 minimum applies), and subsequent
investments may be as little as $25.
There is no minimum investment requirement if you are buying
shares by reinvesting dividends and distributions from the Fund or
other Oppenheimer funds (a list of them appears in the Statement of
Additional Information, or you can ask your dealer or call the Transfer
Agent), or by reinvesting distributions from unit investment trusts
that have made arrangements with the Distributor.
- How Are Shares Purchased? You can buy shares several ways --
through any dealer, broker or financial institution that has a sales
agreement with the Distributor, directly through the Distributor, or
automatically from your bank account through an Asset Builder Plan
under the OppenheimerFunds AccountLink service. The Distributor may
appoint certain servicing agents as the Distributor's agent to accept
purchase (and redemption) orders. When you buy shares, be sure to
specify Class A, Class B or Class C shares. If you do not choose, your
investment will be made in Class A shares.
- Buying Shares Through Your Dealer. Your dealer will place your
order with the Distributor on your behalf.
- Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "OppenheimerFunds Distributor, Inc." Mail it to P.O. Box
5270, Denver, Colorado 80217. If you don't list a dealer on the
application, the Distributor will act as your agent in buying the
shares. However, it is recommended that you discuss your investment
first with a financial advisor, to be sure it is appropriate for you.
- Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or
other financial institution that is an Automated Clearing House (ACH)
member. You can then transmit funds electronically to purchase shares,
to have the Transfer Agent send redemption proceeds, or to transmit
dividends and distributions to your bank account.
Shares are purchased for your account on AccountLink on the regular
business day the Distributor is instructed by you to initiate the ACH
transfer to buy shares. You can provide those instructions
automatically, under an Asset Builder Plan, described below, or by
telephone instructions using OppenheimerFunds PhoneLink, also described
below. You should request AccountLink privileges on the application or
dealer settlement instructions used to establish your account. Please
refer to "AccountLink" below for more details.
- Asset Builder Plans. You may purchase shares of the Fund (and up
to four other Oppenheimer funds) automatically each month from your
account at a bank or other financial institution under an Asset Builder
Plan with AccountLink. Details are on the Application and in the
Statement of Additional Information.
- At What 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. In most cases, to
enable you to receive that day's offering price, the Distributor or its
designated agent must receive your order by the time of day The New
York Stock Exchange closes, which is normally 4:00 P.M., New York time
but may be earlier on some days (all references to time in this
Prospectus mean "New York time"). The net asset value of each class of
shares is determined as of that time on each day The New York Stock
Exchange is open (which is a "regular business day").
If you buy shares through a dealer, the dealer must receive your
order by the close of The New York Stock Exchange, on a regular
business day and transmit it to the Distributor so that it is received
before the Distributor's close of business that day, which is normally
5:00 P.M. The Distributor may reject any purchase order for the Fund's
shares, in its sole discretion.
Special Sales Charge Arrangements for Certain Persons. Appendix A to
this Prospectus sets forth conditions for the waiver of, or exemption
from, sales charges or the special sales charge rates that apply to
purchases of shares of the Fund (including purchases by exchange) by a
person who was a shareholder of one of the Former Quest for Value Funds
(as defined in that Appendix).
Buying Class A Shares. Class A shares are sold at their offering
price, which is normally net asset value plus an initial sales charge.
However, in some cases, described below, purchases are not subject to
an initial sales charge, and the offering price will be the net asset
value. In some cases, reduced sales charges may be available, as
described below. Out of the amount you invest, the Fund receives the
net asset value to invest for your account. The sales charge varies
depending on the amount of your purchase. A portion of the sales
charge may be retained by the Distributor and allocated to your dealer
as commission. The current sales charge rates and commissions paid to
dealers and brokers are as follows:
<TABLE>
<CAPTION>
Front-End Sales Charge Commission as
As a Percentage of: Percentage of
Amount of Offering Price
Purchase Offering Price Amount Invested
<S> <C>> <C> <C>
_______________________________________________________________________
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
</TABLE>
The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter"
under Federal securities laws.
- - Class A Contingent Deferred Sales Charge. There is no initial sales
charge on purchases of Class A shares of any one or more of the
Oppenheimer funds in the following cases:
-- Purchases aggregating $1 million or more;
-- Purchases by a retirement plan qualified under sections 401(a)
or 401(k) of the Internal Revenue Code, by a non-qualified deferred
compensation plan (not including Section 457 plans), employee benefit
plan, group retirement plan (see "How to Buy Shares - Retirement Plans"
in the Statement of Additional Information for further details), an
employee's 403(b)(7) custodial plan account, SEP IRA, SARSEP, or SIMPLE
plan (all of these plans are collectively referred to as "Retirement
Plans"); that: (1) buys shares costing $500,000 or more or (2) has, at
the time of purchase, 100 or more eligible participants, or (3)
certifies that it projects to have annual plan purchases of $200,000 or
more; or
- -- Purchases by an OppenheimerFunds Rollover IRA if the purchases are
made (1) through a broker, dealer, bank or registered investment
adviser that has made special arrangements with the Distributor for
these purchases, or (2) by a direct rollover of a distribution from a
qualified retirement plan if the administrator of that plan has made
special arrangements with the Distributor for those purchases.
The Distributor pays dealers of record commissions on those
purchases in an amount equal to (i) 1.0% for non-Retirement Plan
accounts, and (ii) for Retirement Plan accounts, 1.0% of the first $2.5
million, plus 0.50% of the next $2.5 million, plus 0.25% of purchases
over $5 million. That commission will be paid only on those purchases
that were not previously subject to a front-end sales charge and dealer
commission. No sales commission will be paid to the dealer, broker or
financial institution on sales of Class A shares purchased with the
redemption proceeds of shares of a mutual fund offered as an investment
option in a Retirement Plan in which Oppenheimer funds are also offered
as investment options under a special arrangement with the Distributor
if the purchase occurs more than 30 days after the addition of the
Oppenheimer funds as an investment option to the Retirement Plan.
If you redeem any of those shares within 18 months of the end of
the calendar month of their purchase, a contingent deferred sales
charge (called the "Class A contingent deferred sales charge") may be
deducted from the redemption proceeds. That sales charge 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 18 months of the end of the calendar month of the purchase of
the exchanged shares, the sales charge will apply. Shareholders of the
Fund who acquired (and still hold) Fund shares as a result of a
reorganization of Advance America Funds, Inc. into the Fund on October
18, 1991, and who held shares of Advance America Funds, Inc. on March
30, 1990, may purchase shares of the Fund at a maximum sales charge of
4.50%
- Special Arrangements With Dealers. The Distributor may
advance up to 13 months' commissions to dealers that have established
special arrangements with the Distributor for Asset Builder Plans for
their clients. Until January 1, 1997, dealers whose sales of Class A
shares of Oppenheimer funds (other than money market funds) under
OppenheimerFunds-sponsored 403(b)(7) custodial plans exceed $5 million
per year (calculated per quarter), will receive monthly one-half of the
Distributor's retained commissions on those sales, and if those sales
exceed $10 million per year, those dealers will receive the
Distributor's entire retained commission on those sales.
Reduced Sales Charges for Class A Share Purchases. You may be eligible
to buy Class A shares at reduced sales charge rates in one or more of
the following ways:
- Right of Accumulation. To qualify for the lower sales charge
rates that apply to larger purchases of Class A shares, you and your
spouse can add together Class A and Class B shares you purchase for
your individual accounts, or jointly, or for trust or custodial
accounts on behalf of your children who are minors. A fiduciary can
count all shares purchased for a trust, estate or other fiduciary
account (including one or more employee benefit plans of the same
employer) that has multiple accounts.
Additionally, you can add together current purchases of Class A
and Class B shares of the Fund and other Oppenheimer funds to reduce
the sales charge rate that applies to current purchases of Class A
shares. You can also include Class A and Class B shares of Oppenheimer
funds you previously purchased subject to an initial or contingent
deferred sales charge to reduce the sales charge rate for current
purchases of Class A shares, provided that you still hold your
investment in one of the Oppenheimer funds. The value of those shares
will be based on the greater of the amount you paid for the shares or
their current value (at offering price). The Oppenheimer funds are
listed in "Reduced Sales Charges" in the Statement of Additional
Information, or a list can be obtained from the Distributor. The
reduced sales charge will apply only to current purchases and must be
requested when you buy your shares.
- Letter of Intent. Under a Letter of Intent, if you purchase
Class A shares or Class A and Class B shares of the Fund and other
Oppenheimer funds during a 13-month period, you can reduce the sales
charge rate that applies to your purchases of Class A shares. The
total amount of your intended purchases of both Class A and Class B
shares will determine your reduced sales charge rate for the Class A
shares purchased during that period. This can include purchases made
up to 90 days before the date of the Letter. More information is
contained in the Application and in "Reduced Sales Charges" in the
Statement of Additional Information.
- Waivers of Class A Sales Charges. The Class A sales charges
are not imposed in the circumstances described below. There is an
explanation of this policy in "Reduced Sales Charges" in the Statement
of Additional Information.
Waivers of Initial and Contingent Deferred Sales Charges for
Certain Purchasers. Class A shares purchased by the following
investors are not subject to any Class A sales charges:
- the Manager or its affiliates;
- present or former officers, directors, trustees and employees
(and their "immediate families" as defined in "Reduced Sales Charges"
in the Statement of Additional Information) of the Fund, the Manager
and its affiliates, and retirement plans established by them for their
employees;
- registered management investment companies, or separate
accounts of insurance companies having an agreement with the Manager or
the Distributor for that purpose;
- dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
- employees and registered representatives (and their spouses)
of dealers or brokers described above or financial institutions that
have entered into sales arrangements with such dealers or brokers (and
are identified to the Distributor) or with the Distributor; the
purchaser must certify to the Distributor at the time of purchase that
the purchase is for the purchaser's own account (or for the benefit of
such employee's spouse or minor children);
- dealers, brokers or registered investment advisers that have
entered into an agreement with the Distributor 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);
-- (1) investment advisors and financial planners who charge an
advisory, consulting or other fee for their services and buy shares for
their own accounts or the accounts of their clients, (2) Retirement
Plans and deferred compensation plans and trusts used to fund those
Plans (including, for example, plans qualified or created under
sections 401(a), 403(b) or 457 of the Internal Revenue Code), and
"rabbi trusts" that buy shares for their own accounts, in each case if
those purchases are made through a broker or agent or other financial
intermediary that has made special arrangements with the Distributor
for those purchases; and (3) clients of such investment advisors or
financial planners who buy shares for their own accounts may also
purchase shares without sales charge but only if their accounts are
linked to a master account of their investment advisor or financial
planner on the books and records of the broker, agent or financial
intermediary with which the Distributor has made such special
arrangements (each of these investors may be charged a fee by the
broker, agent or financial intermediary for purchasing shares);
- directors, trustees, officers or full-time employees of OpCap
Advisors or its affiliates, their relatives or any trust, pension,
profit sharing or other benefit plan which beneficially owns shares for
those persons;
- accounts for which Oppenheimer Capital is the investment
adviser (the Distributor must be advised of this arrangement) and
persons who are directors or trustees of the company or trust which is
the beneficial owner of such accounts;
- any unit investment trust that has entered into an appropriate
agreement with the Distributor;
- a TRAC-2000 401(k) plan (sponsored by the former Quest for
Value Advisors) whose Class B or Class C shares of a Former Quest for
Value Fund were exchanged for Class A shares of that fund due to the
termination of the Class B and Class C TRAC-2000 program on November
24, 1995; or
- qualified retirement plans that had agreed with the former
Quest for Value Advisors to purchase shares of any of the Former Quest
for Value Funds at net asset value, with such shares to be held through
DCXchange, a sub-transfer agency mutual fund clearinghouse, provided
that such arrangements are consummated and share purchases commence by
December 31, 1996.
Waivers of Initial and Contingent Deferred Sales Charges in
Certain Transactions. Class A shares issued or purchased in the
following transactions are not subject to Class A sales charges:
- shares issued in plans of reorganization, such as mergers,
asset acquisitions and exchange offers, to which the Fund is a party;
- shares purchased by the reinvestment of loan repayments by a
participant in a retirement plan for which the Manager or its
affiliates acts as sponsor;
- shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds
(other than Oppenheimer Cash Reserves) or unit investment trusts for
which reinvestment arrangements have been made with the Distributor;
- shares purchased and paid for with the proceeds of shares
redeemed in the past 12 months from a mutual fund (other than a fund
managed by the Manager or any of its subsidiaries) on which an initial
sales charge or contingent deferred sales charge was paid (this waiver
also applies to shares purchased by exchange of shares of Oppenheimer
Money Market Fund, Inc. that were purchased and paid for in this
manner); this waiver must be requested when the purchase order is
placed for your shares of the Fund, and the Distributor may require
evidence of your qualification for this waiver; or
- shares purchased with the proceeds of maturing principal of
units of any Qualified Unit Investment Liquid Trust Series.
Waivers of the Class A Contingent Deferred Sales Charge for
Certain Redemptions. The Class A contingent deferred sales charge is
also waived if shares that would otherwise be subject to the contingent
deferred sales charge are redeemed in the following cases:
- to make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the original account value;
- involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see "Shareholder Account
Rules and Policies," below);
- if, at the time a purchase order is placed for Class A shares
that would otherwise be subject to the Class A contingent deferred
sales charge, the dealer agrees in writing to accept the dealer's
portion of the commission payable on the sale in installments of 1/18th
of the commission per month ( and no further commission will be payable
if the shares are redeemed within 18 months of purchase);
- for distributions from a TRAC-2000 401(k) plan sponsored by
the Distributor due to the termination of the TRAC-2000 program; or
- for distributions from Retirement Plans, deferred compensation
plans or other employee benefit plans for any of the following
purposes: (1) following the death or disability (as defined in the
Internal Revenue Code) of the participant or beneficiary (the death or
disability must occur after the participant's account was established);
(2) to return excess contributions; (3) to return contributions made
due to a mistake of fact; (4) hardship withdrawals, as defined in the
plan; (5) under a Qualified Domestic Relations Order, as defined in the
Internal Revenue Code; (6) to meet the minimum distribution
requirements of the Internal Revenue Code; (7) to establish
"substantially equal periodic payments" as described in Section 72(t)
of the Internal Revenue Code; (8) for retirement distributions or loans
to participants or beneficiaries; (9) separation from service; (10)
participant-directed redemptions to purchase shares of a mutual fund
(other than a fund managed by the Manager or its subsidiary) offered as
an investment option in a Retirement Plan in which Oppenheimer funds
are also offered as investment options under a special arrangement with
the Distributor; or (11) plan termination or "in-service
distributions", if the redemption proceeds are rolled over directly to
an OppenheimerFunds IRA.
- Service Plan for Class A Shares. The Fund has adopted a
Service Plan for Class A shares to reimburse the Distributor for a
portion of its costs incurred in connection with the personal service
and maintenance of shareholder accounts that hold Class A shares.
Reimbursement is made quarterly at an annual rate that may not exceed
0.25% of the average annual net assets of Class A shares of the Fund.
The Distributor uses all of those fees to compensate dealers, brokers,
banks and other financial institutions quarterly for providing personal
service and maintenance of accounts of their customers that hold Class
A shares and to reimburse itself (if the Fund's Board of Trustees
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 service providers or their customers. As discussed in
"Expenses," above, the Board of Trustees has set a rate of 0.15% for
net assets representing shares of the Fund sold before April 1, 1991.
That rate can change. The payments under the Plan increase the annual
expenses of Class A shares. For more details, please refer to
"Distribution and Service Plans" in the Statement of Additional
Information.
Buying Class B Shares. Class B shares are sold at net asset value per
share without an initial sales charge. However, if Class B shares are
redeemed within 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
the Distributor to reimburse its expenses of providing distribution-
related services to the Fund in connection with the sale of Class B
shares.
To determine whether the contingent deferred sales charge applies
to a redemption, the Fund redeems shares in the following order: (1)
shares acquired by reinvestment of dividends and capital gains
distributions, (2) shares held for over 6 years, and (3) shares held
the longest during the 6-year period. The contingent deferred sales
change is not imposed in the circumstances described in "Waivers of
Class B and Class C Sales Charges," below.
The amount of the contingent deferred sales charge will depend on
the number of years since you invested and the dollar amount being
redeemed, according to the following schedule:
Contingent Deferred Sales Charge
Years Since Beginning of Month In on Redemptions in that Year
Which Purchase Order Was Accepted (As % of Amount Subject to
Charge)
0 - 1 5.0%
1 - 2 4.0%
2 - 3 3.0%
3 - 4 3.0%
4 - 5 2.0%
5 - 6 1.0%
6 and following None
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of the
month in which the purchase was made.
- - Automatic Conversion of Class B Shares. 72 months after you
purchase Class B shares, those shares will automatically convert to
Class A shares. This conversion feature relieves Class B shareholders
of the asset-based sales charge that applies to Class B shares under
the Class B Distribution and Service Plan, described below. The
conversion is based on the relative net asset value of the two classes,
and no sales load or other charge is imposed. When Class B shares
convert, any other Class B shares that were acquired by the
reinvestment of dividends and distributions on the converted shares
will also convert to Class A shares. The conversion feature is subject
to the continued availability of a tax ruling described in "Alternative
Sales Arrangements - Class A, Class B and Class C Shares" in the
Statement of Additional Information.
Buying Class C Shares. Class C shares are sold at net asset value per
share without an initial sales charge. However, if Class C shares are
redeemed within 12 months of their purchase, a contingent deferred
sales charge of 1.0% will be deducted from the redemption proceeds.
That sales charge will not apply to shares purchased by the
reinvestment of dividends or capital gains distributions. The
contingent deferred sales charge will be based on the lesser of the net
asset value of the redeemed shares at the time of redemption or the
original offering price (which is the original net asset value). The
contingent deferred sales charge is not imposed on the amount of your
account value represented by the increase in net asset value over the
initial purchase price (including increases due to the reinvestment of
dividends and capital gains distributions). The Class C contingent
deferred sales charge is paid to the Distributor to reimburse its
expenses of providing distribution-related services to the Fund in
connection with the sale of Class 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. All purchases are considered to have been
made on the first regular business day of the month in which the
purchase was made.
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 and costs in
distributing Class B and C shares and servicing accounts. Under the
Plans, the Fund pays the Distributor an annual "asset-based sales
charge" of 0.75% per year on Class B shares that are outstanding for 6
years or less and on Class C shares. The Distributor also receives a
service fee of 0.25% per year. If either Plan is terminated by the
Fund, the Board of Trustees may allow the Fund to continue payments of
the asset-based sales charge to the Distributor for distributing shares
before the Plan was terminated.
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 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 Distributor uses the service fees to compensate dealers for
providing personal services for accounts that hold Class B or C shares.
Those services are similar to those provided under the Class A Service
Plan, described above. The Distributor pays the 0.25% service fees to
dealers in advance for the first year after Class B or Class C shares
have been sold by the dealer and retains the service fee paid by the
Fund in that year. After the shares have been held for a year, the
Distributor pays the service fees to dealers on a quarterly basis.
The 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 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. 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 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 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's actual expenses in selling Class B 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 Plan for Class B shares. Therefore, those expenses may be
carried over and paid in future years. At June 30, 1996 and August 31,
1996, the end of the Class B Plan years, the Distributor had incurred
unreimbursed expenses under the Plan of $7,770,045 and $8,245,976,
respectively (equal to 3.08% of the Fund's net assets represented by
Class B shares on June 30, 1996 and 3.18% of the Fund's net assets
represented by Class B shares on August 31, 1996 ), which have been
carried over into the present Plan year. If the Plan is terminated by
the Fund, the Board of Trustees may allow the Fund to continue payments
of the asset-based sales charge to the Distributor for expenses it
incurred 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.
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, if the Transfer Agent is
notified that these conditions apply to the redemption:
- - distributions to participants or beneficiaries from Retirement
Plans, if the distributions are made (a) under an Automatic Withdrawal
Plan after the participant reaches age 59-1/2, as long as the payments
are no more than 10% of the account value annually (measured from the
date the Transfer Agent receives the request), or (b) following the
death or disability (as defined in the Internal Revenue Code) of the
participant or beneficiary (the death or disability must have occurred
after the account was established);
- redemptions from accounts other than Retirement Plans
following the death or disability of the last surviving shareholder
including a trustee of a "grantor" trust or revocable living trust for
which the trustee is also the sole beneficiary (the death or disability
must have occurred after the account was established, and for
disability you must provide evidence of a determination of disability
by the Social Security Administration);
- returns of excess contributions to Retirement Plans;
- distributions from retirement plans to make "substantially
equal periodic payments" as permitted in Section 72(t) of the Internal
Revenue Code that do not exceed 10% of the account value annually
measured from the date the Transfer Agent receives the request;
- shares redeemed involuntarily, as described in "Shareholder
Account Rules and Policies," below; or
- distributions from OppenheimerFunds prototype 401(k) plans (1)
for hardship withdrawals; (2) under a Qualified Domestic Relations
Order, as defined in the Internal Revenue Code; (3) to meet minimum
distribution requirements as defined in the Internal Revenue Code; (4)
to make "substantially equal periodic payments" as described in Section
72(t) of the Internal Revenue Code; or (5) for separation from service.
Waivers for Shares Sold or Issued in Certain Transactions. The
contingent deferred sales charge is also waived on Class B and Class C
shares sold or issued in the following cases:
- shares sold to the Manager or its affiliates;
- shares sold to registered management investment companies or
separate accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose; or
- shares issued in plans of reorganization to which the Fund is
a party.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account to
your account at your bank or other financial institution to enable you
to send money electronically between those accounts to perform a number
of types of account transactions. These include purchases of shares by
telephone (either through a service representative or by PhoneLink,
described below), automatic investments under Asset Builder Plans, and
sending dividends and distributions or Automatic Withdrawal Plan
payments directly to your bank account. Please refer to the Application
for details or call the Transfer Agent for more information.
AccountLink privileges should be requested on the Application you
use to buy shares, or on your dealer's settlement instructions if you
buy your shares through your dealer. After your account is established,
you can request AccountLink privileges by sending signature-guaranteed
instructions to the Transfer Agent. AccountLink privileges will apply
to each shareholder listed in the registration on your account as well
as to your dealer representative of record unless and until the
Transfer Agent receives written instructions terminating or changing
those privileges. After you establish AccountLink for your account, any
change of bank account information must be made by signature-guaranteed
instructions to the Transfer Agent signed by all shareholders who own
the account.
- Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase
shares in amounts up to $250,000 through a telephone representative,
call the Distributor at 1-800-852-8457. The purchase payment will be
debited from your bank account.
- PhoneLink. PhoneLink is the OppenheimerFunds automated
telephone system that enables shareholders to perform a number of
account transactions automatically using a touch-tone phone. PhoneLink
may be used on already-established Fund accounts after you obtain a
Personal Identification Number (PIN), by calling the special PhoneLink
number: 1-800-533-3310.
- Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have
established AccountLink privileges to link your bank account with the
Fund, to pay for these purchases.
- Exchanging Shares. With the OppenheimerFunds Exchange
Privilege, described below, you can exchange shares automatically by
phone from your Fund account to another Oppenheimer funds account you
have already established by calling the special PhoneLink number.
Please refer to "How to Exchange Shares," below, for details.
- Selling Shares. You can redeem shares by telephone
automatically by calling the PhoneLink number and the Fund will send
the proceeds directly to your AccountLink bank account. Please refer
to "How to Sell Shares," below, for details.
Automatic Withdrawal and Exchange Plans. The Fund has several plans
that enable you to sell shares automatically or exchange them to
another Oppenheimer funds account on a regular basis:
- Automatic Withdrawal Plans. If your Fund account is worth
$5,000 or more, you can establish an Automatic Withdrawal Plan to
receive payments of at least $50 on a monthly, quarterly, semi-annual
or annual basis. The checks may be sent to you or sent automatically to
your bank account on AccountLink. You may even set up certain types of
withdrawals of up to $1,500 per month by telephone. You should consult
the Application and Statement of Additional Information for more
details.
- Automatic Exchange Plans. You can authorize the Transfer Agent
to exchange an amount you establish in advance automatically for shares
of up to five other Oppenheimer funds on a monthly, quarterly, semi-
annual or annual basis under an Automatic Exchange Plan. The minimum
purchase for each other Oppenheimer funds account is $25. These
exchanges are subject to the terms of the Exchange Privilege, described
below.
Reinvestment Privilege. If you redeem some or all of your Class A or
Class B shares 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
to Class A shares that you purchased subject to an initial sales charge
and to Class A or Class B shares on which you paid a contingent
deferred sales charge when you redeemed them. This privilege does not
apply to Class C shares. You must be sure to ask the Distributor for
this privilege when you send your payment. Please consult the Statement
of Additional Information for more details.
Retirement Plans. Fund shares are available as an investment for your
retirement plans. If you participate in a plan sponsored by your
employer, the plan trustee or administrator must make the purchase of
shares for your retirement plan account. The Distributor offers a
number of different retirement plans that can be used by individuals
and employers:
- Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
- 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
- SEP-IRAs (Simplified Employee Pension Plans) for small business
owners or people with income from self-employment, including SAR SEP-
IRAs
- Pension and Profit-Sharing Plans for self-employed persons and
other employers
- 401(k) prototype retirement plans for businesses
Please call the Distributor for the OppenheimerFunds plan
documents, which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account by selling
(redeeming) some or all of your shares on any regular business day.
Your shares will be sold at the next net asset value calculated after
your order is received and accepted by the Transfer Agent. The Fund
offers you a number of ways to sell your shares: in writing or by
telephone. You can also set up Automatic Withdrawal Plans to redeem
shares on a regular basis, as described above. If you have questions
about any of these procedures, and especially if you are redeeming
shares in a special situation, such as due to the death of the owner,
or from a retirement plan, please call the Transfer Agent first, at 1-
800-525-7048, for assistance.
- Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must
submit a withholding form with your request to avoid delay. If your
retirement plan account is held for you by your employer, you must
arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the Statement
of Additional Information.
- Certain Requests Require a Signature Guarantee. To protect
you and the Fund from fraud, certain redemption requests must be in
writing and must include a signature guarantee in the following
situations (there may be other situations also requiring a signature
guarantee):
- You wish to redeem more than $50,000 worth of shares
and receive a check
- A redemption check is not payable to all shareholders
listed on the account statement
- A redemption check is not sent to the address of
record on your statement
- Shares are being transferred to a Fund account with a
different owner or name
- Shares are redeemed by someone other than the owners
(such as an Executor)
- Where Can I Have My Signature Guaranteed? The Transfer Agent
will accept a guarantee of your signature by a number of financial
institutions, including: a U.S. bank, trust company, credit union or
savings association, or by a foreign bank that has a U.S. correspondent
bank, or by a U.S. registered dealer or broker in securities, municipal
securities or government securities, or by a U.S. national securities
exchange, a registered securities association or a clearing agency. If
you are signing on behalf of a corporation, partnership or other
business, or as a fiduciary, you must also include your title in the
signature.
Selling Shares by Mail. Write a "letter of instructions" that
includes:
- Your name
- The Fund's name
- Your Fund account number (from your account statement)
- The dollar amount or number of shares to be redeemed
- Any special payment instructions
- Any share certificates for the shares you are selling,
- The signatures of all registered owners exactly as
the account is registered, and
- Any special requirements or documents requested by
the Transfer Agent to assure proper authorization of
the person asking to sell shares.
Use the following address Send courier or Express
for requests by mail: Mail requests to:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Avenue,
Denver, Colorado 80217 Building D,
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of
record may also sell your shares by telephone. To receive the
redemption price on a regular business day, your call must be received
by the Transfer Agent by the close of The New York Stock Exchange that
day, which is normally 4:00 P.M. but may be earlier on some days. You
may not redeem shares held in an OppenheimerFunds retirement plan or
under a share certificate by telephone.
- To redeem shares through a service representative, call 1-800-
852-8457
- To redeem shares automatically on PhoneLink, call 1-800-533-
3310
Whichever method you use, you may have a check sent to the
address on the account statement, or, if you have linked your Fund
account to your bank account on AccountLink, you may have the proceeds
sent via ACH transfer to that bank account.
- Telephone Redemptions Paid by Check. Up to $50,000 may be
redeemed by telephone, in any 7-day period. The check must be payable
to all owners of record of the shares and must be sent to the address
on the account statement. This service is not available within 30 days
of changing the address on an account.
- Telephone Redemptions Through AccountLink or By Wire. There
are no dollar limits on telephone redemption proceeds sent to a bank
account designated when you establish AccountLink. Normally the ACH
transfer to your bank is initiated on the business day after the
redemption. You do not receive dividends on the proceeds of the shares
you redeemed while they are waiting to be transferred.
Shareholders may also have the Transfer Agent send redemption
proceeds of $2,500 or more by Federal Funds wire to a designated
commercial bank account. 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:
- Shares of the fund selected for exchange must be
available for sale in your state of residence
- The prospectuses of this Fund and the fund whose
shares you want to buy must offer the exchange
privilege
- You must hold the shares you buy when you establish
your account for at least 7 days before you can
exchange them; after the account is open 7 days, you
can exchange shares every regular business day
- You must meet the minimum purchase requirements for
the fund you purchase by exchange
- Before exchanging into a fund, you should obtain and
read its prospectus
Shares of a particular class of the Fund may be exchanged only
for shares of the same class in the other Oppenheimer funds. For
example, you can exchange Class A shares of this Fund only for Class A
shares of another fund. At present, Oppenheimer Money Market Fund,
Inc. offers only one class of shares, which are considered to be Class
A shares for this purpose. In some cases, sales charges may be imposed
on exchange transactions. Please refer to "How to Exchange Shares" in
the Statement of Additional Information for more details.
Exchanges may be requested in writing or by telephone:
- Written Exchange Requests. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the
Transfer Agent at the addresses listed in "How to Sell Shares."
- Telephone Exchange Requests. Telephone exchange requests may
be made either by calling a service representative at 1-800-852-8457 or
by using PhoneLink for automated exchanges, by calling 1-800-533-3310.
Telephone exchanges may be made only between accounts that are
registered with the same name(s) and address. Shares held under
certificates may not be exchanged by telephone.
You can find a list of Oppenheimer funds currently available for
exchanges in the Statement of Additional Information or obtain one by
calling a service representative at 1-800-525-7048. That list can
change from time to time.
