<PAGE>
As filed with the Securities and Exchange Commission on ____________, 1998
Registration No.
- --------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES
/ X / OF 1933
/ / PRE-EFFECTIVE AMENDMENT NO.
/ /OST-EFFECTIVE AMENDMENT NO.
OPPENHEIMER INTEGRITY FUNDS
(Exact Name of Registrant as Specified in Charter)
6803 South Tucson Way, Englewood, Colorado 80112
(Address of Principal Executive Offices)
1-303-768-3200
(Registrant's Telephone Number)
Andrew J. Donohue, Esq.
Executive Vice President & General Counsel
OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
(212) 323-0256
(Name and Address of Agent for Service)
As soon as practicable after the Registration Statement becomes effective.
(Approximate Date of Proposed Public Offering)
It is proposed that this filing will become effective on ___________, 1998,
pursuant to Rule 488.
Pursuant to Rule 429, this Registration Statement relates to shares
previously registered by the
Registrant on Form N-1A (Reg. No. 2-76547; 811-3420).
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following pages and documents:
Front Cover
Contents Page
Cross-Reference Sheet
Part A
Proxy Statement for Oppenheimer LifeSpan Income Fund
and
Prospectus for Oppenheimer Bond Fund
Part B
Statement of Additional Information
Part C
Other Information
Signatures
Exhibits
<PAGE>
FORM N-14
OPPENHEIMER INTEGRITY FUNDS
Cross Reference Sheet
Part A of
Form N-14
Item No. Proxy Statement and Prospectus Heading and/or Title of Document
- ---------
- -------------------------------------------------------------------------------
1 (a) Cross Reference Sheet
(b) Front Cover Page
(c) *
2 (a) *
(b) Table of Contents
3 (a) Comparative Fee Tables
(b) Synopsis
(c) Principal Risk Factors
4 (a) Synopsis; Approval of the Reorganization; Comparison
between LifeSpan
Income Fund and Bond Fund; Miscellaneous
(b) Approval of the Reorganization - Capitalization Table
5 (a) Registrant's Prospectus; Comparison Between Oppenheimer
Bond Fund
and Oppenheimer LifeSpan Income Fund
(b) *
(c) *
(d) *
(e) Miscellaneous
(f) Miscellaneous
6 (a) Prospectus of Oppenheimer LifeSpan Income Fund; Annual
Report of
Oppenheimer Bond Fund; Comparison Between Oppenheimer Bond
Fund
and Oppenheimer LifeSpan Income Fund
(b) Miscellaneous
(c) *
(d) *
7 (a) Synopsis; Information Concerning the Meeting
(b) *
(c) Synopsis; Information Concerning the Meeting
8 (a) Proxy Statement
(b) *
9 *
Part B of
Form N-14
Item No. Statement of Additional Information Heading
- --------- -----------------------------------------------------
10 Cover Page
11 Table of Contents
<PAGE>
12 (a) Registrant's Statement of Additional Information
(b) *
(c) *
13 (a) Statement of Additional Information about LifeSpan Income
Fund
(b) *
(c) *
14 Registrant's Statement of Additional Information; Statement of
Additional
Information about Oppenheimer LifeSpan Income Fund; Annual Report
of
Oppenheimer LifeSpan Income Fund at 10/31/97; Registrant's Annual
Report at
12/31/97
Part C of
Form N-14
Item No. Other Information Heading
- --------- --------------------------------
15 Indemnification
16 Exhibits
17 Undertakings
- ---------------
* Not Applicable or negative answer
merge\305.n14
OPPENHEIMER LIFESPAN INCOME FUND
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 9, 1998
To the Shareholders of Oppenheimer LifeSpan Income Fund:
Notice is hereby given that a Special Meeting of the
Shareholders
of Oppenheimer LifeSpan Income Fund ("LifeSpan Income Fund"), a
series of Oppenheimer Series Fund, Inc., a registered management
investment company, will be held at 6803 South Tucson Way,
Englewood, Colorado 80112 at 10:00 A.M., Denver time, on June 9,
1998, or any adjournments thereof (the "Meeting"), for the
following purposes:
1. To approve or disapprove an Agreement and Plan of Reorganization between
LifeSpan Income Fund and Oppenheimer Bond Fund ("Bond Fund") and the
transactions contemplated thereby, including (a) the transfer of substantially
all the assets of LifeSpan Income Fund to Bond Fund in exchange for Class A,
Class B
and Class C shares of Bond Fund, (b) the distribution of such shares to the
Class A, Class B and Class C shareholders of LifeSpan Income Fund in complete
liquidation of LifeSpan Income Fund, and (c) the cancellation of the outstanding
shares of LifeSpan Income Fund (the "Proposal" or the "Reorganization").
2. To act upon such other matters as may properly come before the
Meeting.
Shareholders of record at the close of business on March 10,
1998
are entitled to notice of, and to vote at, the Meeting. The
Proposal is more fully discussed in the Proxy Statement and
Prospectus. Please read it carefully before telling us, through
your proxy or in person, how you wish your shares to be voted.
LifeSpan Income Fund's Board of Directors recommends a vote in
favor of the Proposal. WE URGE YOU TO SIGN, DATE AND MAIL THE
ENCLOSED PROXY PROMPTLY.