There are certain exchange policies you should be aware of:
- Shares are normally redeemed from one fund and purchased from
the other fund in the exchange transaction on the same regular business
day on which the Transfer Agent receives an exchange request that is in
proper form by the close of The New York Stock Exchange that day, which
is normally 4:00 P.M., but may be earlier on some days. However,
either fund may delay the purchase of shares of the fund you are
exchanging into up to 7 days if it determines it would be disadvantaged
by a same-day transfer of the proceeds to buy shares. For example, the
receipt of multiple exchange requests from a dealer in a "market-
timing" strategy might require the sale of portfolio securities at a
time or price disadvantageous to the Fund.
- Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange
request that will disadvantage it, or to refuse multiple exchange
requests submitted by a shareholder or dealer.
- The Fund may amend, suspend or terminate the exchange
privilege at any time. Although the Fund will attempt to provide you
notice whenever it is reasonably able to do so, it may impose these
changes at any time.
- For tax purposes, exchanges of shares involve a redemption of
the shares of the Fund you own and a purchase of the shares of the
other fund, which may result in a capital gain or loss. For more
information about taxes affecting exchanges, please refer to "How to
Exchange Shares" in the Statement of Additional Information.
- If the Transfer Agent cannot exchange all the shares you
request because of a restriction cited above, only the shares eligible
for exchange will be exchanged.
Shareholder Account Rules and Policies
- Net Asset Value Per Share is determined for each class of
shares as of the close of The New York Stock Exchange 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 Trustees has established procedures
to value the Fund's securities to determine net asset value. In
general, securities values are based on market value. There are
special procedures for valuing illiquid and restricted securities and
obligations for which market values cannot be readily obtained. These
procedures are described more completely in the Statement of Additional
Information.
- The offering of shares may be suspended during any period in
which the determination of net asset value is suspended, and the
offering may be suspended by the Board of Trustees at any time the
Board believes it is in the Fund's best interest to do so.
- Telephone Transaction Privileges for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Fund at any
time. If an account has more than one owner, the Fund and the Transfer
Agent may rely on the instructions of any one owner. Telephone
privileges apply to each owner of the account and the dealer
representative of record for the account unless and until the Transfer
Agent receives cancellation instructions from an owner of the account.
- The Transfer Agent will record any telephone calls to verify
data concerning transactions and has adopted other procedures to
confirm that telephone instructions are genuine, by requiring callers
to provide tax identification numbers and other account data or by
using PINs, and by confirming such transactions in writing. If the
Transfer Agent does not use reasonable procedures it may be liable for
losses due to unauthorized transactions, but otherwise neither the
Transfer Agent nor the Fund will be liable for losses or expenses
arising out of telephone instructions reasonably believed to be
genuine. If you are unable to reach the Transfer Agent during periods
of unusual market activity, you may not be able to complete a telephone
transaction and should consider placing your order by mail.
- Redemption or transfer requests will not be honored until the
Transfer Agent receives all required documents in proper form. From
time to time, the Transfer Agent in its discretion may waive certain of
the requirements for redemptions stated in this Prospectus.
- Dealers that can perform account transactions for their
clients by participating in NETWORKING through the National Securities
Clearing Corporation are responsible for obtaining their clients'
permission to perform those transactions and are responsible to their
clients who are shareholders of the Fund if the dealer performs any
transaction erroneously or improperly.
- The redemption price for shares will vary from day to day
because the values of the securities in the Fund's portfolio fluctuate,
and the redemption price, which is the net asset value per share, will
normally be different for Class A, Class B and Class C shares.
Therefore, the redemption value of your shares may be more or less than
their original cost.
- Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the
shareholder under the redemption procedures described above) within 7
days after the Transfer Agent receives redemption instructions in
proper form, except under unusual circumstances determined by the
Securities and Exchange Commission delaying or suspending such
payments. For accounts registered in the name of a broker-dealer,
payment will be forwarded within 3 business days. The Transfer Agent
may delay forwarding a check or processing a payment via AccountLink
for recently purchased shares, but only until the purchase payment has
cleared. That delay may be as much as 10 days from the date the shares
were purchased. That delay may be avoided if you purchase shares by
certified check or arrange with your bank to provide telephone or
written assurance to the Transfer Agent that your purchase payment has
cleared.
- Involuntary redemptions of small accounts may be made by the
Fund if the account value has fallen below $200 for reasons other than
the fact that the market value of shares has dropped, and in some cases
involuntary redemptions may be made to repay the Distributor for losses
from the cancellation of share purchase orders.
- Under unusual circumstances, shares of the Fund may be
redeemed "in kind," which means that the redemption proceeds will be
paid with securities from the Fund's portfolio. Please refer to "How
to Sell Shares" in the Statement of Additional Information for more
details.
- "Backup Withholding" of Federal income tax may be applied at
the rate of 31% from taxable dividends, distributions and redemption
proceeds (including exchanges) if you fail to furnish the Fund a
certified Social Security or Employer Identification Number when you
sign your application, or if you violate Internal Revenue Service
regulations on tax reporting of income.
- The Fund does not charge a redemption fee, but if your dealer
or broker handles your redemption, they may charge a fee. That fee can
be avoided by redeeming your Fund shares directly through the Transfer
Agent. Under the circumstances described in "How to Buy Shares," you
may be subject to a contingent deferred sales charge when redeeming
certain Class A, Class B and Class C shares.
- To avoid sending duplicate copies of materials to households,
the Fund will mail only one copy of each annual and semi-annual report
to shareholders having the same last name and address on the Fund's
records. However, each shareholder may call the Transfer Agent at 1-
800-525-7048 to ask that copies of those materials be sent personally
to that shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A, Class B
and Class C shares from net investment income and pays such dividends
to shareholders quarterly on or about the 29th of March, June,
September and December, but the Board of Trustees can change that date.
It is expected that distributions paid with respect to Class A shares
will generally 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 years ended June 30, 1996 and August 31,
1996, the Fund attempted to pay dividends on its Class A shares at a
constant level. That was done keeping in mind the amount of net
investment income and other distributable income available from the
Fund's portfolio investments. However, the amount of each dividend can
change from time to time (or there might not be a dividend at all on
any class) depending on market conditions, the Fund's expenses, and the
composition of the Fund's portfolio. Attempting to pay dividends at a
constant level required the Manager to monitor the Fund's income stream
from its investments and at times to select higher yielding securities
(appropriate to the Fund's objectives and investment restrictions) to
maintain income at the required level. This practice did not affect
the net asset values of any class of shares. The Board of Trustees may
change or end the Fund's targeted dividend level for Class A shares at
any time. There is no targeted dividend level for Class B or Class C
shares.
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 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 calendar
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 and
distributions. For OppenheimerFunds retirement accounts, all
distributions are reinvested. For other accounts, you have four
options:
- Reinvest All Distributions in the Fund. You can elect to
reinvest all dividends and long-term capital gains distributions in
additional shares of the Fund.
- Reinvest Long-Term Capital Gains Only. You can elect to
reinvest long-term capital gains in the Fund while receiving dividends
by check or sent to your bank account on AccountLink.
- Receive All Distributions in Cash. You can elect to receive a
check for all dividends and long-term capital gains distributions or
have them sent to your bank on AccountLink.
- Reinvest Your Distributions in Another Oppenheimer Fund
Account. You can reinvest all distributions in another Oppenheimer fund
account you have established.
Taxes. If your account is not a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the
Fund. Long-term capital gains are taxable as long-term capital gains
when distributed to shareholders. It does not matter how long you held
your shares. Dividends paid from short-term capital gains and net
investment income are taxable as ordinary income. Distributions are
subject to federal income tax and may be subject to state or local
taxes. Your distributions are taxable when paid, whether you reinvest
them in additional shares or take them in cash. Every year the Fund
will send you and the IRS a statement showing the amount of all taxable
distributions you received in the previous year.
- "Buying a Dividend": When a fund goes ex-dividend, its share
price is reduced by the amount of the distribution. If you buy shares
on or just before the ex-dividend date, or just before the Fund
declares a capital gains distribution, you will pay the full price for
the shares and then receive a portion of the price back as a taxable
dividend or capital gain.
- Taxes on Transactions: Share redemptions, including
redemptions for exchanges, are subject to capital gains tax. Generally
speaking, a capital gain or loss is the difference between the price
you paid for the shares and the price you received when you sold them.
- Returns of Capital: In certain cases distributions made by the
Fund may be considered a non-taxable return of capital to shareholders.
If that occurs, it will be identified in notices to shareholders. A
non-taxable return of capital may reduce your tax basis in your Fund
shares.
This information is only a summary of certain federal tax
information about your investment. More information is contained in
the Statement of Additional Information, and in addition you should
consult with your tax adviser about the effect of an investment in the
Fund on your particular tax situation.
<PAGE>
APPENDIX A
Special Sales Charge Arrangements for Shareholders of the Fund
Who Were Shareholders of the Former Quest for Value Funds
The initial and contingent sales charge rates and waivers for
Class A, Class B and Class C shares of the Fund described elsewhere in
this Prospectus are modified as described below for those shareholders
of (i) Quest for Value Fund, Inc., Quest for Value Growth and Income
Fund, Quest for Value Opportunity Fund, Quest for Value Small
Capitalization Fund and Quest for Value Global Equity Fund, Inc. on
November 24, 1995, when OppenheimerFunds, Inc. became the investment
adviser to those funds, and (ii) Quest for Value U.S. Government Income
Fund, Quest for Value Investment Quality Income Fund, Quest for 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
- - Reduced Class A Initial Sales Charge Rates for Certain Former Quest
Shareholders
- - Purchases by Groups, Associations and Certain Qualified Retirement
Plans. The following table sets forth the initial sales charge rates
for Class A shares purchased by a "Qualified Retirement Plan" through a
single broker, dealer or financial institution, or by members of
"Associations" formed for any purpose other than the purchase of
securities if that Qualified Retirement Plan or that Association
purchased shares of any of the Former Quest for Value Funds or received
a proposal to purchase such shares from OCC Distributors prior to
November 24, 1995. For this purpose only, a "Qualified Retirement
Plan" includes any 401(k) plan, 403(b) plan, and SEP/IRA or IRA plan
for employees of a single employer.
<TABLE>
<CAPTION>
Front-End Front-End
Sales 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
<S> <C> <C> <C>
9 or fewer 2.50% 2.56% 2.00%
At least 10 but not
more than 49 2.00% 2.04% 1.60%
</TABLE>
For purchases by Qualified Retirement plans and Associations
having 50 or more eligible employees or members, there is no initial
sales charge on purchases of Class A shares, but those shares are
subject to the Class A contingent deferred sales charge described on
pages 31 to 33 of this Prospectus.
Purchases made under this arrangement qualify for the lower of
the sales charge rate in the table based on the number of eligible
employees in a Qualified Retirement Plan or members of an Association
or the sales charge rate that applies under the Rights of Accumulation
described above in the Prospectus. In addition, purchases by 401(k)
plans that are Qualified Retirement Plans qualify for the waiver of the
Class A initial sales charge if they qualified to purchase shares of
any of the Former Quest For Value Funds by virtue of projected
contributions or investments of $1 million or more each year.
Individuals who qualify under this arrangement for reduced sales charge
rates as members of Associations, or as eligible employees in Qualified
Retirement Plans also may purchase shares for their individual or
custodial accounts at these reduced sales charge rates, upon request to
the Fund's Distributor.
- - Special Class A Contingent Deferred Sales Charge Rates. Class A
shares of the Fund purchased by exchange of shares of other Oppenheimer
funds that were acquired as a result of the merger of Former Quest for
Value Funds into those Oppenheimer funds, and which shares were subject
to a Class A contingent deferred sales charge prior to November 24,
1995 will be subject to a contingent deferred sales charge at the
following rates: if they are redeemed within 18 months of the end of
the calendar month in which they were purchased, at a rate equal to
1.0% if the redemption occurs within 12 months of their initial
purchase and at a rate of 0.50 of 1.0% if the redemption occurs in the
subsequent six months. Class A shares of any of the Former Quest Fund
for Value Funds purchased without an initial sales charge on or before
November 22, 1995 will continue to be subject to the applicable
contingent deferred sales charge in effect as of that date as set forth
in the then-current prospectus for such fund.
- - Waiver of Class A Sales Charges for Certain Shareholders. Class A
shares of the Fund purchased by the following investors are not subject
to any Class A initial or contingent deferred sales charges:
- Shareholders of the Fund who were shareholders of the AMA
Family of Funds on February 28, 1991 and who acquired shares of any of
the Former Quest for Value Funds by merger of a portfolio of the AMA
Family of Funds.
- Shareholders of the Fund who acquired shares of any Former
Quest for Value Fund by merger of any of the portfolios of the Unified
Funds.
- - Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions. The Class A contingent deferred sales charge will not
apply to redemptions of Class A shares of the Fund purchased by the
following investors who were shareholders of any Former Quest for Value
Fund:
- Investors who purchased Class A shares from a dealer that is or
was not permitted to receive a sales load or redemption fee imposed on
a shareholder with whom that dealer has a fiduciary relationship under
the Employee Retirement Income Security Act of 1974 and regulations
adopted under that law.
- Participants in Qualified Retirement Plans that purchased
shares of any of the Former Quest For Value Funds pursuant to a special
"strategic alliance" with the distributor of those funds. The Fund's
Distributor will pay a commission to the dealer for purchases of Fund
shares as described above in "Class A Contingent Deferred Sales
Charge."
Class A, Class B and Class C Contingent Deferred Sales Charge Waivers
- - Waivers for Redemptions of Shares Purchased Prior to March 6, 1995.
In the following cases, the contingent deferred sales charge will be
waived for redemptions of Class A, B or C shares of the Fund 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
Class C shares if the annual withdrawal does not exceed 10% of the
initial value of the account, and (iii) liquidation of a shareholder's
account if the aggregate net asset value of shares held in the account
is less than the required minimum value of such accounts.
- - Waivers for Redemptions of Shares Purchased on or After March 6, 1995
but Prior to November 24, 1995. In the following case, 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.
Special Dealer Arrangements
Dealers who sold Class B shares of a Former Quest for Value Fund to
Quest for Value prototype 401(k) plan that were maintained on the TRAC-
2000 recordkeeping system and that were transferred to an
OppenheimerFunds prototype 401(k) plan shall be eligible for an
additional one-time payment by the Distributor of 1% of the value of
the plan assets transferred, but that payment may not exceed $5,000 as
to any one plan.
Dealers who sold Class C shares of a Former Quest for Value Fund to
Quest for Value prototype 401(k) plans that were maintained on the
TRAC-2000 recordkeeping system and (i) the shares held by those plans
were exchanged for Class A shares, or (ii) the plan assets were
transferred to an OppenheimerFunds prototype 401(k) plan, shall be
eligible for an additional one-time payment by the Distributor of 1% of
the value of the plan assets transferred, but that payment may not
exceed $5,000.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER EQUITY INCOME FUND
Graphic material included in Prospectus of Oppenheimer Equity
Income Fund: "Comparison of Total Return of Oppenheimer Equity Income
Fund with the S&P 500 Index - Change in Value of a $10,000 Hypothetical
Investments.
Linear graphs will be included in the Prospectus of Oppenheimer
Equity Income Fund (the "Fund") depicting the initial account value and
subsequent account value of a hypothetical $10,000 investment in the
Fund. In the case of the Fund's Class A shares, that graph will cover
each of the Fund's last ten fiscal years from 6/30/86 through 6/30/96
and 8/31/96 in the case of the Fund's Class B shares the graph will
cover the period from the inception of the class (August 17, 1993)
through 6/30/96 and 8/31/96 and in the case of the Fund's Class C share
the graph will cover the period from the inception of the class through
6/30/96 and 8/31/96. The graphs will compare such values with
hypothetical $10,000 investments over the same time periods in the S&P
500 Index. Set forth below are the relevant data points that will
appear on the linear graph. Additional information with respect to the
foregoing, including a description of the S&P 500 Index, is set forth
in the Prospectus under "Performance of the Fund - Comparing the Fund's
Performance to the Market."
Fiscal Year Oppenheimer S&P 500
(Period) Ended Equity Income A Index
6/30/86 $9,425 $10,000
6/30/87 $11,353 $13,150
6/30/88 $11,584 $11,649
6/30/89 $13,125 $14,039
6/30/90 $14,315 $16,348
6/30/91 $14,841 $17,553
6/30/92 $16,365 $19,903
6/30/93 $19,108 $22,611
6/30/94 $19,233 $22,928
6/30/95 $22,246 $28,897
6/30/96 $26,386 $36,404
8/31/96 $26,316 $35,531
Fiscal Oppenheimer S&P
Period Ended Equity Income 500 Index
Fund B
8/17/93(1) $10,000 $10,000
6/30/94 $ 9,765 $ 9,810
6/30/95 $11,216 $12,363
6/30/96 $13,188 $15,575
8/31/96 $12,941 $15,202
Fiscal Oppenheimer S & P
Period Ended Equity Income 500 Index
Fund C
11/1/95(2) $10,000 $10,000
6/30/96 $11,050 $11,713
8/31/96 $10,901 $11,432
- ----------------------
(1) Class B shares of the Fund were first publicly offered on August
17, 1993.
Class C shares of the Fund were first publicly offered on November 1,
1995.
<PAGE>
Oppenheimer Equity Income Fund
3410 South Galena Street
Denver, Colorado 80231
1-800-525-7048
Investment Advisor
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
Deloitte & Touche, LLP
555 Seventeenth Street
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.
<PAGE>
Oppenheimer Equity Income Fund
3410 South Galena Street, Denver, Colorado 80231
1-800-525-7048
Statement of Additional Information dated November 1, 1996
This Statement of Additional Information of Oppenheimer Equity
Income Fund is not a Prospectus. This document contains additional
information about the Fund and supplements information in the
Prospectus dated November 1, 1996. It should be read together with the
Prospectus, which may be obtained by writing to the Fund's Transfer
Agent, OppenheimerFunds Services, at P.O. Box 5270, Denver, Colorado
80217 or by calling the Transfer Agent at the toll-free number shown
above.
TABLE OF CONTENTS
Page
About the Fund
Investment Objectives and Policies 2
Investment Policies and Strategies 2
Other Investment Techniques and Strategies 4
Other Investment Restrictions 17
How the Fund is Managed 18
Organization and History 18
Trustees and Officers of the Fund 19
The Manager and Its Affiliates 23
Brokerage Policies of the Fund 25
Performance of the Fund 26
Distribution and Service Plans 30
About Your Account
How To Buy Shares 32
How To Sell Shares 39
How To Exchange Shares 43
Dividends, Capital Gains and Taxes 45
Additional Information About the Fund 46
Financial Information About the Fund
Independent Auditors' Report 48
Financial Statements 49
Appendix A: Ratings of Investments A-1
Appendix B: Corporate Industry Classifications B-1
<PAGE>
ABOUT THE FUND
Investment Objectives and Policies
Investment Policies and Strategies. The investment objectives and
policies of the Fund are described in the Prospectus. Set forth below
is supplemental information about those policies and the types of
securities in which the Fund may invest, as well as the strategies the
Fund may use to try to achieve its objectives. Capitalized terms used
in this Statement of Additional Information have the same meaning as
those terms have in the Prospectus.
In selecting securities for the Fund's portfolio, the Fund's
investment adviser, OppenheimerFunds, Inc. (the "Manager"), evaluates
the merits of particular equity and fixed-income securities primarily
through the exercise of its own investment analysis. This may include,
among other things, evaluation of the history of the issuer's
operations, prospects for the industry of which the issuer is part, the
issuer's financial condition, the issuer's pending product developments
and developments by competitors, the effect of general market and
economic conditions on the issuer's business, and legislative proposals
or new laws that might affect the issuer.
The portion of the Fund's assets allocated to particular securities
and types of special investment methods selected will depend upon the
judgment of the Fund's Manager as to the future movement of the equity
and fixed-income securities markets. If the Manager believes that
economic conditions favor dividend-paying equity and convertible
securities and fixed-income investments having higher yields, the Fund
will emphasize securities and investment methods selected to achieve
its investment objectives. If the Manager believes that a market
decline is likely, defensive shorter-term securities and investment
methods may be emphasized (See "Temporary Defensive Investments,"
below).
-- Investment Risks of Fixed-Income Securities. All fixed-income
securities are subject to two types of risks: credit risk and interest
rate 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 bonds are subject to credit risk
to a greater extent than lower yielding, investment grade bonds.
Interest rate risk refers to the fluctuations in value of fixed-income
securities resulting solely from the inverse relationship between price
and yield of outstanding fixed-income securities. An increase in
prevailing interest rates will generally reduce the market value of
already-issued fixed-income investments, and a decline in interest
rates will tend to increase their value. In addition, debt securities
with longer maturities, which tend to produce higher yields, are
subject to potentially greater changes in their prices from changes in
interest rates than obligations with shorter maturities. Fluctuations
in the market value of fixed-income securities after the Fund buys them
will not affect the interest payable on those securities, and thus the
cash income from such securities is not affected by interest rate
changes. However, those price fluctuations will be reflected in the
valuations of these securities and therefore the Fund's net asset
values.
As stated in the Prospectus, the Fund may not invest more than 10%
of its assets in non-convertible bonds and debentures in the lower
rating categories of Moody's and Standard & Poor's, the principal
rating services. High yield securities, whether rated or unrated, may
be subject to greater market fluctuations and risks of loss of income
and principal than lower-yielding, higher-rated, fixed-income
securities. Risks of high yield securities may include (i) limited
liquidity and secondary market support, (ii) substantial market price
volatility resulting from changes in prevailing interest rates, (iii)
subordination of the obligations to the prior claims of banks and other
senior lenders, (iv) the operation of mandatory sinking fund or
call/redemption provisions during periods of declining interest rates
that could cause the Fund to be able to reinvest premature redemption
proceeds only in lower-yielding portfolio securities, (v) the
possibility that earnings of the issuer may be insufficient to meet its
debt service, and (vi) the issuer's low creditworthiness and potential
for insolvency during periods of rising interest rates and economic
downturn. As a result of the limited liquidity of high yield
securities, at times their prices have experienced significant and
rapid declines when a substantial number of holders decided to sell
simultaneously. A decline is also likely in the high yield bond market
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. In addition,
there have been several Congressional attempts to limit the use of tax
and other advantages of high yield bonds which, if enacted, could
adversely affect the value of these securities and the Fund's net asset
value. For example, federally-insured savings and loan associations
have been required to divest their investments in high yield bonds.
-- 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 converting the convertible
securities), and (3) the extent to which the convertible security may
be a defensive "equity substitute," providing the ability to
participate in any appreciation in the price of the issuer's common
stock.
-- Warrants and Rights. Warrants basically are options to purchase
equity securities at set prices valid for a specified period of time.
The prices of warrants do not necessarily move in a manner parallel to
the prices of the underlying securities. The price the Fund pays for a
warrant will be lost unless the warrant is exercised prior to its
expiration. Rights are similar to warrants, but normally have a short
duration and are distributed directly by the issuer to its
shareholders. Rights and warrants have no voting rights, receive no
dividends and have no rights with respect to the assets of the issuer.
-- Zero Coupon Securities. The Fund may invest in zero coupon
securities issued by the U.S. Treasury or by private issuers, such as
corporations. Zero coupon U.S. Treasury securities include: (1) U.S.
Treasury bills without interest coupons, (2) U.S. Treasury notes and
bonds that have been stripped of their unmatured interest coupons and
(3) receipts or certificates representing interests in such stripped
debt obligations or coupons. These securities usually trade at a deep
discount from their face or par value and will be subject to greater
fluctuations in market value in response to changing interest rates
than debt obligations of comparable maturities that make current
payments of interest. However, the lack of periodic interest payments
means that the interest rate is "locked in" and there is no risk of
having to reinvest periodic interest payments in securities having
lower rates.
Because the Fund accrues taxable income from zero coupon securities
without receiving cash, the Fund may be required to sell portfolio
securities in order to pay dividends or redemption proceeds for its
shares, which require the payment of cash. This will depend on several
factors: the proportion of shareholders who elect to receive dividends
in cash rather than reinvesting dividends in additional shares of the
Fund, and the amount of cash income the Fund receives from other
investments and the sale of shares. In either case, cash distributed
or held by the Fund that is not reinvested by investors in additional
Fund shares will hinder the Fund from seeking current income.
Other Investment Techniques and Strategies
-- Hedging. The Fund may use hedging instruments for the purposes
described in the Prospectus. When hedging to attempt to protect against
declines in the market value of the Fund's portfolio, or 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 Futures, (ii) buy puts on
such Futures or on securities, or (iii) write covered calls on
securities or on Futures. When hedging to establish a position in the
equity securities markets as a temporary substitute for the purchase of
individual equity securities the Fund may: (i) buy Futures, or (ii) buy
calls on such Futures or securities held by it. Normally, the Fund
would then purchase the equity securities and terminate the hedging
position.
The Fund's strategy of hedging with Futures and options on Futures
will be incidental to the Fund's investment activities in the
underlying cash market. 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, and are legally
permissible and disclosed in the Prospectus. Additional information
about the hedging instruments the Fund may use is provided below.
-- Stock Index Futures, Financial Futures and Interest Rate
Futures. The Fund may buy and sell futures contracts relating to a
securities index ("Financial Futures"), including "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. Financial futures are contracts based on the future
value of the basket of securities that comprise the underlying index.
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.
The Fund may also buy Futures relating to debt securities ("Interest
Rate Futures"). An Interest Rate Future obligates the seller to
deliver and the purchaser to take a specific type of debt security at a
specific future date for a fixed price to settle the futures
transaction, or to enter into an offsetting contract. As with Financial
Futures, no monetary amount is paid or received by the Fund on the
purchase of an Interest Rate Future.
Upon entering into a Futures transaction, the Fund will be required
to deposit an initial margin payment, in cash or U.S. Treasury bills,
with the futures commission merchant (the "futures broker"). Initial
margin payments will be deposited with the Fund's Custodian in an
account registered in the futures broker's name; however, the futures
broker can gain access to that account only under certain specified
conditions. As the Future is marked to market (that is, its value on
the Fund's books is changed) to reflect changes in its market value,
subsequent margin payments, called variation margin, will be paid to or
by the futures broker on a daily basis.
At any time prior to the expiration of the Future, the Fund may
elect to close out its position by taking an opposite position, at
which time a final determination of variation margin is made and
additional cash is required to be paid by or released to the Fund. Any
gain or loss is then realized by the Fund on the Future for tax
purposes. Although Financial Futures and Stock Index Futures by their
terms call for settlement by the delivery of cash, and Interest Rate
Futures call for the delivery of a specific debt security, 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.
-- Purchasing Puts and Calls. The Fund may purchase calls to
protect against the possibility that the Fund's portfolio will not
participate in an anticipated rise in the securities market. When the
Fund purchases a call (other than in a closing purchase transaction),
it pays a premium and, except as to calls on stock indices, 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. 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, 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 call on a stock index, it pays a premium, but
settlement is in cash rather than by delivery of the underlying
investment to the Fund.
The Fund may write covered calls. When the Fund writes a call on an
investment, it receives a premium and agrees to sell the callable
investment to a purchaser of a corresponding call 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 investment)
regardless of market price changes during the call period. 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 option transaction costs and the premium received on the call
the Fund has written is more or less than the price of the call the
Fund subsequently purchased. A profit may also be realized if the call
lapses unexercised, because the Fund retains the underlying investment
and the premium received. Those profits are considered short-term
capital gains for Federal income tax purposes, as are premiums on
lapsed calls, and when distributed by the Fund are taxable as ordinary
income. If the Fund could not effect a closing purchase transaction
due to the lack of a market, it would have to hold the callable
investment until the call lapsed or was exercised. The Fund may also
write calls on Futures without owning a futures contract or deliverable
securities, provided that at the time the call is written, the Fund
covers the call by segregating in escrow an equivalent dollar value of
deliverable securities or liquid assets. The Fund will segregate
additional liquid assets if the value of the escrowed assets drops
below 100% of the current value of the Future. In no circumstances
would an exercise notice as to a Future put the Fund in a short futures
position.
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 that are traded on exchanges, or as
to other acceptable escrow securities, so that no margin will be
required from the Fund for such option transactions. OCC will release
the securities covering a call on the expiration of the call or when
the Fund enters into a closing purchase transaction. Call writing
affects the Fund's turnover rate and the brokerage commissions it pays.
Commissions, normally higher than on general securities transactions,
are payable on writing or purchasing a call.
When the Fund purchases a put, it pays a premium and, except as to
puts on stock indices, 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 (a "protective put") enables the Fund to attempt to
protect itself during the put period against a decline in the value of
the underlying investment below the exercise price by selling the
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
and the Fund will lose the premium payment and the right to sell the
underlying investment. However, the put may be sold prior to
expiration (whether or not at a profit).
Puts and calls on broadly-based stock indices or Stock Index 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 of individual securities or
futures contracts. When the Fund buys a call on a stock index or Stock
Index Future, it pays a premium. If the Fund exercises the call during
the call period, 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 stock 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
call 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 a stock index or Stock Index
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 cash to the Fund to settle the put if the closing
level of the stock index or Stock Index 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.
When the Fund purchases a put on a stock index, or on a Stock Index
Future not owned by it, the put protects the Fund to the extent that
the index moves in a similar pattern to the securities the Fund holds.
The Fund can either resell the put or, in the case of a put on a Stock
Index Future, 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 the expiration date. In
the event of a decline in price of the underlying investment, the Fund
could exercise or sell the put at a profit to attempt to offset some or
all of its loss on its portfolio securities.
The Fund's option activities may affect its portfolio 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. The exercise by the Fund of puts on
securities will cause the sale of underlying investments, increasing
portfolio turnover. Although the decision whether to exercise a put it
holds is within the Fund's control, holding a put might cause the Fund
to sell the related investments for reasons that would not exist in the
absence of the put. The Fund will pay a brokerage commission each time
it buys or sells a call, put or an underlying investment in connection
with the exercise of a put or call. Those commissions may be higher
than the commissions for direct purchases or sales of the underlying
investments.
Premiums paid for options are small in relation to the market value
of the underlying 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.
-- Options on Foreign Currency. The Fund intends to write and
purchase calls on foreign currencies. The Fund may purchase and write
puts and calls on foreign currencies that are traded on a securities or
commodities exchange or over-the-counter markets or are quoted by major
recognized dealers in such options. It does so to protect against
declines in the dollar value of foreign securities and against
increases in the dollar cost of foreign securities to be acquired. If
the Manager anticipates a rise in the dollar value of a foreign
currency in which securities to be acquired are denominated, the
increased cost of such securities may be partially offset by purchasing
calls or writing puts on that foreign currency. If a decline in the
dollar value of a foreign currency is anticipated, the decline in value
of portfolio securities denominated in that currency may be partially
offset by writing calls or purchasing puts on that foreign currency.
However, in the event of currency rate fluctuations adverse to the
Fund's position, it would lose the premium it paid and transactions
costs.
A call written on a foreign currency by the Fund is covered if the
Fund owns the underlying foreign currency covered by the call or has an
absolute and immediate right to acquire that foreign currency without
additional cash consideration (or for additional cash consideration
held in a segregated account by its custodian) upon conversion or
exchange of other foreign currency held in its portfolio. A call may
be written by the Fund on a foreign currency to provide a hedge against
a decline due to an expected adverse change in the exchange rate in the
U.S. dollar value of a security which the Fund owns or has the right to
acquire and which is denominated in the currency underlying the option.
This is a cross-hedging strategy. In such circumstances, the Fund
collateralizes the option by maintaining in a segregated account with
the Fund's custodian, liquid securities of any type, including equity
and debt securities of any grade, in an amount not less than the value
of the underlying foreign currency in U.S. dollars marked-to-market
daily.
-- Forward Contracts. The Fund may enter into foreign currency
exchange contracts ("Forward Contracts"), which obligate the seller to
deliver and the purchaser to take a specific amount of foreign currency
at a specific future date for a fixed price. 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 enter into a Forward Contract in order to
"lock in" the U.S. dollar price of a security denominated in a foreign
currency which it has purchased or sold but which has not yet settled,
or to protect against a possible loss resulting from an adverse change
in the relationship between the U.S. dollar and a foreign currency.
There is a risk that 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. Forward contracts include
standardized foreign currency futures contracts which are traded on
exchanges and are subject to procedures and regulations applicable to
other Futures. The Fund may also enter into a forward contract to sell
a foreign currency denominated in a currency other than that in which
the underlying security is denominated. This is done in the
expectation that there is a greater correlation between the foreign
currency of the forward contract and the foreign currency of the
underlying investment than between the U.S. dollar and the foreign
currency of the underlying investment. This technique is referred to
as "cross hedging." The success of cross hedging is dependent on many
factors, including the ability of the Manager to correctly identify and
monitor the correlation between foreign currencies and the U.S. dollar.
To the extent that the correlation is not identical, the Fund may
experience losses or gains on both the underlying security and the
cross currency hedge.
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 will not speculate with foreign currency exchange
contracts. There is no limitation as to the percentage of the Fund's
assets that may be committed to foreign currency exchange contracts.
The Fund does not enter into such forward contracts or maintain a net
exposure in such contracts to the extent that the Fund would be
obligated to deliver an amount of foreign currency in excess of the
value of the Fund's assets denominated in that currency (or another
currency that is subject to the hedge), or enter into a "cross hedge,"
unless it is denominated in these currencies provided the excess amount
is "covered" by liquid assets of any type including equity and debt
securities of any grade, dominated in any currency, at least equal at
all time to the amount of such excess. See "Tax Aspects of Covered
Calls and Hedging Instruments" below for a discussion of the tax
treatment of foreign currency exchange contracts.
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's Custodian will place liquid assets of any type, including
equity and debt securities of any grade in a separate account of the
Fund having a value equal to the aggregate amount of the Fund's
commitments under forward contracts to cover its short positions. If
the value of the securities placed in the separate account declines,
additional cash or securities will be placed in the account on a daily
basis so that the value of the account will equal the amount of the
Fund's commitments with respect to such contracts. As an alternative
to maintaining all or part of the separate account, 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 differed from the
execution dates of the first contract and offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with
factors such as the currencies involved, the length of the contract
period and the market conditions then prevailing. Because Forward
Contracts are usually entered into on a principal basis, no fees or
commissions are involved. Because such contracts are not traded on an
exchange, the Fund must evaluate the credit and performance risk of
each particular counterparty under a Forward Contract.
Although the Fund values its assets daily in terms of U.S. dollars,
it does not intend to convert its holdings of foreign currencies into
U.S. dollars on a daily basis. The Fund may convert foreign currency
from time to time, and investors should be aware of the costs of
currency conversion. Foreign exchange dealers do not charge a fee for
conversion, but they do seek to realize a profit based on the
difference between the prices at which they buy and sell various
currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the
Fund desire to resell that currency to the dealer.
-- Interest Rate Swap Transactions. Swap agreements entail both
interest rate risk and credit risk. There is a risk that, based on
movements of interest rates in the future, the payments made by the
Fund under a swap agreement will be greater than those received by it.
Credit risk arises from the possibility that the counterparty will
default. If the counterparty to an interest rate swap defaults, the
Fund's loss will consist of the net amount of contractual interest
payments that the Fund has not yet received. The Manager will monitor
the creditworthiness of counterparties to the Fund's interest rate swap
transactions on an ongoing basis. The Fund will enter into swap
transactions with appropriate counterparties pursuant to master netting
agreements.
A master netting agreement provides that all swaps done between the
Fund and that counterparty under the master agreement shall be regarded
as parts of an integral agreement. If on any date amounts are payable
in the same currency in respect of one or more swap transactions, the
net amount payable on that date in that currency shall be paid. In
addition, the master netting agreement may provide that if one party
defaults generally or on one swap, the counterparty may terminate the
swaps with that party. Under such agreements, if there is a default
resulting in a loss to one party, the measure of that party's damages
is calculated by reference to the average cost of a replacement swap
with respect to each swap (i.e., the mark-to-market value at the time
of the termination of each swap). The gains and losses on all swaps
are then netted, and the result is the counterparty's gain or loss on
termination. The termination of all swaps and the netting of gains and
losses on termination is generally referred to as "aggregation." The
Fund will not invest more than 25% of its assets in interest rate swap
transactions.
-- 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
excluded from registration as a "commodity pool operator" if it
complies with the requirements of Rule 4.5 adopted by the CFTC. The
Rule does not limit the percentage of the Fund's assets that may be
used for Futures margin and related option premiums for a bona fide
hedging position. However, under the Rule the Fund must limit its
aggregate initial futures margin and related option premiums to no more
than 5% of the Fund's net assets for hedging strategies that are not
considered bona fide hedging strategies under the Rule. Under the
Rule, the Fund also must use short futures and options on futures
positions solely for bona fide hedging purposes within the meaning and
intent of the applicable provisions of the Commodities Exchange Act.
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. An
exchange may order the liquidation of positions found to be in
violation of those limits and may impose certain other sanctions. Due
to requirements under the Investment Company Act, when the Fund
purchases a Future, the Fund will maintain, in a segregated account or
accounts with its Custodian, cash or readily-marketable, short-term
(maturing in one year or less) debt instruments in an amount equal to
the market value of the securities underlying such Future, less the
margin deposit applicable to it.
-- Tax Aspects of Covered Calls and Hedging Instruments. The Fund
intends to qualify as a "regulated investment company" under the
Internal Revenue Code (although it reserves the right not to qualify).
That qualification enables the Fund to "pass through" its income and
realized capital gains to shareholders without having to pay tax on
them. This avoids a "double tax" on that income and capital gains,
since shareholders normally will be taxed on the dividends and capital
gains they receive from the Fund (unless the Fund's shares are held in
a retirement account or the shareholder is otherwise exempt from tax).
One of the tests for the Fund's qualification as a regulated investment
company is that less than 30% of its gross income must be derived from
gains realized on the sale of securities held for less than three
months. To comply with this 30% cap, the Fund will limit the extent to
which it engages in the following activities, but will not be precluded
from them: (i) selling investments, including Stock Index Futures, held
for less than three months, whether or not they were purchased on the
exercise of a call held by the Fund; (ii) purchasing options which
expire in less than three months; (iii) effecting closing transactions
with respect to calls or puts written or purchased less than three
months previously; (iv) exercising puts or calls held by the Fund for
less than three months; or (v) writing calls on investments held less
than three months.
Certain foreign currency exchange contracts (Forward Contracts) in
which the Fund may invest are treated as "section 1256 contracts."
Gains or losses relating to section 1256 contracts generally are
characterized under the Internal Revenue Code as 60% long-term and 40%
short-term capital gains or losses. However, foreign currency gains or
losses arising from certain section 1256 contracts (including Forward
Contracts) generally are treated as ordinary income or loss. In
addition, section 1256 contracts held by the Fund at the end of each
taxable year are "marked-to-market" with the result that unrealized
gains or losses are treated as though they were realized. These
contracts also may be marked-to-market for purposes of the excise tax
applicable to investment company distributions and for other purposes
under rules prescribed pursuant to the Internal Revenue Code. An
election can be made by the Fund to exempt these transactions from this
marked-to-market treatment.
Certain Forward Contracts entered into by the Fund may result in
"straddles" for Federal income tax purposes. The straddle rules may
affect the character of gains (or losses) realized by the Fund on
straddle positions. Generally, a loss sustained on the disposition of
a position(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.
Under the Internal Revenue Code, gains or losses attributable to
fluctuations in exchange rates which 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 an ordinary gain or loss. Currency
gains and losses are offset against market gains and losses before
determining a net "section 988" gain or loss under the Internal Revenue
Code, which may increase or decrease the amount of the Fund's
investment company income available for distribution to its
shareholders.
-- Risks of Hedging With Options and Futures. An option position
may be closed out only on a market that provides secondary trading for
options of the same series, and there is no assurance that a liquid
secondary market will exist for any particular option. In addition to
the risks associated with hedging that are discussed in the Prospectus
and above, there is a risk in using short hedging by (i) selling Stock
Index Futures or (ii) purchasing puts on stock indices or Stock Index
Futures to attempt to protect against declines in the value of the
Fund's equity securities. The risk is that the prices of Stock Index
Futures 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 depends on participants entering into
offsetting transactions rather than making or taking delivery. To the
extent participants decide to make or take delivery, liquidity in the
futures markets could be reduced, thus producing distortion. Third,
from the point of view of speculators, the deposit requirements in the
futures markets are less onerous than margin requirements in the
securities markets. Therefore, increased participation by speculators
in the futures markets may cause temporary price distortions.
The 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.
If the Fund uses hedging instruments to establish a position in the
equities markets as a temporary substitute for the purchase of
individual equity securities (long hedging) 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 a 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.
-- Investing in Small, Unseasoned Companies. The securities of
small, unseasoned companies may have a limited trading market, which
may adversely affect the Fund's ability to dispose of them and can
reduce the price the Fund might be able to obtain for them. If other
investors trade the same securities when the Fund attempts to dispose
of its holdings, the Fund may receive lower prices than might otherwise
be obtained, because of the thinner market for such securities. The
limitation against investing more than 5% of the Fund's net assets in
securities of companies (including predecessors) with a record of less
than three years' continuous operation does not apply to public
utilities or pipeline companies.
-- Foreign Securities. As noted in the Prospectus, the Fund may
invest in securities (which may be denominated 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. The types of foreign
debt obligations and other securities in which the Fund may invest are
the same types of debts and equity securities identified above.
Foreign securities are subject however, to additional risks not
associated with domestic securities, as discussed below. These
additional risks may be more pronounced as to investments in securities
issued by emerging market countries or by companies located in emerging
market countries.
"Foreign securities" include equity and debt securities of
companies organized under the laws of countries other than the United
States and debt securities of foreign governments that are traded on
foreign securities exchanges or in the foreign over-the-counter
markets. Securities of foreign issuers that are represented by
American Depository Receipts or other similar arrangements 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.
The Fund may invest in U.S. dollar-denominated foreign debt
obligations known as "Brady Bonds," which are issued for the exchange
of existing commercial bank loans to foreign entities for new
obligations that are generally collateralized by zero coupon U.S.
Treasury securities having the same maturity. Because the Fund may
purchase securities denominated in foreign currencies, a change in the
value of such foreign currency against the U.S. dollar will result in a
change in the amount of income the Fund has available for distribution.
Because a portion of the Fund's investment income may be received in
foreign currencies, the Fund will be required to compute its income in
U.S. dollars for distribution to shareholders, and therefore the Fund
will absorb the cost of currency fluctuations. After the Fund has
distributed income, subsequent foreign currency losses may result in
the Fund's having distributed more income in a particular fiscal period
than was available from investment income, which could result in a
return of capital to shareholders.
Investing in foreign securities offers potential benefits not
available from investing solely in securities of domestic issuers,
including 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 sub-custodians or
depositories holding them must be approved by the Fund's Board of
Trustees to the extent that approval is required under applicable rules
of the Securities and Exchange Commission.
-- Risks of Foreign Investing. Investments in foreign securities
present special additional risks and considerations not typically
associated with investments in domestic securities: 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 on 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; 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, 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.
-- Restricted and Illiquid 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 Trustees
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.
-- Loans of Portfolio Securities. The Fund may lend its portfolio
securities subject to the restrictions stated in the Prospectus. Under
applicable regulatory requirements (which are subject to change), the
loan collateral on each business day must at least equal the value of
the loaned securities (by "marking to market" daily) and must consist
of cash, bank letters of credit or securities of the U.S. Government
(or its agencies or instrumentalities). 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. When it
lends securities, the Fund receives amounts equal to the dividends or
interest on loaned securities and also receives one or more of (a)
negotiated loan fees, (b) interest on securities used as collateral,
and (c) interest on short-term debt securities purchased with such loan
collateral. Any of these payments may be shared with the borrower.
The Fund may also pay reasonable finder's, custodian and administrative
fees. The terms of the Fund's loans must meet applicable tests under
the Internal Revenue Code and must permit the Fund to reacquire loaned
securities on five days' notice or in time to vote on any important
matter.
-- "When-Issued" and Delayed Delivery Transactions. The Fund may
purchase securities on a "when-issued" basis, and may purchase or sell
such securities on a "delayed delivery" basis. Although the Fund will
enter into such transactions for the purpose of acquiring securities
for its portfolio or for delivery pursuant to options contracts it has
entered into, the Fund may dispose of a commitment prior to settlement.
"When-issued" or "delayed delivery" refers to securities whose terms
and indenture are available and for which a market exists, but which
are not available for immediate delivery. When such transactions are
negotiated, the price (which is generally expressed in yield terms) is
fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. The Fund does not intend to
make such purchases for speculative purposes. The commitment to
purchase a security for which payment will be made on a future date may
be deemed a separate security and involve a risk of loss if the value
of the security declines prior to the settlement date. During the
period between commitment by the Fund and settlement (generally within
two months but not to exceed 120 days), no payment is made for the
securities purchased by the purchaser, and no interest accrues to the
purchaser from the transaction. Such securities are subject to market
fluctuation; the value at delivery may be less than the purchase price.
The Fund will maintain a segregated account with its Custodian,
consisting of liquid assets of any type, including equity and debt
securities of any grade, at least equal to the value of purchase
commitments until payment is made.
The Fund will engage in when-issued transactions in order to secure
what is considered to be an advantageous price and yield at the time of
entering into the obligation. When the Fund engages in when-issued or
delayed delivery transactions, it relies on the buyer or seller, as the
case may be, to consummate the transaction. Failure of the buyer or
seller to do so may result in the Fund losing the opportunity to obtain
a price and yield considered to be advantageous. At the time the Fund
makes a commitment to purchase or sell a security on a when-issued or
forward commitment basis, it records the transaction and reflects the
value of the security purchased, or if a sale, the proceeds to be
received, in determining its net asset value. If the Fund chooses to
(i) dispose of the right to acquire a when-issued security prior to its
acquisition or (ii) dispose of its right to deliver or receive against
a forward commitment, it may incur a gain or loss.
To the extent the Fund engages in when-issued and delayed delivery
transactions, it will do so for the purpose of acquiring or selling
securities consistent with its investment objective and policies and
not for the purposes of investment leverage. The Fund enters into such
transactions only with the intention of actually receiving or
delivering the securities, although (as noted above), when-issued
securities and forward commitments may be sold prior to settlement
date. In addition, changes in interest rates before settlement in a
direction other than that expected by the Manager will affect the value
of such securities and may cause a loss to the Fund.
When-issued transactions and forward commitments allow the Fund a
technique to use against anticipated changes in interest rates and
prices. For instance, in periods of rising interest rates and falling
prices, the Fund might sell securities in its portfolio on a forward
commitment basis to attempt to limit its exposure to anticipated
falling prices. In periods of falling interest rates and rising
prices, the Fund might sell portfolio securities and purchase the same
or similar securities on a when-issued or forward commitment basis,
thereby obtaining the benefit of currently higher cash yields.
-- 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. An "approved vendor"
is 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 credit requirements set by the Fund's Board
of Trustees from time to time. 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, collateralized by the underlying security. The
Fund's repurchase agreements require that at all times while the
repurchase agreement is in effect, the value of the collateral 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.
-- Temporary Defensive Investments. When the equity markets in
general are declining, the Fund may commit an increasing portion of its
assets to defensive securities. These may include the types of
securities described in the Prospectus. When investing for defensive
purposes, the Fund will normally emphasize investment in short-term
debt securities (that is, securities maturing in one year or less from
the date of purchase), since those types of securities are generally
more liquid and usually may be disposed of quickly without significant
gains or losses so that the Manager may have liquid assets when it
wishes to make investments in securities consistent with its investment
objectives.
Other Investment Restrictions
The Fund's most significant investment restrictions are described in
the Prospectus. The following are also fundamental policies, and
together with the Fund's fundamental investment policies described in
the Prospectus, cannot be changed without the approval of a "majority"
of the Fund's outstanding voting securities. Under the Investment
Company Act, such a "majority" vote is defined as the vote of the
holders of the lesser of (i) 67% or more of the shares present or
represented by proxy at a shareholder meeting, if the holders of more
than 50% of the outstanding shares are present, or represented by
proxy; or (ii) more than 50% of the outstanding shares.
Under these additional restrictions, the Fund cannot:
(1) act as an underwriter of securities of other issuers;
(2) buy or sell real estate or interests in real estate
investment trusts;
(3) buy or sell any securities, other than shares of the Fund,
from or to any officer or Trustee of the Fund or officer or
director of the Manager or firms of which any of them are
members (however, such persons may act as brokers for the
Fund);
(4) buy or retain securities of any issuer if those officers and
Trustees of the Fund or officers and directors of the Manager
who beneficially own more than .5% of the securities of the
issuer together own more than 5% of the securities of such
issuer;
(5) invest in securities of any company for the purpose of
management or the exercise of control;
(6) buy securities of other investment companies, except in
connection with a merger or consolidation;
(7) cease to maintain its business as an investment company as
defined in the Investment Company Act; or
(8) accept the purchase price for any of its shares without
immediately thereafter issuing an appropriate number of
shares.
For purposes of the Fund's policy not to concentrate its assets
described in "Other Investment Restrictions" in the Prospectus, the
Fund has adopted the industry classifications set forth in Appendix B
to this Statement of Additional Information. This is not a fundamental
policy.
In connection with the registration of its shares in certain states,
the Fund has made the following undertakings. These undertakings,
which are non-fundamental policies of the Fund, shall terminate if the
Fund ceases to qualify its shares for sale in that state or if the
state's applicable rules or regulations are amended. The Fund has
undertaken that: (i) it will not invest in oil, gas or other mineral
leases; and (ii) it will not invest in real estate limited
partnerships.
How the Fund Is Managed
Organization and History. As a Massachusetts business trust, 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 Trustees or upon proper request of
the shareholders. Shareholders have the right, upon the declaration in
writing or vote of two-thirds of the outstanding shares of the Fund, to
remove a Trustee. The Trustees will call a meeting of shareholders to
vote on the removal of a Trustee upon the written request of the record
holders of 10% of its outstanding shares. In addition, if the Trustees
receive a request from at least 10 shareholders (who have been
shareholders for at least six months) holding shares of the Fund valued
at $25,000 or more or holding at least 1% of the Fund's outstanding
shares, whichever is less, stating that they wish to communicate with
other shareholders to request a meeting to remove a Trustee, the
Trustees will then either make the Fund's shareholder list available to
the applicants or mail their communication to all other shareholders at
the applicants' expense, or the Trustees may take such other action as
set forth under Section 16(c) of the Investment Company Act.
The Fund's Declaration of Trust contains an express disclaimer of
shareholder or Trustee liability for the Fund's obligations, and
provides for indemnification and reimbursement of expenses out of its
property for any shareholder held personally liable for its
obligations. The Declaration of Trust also provides that the Fund
shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Fund and satisfy any
judgment thereon. Thus, while Massachusetts law permits a shareholder
of a business trust (such as the Fund) to be held personally liable as
a "partner" under certain circumstances, the risk of a Fund shareholder
incurring financial loss on account of shareholder liability is
limited to the relatively remote circumstances in which the Fund would
be unable to meet its obligations described above. Any person doing
business with the Trust, and any shareholder of the Trust, agrees under
the Trust's Declaration of Trust to look solely to the assets of the
Trust for satisfaction of any claim or demand which may arise out of
any dealings with the Trust, and the Trustees shall have no personal
liability to any such person, to the extent permitted by law.
Trustees And Officers of the Fund. The Fund's Trustees and officers
and their principal occupations and business affiliations and
occupations during the past five years are listed below. All of the
Trustees are also trustees, directors or managing general partners of
Oppenheimer Total Return Fund, Inc., Oppenheimer Equity Income 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 Strategic Income & Growth Fund, 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, Daily Cash Accumulation
Fund, Inc. and Centennial Tax Exempt Trust (all of the foregoing funds
are collectively referred to as the "Denver-based Oppenheimer funds")
except for Mr. Fossel and Ms. Macaskill, who are Trustees, Directors or
Managing General Partners of all the Denver-based Oppenheimer funds
except Oppenheimer Integrity Funds, Panorama Series Fund, Inc. and
Oppenheimer Strategic Income Fund. Messrs. Bishop, Bowen, Donohue,
Farrar and Zack hold similar positions as officers of all such funds.
Ms. Macaskill is President and Mr. Swain is Chairman of the Denver-
based Oppenheimer funds. As of September 6, 1996, the Trustees 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, Trustee*; Age 65
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, Trustee; Age 81
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
Charles Conrad, Jr., Trustee; Age 66
19411 Merion Circle, Huntington Beach, California 92648
Chairman and Chief Executive Officer 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, Trustee*; Age 54
Box 44 Mead Street, Waccabuc, New York 10597
Member of the Board of Governors for the Investment Company Institute
(a national association of Investment Companies), Chairman of the
Investment Company Education Foundation, formerly Chairman and
President of the Manager of OppenheimerFunds, Inc. (the "Manager"),
President and a Director of Oppenheimer Acquisition Corp. ("OAC"), the
Manager's parent holding company and Shareholder Services, Inc.
("SSI"), transfer agent subsidiary of the Manager.
Sam Freedman, Trustee; Age: 56
4975 Lakeshore Drive, Littleton, Colorado 80123
Formerly Chairman and Chief Executive Officer of OppenheimerFunds
Services, Chairman, Chief Executive Officer and a director of
Shareholder Services, Inc., Chairman, Chief Executive and Officer and
director of Shareholder Financial Services, Inc., Vice President and
director of Oppenheimer Acquisition Corporation and a director of
OppenheimerFunds, Inc.
Raymond J. Kalinowski, Trustee; Age 67
44 Portland Drive, St. Louis, Missouri 63131
Director of Wave Technologies International Inc. (a computer products
training company); formerly Vice Chairman and a Director of A.G.
Edwards, Inc., parent holding company of A.G. Edwards & Sons, Inc. (a
broker-dealer), of which he was a Senior Vice President.
C. Howard Kast, Trustee; Age 74
2552 East Alameda, Denver, Colorado 80209
Formerly Managing Partner of Deloitte, Haskins & Sells (an accounting
firm).
Robert M. Kirchner, Trustee; Age 75
7500 E. Arapahoe Road, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
Bridget A. Macaskill, President and Trustee*; Age: 48
President, Chief Executive Officer and a Director of the Manager and
HarbourView Asset Management Corporation ("HarbourView"), a subsidiary
of the Manager; Chairman and a director of SSI and Shareholder
Financial Services, Inc.; President and a director of OAC and
Oppenheimer Partnership Holdings, Inc., a holding company subsidiary of
the Manager; a director of Oppenheimer Real Asset Management, Inc.;
formerly an Executive Vice President of the Manager.
_____________________
* A Trustee who is an "interested person" as defined in the Investment
Company Act.
Ned M. Steel, Trustee; Age 81
3416 South Race Street, Englewood, Colorado 80110
Chartered Property and Casualty Underwriter; Director of Visiting Nurse
Corporation of Colorado; formerly Senior Vice President and a Director
of Van Gilder Insurance Corp. (insurance brokers).
James C. Swain, Chairman, Chief Executive Officer and Trustee*; Age 62
3410 South Galena Street, Denver, Colorado 80231
Vice Chairman and a Director of the Manager; President and Director of
Centennial Asset Management Corporation, an investment adviser
subsidiary of the Manager ("Centennial"); formerly Chairman of the
Board of SSI.
John P. Doney, Vice President and Portfolio Manager; Age: 66
Two World Trade Center, New York, N.Y. 10048-0203
Vice President of the Manager; formerly Senior Vice President and Chief
Investment Officer-Equities of National Securities & Research
Corporation (mutual fund investment adviser) and Vice President of the
National affiliated investment companies.
Andrew J. Donohue, Vice President and Secretary; Age 46
Two World Trade Center, New York, New York 10048
Executive Vice President and General Counsel of the Manager and
OppenheimerFunds Distributor, Inc. (the "Distributor"); President and a
director of Centennial; Executive Vice President, General Counsel and a
director of HarbourView, SFSI, SSI and Oppenheimer Partnership Holdings
Inc.; President and a director of Oppenheimer Real Asset Management,
Inc.; General Counsel of OAC; Executive Vice President, Chief Legal
Officer and a director of MultiSource Services, Inc. (a broker-dealer);
an officer of other Oppenheimer funds; formerly Senior Vice President
and Associate General Counsel of the Manager and the Distributor;
Partner in Kraft & McManimon (a law firm); an officer of First
Investors Corporation (a broker-dealer) and First Investors Management
Company, Inc. (broker-dealer and investment adviser); director and an
officer of First Investors Family of Funds and First Investors Life
Insurance Company.
George C. Bowen, Vice President, Assistant Secretary and Treasurer; Age
60
3410 South Galena Street, Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President and
Treasurer of the Distributor and HarbourView; Senior Vice President,
Treasurer, Assistant Secretary and a director of Centennial; Vice
President, Treasurer and Secretary of SSI and SFSI; Treasurer of OAC;
Vice President and Treasurer of Oppenheimer Real Asset Management,
Inc., Chief Executive Officer, Treasurer and a director of MultiSource
Services, Inc.; an officer of other Oppenheimer funds.
_____________________
* A Trustee who is an "interested person" as defined in the Investment
Company Act.
Robert J. Bishop, Assistant Treasurer; Age 37
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly a Fund Controller for the Manager,
prior to which he was an Accountant for Yale & Seffinger, P.C., an
accounting firm, and previously an Accountant and Commissions
Supervisor for Stuart James Company Inc., a broker-dealer.
Scott Farrar, Assistant Treasurer; Age 31
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly a Fund Controller for the Manager,
prior to which he was an International Mutual Fund Supervisor for Brown
Brothers Harriman & Co., a bank, and previously a Senior Fund
Accountant for State Street Bank & Trust Company.
Robert G. Zack, Assistant Secretary; Age 47
Two World Trade Center, New York, New York 10048-0203
Senior Vice President and Associate General Counsel of the Manager,
Assistant Secretary of SSI, SFSI; an officer of other Oppenheimer
funds.
__________________
*A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
-- Remuneration of Trustees. The officers of the Fund are
affiliated with the Manager. They and the Trustees of the Fund who
are affiliated with the Manager (Messrs. Swain and Fossel) receive no
salary or fee from the Fund. The remaining Trustees of the Fund
(excluding Mr. Freedman, who did not become a Trustee until June 27,
1996) received the compensation shown below from the Fund, during its
fiscal years ended June 30, 1996 and August 31, 1996 and from all of
the Denver-based Oppenheimer funds (including the Fund) for which the
served as Trustee, Director or Managing General Partner. Compensation
is paid for services in the positions listed beneath their names:
<TABLE>
<CAPTION>
Aggregate Total Compensation
Compensation from all
from the Fund as of Denver-based
Name and Position 6-30-96 8-31-96 Oppenheimer Funds1
<S> <C> <C> <C>
Robert G. Avis $7,926 $1,348 $53,000
Trustee
William A. Baker $10,955 $1,862 $73,255
Audit and Review
Committee Chairman
and Trustee
Charles Conrad, Jr. $9,618 $1,635 $64,309
Audit and Review
Committee Member
and Trustee
Raymond J. Kalinowski $9,721 $1,653 $65,000
Trustee
C. Howard Kast $9,721 $1,653 $65,000
Trustee
Robert M. Kirchner $10,213 $1,736 $68,292
Audit and Review
Committee Member
and Trustee
Ned M. Steel $7,927 $1,347 $53,000
Trustee
</TABLE>
______________________
1 For the 1995 calendar year during which the Denver-based funds
listed in the first paragraph of this section, included Oppenheimer
Strategic Investment Grade Bond Fund and Oppenheimer Strategic Short-
Term Income Fund (which ceased operations following the acquisition of
their assets by the other Oppenheimer funds) and Panorama Series Fund,
Inc. which became an Oppenheimer fund in June of 1996.
-- Major Shareholders. As of September 26, 1996, no person owned of
record or was known by the Fund to own beneficially 5% or more of the
Fund's outstanding shares except: Ronald E. Elliott, 1528 Mosswood
Drive, Napa, California 94558-1714, who held of record 45,824.484 Class
C shares (6.06% of the Class C shares outstanding as of such date.)
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, Mr.
Fossel and Mr. Swain) serve as Trustees of the Fund.
The Manager and the Fund have a Code of Ethics. It is designed to
detect and prevent improper personal trading by certain employees,
including portfolio managers, that would compete with or take advantage
of the Fund's portfolio transactions. Compliance with the Code of
Ethics is carefully monitored and strictly enforced by the Manager.
-- The Investment Advisory Agreement. A management fee is payable
monthly to the Manager under the terms of the investment advisory
agreement between the Manager and the Fund and is computed on the
aggregate net assets of the Fund as of the close of business each day.
The investment advisory agreement 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 Trustees, 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 June 30, 1994, 1995, and 1996 and August 31, 1996 the
management fees paid by the Fund to the Manager were $10,114,770,
$10,347,426, $12,078,956, and $2,134,834, respectively.
The advisory agreement contains a provision limiting the Fund's
expenses. That provision provides that the Manager will reimburse the
Fund for its annual expenses, other than taxes, interest, brokerage
commissions and extraordinary non-recurring expenses, that exceed in
any fiscal year 1.5% of the first $30 million of the Fund's average
annual net assets plus 1% of the Fund's average annual net assets in
excess of $30 million. The payment of the management fee at the end of
any month will be reduced as necessary so that there will not be any
accrued but unpaid liability under this expense limitation.
The advisory agreement provides that as long as it shall have acted
with due care and in good faith, the Manager is not 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. However,
the Agreement does not exculpate the Manager from willful misfeasance,
bad faith, or gross negligence in the performance of its duties or from
reckless disregard of its obligations and duties under the Agreement.
The Agreement permits the Manager to act as investment adviser for any
other person, firm or corporation and to use the name "Oppenheimer" in
connection with other investment companies for which it may act as
investment adviser or general distributor. If the Manager shall no
longer act as investment adviser to the Fund, the right of the Fund to
use the name "Oppenheimer" as part of its name may be withdrawn.
-- The Distributor. Under its General Distributor's Agreement with
the Fund, the Distributor acts as the Fund's principal underwriter in
the continuous public offering of the Fund's Class A, Class B and Class
C shares but is not obligated to sell a specific number of shares.
Expenses normally attributable to sales, (excluding payments under the
Distribution and Service Plans but including advertising and the cost
of printing and mailing prospectuses, other than those furnished to
existing shareholders), are borne by the Distributor. During the
Fund's fiscal years ended June 30, 1994, 1995, 1996 and for the period
from July 1, 1996 through August 31, 1996 the aggregate sales charges
on sales of the Fund's Class A shares were $7,807,280 , $4,629,585,
$4,966,513 and $632,850, respectively, of which the Distributor and an
affiliated broker-dealer retained in the aggregate, $2,506,452,
$1,414,085, $1,546,454 and $218,008 in those respective years. During
the Fund's fiscal years ended June 30, 1996 and for the period from
July 1, 1996 through August 31, 1996 the contingent deferred sales
charges collected by the Distributor on the Fund's Class B shares
totaled $2,939,846 and $489,862 of which $227,772 and $43,178 were paid
by the Distributor to an affiliate. During the Fund's fiscal year
ended June 30, 1996 and for the period from July 1, 1996 through August
31, 1996, the contingent deferred sales charges collected by the
Distributor on the Fund's Class C shares totaled $55,998 and $15,300
respectively of which the $1,807 and $713 were paid by the Distributor
to an affiliate. For additional information about distribution of the
Fund's shares and the payments made by the Fund to the Distributor in
connection with such activities, please refer to "Distribution and
Service Plans," below.
-- The Transfer Agent. OppenheimerFunds Services, the Fund's
Transfer Agent, is responsible for maintaining the Fund's shareholder
registry and shareholder accounting records, and for shareholder
servicing and administrative functions.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of the
duties of the Manager under the advisory agreement is to arrange the
portfolio transactions for the Fund. The advisory agreement contains
provisi ons 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 Trustees.
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 investment advisory agreement and the procedures and
rules described above. In either case, brokerage is allocated under
the supervision of the Manager's executive officers. Transactions in
securities other than those for which an exchange is the primary market
are generally done with principals or market makers. 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 for in commission dollars. The Board of Trustees
has permitted the Manager to use concessions on fixed price offerings
of fixed income securities to obtain research, in the same manner as is
permitted for agency transactions. The Board has also permitted the
Manager to use stated commissions on secondary fixed-income agency
trades to obtain research where the broker has represented to the
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 Trustees, including the "independent" Trustees of the Fund
(those Trustees 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 June 30, 1994, 1995, 1996 and
for the period from July 1, 1996 through August 31, 1996 total
brokerage commissions paid by the Fund (not including spreads or
concessions on principal transactions on a net trade basis) were
$4,522,951, $2,355,811, $766,137 and $168,229, respectively. During
the fiscal year ended June 30, 1996, and for the period from July 1,
1996 through August 31, 1996, $40,548 and $147,662 was paid to brokers
as commissions in return for research services; the aggregate dollar
amount of those transactions was $103,961,319 and $28,104,364,
respectively. 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 "total return at
net asset value" of an investment in a class of shares of the Fund may
be advertised. An explanation of how these total returns are
calculated for each class and the components of those calculations is
set forth below.
The Fund's advertisements of its performance data must, under
applicable rules of the Securities and Exchange Commission, include the
average annual total returns for each class of shares of the Fund for
the 1, 5, and 10-year periods (or the life of the class, if less)
ending as of the most recently-ended calendar quarter prior to the
publication of the advertisement. This enables an investor to compare
the Fund's performance to the performance of other funds for the same
periods. However, a number of factors should be considered before using
such information as a basis for comparison with other investments. An
investment in the Fund is not insured; its returns and share prices are
not guaranteed and normally will fluctuate on a daily basis. When
redeemed, an investor's shares may be worth more or less than their
original cost. Returns for any given past period are not a prediction
or representation by the Fund of future returns. The returns of Class
A, Class B and Class C shares of the Fund are affected by portfolio
quality, the type of investments the Fund holds and its operating
expenses allocated to the particular class.
-- Average Annual Total Returns. The "average annual total return"
of each class is an average annual compounded rate of return for each
year in a specified number of years. It is the rate of return based on
the change in value of a hypothetical initial investment of $1,000 ("P"
in the formula below) held for a number of years ("n") to achieve an
Ending Redeemable Value ("ERV") of that investment, according to the
following formula:
( ERV ) 1/n
(-----) -1 = Average Annual Total Return
( P )
-- Cumulative Total Returns. The cumulative "total return"
calculation measures the change in value of a hypothetical investment
of $1,000 over an entire period of years. Its calculation uses
some of the same factors as average annual total return, but it does
not average the rate of return on an annual basis. Cumulative total
return is determined as follows:
ERV - P
- ------- = Total Return
P
In calculating total returns for Class A shares, the current maximum
sales charge of 5.75% (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 (5.0% for
the first year, 4.0% for the second year, 3.0% for the third and fourth
years, 2.0% in the fifth year, 1.0% in the sixth year and none
thereafter) is applied to the investment result for the period shown
(unless the total return is shown at net asset value, as described
below). For Class C shares, the payment of the 1% contingent deferred
sales charge is applied to the investment result for the one year
period (or less). Total returns also assume that all dividends and
capital gains distributions during the period are reinvested to buy
additional shares at net asset value per share, and that the investment
is redeemed at the end of the period. The "average annual total
returns" on an investment in Class A shares of the Fund for the one,
five and ten year periods ended June 30, 1996 were 11.79%, 10.87% and
10.19%, respectively. The "average annual total returns on an
investment in Class A shares of the Fund (using the method described
above) for the one, five and ten year periods ended August 31, 1996
were 6.51%, 9.70% and 10.15%, respectively. During a portion of the
periods for which total returns are shown for Class A shares, the
Fund's maximum initial sales charge rate was higher. As a result,
performance of an actual investment during those periods would be less
than the results shown. The cumulative "total return" on Class A
shares for the ten year period ended June 30, 1996 and August 31, 1996
were 163.86% and 162.94%, respectively. The "average annual total
returns" on an investment in Class B shares of the Fund for the one
year period ended June 30, 1996 and for the period from August 17, 1993
(commencement of the offering of Class B shares) through June 30, 1996
was 12.58% and 9.24%, respectively. The "average annual total returns"
on an investment in Class B shares of the Fund for the one year period
ended August 31, 1996 and for the period from August 17, 1993
(commencement of the offering of Class B shares) through June 30, 1996
were 7.11% and 8.86%, respectively. The cumulative "total return" on
Class B shares for the period from August 17, 1993 through June 30,
1996 and August 31, 1996 were 28.88% and 29.41%, respectively. The
cumulative "total return" on Class C shares for the period from
November 1, 1995 through June 30, 1996 and August 31, 1996 were 9.50%
and 9.01%, respectively.
-- Total Returns at Net Asset Value. From time to time the Fund may
also quote an average annual total return at net asset value or a
cumulative total return at net asset value for Class A, Class B or
Class C shares. Each is based on the difference in net asset value per
share at the beginning and the end of the period for a hypothetical
investment in that class of shares (without considering front-end or
contingent deferred sales charges) and takes into consideration the
reinvestment of dividends and capital gains distributions. The
cumulative total return at net asset value of the Fund's Class A shares
for the ten-year period ended June 30, 1996 and August 31, 1996 were
179.96% and 178.99%, respectively. The average annual total returns at
net asset value for the one, five and ten-year periods ended June 30,
1996, for Class A shares were 18.61%, 12.20% and 10.84%, respectively.
The "average annual total return" at net asset value for the one, five
and ten year periods ended August 31, 1996 for Class A shares were
13.01%, 11.01% and 10.80%, respectively. The cumulative total return
at net asset value on the Fund's Class B shares for the period from
August 17, 1993 through June 30, 1996 and August 31, 1996 were 31.88%
and 31.41%, respectively. The average annual total returns at net asset
value on the Fund's Class B shares for the one year period ended June
30, 1996 and for the period from August 17, 1993 through June 30, 1996
were 17.58% and 10.12%, respectively. The average annual total returns
at net asset value on the Fund's Class B shares for the one year period
ended August 31, 1996 and for the period from August 17, 1996 through
August 31, 1996 were 12.11% and 9.41%, respectively. The "cumulative
total return" on Class C shares from the period November 1, 1995
(commencement of the offering of the Class) through June 30, 1996 and
August 31, 1996 were 10.50% and 10.01%, respectively.
Total return information may be useful to investors in reviewing the
performance of the Fund and Class A, Class B or Class C shares.
However, when comparing total return of an investment in shares of the
Fund with that of other alternatives, investors should understand that
as the Fund is an equity fund seeking capital appreciation, its shares
are subject to greater market risks and volatility than shares of funds
having more conservative investment objectives and policies and that
the Fund is designed for investors who are willing to accept greater
risk of loss in the hopes of realizing greater gains.
Other Performance Comparisons. From time to time the Fund may publish
the ranking of its Class A, Class B or Class C shares by Lipper
Analytical Services, Inc. ("Lipper"), a widely-recognized independent
mutual fund monitoring service. Lipper monitors the performance of
regulated investment companies, including the Fund, and ranks their
performance for various periods based on categories relating to
investment objectives. The performance of the Fund is ranked against
(i) all other funds, (ii) all other "equity income" funds and (iii) all
other "equity income" funds with assets of more than $1 billion. The
Lipper performance rankings are based on total returns that include the
reinvestment of capital gain distributions and income dividends but do
not take sales charges or taxes into consideration.
From time to time the Fund may publish the ranking of the
performance of its Class A, Class B or Class C shares by Morningstar,
Inc., an independent mutual fund monitoring service that ranks mutual
funds, including the Fund, monthly in broad investment categories
(equity, taxable bond, municipal bond and hybrid) based on risk-
adjusted investment return. Investment return measures a fund's three,
five and ten-year average annual total returns (when available) in
excess of 90-day U.S. Treasury bill returns after considering sales
charges and expenses. Risk measures fund performance below 90-day U.S.
Treasury bill monthly returns. Risk and investment return are combined
to produce star rankings reflecting performance relative to the average
fund in a fund's category. Five stars is the "highest" ranking (top
10%), four stars is "above average" (next 22.5%), three stars is
"average" (next 35%), two stars is "below average" (next 22.5%) and one
star is "lowest" (bottom 10%). Morningstar ranks the Fund in relation
to other equity funds. Rankings are subject to change.
The total return on an investment in the Fund's Class A, Class B or
Class C shares may be compared with performance for the same period of
either 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
dividends but does not reflect expenses or taxes. The performance of
the Fund's Class A, Class B or Class C shares may also be compared in
publications to (i) the performance of various market indices or to
other investments for which reliable performance data is available, and
(ii) to averages, performance rankings or other benchmarks prepared by
recognized mutual fund statistical services.
Investors may also wish to compare the Fund's Class A, Class B or
Class C return to the returns on fixed income investments available
from banks and thrift institutions, such as certificates of deposit,
ordinary interest-paying checking and savings accounts, and other forms
of fixed or variable time deposits, and various other instruments such
as Treasury bills. However, 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.
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. Each Plan has been approved by a vote of (i) the
Board of Trustees of the Fund, including a majority of the Independent
Trustees, cast in person at a meeting called for the purpose of voting
on that Plan, and (ii) the holders of a "majority" (as defined in the
Investment Company Act) of the shares of each class. For the
Distribution and Service Plans for Class B and Class C shares, that
vote was cast by the Manager as the sole initial holder of Class B and
Class C shares of the Fund.
In addition, under the Plans, the Manager and the Distributor, in
their sole discretion, from time to time, may use their own resources
(which, in the case of the Manager, may include profits from the
advisory fee it receives from the Fund), to make payments to brokers,
dealers or other financial institutions (each is referred to as a
"Recipient" under the Plans) for distribution and administrative
services they perform, at no cost to the Fund. The Distributor and the
Manager may, in their sole discretion, increase or decrease the amount
of payments they make from their own resources to Recipients.
Unless terminated as described below, each Plan continues in effect
from year to year but only as long as its continuance is specifically
approved at least annually by the Fund's Board of Trustees and its
Independent Trustees by a vote cast in person at a meeting called for
the purpose of voting on such continuance. Either Plan may be
terminated at any time by the vote of a majority of the Independent
Trustees or by the vote of the holders of a "majority" (as defined in
the Investment Company Act) of the outstanding shares of that class.
Neither Plan may be amended to increase materially the amount of
payments to be made unless such amendment is approved by shareholders
of the class affected by the amendment. In addition, because Class B
shares of the Fund automatically convert into Class A shares after six
years, the Fund is required to obtain the approval of Class B as well
as Class A shareholders for a proposed amendment to the Class A Plan
that would materially increase payments under the 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 Trustees.
While the Plans are in effect, the Treasurer of the Fund shall
provide separate written reports to the Fund's Board of Trustees at
least quarterly on the amount of all payments made pursuant to each
Plan, the purpose for which payments were made and the services
rendered in connection with the distribution of shares. The report for
the Class B plan is to include the Distributor's distribution costs for
that quarter, and such costs for previous fiscal periods that have been
carried forward, as explained in the Prospectus and below. The Class A
and Class B reports must also identify each recipient that received
payments. Those reports, will be subject to the review and approval of
the Independent Trustees in the exercise of their fiduciary duty. Each
Plan further provides that while it is in effect, the selection and
nomination of those Trustees of the Fund who are not "interested
persons" of the Fund is committed to the discretion of the Independent
Trustees. 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 Trustees.
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 Trustees. The Board of Trustees has set the fees at
the maximum rate (except for assets representing Class A shares
acquired prior to April 1, 1991, for which the rate is 0.15% for the
current fiscal year) and set no minimum amount.
For the fiscal year ended June 30, 1996, and the period from July
1, 1996 through August 31, 1996 payments under the Plan for Class A
shares totaled $3,872,138, and $693,619 , respectively, all of which
was paid by the Distributor to Recipients including $248,431 and
$44,931, respectively, 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 Plan allow 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 June 30, 1996 and the period from July 1,
1996 through August 31, 1996 totalled $2,077,724 and $432,504, of which
$1,728,635 and $355,295 were retained by the Distributor and $34,064
and $ 6,798 were paid to a dealer affiliated with the Distributor,
respectively. Payments made under the Class C Plan during their fiscal
years ended June 30, 1996 and for the period from July 1, 1996 through
August 31, 1996 totaled $ 16,702 and $11,319 of which $15,925 and
$9,940 were retained by the Distributor and $15 and $10 were paid to a
dealer affiliated with the Distributor, respectively.
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 Rules of Fair Practice 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
Plan and from contingent deferred sales charges, and such expenses will
be carried forward and paid in future years. The Fund will be charged
only for interest expenses, carrying charges or other financial costs
that are directly related to the carry-forward of actual distribution
expenses. For example, if the Distributor incurred distribution
expenses of $4 million in a given fiscal year, of which $2,000,000 was
recovered in the form of contingent deferred sales charges paid by
investors and $1,600,000 was reimbursed in the form of payments made by
the Fund to the Distributor under the Class B Plan, the balance of
$400,000 (plus interest) would be subject to recovery in future fiscal
years from such sources.
The Class B Plan allows for the carry-forward of distribution
expenses, to be recovered from asset-based sales charges in subsequent
fiscal periods, as described in the Prospectus. The asset-based sales
charge paid to the Distributor by the Fund under the Class B Plan is
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. Such payments
may also be used to pay the Distributor for the following expenses in
connection with the distribution of Class B shares: (i) financing the
advance of the service fee payment to Recipients under the Class B
Plan, (ii) compensation and expenses of personnel employed by the
Distributor to support distribution of Class B shares, and (iii) costs
of sales literature, advertising and prospectuses (other than those
furnished to current shareholders) and state "blue sky" registration
fees.
The Class C Plan provides 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), state "blue sky" registration fees and certain
other distribution expenses.
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A, Class B and Class C Shares.
The availability of three classes of shares permits an investor to
choose the method of purchasing shares that is more beneficial to the
investor depending on the amount of the purchase, the length of time
the investor expects to hold shares and other relevant circumstances.
Investors should understand that the purpose and function of the
deferred sales charge and asset-based sales charge with respect to
Class B shares 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.
The three 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 such shares
will be reduced by expenses borne solely by those classes, including
the asset-based sales charge to which both classes of 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 B shares does not
constitute a taxable event for the holder under Federal income tax law.
If such a revenue ruling or opinion is no longer available, the
automatic conversion feature may be suspended, in which event no
further conversions of Class B shares would occur while such suspension
remained in effect. Although Class B shares could then be exchanged
for Class A shares on the basis of relative net asset value of the two
classes, without the imposition of a sales charge or fee, such exchange
could constitute a taxable event for the holder, and absent such
exchange, Class B shares might continue to be subject to the asset-
based sales charge for longer than six years.
The methodology for calculating the net asset value, dividends and
distributions of the Fund's Class A, Class B and Class C shares
recognizes two types of expenses. General expenses that do not pertain
specifically to any class are allocated pro rata to the shares of each
class, based on the percentage of the net assets of such class to the
Fund's total 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 Independent
Trustees, (v) custodian expenses, (vi) share issuance costs, (vii)
organization and start-up costs, (viii) interest, taxes and brokerage
commissions, and (ix) non-recurring expenses, such as litigation costs.
Other expenses that are directly attributable to a class are allocated
equally to each outstanding share within that class. Such expenses
include (i) Distribution and/or Service Plan fees, (ii) incremental
transfer and shareholder servicing agent fees and expenses, (iii)
registration fees and (iv) shareholder meeting expenses, to the extent
that such expenses pertain to a specific class rather than to the Fund
as a whole.
Determination of Net Asset Values Per Share. The net asset values per
share of Class A, Class B, Class C and Class Y shares of the Fund are
determined as of the close of business of The New York Stock Exchange
(the "Exchange") on each day that the Exchange is open, by dividing the
Fund's net assets attributable to a class by the number of shares of
that class that are outstanding. The Exchange normally closes at 4:00
P.M., but may close earlier on some other days (for example, in case of
weather emergencies or days falling before a holiday). The Exchange's
most recent annual announcement (which is subject to change) states
that it will close on New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. It may also close on other days. The Fund may invest a
portion of its assets in foreign securities primarily listed on foreign
exchanges which may trade on Saturdays or customary U.S. business
holidays on which the Exchange is closed. Because the Fund's price and
net asset value will not be calculated on those days, the Fund's net
asset values per share may be significantly affected on such days when
shareholders may not purchase or redeem shares.
The Fund's Board of Trustees has established procedures for the
valuation of the Fund's securities, generally as follows: (i) equity
securities traded on a 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 their primary exchange or NASDAQ that day (or,
in the absence of sales that day, at values based on the last sale
price of the preceding trading day, or closing bid and asked prices
that day); (ii) securities traded on a foreign securities exchange are
valued generally at the last sales price available to the pricing
service approved by the Fund's Board of Trustees or to the Manager as
reported by the principal exchange on which the security is traded at
its last trading session on or immediately preceding the valuation
date, or at the mean between "bid" and "asked" prices obtained from the
principal exchange or two active market makers in the security on the
basis of reasonable inquiry; (iii) long-term debt securities having a
remaining maturity in excess of 60 days are valued based on the mean
between the "bid" and "asked" prices determined by a portfolio pricing
service approved by the Fund's Board of Trustees or obtained by the
Manager from two active market makers in the security on the basis of
reasonable inquiry; (iv) debt instruments having a maturity of more
than 397 days when issued, and non-money market type instruments having
a maturity of 397 days or less when issued, which have a remaining
maturity of 60 days or less are valued at the mean between "bid" and
"asked" prices determined by a pricing service approved by the Fund's
Board of Trustees or obtained by the Manager from two active market
makers in the security on the basis of reasonable inquiry; (v) money
market-type debt securities that had a maturity of less than 397 days
when issued that have a remaining maturity of 60 days or less are
valued at cost, adjusted for amortization of premiums and accretion of
discounts; and (vi) securities (including restricted securities) not
having readily-available market quotations are valued at fair value
determined under the Board's procedures. If the Manager is unable to
locate two market makers willing to give quotes (see (ii), (iii) and
(iv) above), the security may be priced at the mean between the "bid"
and "asked" prices provided by a single active market maker.
In the case of U.S. Government Securities and mortgage-backed
securities, where last sale information is not generally available,
such pricing procedures may include "matrix" comparisons to the prices
for comparable instruments on the basis of quality, yield, maturity and
other special factors involved. The Manager may use pricing services
approved by the Board of Trustees to price any of the types of
securities described above to price U.S. Government Securities,
mortgage-backed securities, foreign government securities and corporate
bonds. The Manager will monitor the accuracy of such pricing services,
which may include comparing prices used for portfolio evaluation to
actual sales prices of selected securities.
Trading in securities on European and Asian exchanges and over-the-
counter markets is normally completed before the close of the New York
Stock Exchange. Events affecting the values of foreign securities
traded in securities markets that occur between the time their prices
are determined and the close of the New York Stock Exchange will not be
reflected in the Fund's calculation of net asset value unless the Board
of Trustees or the Manager, under procedures established by the Board
of Trustees, determines that the particular event is likely to effect a
material change in the value of such security. Foreign currency,
including forward contracts, will be valued at the closing price in the
London foreign exchange market that day as provided by a reliable bank,
dealer or pricing service. The values of securities denominated in
foreign currency will be converted to U.S. dollars at the closing price
in the London foreign exchange market that day as provided by a
reliable bank, dealer or pricing service.
Puts, calls and Futures are valued at the last sales price on the
principal exchange on which they are traded, or on NASDAQ, as
applicable, as determined by a pricing service approved by the Board of
Trustees or by the Manager. If there were no sales that day, value
shall be the last sale price on the preceding trading day if it is
within the spread of the closing bid and asked prices on the principal
exchange or on NASDAQ on the valuation date, or, if not, value shall be
the closing bid price on the principal exchange or on NASDAQ on the
valuation date. If the put, call or future is not traded on an
exchange or on NASDAQ, it shall be valued at the mean between bid and
asked prices obtained by the Manager from two active market makers
(which in certain cases may be the bid price if no asked price is
available).
When the Fund writes an option, an amount equal to the premium received
by the Fund is included in the Fund's Statement of Assets and
Liabilities as an asset, and an equivalent deferred credit is included
in the liability section. The deferred credit is adjusted "marked-to-
market" to reflect the current market value of the option. In
determining the Fund's gain on investments, if a call written by the
Fund is exercised, the proceeds are increased by the premium received.
If a call or put written by the Fund expires, the Fund has a gain in
the amount of the premium; if the Fund enters into a closing purchase
transaction, it will have a gain or loss depending on whether the
premium was more or less than the cost of the closing transaction. If
the Fund exercises a put it holds, the amount the Fund receives on its
sale of the underlying investment is reduced by the amount of premium
paid by the Fund.
AccountLink. When shares are purchased through AccountLink, each
purchase must be at least $25.00. Shares will be purchased on the
regular business day the Distributor is instructed to initiate the
Automated Clearing House ("ACH") transfer to buy the shares. Dividends
will begin to accrue on shares purchased by the proceeds of ACH
transfers on the business day the Fund receives Federal Funds for such
purchase through the ACH system before the close of the 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 three days after the
transfers are initiated. The Distributor and the Fund are not
responsible for any delays in purchasing shares resulting from delays
in ACH transmissions.
Reduced Sales Charges. 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 reduction in expenses realized by the Distributor, dealers
and brokers making such sales. No sales charge is imposed in certain
other circumstances described in the Prospectus because the Distributor
incurs little or no selling expenses. The term "immediate family"
refers to one's spouse, children, grandchildren, grandparents, parents,
parents-in-law, brothers and sisters, sons- and daughters-in-law, a
sibling's spouse, a spouse's siblings, aunts, uncles, nieces and
nephews.
-- The Oppenheimer Funds. The Oppenheimer funds are those mutual
funds for which the Distributor acts as the distributor or the sub-
distributor and include the following:
Oppenheimer Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer California Municipal Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer Insured Municipal Fund
Oppenheimer Main Street California Municipal Fund
Oppenheimer Florida Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer New Jersey Municipal Fund Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer International Growth Fund
Oppenheimer Enterprise Fund
Oppenheimer Bond Fund for Growth
Oppenheimer Life Span Balanced Fund
Oppenheimer Life Span Growth Fund
Oppenheimer Life Span Income Fund
Oppenheimer High Yield Fund
Oppenheimer Champion Income Fund
Oppenheimer Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer International Bond Fund
Oppenheimer 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*
Rochester Portfolio Series-Limited Term New York Municipal Fund*
Oppenheimer Disciplined Value Fund
Oppenheimer Disciplined Allocation Fund
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
*Shares of the Fund are not presently exchangeable for shares of
these funds
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).
-- 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)
applicable 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
purchases 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.
-- Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in value
to 5% of the intended purchase amount specified in the Letter shall be
held in escrow by the Transfer Agent. For example, if the intended
purchase amount is $50,000, the escrow shall be shares valued in the
amount of $2,500 (computed at the public offering price adjusted for a
$50,000 purchase). Any dividends and capital gains distributions on
the escrowed shares will be credited to the investor's account.
2. If the intended purchase amount specified under the Letter is
completed within the thirteen-month Letter of Intent period, the
escrowed shares will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period the
total purchases pursuant to the Letter are less than the intended
purchase amount specified in the Letter, the investor must remit to the
Distributor an amount equal to the difference between the dollar amount
of sales charges actually paid and the amount of sales charges which
would have been paid if the total amount purchased had been made at a
single time. Such sales charge adjustment will apply to any shares
redeemed prior to the completion of the Letter. If such difference in
sales charges is not paid within twenty days after a request from the
Distributor or the dealer, the Distributor will, within sixty days of
the expiration of the Letter, redeem the number of escrowed shares
necessary to realize such difference in sales charges. Full and
fractional shares remaining after such redemption will be released from
escrow. If a request is received to redeem escrowed shares prior to
the payment of such additional sales charge, the sales charge will be
withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes and
appoints the Transfer Agent as attorney-in-fact to surrender for
redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the holding
of which may be counted toward completion of a Letter) include (a)
Class A shares sold with a front-end sales charge or subject to a Class
A contingent deferred sales charge, (b) Class B shares acquired subject
to a contingent deferred sales charge, and (c) Class A or B shares
acquired in exchange for either (i) Class A shares of one of the other
Oppenheimer funds that were acquired subject to a Class A initial or
contingent deferred sales charge or (ii) Class B shares of one of the
other Oppenheimer funds that were acquired subject to a contingent
deferred sales charge.
6. Shares held in escrow hereunder will automatically be exchanged
for shares of another fund to which an exchange is requested, as
described in the section of the Prospectus entitled "Exchange
Privilege," 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.
There is a front-end sales charge on the purchase of certain
Oppenheimer funds, or a contingent deferred sales charge may apply to
shares purchased by Asset Builder payments. An application should be
obtained from the Distributor, completed and returned, and a prospectus
of the selected fund(s) should be obtained from the Distributor or your
financial advisor before initiating Asset Builder payments. The amount
of the Asset Builder investment may be changed or the automatic
investments may be terminated at any time by writing to the Transfer
Agent. A reasonable period (approximately 15 days) is required after
the Transfer Agent's receipt of such instructions to implement them.
The Fund reserves the right to amend, suspend, or discontinue offering
such plans at any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders for
the Fund's shares (for example, when a purchase check is returned to
the Fund unpaid) causes a loss to be incurred when the net asset value
of the Fund's shares on the cancellation date is less than on the
purchase date. That loss is equal to the amount of the decline in the
net asset value per share multiplied by the number of shares in the
purchase order. The investor is responsible for that loss. If the
investor fails to compensate the Fund for the loss, the Distributor
will do so. The Fund may reimburse the Distributor for that amount by
redeeming shares from any account registered in that investor's name,
or the Fund or the Distributor may seek other redress.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and conditions
for redemptions set forth in the Prospectus.
-- Involuntary Redemptions. The Fund's Board of Trustees 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
$200 or such lesser amount as the Board may fix. The Board of Trustees
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, the requirements for any notice to be given to
the shareholders in question (not less than 30 days), or the Board may
set requirements for granting permission to the Shareholder to increase
the investment, and set other terms and conditions so that the shares
would not be involuntarily redeemed.
-- Payments "In Kind". The Prospectus states that payment for
shares tendered for redemption is ordinarily made in cash. However,
the Board of Trustees 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 the
"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 purchased subject to an initial sales charge, or (ii)
Class A or Class B shares on which the shareholder paid a contingent
deferred sales charge when redeemed. This privilege does not apply to
Class C shares. 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 Class C contingent deferred sales charge will be followed in
determining the order in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, 401(k)
plans, or pension or profit-sharing plans should be addressed to
"Trustee, OppenheimerFunds Retirement Plans," c/o the Transfer Agent at
its address listed in "How To Sell Shares" in the Prospectus or on the
back cover of this Statement of Additional Information. The request
must: (i) state the reason for the distribution; (ii) state the owner's
awareness of tax penalties if the distribution is premature; and (iii)
conform to the requirements of the plan and the Fund's other redemption
requirements. Participants (other than self-employed persons
maintaining a plan in their own name) in OppenheimerFunds-sponsored
pension, profit-sharing plans or 401(k) plans may not directly redeem
or exchange shares held for their accounts under those plans. The
employer or plan administrator must sign the request. Distributions
from pension and profit sharing plans are subject to special
requirements under the Internal Revenue Code and certain documents
(available from the Transfer Agent) must be completed before the
distribution may be made. Distributions from retirement plans are
subject to withholding requirements under the Internal Revenue Code,
and IRS Form W-4P (available from the Transfer Agent) must be submitted
to the Transfer Agent with the distribution request, or the
distribution may be delayed. Unless the shareholder has provided the
Transfer Agent with a certified tax identification number, the Internal
Revenue Code requires that tax be withheld from any distribution even
if the shareholder elects not to have tax withheld. The Fund, the
Manager, the Distributor, the Trustee and the Transfer Agent assume no
responsibility to determine whether a distribution satisfies the
conditions of applicable tax laws and will not be responsible for any
tax penalties assessed in connection with a distribution.
Special Arrangements for Repurchase of Shares from Dealers and Brokers.
The Distributor is the Fund's agent to repurchase its shares from
authorized dealers or brokers 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 closed (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 the required redemption documents in proper form,
with the signature(s) of the registered owners guaranteed on the
redemption document as described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of
the Fund valued at $5,000 or more can authorize the Transfer Agent to
redeem shares (minimum $50) automatically on a monthly, quarterly,
semi-annual or annual basis under an Automatic Withdrawal Plan. Shares
will be redeemed three business days prior to the date requested by the
shareholder for receipt of the payment. Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are to be
made by check payable to all shareholders of record and sent to the
address of record for the account (and if the address has not been
changed within the prior 30 days). Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on this
basis. Payments are normally made by check, but shareholders having
AccountLink privileges (see "How To Buy Shares") may arrange to have
Automatic Withdrawal Plan payments transferred to the bank account
designated on the OppenheimerFunds New Account Application or
signature-guaranteed instructions. The Fund cannot guarantee receipt
of a payment on the date requested and reserves the right to amend,
suspend or discontinue offering such plans at any time without prior
notice. Because of the sales charge assessed on Class A share
purchases, shareholders should not make regular additional Class A
share purchases while participating in an Automatic Withdrawal Plan.
Class B and Class C shareholders should not establish withdrawal plans
because of the imposition of the contingent deferred sales charge on
such withdrawals (except where the Class B or Class C contingent
deferred sales charge is waived as described in the Prospectus under
"Waivers of Class B and Class C Sales Charges").
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such
plans, as stated below and in the provisions of the OppenheimerFunds
Application relating to such Plans, as well as the Prospectus. These
provisions may be amended from time to time by the Fund and/or the
Distributor. When adopted, such amendments will automatically apply to
existing Plans.
-- Automatic Exchange Plans. Shareholders can authorize the
Transfer Agent (on the OppenheimerFunds Application or signature-
guaranteed instructions) to exchange a pre-determined amount of shares
of the Fund for shares (of the same class) of other Oppenheimer funds
automatically on a monthly, quarterly, semi-annual or annual basis
under an Automatic Exchange Plan. The minimum amount that may be
exchanged to each other fund account is $25. Exchanges made under
these plans are subject to the restrictions that apply to exchanges as
set forth in "How to Exchange Shares" in the Prospectus and below in
this Statement of Additional Information.
-- Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a sales
charge will be redeemed first and shares acquired with reinvested
dividends and capital gains distributions will be redeemed next,
followed by shares acquired with a sales charge, to the extent
necessary to make withdrawal payments. Depending upon the amount
withdrawn, the investor's principal may be depleted. Payments made
under withdrawal plans should not be considered as a yield or income on
your investment.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the
"Planholder") who executed the Plan authorization and application
submitted to the Transfer Agent. Neither the Fund nor the Transfer
Agent shall incur any 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 Class A shares held under the Plan as collateral for a debt,
the Planholder may request issuance of a portion of the Class A shares
in certificated form. Share certificates are not issued for Class B or
Class C shares. Upon written request from the Planholder, the Transfer
Agent will determine the number of Class A shares for which a
certificate may be issued without causing the withdrawal checks to stop
because of exhaustion of uncertificated shares needed to continue
payments. However, should such uncertificated shares become exhausted,
Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the Fund,
the Planholder will be deemed to have appointed any successor transfer
agent to act as agent in administering the Plan.
How To Exchange Shares
As stated in the Prospectus, shares of a particular class of
Oppenheimer funds having more than one class of shares may be exchanged
only for shares of the same class of other Oppenheimer funds. Shares
of the Oppenheimer funds that have a single class without a class
designation are deemed "Class A" shares for this purpose. All of the
Oppenheimer funds offer Class A, B and C shares except Oppenheimer
Money Market Fund, Inc., Centennial Money Market Trust, Centennial Tax
exempt Trust, Centennial Government Trust, Centennial New York Tax
Exempt Trust, Centennial California Tax Exempt Trust, Centennial
America Fund, L.P., and Daily Cash Accumulation Fund, Inc., 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. Prior to May 1, 1996, Oppenheimer
Disciplined Value Fund, Oppenheimer Disciplined Allocation Fund,
Oppenheimer LifeSpan Balanced Fund, Oppenheimer LifeSpan Income Fund
and Oppenheimer LifeSpan Growth Fund offered only Class A and Class B
shares and are not eligible for exchange to or from other Oppenheimer
funds.
For accounts established on or before March 8, 1996 holding Class M
shares of Oppenheimer Bond Fund for Growth, Class M shares can be
exchanged only for Class A shares of other Oppenheimer funds, including
Rochester Fund Municipals and Limited Term New York Municipal Fund.
Class A shares of Rochester Fund Municipals or Limited Term New York
Municipal Fund acquired on the exchange of Class M shares of
Oppenheimer Bond Fund for Growth may be exchanged for Class M shares of
that fund. For accounts of Oppenheimer Bond Fund for Growth
established after March 8, 1996, Class M shares may be exchanged for
Class A shares of other Oppenheimer funds except Rochester Fund
Municipals and Limited Term New York Municipals. Exchanges to Class M
shares of Oppenheimer Bond Fund for Growth are permitted from Class A
shares of Oppenheimer Money Market Fund, Inc. or Oppenheimer Cash
Reserves that were acquired by exchange from Class M shares. Otherwise
no exchanges of any class of any Oppenheimer fund into Class M shares
are permitted.
Class A shares of the Oppenheimer funds may be exchanged at net
asset value for shares of any Money Market Fund. Shares of any Money
Market Fund purchased without a sales charge may be exchanged for
shares of Oppenheimer funds offered with a sales charge upon payment of
the sales charge (or, if applicable, may be used to purchase shares of
Oppenheimer funds subject to a contingent deferred sales charge).
However, shares of Oppenheimer Money Market Fund, Inc., purchased with
the redemption proceeds of shares of other mutual funds (other than
funds managed by the Manager or its subsidiaries) redeemed within the
12 months prior to that purchase may subsequently be exchanged for
shares of other Oppenheimer funds without being subject to an initial
or contingent deferred sales charge, whichever is applicable. To
qualify for that privilege, the investor or the investor's dealer must
notify the Distributor of eligibility for this privilege at the time
the shares of Oppenheimer Money Market Fund, Inc., are purchased, and,
if requested, must supply proof of entitlement to this privilege.
Shares of this Fund acquired by reinvestment of dividends or
distributions from any other of the Oppenheimer funds (except
Oppenheimer Cash Reserves) or from any unit investment trust for which
reinvestment arrangements have been made with the Distributor may be
exchanged at net asset value for shares of any of the Oppenheimer
funds. No contingent deferred sales charge is imposed on exchanges of
shares of either class purchased subject to a contingent deferred sales
charge. However, when Class A shares acquired by exchange of Class A
shares of other Oppenheimer funds purchased subject to a Class A
contingent deferred sales charge are redeemed within 18 months of the
end of the calendar month of the initial purchase of the exchanged
Class A shares, the Class A contingent deferred sales charge is imposed
on the redeemed shares (see "Class A Contingent Deferred Sales Charge"
in the Prospectus). The Class B contingent deferred sales charge is
imposed on Class B shares acquired by exchange if they are redeemed
within 6 years of the initial purchase of the exchanged Class B shares.
The Class C contingent deferred sales charge is imposed on Class C
shares acquired by exchange if they are redeemed within 12 months of
the initial purchase of the exchanged Class C shares.
When Class 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 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 Trustees 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 during its last fiscal year, and intends to qualify in
current and future years, but reserves the right not to do so. The
Internal Revenue Code contains a number of complex tests to determine
whether the Fund will qualify, and the Fund might not meet those tests
in a particular year. For example, if the Fund derives 30% or more of
its gross income from the sale of securities held less than three
months, it may fail to qualify (see "Tax Aspects of Covered Calls and
Hedging Instruments," above). If it 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 to enable the investor to
earn a return on otherwise idle funds.
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, collecting income on the
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 between the Manager and 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 Funds cash balances in excess of $100,000 is not
protected by Federal deposit insurance. Such uninsured balances may at
times be substantial.
Independent Auditors. The independent auditors of the Fund audit the
Fund's financial statements and perform other related audit services.
They also act as auditors for the Manager and certain other funds
advised by the Manager and its affiliates.
<PAGE>
Independent Auditors' Report
The Board of Trustees and Shareholders of Oppenheimer Equity Income
Fund:
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Oppenheimer Equity Income
Fund as of August 31, 1996, the statements of operations for the two
months then ended and the year ended June 30, 1996, the statements of
changes in net assets for the two months ended August 31, 1996 and the
years ended June 30, 1996 and 1995, and the financial highlights for
the period July 1, 1991 to August 31, 1996. These financial statements
and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned at August 31, 1996 by correspondence
with the custodian and brokers; where replies were not received from
brokers, we performed other auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Oppenheimer Equity Income Fund at August 31, 1996, the results of its
operations, the changes in its net assets, and the financial highlights
for the respective stated periods, in conformity with generally
accepted accounting principles.
/s/ Deloitte & Touche LLP
- ------------------------
DELOITTE & TOUCHE LLP
Denver, Colorado
September 23, 1996
<PAGE>
<TABLE>
<CAPTION>
Statement of Investments August 31, 1996
Face Market Value
Amount(1) See Note 1
==========================================================
==========================================================
===============
<S> <C> <C>
U.S. Government Obligations--5.3%
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, STRIPS, Zero Coupon, 7.20%, 8/15/08(2) $ 150,000,000 $
64,349,693
---------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., STRIPS, Zero Coupon, 6.78%, 2/15/04(2) 102,500,000
61,708,688
--------------
Total U.S. Government Obligations (Cost $126,743,872) 126,058,381
==========================================================
==========================================================
===============
Foreign Government Obligations--4.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Past Due Interest Bonds, Series L, 6.312%, 3/31/05(3) 6,435,000
5,007,235
---------------------------------------------------------------------------------------------------------------
Banco Nacional de Comercio Exterior SNC
International Finance BV Gtd. Nts., 8%, 8/5/03 9,000,000 7,970,625
---------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Capitalization Bonds, 8%, 4/15/14 10,824,321 6,985,065
---------------------------------------------------------------------------------------------------------------
Bulgaria (Republic of) Interest Arrears Bonds, 6.688%, 7/28/11(3) 17,000,000
7,607,500
---------------------------------------------------------------------------------------------------------------
Canada (Government of) Real Return Debs., 4.517%, 12/1/21(4) CAD 19,800,000
14,328,332
---------------------------------------------------------------------------------------------------------------
New South Wales State Bank Bonds, 9.25%, 2/18/03 AUD 9,900,000
8,273,813
---------------------------------------------------------------------------------------------------------------
Quebec, Canada (Province of) Debs., 10.25%, 4/7/98 CAD 10,000,000
7,871,276
---------------------------------------------------------------------------------------------------------------
Queensland Treasury Corp. Exchangeable Gtd. Nts., 8%, 8/14/01 AUD 33,650,000
27,024,327
---------------------------------------------------------------------------------------------------------------
South Australia (Government of) Bonds, 9%, 9/23/02 AUD 3,000,000
2,483,479
---------------------------------------------------------------------------------------------------------------
Venezuela (Republic of) Front-Loaded Interest Reduction Bonds:
Series A, 6.375%, 3/31/07(3) 14,250,000 11,008,125
Series B, 6.50%, 3/31/07(3) 2,250,000 1,738,125
--------------
Total Foreign Government Obligations (Cost $96,763,028) 100,297,902
==========================================================
==========================================================
===============
Non-Convertible Corporate Bonds and Notes--5.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Auburn Hills Trust, 12% Gtd. Exchangeable Certificates, 5/1/20(3) 5,000,000
7,087,730
---------------------------------------------------------------------------------------------------------------
Banco Bamerindus do Brasil SA:
11% Sr. Unsub. Unsec. Bonds, 10/6/97 465,000 454,537
11% Unsub. Unsec. Nts., 11/24/97 646,000 631,465
9% Unsub. Unsec. Bonds, 10/29/98 1,500,000 1,365,000
---------------------------------------------------------------------------------------------------------------
Boyd Gaming Corp., 10.75% Sr. Sub. Nts., Series B, 9/1/03 5,000,000
5,212,500
---------------------------------------------------------------------------------------------------------------
California Energy Co., 0%/10.25% Sr. Disc. Nts., 1/15/04(5) 4,350,000
4,371,750
---------------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp., 9.125% Sr. Nts., 4/15/06 4,000,000 3,950,000
---------------------------------------------------------------------------------------------------------------
Comcast Corp., 10.25% Sr. Sub. Debs., 10/15/01 6,000,000 6,300,000
---------------------------------------------------------------------------------------------------------------
Cott Corp., 9.375% Sr. Nts., 7/1/05 6,350,000 6,238,875
---------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 9.40% First Mtg. Bonds, Series E, 5/1/11 6,000,000 6,067,500
---------------------------------------------------------------------------------------------------------------
Falcon Drilling, Inc., 8.875% Sr. Nts., Series B, 3/15/03 5,850,000 5,703,750
---------------------------------------------------------------------------------------------------------------
Ferrellgas Partners LP, 9.375% Sr. Sec. Nts., 6/15/06(6) 5,000,000 4,956,250
---------------------------------------------------------------------------------------------------------------
Granite Broadcasting Corp., 9.375% Sr. Sub. Nts., Series A, 12/1/05 5,000,000
4,787,500
---------------------------------------------------------------------------------------------------------------
Heritage Media Corp., 8.75% Sr. Sub. Nts., 2/15/06 4,500,000 4,252,500
---------------------------------------------------------------------------------------------------------------
HMH Properties, Inc., 9.50% Sr. Sec. Nts., Series B, 5/15/05 5,000,000
4,900,000
---------------------------------------------------------------------------------------------------------------
Hollinger International Publishing, Inc., 9.25% Sr. Sub. Gtd. Nts., 2/1/06 5,000,000
4,750,000
---------------------------------------------------------------------------------------------------------------
Magellan Health Services, Inc., 11.25% Sr. Sub. Nts., Series A, 4/15/04 8,250,000
8,868,750
---------------------------------------------------------------------------------------------------------------
MagneTek, Inc., 10.75% Sr. Sub. Debs., 11/15/98 3,000,000 3,015,000
</TABLE>
6 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Non-Convertible Corporate
Bonds and Notes
(continued)
MFS Communications Co., Inc., 0%/9.375% Sr. Disc Nts., 1/15/04(5) $ 4,500,000 $
3,667,500
---------------------------------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp., 0%/11.375% Sr Sub. Disc. Nts., 8/1/03(5) 3,750,000
3,337,500
---------------------------------------------------------------------------------------------------------------
Reliance Group Holdings, Inc., 9.75% Sr. Sub. Debs., 11/15/03 9,000,000
9,067,500
---------------------------------------------------------------------------------------------------------------
Rowan Cos., Inc., 11.875% Sr. Nts., 12/1/01 7,000,000 7,542,500
---------------------------------------------------------------------------------------------------------------
Sociedad Comercial del Plata SA, 11.50% Medium-Term Nts., 5/9/00 1,600,000
1,610,000
---------------------------------------------------------------------------------------------------------------
Station Casinos, Inc., 9.625% Sr. Sub. Nts., 6/1/03 2,700,000 2,605,500
---------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp., 10.125% Sr. Sub. Nts., 3/1/05 5,000,000 5,393,750
---------------------------------------------------------------------------------------------------------------
Tribasa Toll Road Trust, 10.50% Nts., Series 1993-A, 12/1/11(6) 2,500,000
1,937,500
---------------------------------------------------------------------------------------------------------------
Triton Energy Corp., 0%/9.75% Sr. Sub. Disc. Nts., 12/15/00(5) 3,500,000
3,495,625
---------------------------------------------------------------------------------------------------------------
Viacom International, Inc., 10.25% Sr. Sub. Nts., 9/15/01 12,000,000 12,891,035
---------------------------------------------------------------------------------------------------------------
WestPoint Stevens, Inc., 8.75% Sr. Nts., 12/15/01 6,000,000 6,037,500
--------------
Total Non-Convertible Corporate Bonds and Notes (Cost $136,889,691)
140,499,017
==========================================================
==========================================================
===============
Convertible Corporate Bonds and Notes--3.3%
- -----------------------------------------------------------------------------------------------------------------------------------
ALZA Corp., 5% Cv. Sub. Debs., 5/1/06 10,000,000 9,787,500
---------------------------------------------------------------------------------------------------------------
Box Energy Corp., 8.25% Cv. Sub. Nts., 12/1/02 5,000,000 5,112,500
---------------------------------------------------------------------------------------------------------------
Cooper Industries, Inc., 7.05% Cv. Unsec. Sub. Bonds, 1/1/15 6,741,000
7,044,345
---------------------------------------------------------------------------------------------------------------
Inco Ltd.:
5.75% Cv. Debs., 7/1/04 9,700,000 12,270,500
7.75% Cv. Debs., 3/15/16 9,800,000 10,412,500
---------------------------------------------------------------------------------------------------------------
Integrated Device Technology, Inc., 5.50% Cv. Sub. Nts., 6/1/02 7,000,000
5,398,750
---------------------------------------------------------------------------------------------------------------
Mutual Risk Management Ltd., Zero Coupon Cv
Exchangeable Sub. Debs., 5.25%, 10/30/15(2)(6) 19,500,000 7,312,500
---------------------------------------------------------------------------------------------------------------
Oryx Energy Co., 7.50% Cv. Sub. Debs., 5/15/14 7,000,000 6,247,500
---------------------------------------------------------------------------------------------------------------
Stone Container Corp., 8.875% Cv. Sr. Sub. Nts., 7/15/00 3,000,000 4,038,750
---------------------------------------------------------------------------------------------------------------
VLSI Technology, Inc., 8.25% Cv. Sub. Nts., 10/1/05 11,800,000
10,693,750
--------------
Total Convertible Corporate Bonds and Notes (Cost $74,305,048) 78,318,595
Shares
==========================================================
==========================================================
===============
Common Stocks--53.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Basic Materials--3.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Chemicals--1.5%
Dexter Corp. 400,000 11,650,000
---------------------------------------------------------------------------------------------------------------
Dow Chemical Co. (The) 100,000 7,975,000
---------------------------------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co. 200,000 16,425,000
--------------
36,050,000
- -----------------------------------------------------------------------------------------------------------------------------------
Metals--0.2%
Reynolds Metals Co. 100,000 5,350,000
- -----------------------------------------------------------------------------------------------------------------------------------
Paper--1.3%
Union Camp Corp. 200,000 9,700,000
---------------------------------------------------------------------------------------------------------------
Westvaco Corp. 375,000 10,734,375
---------------------------------------------------------------------------------------------------------------
Weyerhaeuser Co. 250,000 11,156,250
--------------
31,590,625
</TABLE>
7 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
Statement of Investments (Continued)
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Consumer Cyclicals--5.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Autos & Housing--2.4%
Ford Motor Co. 500,000 $ 16,750,000
---------------------------------------------------------------------------------------------------------------
General Motors Corp. 400,000 19,900,000
---------------------------------------------------------------------------------------------------------------
Snap-On, Inc. 450,000 20,531,250
--------------
57,181,250
- -----------------------------------------------------------------------------------------------------------------------------------
Leisure & Entertainment--1.7%
AMR Corp.(7) 189,900 15,571,800
---------------------------------------------------------------------------------------------------------------
Delta Air Lines, Inc. 348,640 24,709,860
--------------
40,281,660
- -----------------------------------------------------------------------------------------------------------------------------------
Retail: General--0.9%
Sears Roebuck & Co. 500,000 22,000,000
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclicals--4.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare/Drugs--1.2%
American Home Products Corp. 200,000 11,850,000
---------------------------------------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 200,000 17,550,000
--------------
29,400,000
- -----------------------------------------------------------------------------------------------------------------------------------
Tobacco--3.3%
Philip Morris Cos., Inc. 600,000 53,850,000
---------------------------------------------------------------------------------------------------------------
RJR Nabisco Holdings Corp. 350,000 9,231,250
---------------------------------------------------------------------------------------------------------------
UST, Inc. 500,000 15,000,000
--------------
78,081,250
- -----------------------------------------------------------------------------------------------------------------------------------
Energy--2.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Oil-Integrated--2.4%
Mobil Corp. 100,000 11,275,000
---------------------------------------------------------------------------------------------------------------
Occidental Petroleum Corp. 400,000 9,300,000
---------------------------------------------------------------------------------------------------------------
Phillips Petroleum Co. 300,000 12,150,000
---------------------------------------------------------------------------------------------------------------
Royal Dutch Petroleum Co. 100,000 14,937,500
---------------------------------------------------------------------------------------------------------------
Texaco, Inc. 100,000 8,875,000
--------------
56,537,500
- -----------------------------------------------------------------------------------------------------------------------------------
Financial--28.7%
- -----------------------------------------------------------------------------------------------------------------------------------
Banks--22.8%
Banc One Corp. 770,000 29,548,750
---------------------------------------------------------------------------------------------------------------
Bank of Boston Corp. 505,636 26,672,299
---------------------------------------------------------------------------------------------------------------
Bank of New York Co., Inc. (The) 792,838 22,100,359
---------------------------------------------------------------------------------------------------------------
BankAmerica Corp. 600,000 46,500,000
---------------------------------------------------------------------------------------------------------------
Bankers Trust New York Corp. 100,000 7,775,000
---------------------------------------------------------------------------------------------------------------
Chase Manhattan Corp. (New) 1,122,000 83,448,750
---------------------------------------------------------------------------------------------------------------
Citicorp 741,398 61,721,383
---------------------------------------------------------------------------------------------------------------
Commonwealth Bank, ADR(6)(7) 305,333 4,923,495
---------------------------------------------------------------------------------------------------------------
Crestar Financial Corp. 275,000 15,984,375
---------------------------------------------------------------------------------------------------------------
First Chicago NBD Corp. 452,500 19,287,812
---------------------------------------------------------------------------------------------------------------
First Union Corp. 839,055 53,594,638
---------------------------------------------------------------------------------------------------------------
Fleet Financial Group, Inc. 400,000 16,700,000
---------------------------------------------------------------------------------------------------------------
Great Western Financial Corp. 600,000 14,850,000
---------------------------------------------------------------------------------------------------------------
Greenpoint Financial Corp. 500,000 17,812,500
</TABLE>
8 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Banks (continued)
KeyCorp 400,000 $ 16,050,000
---------------------------------------------------------------------------------------------------------------
Klamath First Bancorp, Inc. 270,000 3,813,750
---------------------------------------------------------------------------------------------------------------
Magna Group, Inc. 400,000 9,950,000
---------------------------------------------------------------------------------------------------------------
Mellon Bank Corp. 450,000 24,918,750
---------------------------------------------------------------------------------------------------------------
National City Corp. 500,000 18,812,500
---------------------------------------------------------------------------------------------------------------
PNC Bank Corp. 301,600 9,425,000
---------------------------------------------------------------------------------------------------------------
Signet Banking Corp. 400,000 9,650,000
---------------------------------------------------------------------------------------------------------------
Summit Bancorp 500,000 19,375,000
---------------------------------------------------------------------------------------------------------------
U.S. Bancorp, Inc. 245,000 9,371,250
--------------
542,285,611
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified Financial--1.5%
American Express Co. 600,000 26,250,000
---------------------------------------------------------------------------------------------------------------
Capital One Financial Corp. 300,000 9,037,500
--------------
35,287,500
- -----------------------------------------------------------------------------------------------------------------------------------
Insurance--4.4%
Allstate Corp. 724,432 32,327,778
---------------------------------------------------------------------------------------------------------------
American General Corp. 500,000 18,250,000
---------------------------------------------------------------------------------------------------------------
American States Financial Corp. 550,000 12,650,000
---------------------------------------------------------------------------------------------------------------
Everest Reinsurance Holdings, Inc. 248,000 6,045,000
---------------------------------------------------------------------------------------------------------------
GCR Holdings Ltd. 100,000 2,300,000
---------------------------------------------------------------------------------------------------------------
IPC Holdings Ltd. 419,000 8,641,875
---------------------------------------------------------------------------------------------------------------
ITT Hartford Group, Inc. 150,000 7,912,500
---------------------------------------------------------------------------------------------------------------
Reliance Group Holdings, Inc. 2,141,500 16,864,313
--------------
104,991,466
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial--3.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Electrical Equipment--0.8%
AMP, Inc. 500,000 19,125,000
- -----------------------------------------------------------------------------------------------------------------------------------
Manufacturing--2.5%
Keystone International, Inc. 300,000 6,037,500
---------------------------------------------------------------------------------------------------------------
Minnesota Mining & Manufacturing Co. 400,000 27,500,000
---------------------------------------------------------------------------------------------------------------
Tenneco, Inc. 500,000 24,875,000
--------------
58,412,500
- -----------------------------------------------------------------------------------------------------------------------------------
Technology--1.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Aerospace/Defense--0.5%
United Technologies Corp. 100,000 11,275,000
- -----------------------------------------------------------------------------------------------------------------------------------
Electronics--0.3%
Tektronix, Inc. 200,000 7,750,000
- -----------------------------------------------------------------------------------------------------------------------------------
Telecommunications-
Technology--0.3%
ICG Communications, Inc.(7)(8) 310,500 6,526,322
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities--5.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Electric Utilities--3.6%
Allegheny Power System, Inc. 300,000 8,887,500
---------------------------------------------------------------------------------------------------------------
Central & South West Corp. 400,000 10,550,000
---------------------------------------------------------------------------------------------------------------
DTE Energy Co. 300,000 8,550,000
---------------------------------------------------------------------------------------------------------------
Entergy Corp. 550,000 13,956,250
---------------------------------------------------------------------------------------------------------------
Florida Progress Corp. 500,000 17,312,500
---------------------------------------------------------------------------------------------------------------
Ohio Edison Co. 400,000 8,400,000
---------------------------------------------------------------------------------------------------------------
Potomac Electric Power Co. 400,000 9,850,000
---------------------------------------------------------------------------------------------------------------
Public Service Co. of Colorado 200,000 7,125,000
--------------
84,631,250
</TABLE>
9 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
Statement of Investments (Continued)
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Gas Utilities--0.3%
NorAm Energy Corp. 225,000 $ 3,290,625
---------------------------------------------------------------------------------------------------------------
Pacific Enterprises 150,000 4,481,250
--------------
7,771,875
- -----------------------------------------------------------------------------------------------------------------------------------
Telephone Utilities--1.9%
GTE Corp. 500,000 19,687,500
---------------------------------------------------------------------------------------------------------------
Portugal Telecom SA, Sponsored ADR(7) 410,000 10,916,250
---------------------------------------------------------------------------------------------------------------
SBC Communications, Inc. 300,000 13,987,500
--------------
44,591,250
--------------
Total Common Stocks (Cost $891,178,615) 1,279,120,059
==========================================================
==========================================================
===============
Preferred Stocks--4.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Armco, Inc., $3.625 Cum. Cv 200,000 9,050,000
---------------------------------------------------------------------------------------------------------------
Banco Commercial Portuguese International Bank Ltd.,
8% Cv. Preferred Stock, Series A 396,000 19,701,000
---------------------------------------------------------------------------------------------------------------
Chiquita Brands International, Inc. $3.75 Cv., Series B 180,000 9,427,500
---------------------------------------------------------------------------------------------------------------
Fidelity Federal Bank, 12% Non-Cum. Exchangeable
Perpetual Preferred Stock, Series A 100,000 2,750,000
---------------------------------------------------------------------------------------------------------------
First Chicago NBD Corp., Depositary Shares
(each representing a one-hundredth interest in a
share of 5.75% cum. cv. preferred stock, series B) 135,000 9,686,250
---------------------------------------------------------------------------------------------------------------
Glendale Federal Bank, F.S.B., 8.75% Non-Cum. Cv., Series E 200,000
9,400,000
---------------------------------------------------------------------------------------------------------------
Occidental Petroleum Corp., $3.875 Cum. Cv. (6) 400,000 22,500,000
---------------------------------------------------------------------------------------------------------------
Sovereign Bancorp, Inc., 6.25% Cv., Series B 36,500 2,139,813
---------------------------------------------------------------------------------------------------------------
Valero Energy Corp., 6.25% Cv. Preferred 200,000 9,725,000
---------------------------------------------------------------------------------------------------------------
Washington Mutual, Inc., $6.00 Non-Cum. Cv. Perpetual Preferred Stock, Series D 96,800
13,600,400
--------------
Total Preferred Stocks (Cost $98,771,850) 107,979,963
==========================================================
==========================================================
===============
Other Securities--9.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Allstate Corp., $2.30 Debt Exchangeable for Common Stock of PMI Group, Inc. 111,000
4,884,000
---------------------------------------------------------------------------------------------------------------
American Express Co., Debt Exchangeable for
Common Stock of First Data Corp., 6.25%, 10/15/96 200,000 12,800,000
---------------------------------------------------------------------------------------------------------------
American General Delaware, LLC, $3.00 Cv
Monthly Income Preferred Securities, Series A 75,000 3,937,500
---------------------------------------------------------------------------------------------------------------
Atlantic Richfield Co., 9% Exchangeable Nts. for
Common Stock of Lyondell Petrochemical Co., 9/15/97 400,000 9,150,000
---------------------------------------------------------------------------------------------------------------
Browning-Ferris Industries, Inc., 7.25% Cv
Automatic Common Exchangeable Securities 225,000 6,637,500
---------------------------------------------------------------------------------------------------------------
Continental Airlines Finance Trust,
8.50% Cv. Trust Originated Preferred Securities(6) 250,000 13,250,000
---------------------------------------------------------------------------------------------------------------
Corning Delaware LP, 6% Cv. Monthly Income Preferred Securities 150,000
8,325,000
</TABLE>
10 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Other Securities
(continued)
Elsag Bailey Financing Trust, 5.50% Cv
Trust Originated Preferred Securities(6) 250,000 $ 11,187,500
---------------------------------------------------------------------------------------------------------------
Enron Corp., 6.25% Cv. Automatic Common Exchangeable
Securities, redeemable into Enron Oil & Gas Co. Common Stock 270,000
6,581,250
---------------------------------------------------------------------------------------------------------------
Hollinger International, Inc., 9.75% Preferred Redeemable
Increased Dividend Equity Securities, Cv., 8/1/00 500,000 5,375,000
---------------------------------------------------------------------------------------------------------------
James River Corp. of Virginia, Depositary Shares each
representing a one-hundredth interest in a share of Series P,
9% Cum. Cv. Preferred Stock, Dividend Enhanced Convertible Stock 700,000
17,412,500
---------------------------------------------------------------------------------------------------------------
MCN Corp., 8.75% Cv. Preferred Redeemable
Increased Dividend Equity Securities 135,000 3,746,250
---------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 6% Cv. Structured Yield Product
Exchangeable for Common Stock of Cox Communications, Inc., 6/1/99 400,000
8,350,000
---------------------------------------------------------------------------------------------------------------
NorAm Financing I, 6.25% Cv. Gtd. Trust Originated Preferred Securities 85,000
5,270,000
---------------------------------------------------------------------------------------------------------------
Owens Corning Capital LLC, 6.50% Cv. Monthly
Income Preferred Securities, Non-Vtg.(6) 200,000 10,362,500
---------------------------------------------------------------------------------------------------------------
Reynolds Metals Co., 7% Preferred Redeemable Increased
Dividend Equity Securities, $3.31 Cv., 12/31/97 160,000 7,620,000
---------------------------------------------------------------------------------------------------------------
RJR Nabisco Holdings Corp., $6.50 Cv., Series C 4,315,000 23,193,125
---------------------------------------------------------------------------------------------------------------
Salomon, Inc., 7.625% Cv. Preferred, Debt Exchangeable
for Common Stock of Financial Security Assurance Holdings Ltd. 460,000
12,995,000
---------------------------------------------------------------------------------------------------------------
Santa Fe Energy Resources, Inc., 8.25% Dividend Enhanced Convertible Stock(9) 805,000
8,754,375
---------------------------------------------------------------------------------------------------------------
U S West, Inc., 7.625% Cv. Debt Exchangeable for
Common Stock of Enhance Financial Services Group, Inc. 415,000
11,256,875
---------------------------------------------------------------------------------------------------------------
U.S. Surgical Corp., $2.20 Depositary Shares representing
one-fiftieth share of Series A Preferred Stock 550,000 19,800,000
---------------------------------------------------------------------------------------------------------------
Westinghouse Electric Corp., $1.30 Cv., Participating Equity
Preferred Stock, Series C(6) 600,000 9,375,000
--------------
Total Other Securities (Cost $199,428,913) 220,263,375
Face
Amount(1)
==========================================================
==========================================================
===============
Structured Instruments--0.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Canadian Imperial Bank of Commerce, New York Branch, 18.50% CD
Linked Nts., 9/18/96 (indexed to the Federation GKO, Zero Coupon, 9/11/96) $ 3,500,000
3,501,400
---------------------------------------------------------------------------------------------------------------
CS First Boston Corp. Argentina Structured Product Asset
Return Trust Certificates, 9.40%, 9/1/97 [representing debt
of Argentina (Republic of) Bonos del Tesoro Bonds, Series
II, 5.54%, 9/1/97 and an interest rate swap
between Credit Suisse Financial Products and the Trust](6) 4,000,000 3,923,556
--------------
Total Structured Instruments (Cost $7,500,000) 7,424,956
</TABLE>
11 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
Statement of Investments (Continued)
Face Market Value
Amount(1) See Note 1
==========================================================
==========================================================
===============
<S> <C> <C>
Repurchase Agreement--12.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Goldman, Sachs & Co., 5 25%, dated
8/30/96, to be repurchased at $305,478,092 on 9/3/96,
collateralized by U.S. Treasury Bonds, 8.75%--10.375%,
5/15/17--11/15/12, with a value
of $312,619,141 (Cost $305,300,000) $ 305,300,000 $ 305,300,000
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $1,936,881,017) 99.5% 2,365,262,248
- -----------------------------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.5 12,154,306
-------------- --------------
Net Assets 100.0% $2,377,416,554
==============
==============
</TABLE>
1. Face amount is reported in U.S. Dollars, except for those denoted
in the following currencies:
AUD--Australian Dollar
CAD--Canadian Dollar
2. For zero coupon bonds, the interest rate shown is the effective
yield on the date of purchase.
3. Represents the current interest rate for a variable rate security.
4. Indexed instrument for which the principal amount and/or interest
due at maturity is affected by the relative value of a foreign index.
5. Denotes a step bond: a zero coupon bond that converts to a fixed
rate of interest at a designated future date.
6. Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This
security has been determined to be liquid under guidelines established
by the Board of Trustees. These securities amount to $89,728,301 or
3.77% of the Fund's net assets, at August 31, 1996.
7. Non-income producing security.
8. Identifies issues considered to be illiquid--See Note 5 of Notes
to Financial Statements.
9. Affiliated company. Represents ownership of at least 5% of the
voting securities of the issuer and is or was an affiliate, as defined
in the Investment Company Act of 1940, at or during the period ended
August 31, 1996. The aggregate fair value of all securities of
affiliated companies as of August 31, 1996 amounted to $8,754,375.
Transactions during the period in which the issuer was an affiliate are
as follows:
<TABLE>
<CAPTION>
Balance June 30, 1996 Gross Additions Gross Reductions Balance August 31, 1996
Dividend
----------------------- --------------- ---------------- ----------------------- ---------
Shares Cost Shares Cost Shares Cost Shares Cost Income
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<C>
Santa Fe Energy Resources, Inc.,
8.25% Dividend Enhanced
Convertible Stock 805,000 $7,144,375 -- $-- -- $-- 805,000 $7,144,375 $147,315
</TABLE>
See accompanying Notes to Financial Statements.
Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities August 31, 1996
==========================================================
==========================================================
===============
<S> <C> <C>
Assets Investments, at value (including repurchase agreement of
$305,300,000) --see accompanying statement:
Unaffiliated companies (cost $1,929,736,642) $2,356,507,873
Affiliated companies (cost $7,144,375) 8,754,375
---------------------------------------------------------------------------------------------------------------
Receivables:
Interest and dividends 13,714,369
Investments sold 4,504,586
Shares of beneficial interest sold 1,064,370
---------------------------------------------------------------------------------------------------------------
Other 27,351
--------------
Total assets 2,384,572,924
--------------
==========================================================
==========================================================
===============
Liabilities Bank overdraft 457,618
---------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 5,110,847
Distribution and service plan fees 791,028
Shareholder reports 356,453
Transfer and shareholder servicing agent fees 153,759
Trustees' fees 3,234
Other 283,431
--------------
Total liabilities 7,156,370
--------------
Net Assets $2,377,416,554
==============
==========================================================
==========================================================
===============
Composition of Paid-in capital $1,858,826,553
Net Assets ---------------------------------------------------------------------------------------------------------------
Undistributed net investment income 10,933,236
---------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 79,266,067
---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets
and liabilities denominated in foreign currencies 428,390,698
--------------
Net assets $2,377,416,554
==============
==========================================================
==========================================================
===============
Net Asset Value Class A Shares:
Per Share Net asset value and redemption price per share (based on net assets
of $2,110,465,031 and 185,740,752 shares of beneficial interest outstanding) $ 11.36
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $ 12.05
---------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $259,569,757 and 22,998,516 shares of beneficial interest outstanding) $ 11.29
---------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $7,381,766 and 653,028 shares of beneficial interest outstanding) $ 11.30
</TABLE>
See accompanying Notes to Financial Statements
13 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
Statements of Operations
Two Months Year Ended
Ended Aug. 31, June 30,
1996(1) 1996
==========================================================
==========================================================
===============
<S> <C> <C>
Investment Income Interest $11,492,450 $68,337,314
Foreign withholding taxes (3,184) --
---------------------------------------------------------------------------------------------------------------
Dividends:
Unaffiliated companies 9,821,466 52,732,474
Foreign withholding taxes -- (259,580)
Affiliated companies 147,315 1,464,260
----------- -------------
Total income 21,458,047 122,274,468
==========================================================
==========================================================
===============
Expenses Management fees--Note 4 2,134,834 12,078,956
---------------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 693,619 3,872,138
Class B 432,504 2,077,724
Class C 11,319 16,702
---------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 570,503 2,688,008
---------------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 129,599 53,250
Class B 23,747 33,448
Class C 966 2,141
---------------------------------------------------------------------------------------------------------------
Shareholder reports 82,094 608,737
---------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses--Note 1 11,234 66,081
---------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 9,200 165,431
---------------------------------------------------------------------------------------------------------------
Insurance expenses 6,355 42,476
---------------------------------------------------------------------------------------------------------------
Legal and auditing fees 6,018 80,779
---------------------------------------------------------------------------------------------------------------
Other 19,699 167,101
----------- -------------
Total expenses 4,131,691 21,952,972
==========================================================
==========================================================
===============
Net Investment Income 17,326,356 100,321,496
----------- -------------
==========================================================
==========================================================
===============
Realized and Net realized gain (loss) on:
Unrealized Investments 19,243,143 75,856,513
Gain (Loss) Foreign currency transactions (4,723,329) (4,049,609)
----------- -------------
Net realized gain 14,519,814 71,806,904
---------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments (44,560,796) 198,519,095
Translation of assets and liabilities
denominated in foreign currencies 4,806,865 8,097,685
----------- -------------
Net change (39,753,931) 206,616,780
----------- -------------
Net realized and unrealized gain (loss) (25,234,117) 278,423,684
----------- -------------
==========================================================
==========================================================
===============
Net Increase (Decrease) in Net Assets Resulting From Operations $(7,907,761) $
378,745,180
===========
=============
</TABLE>
1. The Fund changed its fiscal year end from June 30 to August 31.
See accompanying Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
Two Months Year Ended June 30,
Ended Aug. 31, ------------------------------
1996(1) 1996 1995
==========================================================
==========================================================
===============
<S> <C> <C> <C>
Operations Net investment income $17,326,356 $100,321,496 $97,932,280
--------------------------------------------------------------------------------------------------------------------
Net realized gain 14,519,814 71,806,904 33,525,676
--------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (39,753,931) 206,616,780 153,278,187
-------------- -------------- --------------
Net increase (decrease) in net assets resulting
from operations (7,907,761) 378,745,180 284,736,143
==========================================================
==========================================================
===============
Dividends and Dividends from net investment income:
Distributions Class A -- (88,933,508) (88,319,907)
to Class B -- (7,653,335) (5,380,964)
Shareholders Class C -- (81,369) --
--------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A -- (45,033,840) (23,241,171)
Class B -- (4,472,521) (1,584,662)
Class C -- (15,717) --
==========================================================
==========================================================
===============
Beneficial Net increase (decrease) in net assets resulting from Interest
beneficial interest transactions--Note 2:
Transactions Class A (23,541,609) 35,013,412 (34,706,185)
Class B 8,288,875 70,965,886 62,397,726
Class C 1,564,603 5,782,628 --
==========================================================
==========================================================
===============
Net Assets Total increase (decrease) (21,595,892) 344,316,816 193,900,980
--------------------------------------------------------------------------------------------------------------------
Beginning of period 2,399,012,446 2,054,695,630 1,860,794,650
-------------- -------------- --------------
End of period [including undistributed (overdistributed)
net investment income of $10,933,236, $2,274,563
and $(970,447), respectively] $2,377,416,554 $2,399,012,446 $2,054,695,630
==============
============== ==============
</TABLE>
1. The Fund changed its fiscal year end from June 30 to August 31 See
accompanying Notes to Financial Statements.
15 Oppenheimer Equity Income Fund
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights
Class A
-----------------------------------------------------------------------------------
Two Months
Ended
August 31, Year Ended June 30,
1996(2) 1996 1995 1994 1993 1992
==========================================================
==========================================================
===============
<S> <C> <C> <C> <C> <C>
<C>
Per Share Operating Data:
Net asset value, beginning of period $11.39 $10.25 $9.44 $10.01 $9.15 $8.86
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .09 .50 .50 .47 .50 .50
Net realized and unrealized gain (loss) (.12) 1.36 .92 (.39) .99 .39
------ ------ ------ ----- ------ -----
Total income (loss) from
investment operations (.03) 1.86 1.42 .08 1.49 .89
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income -- (.48) (.48) (.47) (.48) (.48)
Dividends in excess of net investment income -- -- -- (.01) -- --
Distributions from net realized gain -- (.24) (.13) (.12) (.15) (.12)
Distributions in excess of net realized gain -- -- -- (.05) -- --
------ ------ ------ ----- ------ -----
Total dividends and distributions
to shareholders -- (.72) (.61) (.65) (.63) (.60)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.36 $11.39 $10.25 $9.44 $10.01 $9.15
====== ====== ====== =====
====== =====
==========================================================
==========================================================
===============
Total Return, at Net Asset Value(4) (0.26)% 18.61% 15.66% 0.65% 16.76%
10.26%
==========================================================
==========================================================
===============
Ratios/Supplemental Data:
Net assets, end of period (in millions) $2,110 $2,141 $1,893 $1,773 $1,790 $1,556
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $2,109 $2,054 $1,798 $1,832 $1,658 $1,526
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 3.28%(5) 4.51% 5.15% 4.72% 5.12%
5.33%
Expenses 0.94%(5) 0.89% 0.96% 0.90% 0.79% 0.82%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 13.5% 42.9% 45.7% 30.4% 59.0% 37.0%
Average brokerage commission rate(7) $0.0587 $0.0592 -- -- -- --
<CAPTION>
Financial Highlights (Continued)
Class B Class C
------------------------------------------------- ----------------------
Two Months Two Months Period
Ended Ended Ended
August 31, Year Ended June 30, August 31, June 30,
1996(2) 1996 1995 1994(3) 1996(2) 1996(1)
==========================================================
==========================================================
============
<S> <C> <C> <C> <C> <C>
<C>
Per Share Operating Data:
Net asset value, beginning of period $11.33 $10.21 $9.40 $10.22 $11.35 $10.76
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .07 .41 .43 .36 .07 .28
Net realized and unrealized gain (loss) (.11) 1.35 .91 (.58) (.12) .88
------ ------ ------ ----- ------ ------
Total income (loss) from
investment operations (.04) 1.76 1.34 (.22) (.05) 1.16
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income -- (.40) (.40) (.42) -- (.33)
Dividends in excess of net investment income -- -- -- (.01) -- --
Distributions from net realized gain -- (.24) (.13) (.12) -- (.24)
Distributions in excess of net realized gain -- -- -- (.05) -- --
------ ------ ------ ----- ------ ------
Total dividends and distributions
to shareholders -- (.64) (.53) (.60) -- (.57)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.29 $11.33 $10.21 $9.40 $11.30 $11.35
====== ====== ====== =====
====== ======
==========================================================
==========================================================
============
Total Return, at Net Asset Value(4) (0.35)% 17.58% 14.87% (2.35)% (0.44)%
10.50%
==========================================================
==========================================================
============
Ratios/Supplemental Data:
Net assets, end of period (in millions) $260 $252 $161 $88 $7 $6
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $255 $208 $122 $47 $7 $3
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 2.48%(5) 3.68% 4.34% 3.99%(5 2.55%(5)
3.53%(5)
Expenses 1.76%(5) 1.72% 1.79% 1.82%(5 1.79%(5) 1.81%(5)
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 13.5% 42.9% 45.7% 30.4% 13.5% 42.9%
Average brokerage commission rate(7) $0.0587 $0.0592 -- -- $0.0587 $0.0592
</TABLE>
1. For the period from November 1, 1995 (inception of offering) to
June 30, 1996.
2. The Fund changed its fiscal year end from June 30 to August 31.
3. For the period from August 17, 1993 (inception of offering) to
June 30, 1994.
4. Assumes a hypothetical initial investment on the business day
before the first day of the fiscal period (or inception of offering),
with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated
on the last business day of the fiscal period. Sales charges are not
reflected in the total returns. Total returns are not annualized for
periods of less than one full year.
5. Annualized.
6. The lesser of purchases or sales of portfolio securities for a
period, divided by the monthly average of the market value of portfolio
securities owned during the period. Securities with a maturity or
expiration date at the time of acquisition of one year or less are
excluded from the calculation. Purchases and sales of investment
securities (excluding short-term securities) for the period ended
August 31, 1996 were $293,833,873 and $502,985,239, respectively.
7. Total brokerage commissions paid on applicable purchases and sales
of portfolio securities for the period divided by the total number of
related shares purchased and sold.
See accompanying Notes to Financial Statements.
16 & 17 Oppenheimer Equity Income Fund
<PAGE>
Notes to Financial Statements
1. Significant Accounting Policies
Oppenheimer Equity Income Fund (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. On August 27, 1996, the Board of
Trustees elected to change the fiscal year end of the Fund from June 30
to August 31. Accordingly, these financial statements include
information for the two month period from July 1, 1996 to August 31,
1996. The Fund's investment objective is to seek as much current income
as is compatible with prudent investment. The Fund's investment adviser
is OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class
B and Class C shares. Class A shares are sold with a front-end sales
charge.
Class B and Class C shares may be subject to a contingent deferred
sales charge. All classes of shares have identical rights to earnings,
assets and voting privileges, except that each class has its own
distribution and/or service plan, expenses directly attributable to a
particular class and exclusive voting rights with respect to matters
affecting a single class. Class B shares will automatically convert to
Class A shares six years after the date of purchase. The following is a
summary of significant accounting policies consistently followed by the
Fund.
Investment Valuation. Portfolio securities are valued at the close of
the New York Stock Exchange on each trading day. Listed and unlisted
securities for which such information is regularly reported are valued
at the last sale price of the day or, in the absence of sales, at
values based on the closing bid or the last sale price on the prior
trading day. Long-term and short-term "non-money market" debt
securities are valued by a portfolio pricing service approved by the
Board of Trustees. Such securities which cannot be valued by the
approved portfolio pricing service are valued using dealer-supplied
valuations provided the Manager is satisfied that the firm rendering
the quotes is reliable and that the quotes reflect current market
value, or are valued under consistently applied procedures established
by the Board of Trustees to determine fair value in good faith.
Short-term "money market type" debt securities having a remaining
maturity of 60 days or less are valued at cost (or last determined
market value) adjusted for amortization to maturity of any premium or
discount.
- -----------------------------------------------------------------------
- ---------
Foreign Currency Translation. The accounting records of the Fund are
maintained in U.S. dollars. Prices of securities denominated in foreign
currencies are translated into U.S. dollars at the closing rates of
exchange. Amounts related to the purchase and sale of securities and
investment income are translated at the rates of exchange prevailing on
the respective dates of such transactions. The effect of changes in
foreign currency exchange rates on investments is separately identified
from the fluctuations arising from changes in market values of
securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
- -----------------------------------------------------------------------
- ---------
Repurchase Agreements. The Fund requires the custodian to take
possession, to have legally segregated in the Federal Reserve Book
Entry System or to have segregated within the custodian's vault, all
securities held as collateral for repurchase agreements. The market
value of the underlying securities is required to be at least 102% of
the resale price at the time of purchase. If the seller of the
agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
Allocation of Income, Expenses, and Gains and Losses. Income, expenses
(other than those attributable to a specific class) and gains and
losses are allocated daily to each class of shares based upon the
relative proportion of net assets represented by such class. Operating
expenses directly attributable to a specific class are charged against
the operations of that class.
- -----------------------------------------------------------------------
- ---------
Federal Taxes. The Fund intends to continue to comply with provisions
of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income, including any
net realized gain on investments not offset by loss carryovers, to
shareholders. Therefore, no federal income or excise tax provision is
required.
18 Oppenheimer Equity Income Fund
<PAGE>
Notes to Financial Statements (Continued)
=======================================================================
=========
1. Significant Accounting Policies
(continued)
Distributions to Shareholders. Dividends and distributions to
shareholders are recorded on the ex-dividend date.
- -----------------------------------------------------------------------
- ---------
Classification of Distributions to Shareholders. Net investment income
(loss) and net realized gain (loss) may differ for financial statement
and tax purposes. The character of the distributions made during the
year from net investment income or net realized gains may differ from
the ultimate characterization for federal income tax purposes. Also,
due to timing of dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that the income or
realized gain (loss) was recorded by the Fund. In addition, to properly
reflect foreign currency loss in the components of capital, $4,504,000
of foreign exchange loss determined according to U.S. federal income
tax rules has been reclassified from net realized loss to undistributed
net investment income.
During the two months ended August 31, 1996, the Fund adjusted the
classification of distributions to shareholders to reflect the
differences between the financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly,
during the two months ended August 31, 1996, amounts have been
reclassified to reflect a decrease in undistributed net investment
income and an increase in accumulated net realized gain on investments
of $4,163,684.
- -----------------------------------------------------------------------
- ---------
Other. Investment transactions are accounted for on the date the
investments are purchased or sold (trade date) and dividend income is
recorded on the ex-dividend date. Discount on securities purchased is
amortized over the life of the respective securities, in accordance
with federal income tax requirements. Interest on payment-in-kind debt
instruments is accrued as income at the coupon rate and a market
adjustment is made on the ex-date. Realized gains and losses on
investments and unrealized appreciation and depreciation are determined
on an identified cost basis, which is the same basis used for federal
income tax purposes.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of income
and expenses during the reporting period. Actual results could differ
from those estimates.
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
Two Months Ended Aug. 31, 1996(2) Year Ended June 30, 1996(1) Year Ended June 30,
1995
--------------------------------- --------------------------- -------------------------
Shares Amount Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A:
Sold 3,550,795 $ 40,479,520 20,146,940 $223,283,409 19,327,605 $207,336,132
Dividends and distributions
reinvested -- -- 11,433,753 125,568,723 11,012,028 83,402,034
Redeemed (5,703,125) (64,021,129) (28,310,542) (313,838,720) (33,557,623) (325,444,351)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) (2,152,330) $(23,541,609) 3,270,151 $35,013,412 (3,217,990)
$(34,706,185)
============ ============ ============
============ ============ ============
- ----------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 1,234,485 $13,913,799 8,424,677 $92,863,112 7,529,176 $72,586,104
Dividends and distributions
reinvested -- -- 1,014,528 11,086,597 670,317 6,342,433
Redeemed (503,549) (5,624,924) (2,987,292) (32,983,823) (1,724,724) (16,530,811)
------------ ------------ ------------ ------------ ------------ ------------
Net increase 730,936 $8,288,875 6,451,913 $70,965,886 6,474,769 $62,397,726
============ ============ ============
============ ============ ============
- ----------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 153,840 $1,732,419 523,531 $5,887,218 -- $--
Dividends and distributions
reinvested -- -- 8,456 94,181 -- --
Redeemed (14,976) (167,816) (17,823) (198,771) -- --
------------ ------------ ------------ ------------ ------------ -----------
Net increase 138,864 $1,564,603 514,164 $5,782,628 -- $--
============ ============ ============
============ ============ ===========
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
1. For the year ended June 30, 1996 for Class A and Class B shares
and for the period from November 1, 1995 (inception of offering) to
June 30, 1996 for Class C shares.
2. The Fund changed its fiscal year end from June 30 to August 31.
19 Oppenheimer Equity Income Fund
<PAGE>
Notes to Financial Statements (Continued)
3. Unrealized Gains and Losses on Investments
At August 31, 1996, net unrealized appreciation on investments of
$428,381,231 was composed of gross appreciation of $451,459,716, and
gross depreciation of $23,078,485.
4. Management Fees and Other Transactions With Affiliates
Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee of
0.75% of the first $100 million of average 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 Manager has agreed to reimburse the Fund
if aggregate expenses (with specified exceptions) exceed 1.5% of the
first $30 million of average annual net assets of the Fund, plus 1% of
average annual net assets in excess of $30 million.
For the two months ended August 31, 1996, commissions (sales
charges paid by investors) on sales of Class A shares totaled $632,850,
of which $218,008 was retained by OppenheimerFunds Distributor, Inc.
(OFDI), a subsidiary of the Manager, as general distributor, and by an
affiliated broker/dealer. Sales charges advanced to broker/dealers by
OFDI on sales of the Fund's Class B and Class C shares totaled $489,862
and $15,300, of which $43,178 was paid to an affiliated broker/dealer
for Class B. During the two months ended August 31, 1996, OFDI received
contingent deferred sales charges of $70,589 upon redemption of Class B
shares as reimbursement for sales commissions advanced by OFDI at the
time of sale of such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund, and for other
registered investment companies. OFS's total costs of providing such
services are allocated ratably to these companies.
Under separate approved plans, each class may expend up to 0.25%
of its net assets annually to compensate OFDI for costs incurred in
connection with the personal service and maintenance of accounts that
hold shares of the Fund, including amounts paid to brokers, dealers,
banks and other institutions. In addition, Class B and Class C shares
are subject to an asset-based sales charge of 0.75% of net assets
annually, to compensate OFDI for sales commissions paid from its own
resources at the time of sale and associated financing costs. In the
event of termination or discontinuance of the Class B or Class C plan,
the Board of Trustees may allow the Fund to continue payment of the
asset-based sales charge to OFDI for distribution expenses incurred on
Class B or Class C shares sold prior to termination or discontinuance
of the plan. During the two months ended August 31, 1996, OFDI paid
$44,931 and $6,798, respectively, to an affiliated broker/dealer as
compensation for Class A and Class B personal service and maintenance
expenses, and retained $355,295 and $9,940, respectively, as
compensation for Class B and Class C sales commissions and service fee
advances, as well as financing costs. At August 31, 1996, OFDI had
incurred unreimbursed expenses of $8,245,976 for Class B and $122,658
for ClassC.
=======================================================================
=========
5. Illiquid and Restricted Securities
At August 31, 1996, investments in securities included issues that are
illiquid or restricted. The securities are often purchased in private
placement transactions, are not registered under the Securities Act of
1933, may have contractual restrictions on resale, and are valued under
methods approved by the Board of Trustees as reflecting fair value. A
security may also be considered illiquid if its valuation has not
changed for a certain period of time. The Fund intends to invest no
more than 10% of its net assets (determined at the time of purchase and
reviewed from time to time) in illiquid or restricted securities. The
aggregate value of these securities subject to this limitation at
August 31, 1996 was $6,526,322, which represents 0.27% of the Fund's
net assets. Information concerning these securities is as follows:
<TABLE>
<CAPTION>
Valuation Per Unit
Security Acquisition Date Cost Per Unit As of August 31, 1996
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
ICG Communications, Inc. 10/26/93--4/15/96 $18.15 $21.02
</TABLE>
Pursuant to guidelines adopted by the Board of Trustees, certain
unregistered securities are determined to be liquid and are not
included within the 10% limitation specified above.
20 Oppenheimer Equity Income Fund
<PAGE>
Appendix A: Ratings of Investments
Description of Moody's Investors Service, Inc. Bond Ratings
Aaa: Bonds which are rated "Aaa" are judged to be the best quality and
to carry the smallest degree of investment risk. Interest payments are
protected by a large or by an exceptionally stable margin and principal
is secure. While the various protective elements are likely to change,
the changes that can be expected are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds which are rated "Aa" are judged to be of high quality by all
standards. Together with the "Aaa" group, they comprise what are
generally known as "high-grade" bonds. They are rated lower than the
best bonds because margins of protection may not be as large as with
"Aaa" securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than those of "Aaa" securities.
A: Bonds which are rated "A" possess many favorable investment
attributes and are to be considered as upper-medium grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
Baa: Bonds which are rated "Baa" are considered medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and have speculative
characteristics as well.
The bond investments in which the Fund will principally invest will be
in the lower-rated categories described below.
Ba: Bonds which are rated "Ba" are judged to have speculative elements;
their future cannot be considered well-assured. Often the protection
of interest and principal payments may be very moderate and not well
safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B: Bonds which are rated "B" generally lack characteristics of
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
Caa: Bonds which are rated "Caa" are of poor standing and may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca: Bonds which are rated "Ca" represent obligations which are
speculative in a high degree and are often in default or have other
marked shortcomings.
C: Bonds which are rated "C" can be regarded as having extremely poor
prospects of ever retaining any real investment standing.
Description of Standard & Poor's Bond Ratings
AAA: "AAA" is the highest rating assigned to a debt obligation and
indicates an extremely strong capacity to pay principal and interest.
AA: Bonds rated "AA" also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the
majority of instances they differ from "AAA" issues only in small
degree.
A: Bonds rated "A" have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to adverse
effects of change in circumstances and economic conditions.
BBB: The bond investments in which the Fund will principally invest
will be in the lower-rated categories, described below. Bonds rated
"BBB" are regarded as having an adequate capacity to pay principal and
interest. Whereas they normally exhibit protection parameters, adverse
economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay principal and interest for bonds in this
category than for bonds in the "A" category.
BB, B, CCC, CC: Bonds rated "BB," "B," "CCC" and "CC" are regarded, on
balance, as predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with the
terms of the obligation. "BB" indicates the lowest degree of
speculation and "CC" the highest degree. While such bonds will likely
have some quality and protective characteristics, these are outweighed
by large uncertainties or major risk exposures to adverse conditions.
C, D: Bonds on which no interest is being paid are rated "C." Bonds
rated "D" are in default and payment of interest and/or repayment of
principal is in arrears.
<PAGE>
Appendix
Corporate Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
Food
Gas Transmission
Gas Utilities
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking
<PAGE>
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
Deloitte & Touche LLP
555 Seventeenth Street
Suite 3600
Denver, Colorado 80202-3942
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202
<PAGE>
OPPENHEIMER EQUITY INCOME FUND
FORM N-1A
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements:
--------------------
(1) Condensed Financial Information: See Part A (Prospectus): Filed
herewith.
(2) Independent Auditors' Report: See Part B (Statement of Additional
Information): Filed herewith.
(3) Statement of Investments: See Part B (Statement of Additional
Information): Filed herewith.
(4) Statement of Assets and Liabilities: See Part B (Statement of
Additional Information): Filed herewith.
(5) Statement of Operations: See Part B (Statement of Additional
Information): Filed herewith.
(6) Statements of Changes in Net Assets: See Part B (Statement of
Additional Information): Filed herewith.
(7) Notes to Financial Statements: See Part B (Statement of Additional
Information): Filed herewith.
(b) Exhibits:
--------
(1) Amended and Restated Declaration of Trust dated August 4, 1995: with
Post-Effective Amendment No. 43, 8/31/95, to Registrant's
Registration Statement, and incorporated herein by reference.
(2) Amended By-Laws dated June 26, 1990: Filed with Post Effective
Amendment No. 36, 11/1/91, to Registrant's Registration Statement,
and refiled with Post-Effective Amendment No. 42, 10/28/94, pursuant
to Item 102 of Regulation S-T, and incorporated herein by reference.
(3) Not Applicable.
(4) (i) Specimen Class A Share Certificate: Filed herewith.
(ii) Specimen Class B Share Certificate: Filed herewith.
(iii) Specimen Class C Share Certificate: Filed herewith.
(5) Investment Advisory Agreement dated 10/22/90: Filed with Post-
Effective Amendment No. 34 to Registrant's Registration Statement
dated 11/1/90, and refiled with Post-Effective Amendment No. 42,
10/28/94, pursuant to Item 102 of Regulation S-T, and incorporated
herein by reference.
(6) (i) General Distributor's Agreement dated 10/13/92: Filed with
Post-Effective Amendment No. 42, 10/28/94, and incorporated
herein by reference.
(ii) Form of Dealer Agreement of Oppenheimer Funds Distributor, Inc.:
Filed with Post-Effective Amendment No. 12 of Oppenheimer
Government Securities Fund (Reg. No. 33-02769), 12/2/92, and
refiled with Post-Effective Amendment No. 14 of Oppenheimer Main
Street Funds, Inc. (Reg. No. 33-17850), 9/30/94, pursuant to
Item 102 of Regulation S-T, and incorporated herein by
reference.
(iii) Form of Oppenheimer Funds Distributor, Inc. Broker Agreement:
Filed with Post-Effective Amendment No. 12 of Oppenheimer Government
Securities Fund (Reg. No. 33-02769), 12/2/92, and refiled with Post-
Effective Amendment No. 14 of Oppenheimer Main Street Funds, Inc.
(Reg. No. 33-17850), 9/30/94, pursuant to Item 102 of Regulation S-T,
and incorporated herein by reference.
(iv) Broker Agreement between Oppenheimer Funds Distributor, Inc. and
Newbridge Securities dated 10/1/86: Previously filed with Post-
Effective Amendment No. 25 of Oppenheimer Special Fund (Reg. No.
2-45272), 11/1/86, and refiled with Post-Effective Amendment No.
45, of Oppenheimer Special Fund (Reg. No. 2-45272) 8/22/94,
pursuant to Item 102 of Regulation S-T, and incorporated herein
by reference.
(v) Form of Oppenheimer Funds Distributor, Inc. Agency Agreement:
Filed with Post-Effective Amendment No. 12 of Oppenheimer
Government Securities Fund (Reg. No. 33-02769), 12/2/92, and
refiled with Post-Effective Amendment No. 14 of Oppenheimer Main
Street Funds, Inc. (Reg. No. 33-17850), 9/30/94, pursuant to
Item 102 of Regulation S-T, and incorporated herein by
reference.
(7) Not applicable.
(8) Custody Agreement dated October 6, 1992: Filed with Post-Effective
Amendment No. 37, to Registrant's Registration Statement dated
10/28/93, and refiled with Post-Effective Amendment No. 42, 10/28/94,
pursuant to Item 102 of Regulation S-T, and incorporated herein by
reference.
(9) Not applicable.
(10) Opinion and Consent of Counsel dated 9/30/70: Filed with
Registrant's Initial Registration Statement and refiled with Post
Effective amendment No. 42, 10/28/94, pursuant to Item 102 of
Regulation S-T.
(11) Independent Auditor's Consent: Filed herewith.
(12) Not applicable.
(13) Not applicable.
(14)(i) Form of Individual Retirement Account Trust Agreement (IRA):
Previously filed with Post-Effective Amendment No. 21 to the Registration
Statement of Oppenheimer U.S. Government Trust (Reg. No. 2-76645),
8/25/93, and incorporated herein by reference.
(ii) Form of prototype Standardized and Non-Standardized Profit Sharing
Plans and Money Purchase Plans for self-employed persons and corporations:
Filed with Post-Effective Amendment No. 7 to the Registration Statement
of Oppenheimer Global Growth & Income Fund (Reg. No. 33-33799), 12/2/94,
and incorporated herein by reference.
(iii) 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 of Oppenheimer Growth Fund
(File No. 2-45272), 10/21/94, and incorporated herein by reference.
(iv) Form of Simplified Employee Pension IRA: Filed with Post-Effective
Amendment No. 15, to the Registration Statement Oppenheimer Mortgage
Income Fund (Reg. No. 33-6614), 1/19/95, and incorporated herein by
reference.
(v) Form of prototype 401(k) plan: Previously 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.
(15)(i) Service Plan and Agreement for Class A shares under Rule 12b-1
of the Investment Company Act dated June 22, 1993: Filed with Post-
Effective Amendment No. 38 to Registrant's Registration Statement, 8/3/93,
and incorporated herein by reference.
(ii) Distribution and Service Plan and Agreement for Class B shares under
Rule 12b-1 of the Investment Company Act dated February 23, 1994: Filed
with Post-Effective Amendment No. 42, 10/28/94, and incorporated herein
by reference.
(iii) Distribution and Service Plan and Agreement for Class C Shares
under Rule 12b-1 of the Investment Company Act dated August 4, 1995: Filed
with Post-Effective Amendment No. 43, 8/31/95, to Registrant's
Registration Statement, and incorporated herein by reference.
(16) Performance Data Computation Schedule: Filed herewith.
(17)(i) Financial Data Schedule for Class A shares at 6-30-96 and 8-31-
96: Filed herewith.
(ii) Financial Data Schedule for Class B shares at 6-30-96 and 8-31-96:
Filed herewith.
(iii) Financial Data Schedule for Class C shares at 6-30-96 and 8-31-96:
Filed herewith.
(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 (33-23566), 11/1/95,
and incorporated herein by reference.
-- Powers of Attorney: Filed with Post-Effective Amendment No. 42, to
Registrant's Registration Statement, 10/28/94, and incorporated
herein by reference.
Item 25. Persons Controlled by or Under Common Control with Registrant
-------------------------------------------------------------
None
Item 26. Number of Holders of Securities
-------------------------------
Number of Record
Holders as of
Title of Class October 2, 1996
-------------- -------------------
Shares of Beneficial Interest, Class A 144,780
Shares of Beneficial Interest, Class B 16,303
Shares of Beneficial Interest, Class C 0
Item 27. Indemnification
---------------
Reference is made to the provisions of Article SEVENTH of
Registrant's Declaration of Trust.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, 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 trustee, officer or controlling person of Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person, Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed
in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
- -------- ----------------------------------------------------
(a) OppenheimerFunds, Inc. is the investment adviser of the
Registrant; it and certain subsidiaries and affiliates act in the same
capacity to other registered investment companies as described in Parts
A and B hereof and listed in Item 28(b) below.
(b) There is set forth below information as to any other
business, profession, vocation or employment of a substantial nature in
which each officer and director of OppenheimerFunds, Inc. is, or at any
time during the past two fiscal years has been, engaged for his/her own
account or in the capacity of director, officer, employee, partner or
trustee.
<TABLE>
<CAPTION>
Name & Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- -------------------------------
<S> <C>
Mark J.P. Anson,
Vice President Vice President of Oppenheimer Real
Asset Management, Inc. ("ORAMI");
formerly Vice President of Equity
Derivatives at Salomon Brothers,
Inc.
Peter M. Antos,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; a Chartered Financial
Analyst; Senior Vice President of
HarbourView; prior to March, 1996
he was the senior equity portfolio
manager for the Panorama Series
Fund, Inc. (the "Company") and
other mutual funds and pension
funds managed by G.R. Phelps & Co.
Inc. ("G.R. Phelps"), the
Company's former investment
adviser, which was a subsidiary of
Connecticut Mutual Life Insurance
Company; was also responsible for
managing the common stock
department and common stock
investments of Connecticut Mutual
Life Insurance Co.
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
Bruce Bartlett,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; formerly a Vice President
and Senior Portfolio Manager at
First of America Investment Corp.
Ellen Batt,
Assistant Vice President None
Kathleen Beichert,
Assistant Vice President Formerly employed by Smith Barney,
Inc.
David Bernard,
Vice President Previously a Regional Sales
Director for Retirement Plan
Services at Charles Schwab & Co.,
Inc.
Robert J. Bishop,
Vice President Assistant Treasurer of the
Oppenheimer Funds (listed below);
previously a Fund Controller for
OppenheimerFunds, Inc. (the
"Manager").
George Bowen,
Senior Vice President & Treasurer Treasurer of the New York-based
Oppenheimer Funds; Vice President,
Assistant Secretary and Treasurer
of the Denver-based Oppenheimer
Funds. Vice President and
Treasurer of OppenheimerFunds
Distributor, Inc. (the
"Distributor") and HarbourView
Asset Management Corporation
("HarbourView"), an investment
adviser subsidiary of the Manager;
Senior Vice President, Treasurer,
Assistant Secretary and a director
of Centennial Asset Management
Corporation ("Centennial"), an
investment adviser subsidiary of
the Manager; Vice President,
Treasurer and Secretary of
Shareholder Services, Inc. ("SSI")
and Shareholder Financial
Services, Inc. ("SFSI"), transfer
agent subsidiaries of the Manager;
Director, Treasurer and Chief
Executive Officer of MultiSource
Services, Inc.; Vice President and
Treasurer of Oppenheimer Real
Asset Management, Inc.; President,
Treasurer and Director of
Centennial Capital Corporation;
Vice President and Treasurer of
Main Street Advisers.
Scott Brooks,
Assistant Vice President None.
Susan Burton,
Assistant Vice President Previously a Director of
Educational Services for H.D. Vest
Investment Securities, Inc.
Michael A. Carbuto,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; Vice President of
Centennial.
Ruxandra Chivu,
Assistant Vice President None.
O. Leonard Darling,
Executive Vice President Formerly Co-Director of Fixed
Income for State Street Research &
Management Co.
Robert A. Densen,
Senior Vice President None.
Robert Doll, Jr.,
Executive Vice President and
Director An officer and/or portfolio
manager of certain Oppenheimer
funds.
John Doney,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
Andrew J. Donohue,
Executive Vice President,
General Counsel and Director Secretary of the New York-based
Oppenheimer Funds; Vice President
and Secretary of the Denver-based
Oppenheimer Funds; Secretary of
the Oppenheimer Quest and
Oppenheimer Rochester Funds;
Executive Vice President, Director
and General Counsel of the
Distributor; President and a
Director of Centennial; Chief
Legal Officer and a Director of
MultiSource Services, Inc.;
President and a Director of
Oppenheimer Real Asset Management,
Inc.; Executive Vice President,
General Counsel and Director of
SFSI and SSI; formerly Senior Vice
President and Associate General
Counsel of the Manager and the
Distributor.
George Evans,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
Scott Farrar,
Vice President Assistant Treasurer of the New
York-based and Denver-based
Oppenheimer funds.
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary of
OppenheimerFunds Distributor,
Inc.; Secretary of HarbourView
Asset Management Corporation,
MultiSource Services, Inc. and
Centennial Asset Management
Corporation; Secretary, Vice
President and Director of
Centennial Capital Corporation;
Vice President and Secretary of
ORAMI.
Ronald H. Fielding,
Senior Vice President; Chairman:
Rochester Division An officer, Director and/or
portfolio manager of certain
Oppenheimer funds. Formerly
Chairman of the Board and Director
of Rochester Fund Distributors,
Inc. ("RFD"), President and
Director of Fielding Management
Company, Inc. ("FMC"), President
and Director of Rochester Capital
Advisors, Inc. ("RCAI"), Managing
Partner of Rochester Capital
Advisors, L.P., President and
Director of Rochester Fund
Services, Inc. ("RFS"), President
and Director of Rochester Tax
Managed Fund, Inc.
John Fortuna,
Vice President None.
Jon S. Fossel,
Chairman of the Board Director of OAC, the Manager's
parent holding company; President,
CEO and a director of HarbourView;
a director of SSI and SFSI;
President, Director, Trustee, and
Managing General Partner of the
Denver-based Oppenheimer Funds;
President and Chairman of the
Board of Main Street Advisers,
Inc.; formerly Chief Executive
Officer of the Manager.
Patricia Foster,
Vice President An officer of certain Oppenheimer
funds; Secretary and General
Counsel of Rochester Capital
Advisors, L.P. and Secretary of
Rochester Tax Managed Fund, Inc.
Robert G. Galli,
Vice Chairman Trustee of the New York-based
Oppenheimer Funds; Vice President
and Counsel of OAC; formerly he
held the following positions: Vice
President and a director of
HarbourView and Centennial, a
director of SFSI and SSI, an
officer of other Oppenheimer
Funds.
Linda Gardner,
Assistant Vice President None.
Janelle Gellerman,
Assistant Vice President None.
Jill Glazerman, None.
Assistant Vice President
Ginger Gonzalez,
Vice President, Director of
Marketing Communications Formerly 1st Vice President /
Director of Graphic and Print
Communications for Shearson Lehman
Brothers.
Mildred Gottlieb,
Assistant Vice President Formerly served as a Strategy
Consultant for the Private Client
Division of Merrill Lynch.
Caryn Halbrecht,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; formerly Vice President of
Fixed Income Portfolio Management
at Bankers Trust.
Barbara Hennigar,
Executive Vice President and
President and Chief Executive
Officer of OppenheimerFunds
Services, a division of the Manager President and Director of SFSI;
President and Chief Executive
Officer of SSI.
Dorothy Hirshman,
Assistant Vice President None.
Alan Hoden,
Vice President None.
Merryl Hoffman,
Vice President None.
Scott T. Huebl,
Assistant Vice President None.
Richard Hymes,
Assistant Vice President None.
Jane Ingalls,
Assistant Vice President Formerly a Senior Associate with
Robinson, Lake/Sawyer Miller.
Ronald Jamison,
Vice President Formerly Vice President and
Associate General Counsel at
Prudential Securities, Inc.
Frank Jennings,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds. Formerly a Managing
Director of Global Equities at
Paine Webber's Mitchell Hutchins
division.
Heidi Kagan,
Assistant Vice President None.
Thomas W. Keffer,
Vice President Formerly Senior Managing Director
of Van Eck Global.
Avram Kornberg,
Vice President Formerly a Vice President with
Bankers Trust.
Paul LaRocco,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds. Formerly a Securities
Analyst for Columbus Circle
Investors.
Michael Levine,
Assistant Vice President None.
Stephen F. Libera,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; a Chartered Financial
Analyst; a Vice President of
HarbourView; prior to March, 1996
he was the senior bond portfolio
manager for Panorama Series Fund,
Inc., other mutual funds and
pension accounts managed by G.R.
Phelps; was also responsible for
managing the public fixed-income
securities department at
Connecticut Mutual Life Insurance
Co.
Mitchell J. Lindauer,
Vice President None.
Loretta McCarthy,
Executive Vice President None.
Bridget Macaskill,
President, Chief Executive Officer
and Director President, Director and Trustee of
the New York-based and the Denver-
based Oppenheimer funds; President
and a Director of OAC, HarbourView
and Oppenheimer Partnership
Holdings, Inc.; Director of ORAMI;
Chairman and Director of SSI; a
Director of Oppenheimer Real Asset
Management, Inc.
Timothy Martin,
Assistant Vice President Formerly Vice President, Mortgage
Trading, at S.N. Phelps & Co.,
Salomon Brothers, and Kidder
Peabody.
Sally Marzouk,
Vice President None.
Lisa Migan,
Assistant Vice President, None.
Robert J. Milnamow,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds. Formerly a Portfolio
Manager with Phoenix Securities
Group.
Denis R. Molleur,
Vice President None.
Kenneth Nadler,
Vice President None.
David Negri,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
Barbara Niederbrach,
Assistant Vice President None.
Robert A. Nowaczyk,
Vice President None.
Robert E. Patterson,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
John Pirie,
Assistant Vice President Formerly a Vice President with
Cohane Rafferty Securities, Inc.
Tilghman G. Pitts III,
Executive Vice President Chairman and Director of the
Distributor.
Jane Putnam,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds. Formerly Senior Investment
Officer and Portfolio Manager with
Chemical Bank.
Russell Read,
Vice President Consultant for Prudential
Insurance on behalf of the General
Motors Pension Plan.
Thomas Reedy,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds. Formerly a Securities
Analyst for the Manager.
David Robertson,
Vice President None.
Adam Rochlin,
Vice President Formerly a Product Manager for
Metropolitan Life Insurance
Company.
Michael S. Rosen
Vice President; President:
Rochester Division An officer and/or portfolio
manager of certain Oppenheimer
funds. Formerly Vice President of
RFS, President and Director of
RFD, Vice President and Director
of FMC, Vice President and
director of RCAI, General Partner
of RCA, an officer and/or
portfolio manager of certain
Oppenheimer funds.
David Rosenberg,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
Richard H. Rubinstein,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; formerly Vice President and
Portfolio Manager/Security Analyst
for Oppenheimer Capital Corp., an
investment adviser.
Lawrence Rudnick,
Assistant Vice President Formerly Vice President of Dollar
Dry Dock Bank.
James Ruff,
Executive Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Stephanie Seminara,
Vice President Formerly Vice President of
Citicorp Investment Services.
Diane Sobin,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; formerly a Vice President
and Senior Portfolio Manager for
Dean Witter InterCapital, Inc.
Richard A. Soper, None.
Assistant Vice President
Nancy Sperte,
Executive Vice President None.
Donald W. Spiro,
Chairman Emeritus Vice Chairman and Trustee of the
New York-based Oppenheimer Funds;
formerly Chairman of the Manager
and the Distributor.
Arthur Steinmetz,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
Ralph Stellmacher,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
John Stoma,
Senior Vice President,
Director Retirement Plans Formerly Vice President of U.S.
Group Pension Strategy and
Marketing for Manulife Financial.
Michael C. Strathearn,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; a Chartered Financial
Analyst; a Vice President of
HarbourView; prior to March, 1996
he was an equity portfolio manager
for Panorama Series Fund, Inc. and
other mutual funds and pension
accounts managed by G.R. Phelps.
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee,
Director or Managing Partner of
the Denver-based Oppenheimer
Funds; President and a Director
of Centennial; formerly President
and Director of OAMC, and Chairman
of the Board of SSI.
James Tobin,
Vice President None.
Jay Tracey,
Vice President Vice President of the Manager;
Vice President and Portfolio
Manager of Oppenheimer Discovery
Fund, Oppenheimer Global Emerging
Growth Fund and Oppenheimer
Enterprise Fund. Formerly
Managing Director of Buckingham
Capital Management.
Gary Tyc,
Vice President, Assistant
Secretary and Assistant Treasurer Assistant Treasurer of the
Distributor and SFSI.
Ashwin Vasan,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
Valerie Victorson,
Vice President None.
Dorothy Warmack,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds.
Jerry A. Webman,
Senior Vice President Director of New York-based tax-
exempt fixed income Oppenheimer
Funds; Formerly Managing Director
and Chief Fixed Income Strategist
at Prudential Mutual Funds.
Christine Wells,
Vice President None.
Kenneth B. White,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; a Chartered Financial
Analyst; Vice President of
HarbourView; prior to March, 1996
he was an equity portfolio manager
for Panorama Series Fund, Inc. and
other mutual funds and pension
funds managed by G.R. Phelps.
William L. Wilby,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; Vice President of
HarbourView.
Carol Wolf,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; Vice President of
Centennial; Vice President,
Finance and Accounting and member
of the Board of Directors of the
Junior League of Denver, Inc.
Robert G. Zack,
Senior Vice President and
Assistant Secretary Associate General Counsel of the
Manager; Assistant Secretary of
the Oppenheimer Funds; Assistant
Secretary of SSI, SFSI; an officer
of other Oppenheimer Funds.
Arthur J. Zimmer,
Vice President An officer and/or portfolio
manager of certain Oppenheimer
funds; Vice President of
Centennial.
</TABLE>
The Oppenheimer Funds include the New York-based Oppenheimer Funds, the
Denver-based Oppenheimer Funds, and the Rochester-based Oppenheimer
Funds, set forth below:
New York-based Oppenheimer Funds
- --------------------------------
Oppenheimer Asset Allocation Fund
Oppenheimer California Municipal Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Municipal Trust
Oppenheimer New York Municipal Fund
Oppenheimer Fund
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest for Value Funds
Oppenheimer Series Fund, Inc.
Oppenheimer Target Fund
Oppenheimer Municipal Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer World Bond Fund
Denver-based Oppenheimer Funds
- ------------------------------
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Municipal Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Rochester-based Oppenheimer Funds
- ---------------------------------
Bond Fund Series - Oppenheimer Bond Fund For
Growth
Rochester Fund Municipals
Rochester Portfolio Series - Limited Term
New York Municipal Fund
The address of OppenheimerFunds, Inc., the New York-based
Oppenheimer Funds, OppenheimerFunds Distributor, Inc., HarbourView
Asset Management Corp., Oppenheimer Partnership Holdings, Inc., and
Oppenheimer Acquisition Corp. is Two World Trade Center, New York, New
York 10048-0203.
The address of the Denver-based Oppenheimer Funds, Shareholder
Financial Services, Inc., Shareholder Services, Inc., OppenheimerFunds
Services, Centennial Asset Management Corporation, Centennial Capital
Corp., Oppenheimer Real Asset Management, Inc., MultiSource Services,
Inc. and Oppenheimer Real Asset Management, Inc. is 3410 South Galena
Street, Denver, Colorado 80231.
The address of the Rochester-based funds is 350 Linden Oaks,
Rochester, New York 14625-2807.
Item 29. Principal Underwriter
- -------- ---------------------
(a) OppenheimerFunds Distributor, Inc. is the Distributor of
Registrant's shares. It is also the Distributor of each of the other
registered open-end investment companies for which OppenheimerFunds,
Inc. is the investment adviser, as described in Part A and B of this
Registration Statement and listed in Item 28(b) above.
(b) The directors and officers of the Registrant's principal
underwriter are:
<TABLE>
<CAPTION>
Positions and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- -------------
<S> <C> <C>
Susan P. Bader ++ Assistant Vice President None
George Clarence Bowen+ Vice President & Treasurer Vice President
and Treasurer
of the NY-
based
Oppenheimer
funds / Vice
President,
Secretary and
Treasurer of
the Denver-
based Oppen-
heimer funds
Julie Bowers Vice President None
21 Dreamwold Road
Scituate, MA 02066
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Maryann Bruce* Senior Vice President - None
Director - Financial
Institution Div.
Robert Coli Vice President None
12 White Tail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce DeLeon Ave.
Decatur, GA 30030
Bill Coughlin Vice President None
3425 1/2 Irving Avenue So.
Minneapolis, MN 55408
Mary Crooks+ Senior Vice President None
Paul Delli-Bovi Vice President None
750 W. Broadway
Apt. 5M
Long Beach, NY 11561
E. Drew Devereaux ++ Assistant Vice President None
Andrew John Donohue* Executive Vice Secretary of
President, General the New York-
Counsel and Director based Oppen-
heimer funds /
Vice President
of the Denver-
based Oppen-
heimer funds
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
Katherine P. Feld* Vice President & Secretary None
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding++ Vice President; Chairman:
Rochester Division None
Reed F. Finley Vice President - None
320 E. Maple, Ste. 254 Financial Institution Div.
Birmingham, MI 48009
Wendy Fishler* Vice President - None
Financial Institution Div.
Ronald R. Foster Senior Vice President None
139 Avant Lane
Cincinatti, OH 45249
Patricia Gadecki Vice President None
3906 Americana Drive
Tampa, FL 3334
Luiggino Galleto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President - None
5506 Bryn Mawr Financial Institution Div.
Dallas, TX 75209
Ralph Grant* Vice President/National None
Sales Manager - Financial
Institution Div.
Sharon Hamilton Vice President None
720 N. Juanita Ave. - #1
Redondo Beach, CA 90277
Mark D. Johnson Vice President None
7512 Cromwell Dr. Apt 1
Clayton, MO 63105
Michael Keogh* Vice President None
Richard Klein Vice President None
4820 Fremont Avenue So.
Minneapolis, MN 55409
Ilene Kutno* Vice President - None
Director - Regional Sales
Wayne A. LeBlang Senior Vice President - None
23 Fox Trail Director Eastern Div.
Lincolnshire, IL 60069
Dawn Lind Vice President - None
7 Maize Court Financial Institution Div.
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
John McDonough Vice President None
P.O. Box 760
50 Riverview Road
New Castle, NH 03854
Laura Mulhall* Senior Vice President - None
Director of Key Accounts
Timothy G. Mulligan ++ Vice President None
Charles Murray Vice President None
50 Deerwood Drive
Littleton, CO 80127
Wendy Murray Vice President None
114-B Larchmont Acres West
Larchmont, NY 10538
Joseph Norton Vice President None
2518 Fillmore Street
Apt. 1
San Francisco, CA 94115
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Randall Payne Vice President - None
1307 Wandering Way Dr. Financial Institution Div.
Charlotte, NC 28226
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice President None
1777 Larimer St. #807
Denver, CO 80202
Tilghman G. Pitts, III* Chairman & Director None
Elaine Puleo* Vice President - None
Financial Institution Div.,
Director -
Key Accounts
Minnie Ra Vice President - None
0895 Thirty-First Ave. Financial Institution Div.
Apt. 4
San Francisco, CA 94121
Michael Raso Vice President None
30 Hommocks Road
Apt. 30
Larchmont, NY 10538
John C. Reinhardt ++ Vice President None
Ian Robertson Vice President None
4204 Summit Way
Marietta, GA 30066
Michael S. Rosen++ Vice President, President:
Rochester Division None
Kenneth Rosenson Vice President None
3802 Knickerbocker Place
Apt. 3D
Indianapolis, IN 46240
James Ruff* President None
Timothy Schoeffler Vice President None
1717 Fox Hall Road
Wasington, DC 20007
Mark Schon Vice President None
10483 E. Corrine Dr.
Scottsdale, AZ 85259
Michael Sciortino Vice President None
3114 Hickory Run
Sugarland, TX 77479
Robert Shore Vice President - None
26 Baroness Lane Financial Institution Div.
Laguna Niguel, CA 92677
Peggy Spilker ++ Vice President None
Michael Stenger Vice President None
8572 Saint Ives Place
Cincinnati, OH 45255
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
David G. Thomas Vice President - None
111 South Joliet Circle Financial Institution Div.
#304
Aurora, CO 80112
Philip Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Gary Paul Tyc+ Assistant Treasurer None
Mark Stephen Vandehey+ Vice President None
Gregory K. Wilson Vice President None
2 Side Hill Road
Westport, CT 06880
</TABLE>
* Two World Trade Center, New York, NY 10048-0203
+ 3410 South Galena St., Denver, CO 80231
++ 350 Linden Oaks, Rochester, NY 14625-2807 (the "Rochester
Division")
(c) Not applicable.
Item 30. Location of Accounts and Records
--------------------------------
The accounts, books and other documents required to be maintained
by Registrant pursuant to Section 31(a) of the Investment Company
Act of 1940 and rules promulgated thereunder are in the possession
of Oppenheimer Management Corporation at its offices at 3410 South
Galena Street, Denver, Colorado 80231.
Item 31. Management Services
-------------------
Not applicable.
Item 32. Undertakings
------------
(i) Not applicable.
(ii) Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant certifies that it meets
all of the requirements for effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and
has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Denver
and State of Colorado on the 24th day of October, 1996.
OPPENHEIMER EQUITY INCOME FUND
/s/ James C. Swain *
by: --------------------------
James C. Swain
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons
in the capacities on the dates indicated:
Signatures: Title Date
/s/ James C. Swain * Chairman of the Board October 24, 1996
- ---------------------- of Trustees
James C. Swain
/s/ Jon S. Fossel* Trustee October 24, 1996
- ----------------------
Jon S. Fossel
/s/ George Bowen * Treasurer and October 24, 1996
- ---------------------- Principal Financial
George Bowen and Accounting Officer
/s/ Robert G. Avis * Trustee October 24, 1996
- ----------------------
Robert G. Avis
/s/ William A. Baker * Trustee October 24, 1996
- ----------------------
William A. Baker
/s/ Charles Conrad, Jr. * Trustee October 24, 1996
- ----------------------
Charles Conrad, Jr.
/s/ Sam Freedman Trustee October 24, 1996
- -----------------
Sam Freedman
/s/ Raymond J. Kalinowski * Trustee October 24, 1996
- --------------------------
Raymond J. Kalinowski
/s/ C. Howard Kast * Trustee October 24, 1996
- ----------------------
C. Howard Kast
/s/ Robert M. Kirchner * Trustee October 24, 1996
- ----------------------
Robert M. Kirchner
/s/ Bridget A. Macaskill President and October 24, 1996
- --------------------- Trustee
Bridget A. Macaskill
/s/ Ned M. Steel * Trustee October 24, 1996
- ---------------------
Ned M. Steel
/s/ Robert G. Zack
*By: --------------------------------
Robert G. Zack, Attorney-in-Fact
<PAGE>
OPPENHEIMER EQUITY INCOME FUND
EXHIBIT INDEX
-------------
Form N-1A
Item No. Description
- ---------- -----------
24(b)(4)(i) Speciman Stock Certificate for Class A Shares
24(b)(4)(ii) Speciman Stock Certificate for Class B Shares
24(b)(4)(iii) Speciman Stock Certificate for Class C Shares
24(b)(11) Independent Auditors' Consent
24(b)(16) Performance Data Computation Schedule
24(b)(17)(i) Financial Data Schedule for Class A Shares at
6-30-96 and 8-31-96
24(b)(17)(ii) Financial Data Schedule for Class B Shares at
6-30-96 and 8-31-96
24(b)(17)(iii) Financial Data Schedule for Class C Shares at
6-30-96 and 8-31-96
Power of Attorney for
Bridget A. Macaskill
Power of Attorney for
Sam Freedman
Exhibit 24(b)(4)(i)
OPPENHEIMER EQUITY INCOME FUND
Class A Share Certificate (8-1/2" x 12-5/8")
I. FRONT OF CERTIFICATE (All text and other matter lies within 7-1/4"
x 11-1/4" decorative border)
(upper left) box with heading: NUMBER (OF SHARES)
(upper right) box with heading: CLASS A SHARES
(centered
below boxes) OPPENHEIMER EQUITY INCOME FUND
A MASSACHUSETTS BUSINESS TRUST
(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR
CERTAIN DEFINITIONS
box with CUSIP number
683793 10 3
(at left) is the owner of
(centered) FULLY PAID CLASS A SHARES OF
BENEFICIAL INTEREST OF
OPPENHEIMER EQUITY INCOME FUND
A series of Oppenheimer Equity Income Fund (hereinafter
called the "Fund"), transferable only on the books of the
Fund by the holder hereof in person or by duly authorized
attorney, upon surrender of this certificate properly
endorsed. This Certificate and the shares represented
hereby are issued and shall be held subject to all of the
provisions of the Declaration of Trust of the Fund to all
of which the holder by acceptance hereof assents. This
certificate is not valid until countersigned by the
Transfer Agent.
WITNESS the facsimile seal of the Fund and the signatures
of its duly authorized officers.
(at left (at right
of seal) of seal)
(signature) (signature)
Dated:
/s/ George Bowen /s/Bridget Macaskill
_______________________ ___________________
TREASURER PRESIDENT
Exhibit 24(b)(4)(i)
Page 2
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER EQUITY INCOME FUND
SEAL
1986
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS SERVICES
(A DIVISION OF OPPENHEIMERFUNDS, INC.
Denver (Colo) Transfer Agent
By ____________________________
Authorized Signature
(at lower left corner, outside
ornamental border)
300-000000 [certificate number]
II. BACK OF CERTIFICATE (text reads from top to bottom of 12-5/8"
dimension)
The following abbreviations when used in the inscription on the face
of this certificate, shall be construed as though they were written out
in full according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as joint tenants with
rights of survivorship and not
as tenants in common
UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian _______________
(Cust) (Minor)
UNDER UGMA/UTMA ___________________
(State)
Additional abbreviations may also be used though not in the above list.
Exhibit 24(b)(4)(i)
Page 3
For Value Received ................ hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
_______________________________________________________________________
(Please print or type name and address of assignee)
______________________________________________________
________________________________________________ Class A Shares of
beneficial interest represented by the within Certificate, and do
hereby irrevocably constitute and appoint ___________________________
Attorney to transfer the said shares on the books of the within named Fund
with full power of substitution in the premises.
Dated: ______________________
Signed: __________________________
___________________________________
(Both must sign if joint owners)
Signature(s) __________________________
guaranteed Name of Guarantor
by: _____________________________
Signature of Officer/Title
(text printed NOTICE: The signature(s) to this assignment must
vertically to right correspond with the name(s) as written upon the
of above paragraph) face of the certificate in every particular
without alteration or enlargement or any change
whatever.
(text printed in Signatures must be guaranteed by a financial
box to left of institution of the type described in the current
signature(s)) prospectus of the Fund.
_______________________________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY
certific\300cert
Exhibit 24(b)(4)(ii)
OPPENHEIMER EQUITY INCOME FUND
Class B Share Certificate (8-1/2" x 12-5/8")
I. FRONT OF CERTIFICATE (All text and other matter lies within 7-1/4"
x 11-1/4" decorative border)
(upper left) box with heading: NUMBER (OF SHARES)
(upper right) box with heading: CLASS B SHARES
(centered
below boxes) OPPENHEIMER EQUITY INCOME FUND
A MASSACHUSETTS BUSINESS TRUST
(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR
CERTAIN DEFINITIONS
box with CUSIP number
683793 20 2 (at left)
is the owner of
(centered) FULLY PAID CLASS B SHARES OF
BENEFICIAL INTEREST OF
OPPENHEIMER EQUITY INCOME FUND
A series of Oppenheimer Equity Income Fund (hereinafter
called the "Fund"), transferable only on the books of the
Fund by the holder hereof in person or by duly authorized
attorney, upon surrender of this certificate properly
endorsed. This certificate and the shares represented
hereby are issued and shall be held subject to all of the
provisions of the Declaration of Trust of the Fund to all
of which the holder by acceptance hereof assents. This
certificate is not valid until countersigned by the
Transfer Agent.
WITNESS the facsimile seal of the Fund and the signatures
of its duly authorized officers.
(at left (at right
of seal) of seal)
(signature) (signature)
Dated:
/s/ George Bowen /s/ Bridget Macaskill
_______________________ ___________________
TREASURER PRESIDENT
Exhibit 24(b)(4)(ii)
Page 2
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER EQUITY INCOME FUND
SEAL
1986
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS SERVICES
(A DIVISION OF OPPENHEIMERFUNDS, INC.
Denver (Colo) Transfer Agent
By ____________________________
Authorized Signature
(at lower left corner, outside
ornamental border)
301-000000 [certificate number]
II. BACK OF CERTIFICATE (text reads from top to bottom of 12-5/8"
dimension)
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out
in full according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as tenants with
rights of survivorship and not
as tenants in common
UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian _______________
(Cust) (Minor)
UNDER UGMA/UTMA ___________________
(State)
Additional abbreviations may also be used though not in the above list.
<PAGE>
Exhibit 24(b)(4)(ii)
Page 3
For Value Received ................ hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
_______________________________________________________________________
(Please print or type name and address of assignee)
______________________________________________________
________________________________________________ Class B Shares of
beneficial interest represented by the within certificate, and do
hereby irrevocably constitute and appoint ___________________________
Attorney to transfer the said shares on the books of the within named Fund
with full power of substitution in the premises.
Dated: ______________________
Signed: __________________________
___________________________________
(Both must sign if joint owners)
Signature(s) __________________________
guaranteed Name of Guarantor
by: _____________________________
Signature of Officer/Title
(text printed NOTICE: The signature(s) to this assignment must
vertically to right correspond with the name(s) as written upon the
of above paragraph) face of the certificate in every particular
without alteration or enlargement or any change
whatever.
(text printed in Signatures must be guaranteed by a financial
box to left of institution of the type described in the current
signature(s)) prospectus of the Fund.
_______________________________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY
certific\300CERTB
Exhibit 24(b)(4)(iii)
OPPENHEIMER EQUITY INCOME FUND
Class C Share Certificate (8-1/2" x 12-5/8")
I. FRONT OF CERTIFICATE (All text and other matter lies within 7-1/4"
x 11-1/4" decorative border)
(upper left) box with heading: NUMBER (OF SHARES)
(upper right) box with heading: CLASS C SHARES
(centered
below boxes) OPPENHEIMER EQUITY INCOME FUND
A MASSACHUSETTS BUSINESS TRUST
(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR
CERTAIN DEFINITIONS
box with CUSIP number
683793 20 2 (at left)
is the owner of
(centered) FULLY PAID CLASS C SHARES OF
BENEFICIAL INTEREST OF
OPPENHEIMER EQUITY INCOME FUND
A series of Oppenheimer Equity Income Fund (hereinafter
called the "Fund"), transferable only on the books of the
Fund by the holder hereof in person or by duly authorized
attorney, upon surrender of this certificate properly
endorsed. This certificate and the shares represented
hereby are issued and shall be held subject to all of the
provisions of the Declaration of Trust of the Fund to all
of which the holder by acceptance hereof assents. This
certificate is not valid until countersigned by the
Transfer Agent.
WITNESS the facsimile seal of the Fund and the signatures
of its duly authorized officers.
(at left (at right
of seal) of seal)
(signature) (signature)
Dated:
/s/ George Bowen /s/ Bridget A. Macaskill
_______________________ ___________________
TREASURER PRESIDENT
Exhibit 24(b)(4)(ii)
Page 2
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER EQUITY INCOME FUND
SEAL
1986
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS SERVICES
(A DIVISION OF OPPENHEIMERFUNDS, INC.
Denver (Colo) Transfer Agent
By ____________________________
Authorized Signature
(at lower left corner, outside
ornamental border)
301-000000 [certificate number]
II. BACK OF CERTIFICATE (text reads from top to bottom of 12-5/8"
dimension)
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out
in full according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as tenants with
rights of survivorship and not
as tenants in common
UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian _______________
(Cust) (Minor)
UNDER UGMA/UTMA ___________________
(State)
Additional abbreviations may also be used though not in the above list.
<PAGE>
Exhibit 24(b)(4)(ii)
Page 3
For Value Received ................ hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
_______________________________________________________________________
(Please print or type name and address of assignee)
______________________________________________________
________________________________________________ Class C Shares of
beneficial interest represented by the within certificate, and do
hereby irrevocably constitute and appoint ___________________________
Attorney to transfer the said shares on the books of the within named Fund
with full power of substitution in the premises.
Dated: ______________________
Signed: __________________________
___________________________________
(Both must sign if joint owners)
Signature(s) __________________________
guaranteed Name of Guarantor
by: _____________________________
Signature of Officer/Title
(text printed NOTICE: The signature(s) to this assignment must
vertically to right correspond with the name(s) as written upon the
of above paragraph) face of the certificate in every particular
without alteration or enlargement or any change
whatever.
(text printed in Signatures must be guaranteed by a financial
box to left of institution of the type described in the current
signature(s)) prospectus of the Fund.
_______________________________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY
certific\300CERTB
Exhibit 24(b)(11)
INDEPENDENT AUDITORS' CONSENT
Oppenheimer Equity Income Fund:
We consent to the use in this Post-Effective Amendment No. 46 to
Registration Statement No. 2-33043 of our reports dated July 22,
1996 and September 23, 1996 appearing in the Statement of
Additional Information, which is a part of such Registration
Statement, and to the reference to us under the caption
"Financial Highlights" appearing in the Prospectus, which is also
a part of such Registration Statement.
/s/ Deloitte & Touche LLP
- ----------------------------------
DELOITTE & TOUCHE LLP
Denver, Colorado
October 22, 1996
Oppenheimer Equity Income Fund
Exhibit 24(b)(16) to Form N-1A
Performance Data Computation Schedule
The Fund's average annual total returns and total returns are calculated as
described below, on the basis of the Fund's distributions, for the past
10 years which are as follows:
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares
07/14/86 0.1200 0.5200 8.380
10/13/86 0.1200 0.0000 8.340
12/19/86 0.0000 0.0900 8.490
01/12/87 0.1200 0.0000 8.760
04/06/87 0.1200 0.0000 9.740
07/06/87 0.1200 0.5200 9.230
10/09/87 0.1200 0.0000 9.350
12/24/87 0.1200 0.3550 7.940
03/25/88 0.1200 0.0000 8.200
06/24/88 0.1200 0.0000 8.500
09/23/88 0.1200 0.0000 8.330
12/23/88 0.1200 0.0150 8.420
03/23/89 0.1200 0.0000 8.660
06/23/89 0.1200 0.0000 9.310
09/21/89 0.1200 0.0000 9.600
12/22/89 0.1400 0.2400 9.150
03/29/90 0.1200 0.0000 9.110
06/21/90 0.1200 0.0000 9.230
09/27/90 0.1200 0.0000 8.460
12/27/90 0.1200 0.1450 8.470
03/21/91 0.1200 0.0000 8.990
06/26/91 0.1200 0.0000 8.850
09/26/91 0.1200 0.0000 9.210
12/26/91 0.1250 0.1185 9.120
03/26/92 0.1200 0.0000 9.110
06/25/92 0.1200 0.0000 9.090
09/24/92 0.1200 0.0000 9.220
12/24/92 0.1200 0.1450 9.320
03/25/93 0.1200 0.0000 9.840
06/24/93 0.1200 0.0000 9.880
09/23/93 0.1200 0.0000 10.200
12/27/93 0.1200 0.1721 10.010
03/24/94 0.1200 0.0000 9.860
06/23/94 0.1200 0.0000 9.490
09/22/94 0.1200 0.0000 9.700
12/23/94 0.1200 0.1272 9.140
03/23/95 0.1200 0.0000 9.510
06/20/95 0.1200 0.0000 10.230
09/21/95 0.1200 0.0000 10.830
12/22/95 0.1200 0.2444 10.840
03/20/96 0.1200 0.0000 11.290
06/20/96 0.1200 0.0000 11.280
Oppenheimer Equity Income Fund
Page 2
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class B Shares
09/23/93 0.1150 0.0000 10.180
12/27/93 0.1060 0.1721 9.990
03/24/94 0.1030 0.0000 9.830
06/23/94 0.1020 0.0000 9.460
09/22/94 0.1020 0.0000 9.670
12/23/94 0.1010 0.1272 9.100
03/23/95 0.1020 0.0000 9.480
06/20/95 0.1020 0.0000 10.180
09/21/95 0.0990 0.0000 10.780
12/22/95 0.0985 0.2444 10.780
03/20/96 0.0990 0.0000 11.230
06/20/96 0.0970 0.0000 11.220
Class C Shares
12/22/95 0.1169 0.2444 10.820
03/20/96 0.1050 0.0000 11.260
06/20/96 0.1010 0.0000 11.240
1. Average Annual Total Returns for the Periods Ended 06/30/96:
The formula for calculating average annual total return is as follows:
1 ERV n
--------------- = n (---) - 1 = average annual total return
number of years P
Where: ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year
$1,117.92 1 $1,675.59 .2
(---------) - 1 = 11.79% (---------) - 1 = 10.87%
$1,000 $1,000
Ten Year
$2,638.55 .1
(---------) - 1 = 10.19%
$1,000
Oppenheimer Equity Income Fund
Page 3
1. Average Annual Total Returns for the Periods Ended 06/30/96 (continued):
Class B Shares
Example assuming a maximum contingent deferred sales charge of 5.00% for the
first year, and 3.00% for the inception year:
One Year Inception
$1,125.76 1 $1,288.79 .3485
(---------) - 1 = 12.58% (---------) - 1 = 9.24%
$1,000 $1,000
Class C Shares
Example assuming a maximum contingent deferred sales charge of 1.00% for the
inception year:
Inception
$1,094.96 1.5063
(---------) - 1 = 14.64%
$1,000
Examples at NAV:
Class A Shares
One Year Five Year
$1,186.13 1 $1,777.80 .2
(---------) - 1 = 18.61% (---------) - 1 = 12.20%
$1,000 $1,000
Ten Year
$2,799.55 .1
(---------) - 1 = 10.84%
$1,000
Class B Shares
One Year Inception
$1,175.76 1 $1,318.79 .3485
(---------) - 1 = 17.58% (---------) - 1 = 10.12%
$1,000 $1,000
Class C Shares
Inception
$1,104.96 1.5063
(---------) - 1 = 16.22%
$1,000
Oppenheimer Equity Income Fund
Page 4
2. Cumulative Total Returns for the Periods Ended 06/30/96:
The formula for calculating cumulative total return is as follows:
ERV - P
------- = Cumulative Total Return
P
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year
$1,117.92 - $1,000 $1,675.59 - $1,000
------------------ = 11.79% ------------------ = 67.56%
$1,000 $1,000
Ten Year
$2,638.55 - $1,000
------------------ = 163.86%
$1,000
Class B Shares
Example assuming a maximum contingent deferred sales charge of 5.00% for the
first year, and 3.00% for the inception year:
One Year Inception Year
$1,125.76 - $1,000 $1,288.79 - $1,000
------------------ = 12.58% ------------------ = 28.88%
$1,000 $1,000
Class C Shares
Example assuming a maximum contingent deferred sales charge of 5.00% for the
inception year:
Inception Year
$1,094.96 - $1,000
------------------ = 9.50%
$1,000
Oppenheimer Equity Income Fund
Page 5
2. Cumulative Total Returns for the Periods Ended 06/30/96 (Continued):
Examples at NAV:
Class A Shares
One Year Five Year
$1,186.13 - $1,000 $1,777.80 - $1,000
------------------ = 18.61% ------------------ = 77.78%
$1,000 $1,000
Ten Year
$2,799.55 - $1,000
------------------ = 179.96%
$1,000
Class B Shares
One Year Inception Year
$1,175.76 - $1,000 $1,318.79 - $1,000
------------------ = 17.58% ------------------ = 31.88%
$1,000 $1,000
Class C Shares
Inception Year
$1,104.96 - $1,000
------------------ = 10.50%
$1,000
Oppenheimer Equity Income Fund
Exhibit 24(b)(16) to Form N-1A
Performance Data Computation Schedule
The Fund's average annual total returns and total returns are
calculated as described below, on the basis of the Fund's
distributions, for the past 10 years which are as follows:
Amount From
Distribution Amount From Long or
Reinvestment Investment Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares
07/14/86 $0.1200 $0.5200 $8.380
10/13/86 0.1200 0.0000 8.340
12/19/86 0.0000 0.0900 8.490
01/12/87 0.1200 0.0000 8.760
04/06/87 0.1200 0.0000 9.740
07/06/87 0.1200 0.5200 9.230
10/09/87 0.1200 0.0000 9.350
12/24/87 0.1200 0.3550 7.940
03/25/88 0.1200 0.0000 8.200
06/24/88 0.1200 0.0000 8.500
09/23/88 0.1200 0.0000 8.330
12/23/88 0.1200 0.0150 8.420
03/23/89 0.1200 0.0000 8.660
06/23/89 0.1200 0.0000 9.310
09/21/89 0.1200 0.0000 9.600
12/22/89 0.1400 0.2400 9.150
03/29/90 0.1200 0.0000 9.110
06/21/90 0.1200 0.0000 9.230
09/27/90 0.1200 0.0000 8.460
12/27/90 0.1200 0.1450 8.470
03/21/91 0.1200 0.0000 8.990
06/26/91 0.1200 0.0000 8.850
09/26/91 0.1200 0.0000 9.210
12/26/91 0.1250 0.1185 9.120
03/26/92 0.1200 0.0000 9.110
06/25/92 0.1200 0.0000 9.090
09/24/92 0.1200 0.0000 9.220
12/24/92 0.1200 0.1450 9.320
03/25/93 0.1200 0.0000 9.840
06/24/93 0.1200 0.0000 9.880
09/23/93 0.1200 0.0000 10.200
12/27/93 0.1200 0.1721 10.010
03/24/94 0.1200 0.0000 9.860
06/23/94 0.1200 0.0000 9.490
09/22/94 0.1200 0.0000 9.700
12/23/94 0.1200 0.1272 9.140
03/23/95 0.1200 0.0000 9.510
06/20/95 0.1200 0.0000 10.230
09/21/95 0.1200 0.0000 10.830
12/22/95 0.1200 0.2444 10.840
03/20/96 0.1200 0.0000 11.290
06/20/96 0.1200 0.0000 11.280
Oppenheimer Equity Income Fund
Page 2
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term
Reinvestment
(Ex)Date Income Capital Gains Price
Class B Shares 09/23/93 0.1150
0.0000 10.180
12/27/93 0.1060 0.1721 9.990
03/24/94 0.1030 0.0000 9.830
06/23/94 0.1020 0.0000 9.460
09/22/94 0.1020 0.0000 9.670
12/23/94 0.1010 0.1272 9.100
03/23/95 0.1020 0.0000 9.480
06/20/95 0.1020 0.0000 10.180
09/21/95 0.0990 0.0000 10.780
12/22/95 0.0985 0.2444 10.780
03/20/96 0.0990 0.0000 11.230
06/20/96 0.0970 0.0000 11.220
Class C Shares
12/22/95 0.1169 0.2444 10.820
03/20/96 0.1050 0.0000 11.260
06/20/96 0.1010 0.0000 11.240
1. AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 08/31/96:
The formula for calculating average annual total return is as
follows:
1 ERV n
--------------- = n(---) - 1 = average annual total return
number of years P
Where: ERV = ending redeemable value of a hypothetical $1,000
payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year
$1,065.10 1 $1,588.71 .2
(---------) - 1 = 6.51% (---------) - 1 = 9.70%
$1,000 $1,000
Ten Year
$2,629.43 .1
(---------) - 1 = 10.15%
$1,000
Oppenheimer Equity Income Fund
Page 3
1. AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 08/31/96
(CONTINUED):
Class B Shares
Example assuming a maximum contingent deferred sales charge of 5.00%
for the first year, and 2.00% for the inception year:
One Year Inception
$1,071.10 1 $1,294.14 .3291
(---------) - 1 = 7.11% (---------) - 1 = 8.85%
$1,000 $1,000
Examples at NAV:
Class A Shares
One Year Five Year
$1,130.08 1 $1,685.61 .2
(---------) - 1 = 13.01% (---------) - 1 = 11.01%
$1,000 $1,000
Ten Year
$2,789.91 .1
(---------) - 1 = 10.80%
$1,000
Class B Shares
One Year Inception
$1,121.11 1 $1,314.13 .3291
(---------) - 1 = 12.11% (---------) - 1 = 9.41%
$1,000 $1,000
Oppenheimer Equity Income Fund
Page 4
2. CUMULATIVE TOTAL RETURNS FOR THE PERIODS ENDED 08/31/96:
The formula for calculating cumulative total return is as follows:
ERV - P
------- = Cumulative Total Return
P
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year
$1,065.10 - $1,000 $1,588.71 - $1,000
------------------ = 6.51% ------------------ = 58.87%
$1,000 $1,000
Ten Year
$2,629.43 - $1,000
------------------ = 162.95%
$1,000
Class B Shares
Example assuming a maximum contingent deferred sales charge of 5.00%
for the first year, and 2.00% for the inception year:
One Year Inception Year
$1,071.10 - $1,000 $1,294.14 - $1,000
------------------ = 7.11% ------------------ = 29.41%
$1,000 $1,000
Class C Shares
Example assuming a maximum contingent deferred sales charge of 1.00%
for the inception year:
Inception Year
$1,090.09 - $1,000
------------------ = 9.01%
$1,000
Oppenheimer Equity Income Fund
Page 5
2. CUMLATIVE TOTAL RETURNS FOR THE PERIODS ENDED 08/31/96 (CONTINUED):
Examples at NAV:
Class A Shares
One Year Five Year
$1,130.08 - $1,000 $1,685.61 - $1,000
------------------ = 13.01% ------------------ = 68.56%
$1,000 $1,000
Ten Year
$2,789.91 - $1,000
------------------ = 178.99%
$1,000
Class B Shares
One Year Inception Year
$1,121.11 - $1,000 $1,314.13 - $1,000
------------------ = 12.11% ------------------ = 31.41%
$1,000 $1,000
Class C Shares
Inception Year
$1,100.09 - $1,000
------------------ = 10.01%
$1,000
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 045156
<NAME> OPPENHEIMER EQUITY INCOME FUND-A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 1,917,014,485
<INVESTMENTS-AT-VALUE> 2,385,149,752
<RECEIVABLES> 18,930,675
<ASSETS-OTHER> 409,304
<OTHER-ITEMS-ASSETS> 1,863,490
<TOTAL-ASSETS> 2,406,353,221
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7,340,775
<TOTAL-LIABILITIES> 7,340,775
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,872,514,684
<SHARES-COMMON-STOCK> 187,893,082
<SHARES-COMMON-PRIOR> 184,622,931
<ACCUMULATED-NII-CURRENT> 2,274,563
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 56,078,570
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 468,144,629
<NET-ASSETS> 2,140,809,971
<DIVIDEND-INCOME> 53,937,154
<INTEREST-INCOME> 68,337,314
<OTHER-INCOME> 0
<EXPENSES-NET> 21,952,972
<NET-INVESTMENT-INCOME> 100,321,496
<REALIZED-GAINS-CURRENT> 71,806,904
<APPREC-INCREASE-CURRENT> 206,616,780
<NET-CHANGE-FROM-OPS> 378,745,180
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 88,933,508
<DISTRIBUTIONS-OF-GAINS> 45,033,840
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20,146,940
<NUMBER-OF-SHARES-REDEEMED> 28,310,542
<SHARES-REINVESTED> 11,433,753
<NET-CHANGE-IN-ASSETS> 344,316,816
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 33,385,470
<OVERDISTRIB-NII-PRIOR> 970,447
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 12,078,956
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 21,952,972
<AVERAGE-NET-ASSETS> 2,054,132,000
<PER-SHARE-NAV-BEGIN> 10.25
<PER-SHARE-NII> 0.50
<PER-SHARE-GAIN-APPREC> 1.36
<PER-SHARE-DIVIDEND> 0.48
<PER-SHARE-DISTRIBUTIONS> 0.24
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.39
<EXPENSE-RATIO> 0.89
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 045156
<NAME> OPPENHEIMER EQUITY INCOME FUND-A
<S> <C>
<PERIOD-TYPE> 2-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 1,936,881,017
<INVESTMENTS-AT-VALUE> 2,365,262,248
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<PAID-IN-CAPITAL-COMMON> 1,858,826,553
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<SHARES-COMMON-PRIOR> 187,893,082
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<ACCUM-APPREC-OR-DEPREC> 428,390,698
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<DIVIDEND-INCOME> 9,968,781
<INTEREST-INCOME> 11,489,266
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<EXPENSES-NET> 4,131,691
<NET-INVESTMENT-INCOME> 17,326,356
<REALIZED-GAINS-CURRENT> 14,519,814
<APPREC-INCREASE-CURRENT> (39,753,931)
<NET-CHANGE-FROM-OPS> (7,907,761)
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<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (21,595,892)
<ACCUMULATED-NII-PRIOR> 2,274,563
<ACCUMULATED-GAINS-PRIOR> 56,078,570
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,134,834
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,131,691
<AVERAGE-NET-ASSETS> 2,108,522,000
<PER-SHARE-NAV-BEGIN> 11.39
<PER-SHARE-NII> 0.09
<PER-SHARE-GAIN-APPREC> (0.12)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.36
<EXPENSE-RATIO> 0.94
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 045156
<NAME> OPPENHEIMER EQUITY INCOME FUND-B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 1,917,014,485
<INVESTMENTS-AT-VALUE> 2,385,149,752
<RECEIVABLES> 18,930,675
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<OTHER-ITEMS-ASSETS> 1,863,490
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<PAID-IN-CAPITAL-COMMON> 1,872,514,684
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<REALIZED-GAINS-CURRENT> 71,806,904
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<NET-CHANGE-FROM-OPS> 378,745,180
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<DISTRIBUTIONS-OF-GAINS> 4,472,521
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<GROSS-EXPENSE> 21,952,972
<AVERAGE-NET-ASSETS> 207,785,000
<PER-SHARE-NAV-BEGIN> 10.21
<PER-SHARE-NII> 0.41
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 045156
<NAME> OPPENHEIMER EQUITY INCOME FUND-B
<S> <C>
<PERIOD-TYPE> 2-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> AUG-31-1996
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<INVESTMENTS-AT-VALUE> 2,365,262,248
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<NET-CHANGE-IN-ASSETS> (21,595,892)
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<PER-SHARE-NII> 0.07
<PER-SHARE-GAIN-APPREC> (0.11)
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<PER-SHARE-NAV-END> 11.29
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 045156
<NAME> OPPENHEIMER EQUITY INCOME FUND-C
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 1,917,014,485
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<ACCUMULATED-NII-CURRENT> 2,274,563
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 56,078,570
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 468,144,629
<NET-ASSETS> 5,836,087
<DIVIDEND-INCOME> 53,937,154
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<EXPENSES-NET> 21,952,972
<NET-INVESTMENT-INCOME> 100,321,496
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<APPREC-INCREASE-CURRENT> 206,616,780
<NET-CHANGE-FROM-OPS> 378,745,180
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<DISTRIBUTIONS-OF-INCOME> 81,369
<DISTRIBUTIONS-OF-GAINS> 15,717
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 523,531
<NUMBER-OF-SHARES-REDEEMED> 17,823
<SHARES-REINVESTED> 8,456
<NET-CHANGE-IN-ASSETS> 344,316,816
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 33,385,470
<OVERDISTRIB-NII-PRIOR> 970,447
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 12,078,956
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<GROSS-EXPENSE> 21,952,972
<AVERAGE-NET-ASSETS> 2,535,000
<PER-SHARE-NAV-BEGIN> 10.76
<PER-SHARE-NII> 0.28
<PER-SHARE-GAIN-APPREC> 0.88
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<EXPENSE-RATIO> 1.81
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 045156
<NAME> OPPENHEIMER EQUITY INCOME FUND-C
<S> <C>
<PERIOD-TYPE> 2-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 1,936,881,017
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<ACCUMULATED-NII-PRIOR> 2,274,563
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<PER-SHARE-NAV-BEGIN> 11.35
<PER-SHARE-NII> 0.07
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<EXPENSE-RATIO> 1.79
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes
and appoints Andrew J. Donohue or Robert G. Zack, and each of them, her
true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for her and in her capacity as a trustee
of OPPENHEIMER EQUITY INCOME FUND, a Massachusetts business trust (the
"Fund"), to sign on her behalf any and all Registration Statements
(including any post-effective amendments to Registration Statements) under
the Securities Act of 1933, the Investment Company Act of 1940 and any
amendments and supplements thereto, and other documents in connection
thereunder, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as
fully as to all intents and purposes as she might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and
agents, and each of them, may lawfully do or cause to be done by virtue
hereof.
Dated this 24th day of October, 1995.
/s/ Bridget A. Macaskill
- ---------------------------------
Bridget A. Macaskill
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 a trustee of OPPENHEIMER EQUITY INCOME FUND, a Massachusetts
business trust (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 she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents,
and each of them, may lawfully do or cause to be done by virtue hereof.
Dated this 27th day of June, 1996.
/s/ Sam Freedman
_________________________
Sam Freedman