By Order of the Board of Directors,
Andrew J. Donohue, Secretary
April 1, 1998
- -----------------------------------------------------------------
Shareholders who do not expect to attend the Meeting are requested to indicate
voting instructions on the enclosed proxy and to date, sign and return it in the
accompanying postage-paid envelope. To avoid unnecessary duplicate mailings, we
ask your cooperation in promptly mailing your proxy no matter how large or small
your holdings may be.
<PAGE>
OPPENHEIMER LIFESPAN INCOME FUND
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
PROXY STATEMENT
OPPENHEIMER BOND FUND
6803 South Tucson Way, Englewood, CO 80112
1-800-525-7048
PROSPECTUS
This Proxy Statement of Oppenheimer LifeSpan Income Fund ("LifeSpan Income
Fund") relates to the Agreement and Plan of Reorganization (the "Reorganization
Agreement")and the transactions contemplated thereby (the "Reorganization")
between LifeSpan Income Fund and Oppenheimer Bond Fund ("Bond Fund"). This
document also constitutes a Prospectus of Bond Fund included in a Registration
Statement on Form N-14 filed by Oppenheimer Bond Fund with the Securities and
Exchange Commission (the "SEC"). Such Registration Statement relates to the
registration of shares of Bond Fund to be offered to the shareholders of
LifeSpan Income Fund pursuant to the Reorganization Agreement. LifeSpan Income
Fund is located at Two World Trade Center, New York, New York 10048-0203
(telephone 1-800- 525-7048).
This Proxy Statement and Prospectus sets forth information about Bond Fund and
the Reorganization that shareholders of LifeSpan Income Fund should know before
voting on the Reorganization. A copy of the Prospectus for Bond Fund, dated
April 30, 1997, is enclosed, and incorporated herein by reference. The following
documents have been filed with the SEC and are available without charge upon
written request to OppenheimerFunds Services, the transfer and shareholder
servicing agent for Bond Fund and LifeSpan Income Fund, at P.O. Box 5270,
Denver, Colorado 80217, or by calling the toll-free number shown above: (i) a
Prospectus for LifeSpan Income Fund, dated February 19, 1998, as supplemented on
February 24, 1998 (ii) a Statement of Additional Information for LifeSpan Income
Fund, dated February 19, 1998, and (iii) a Statement of Additional Information
for Bond Fund, dated April 30, 1997. A Statement of Additional Information
relating to the Reorganization, dated April 1, 1998 (the "Bond Fund Additional
Statement") which is incorporated herein by reference and which contains more
detailed information about Bond Fund and its management, has been filed with the
SEC as part of the Bond Fund Registration Statement on Form N-14 and is
available by written request to OppenheimerFunds Services at the same address
listed above or by calling the toll-free number shown above.
Investors are advised to read and retain this Proxy Statement
and
Prospectus for future reference.
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED ON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
This Proxy Statement and Prospectus is dated April 1, 1998
<PAGE>
TABLE OF CONTENTS
PROXY STATEMENT AND PROSPECTUS
Page
Introduction.............................................................
General...............................................................
Record Date; Vote Required; Share Information.........................
Proxies...............................................................
Costs of the Solicitation and the Reorganization......................
Comparative Fee Tables...................................................
Synopsis.................................................................
Parties to the Reorganization.........................................
Shares to be Issued...................................................
The Reorganization ..............................................
Reasons for the Reorganization........................................
Tax Consequences of the Reorganization................................
Investment Objectives and Policies....................................
Investment Advisory and Distribution and Service Plan Fees............
Purchases, Exchanges and Redemptions..................................
Principal Risk Factors...................................................
Approval of the Reorganization (The Proposal)............................
Reasons for the Reorganization........................................
The Reorganization....................................................
Tax Aspects of the Reorganization.....................................
Capitalization Table (Unaudited)......................................
Comparison Between LifeSpan Income Fund and
Bond Fund
Investment Objectives and Policies....................................
Permitted Investments By Both LifeSpan Income Fund
and Bond Fund.......................................................
Investment Restrictions...............................................
Portfolio Turnover....................................................
Description of Brokerage Practices....................................
Expense Ratios and Performance........................................
Shareholder Services..................................................
Rights of Shareholders................................................
Organization and History..............................................
Management and Distribution Arrangements..............................
Purchase of Additional Shares.........................................
Dividends and Distributions...........................................
Method of Carrying Out the Reorganization ...............................
Additional Information...................................................
Financial Information.................................................
Public Information....................................................
Other Business...........................................................
Exhibit A - Agreement and Plan of Reorganization by and between
LifeSpan Income Fund and Bond Fund....................................A-1
Exhibit B - Average Annual Total Returns for the Period
Ended 12/31/97.......................................................B-1
<PAGE>
OPPENHEIMER LIFESPAN INCOME FUND
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
PROXY STATEMENT
Oppenheimer Bond Fund
6803 South Tucson Way
Englewood, CO 80112
1-800-525-7048
PROSPECTUS
Special Meeting of Shareholders
to be held June 9, 1998
INTRODUCTION
General
This Proxy Statement and Prospectus is being furnished to the
shareholders of Oppenheimer LifeSpan Income Fund("LifeSpan
Income
Fund"), a series of Oppenheimer Series Fund, Inc. (the
"Company"),
a registered management investment company, in connection with the solicitation
by the Board of Directors (the "Board") of proxies to be used at the Special
Meeting of Shareholders of LifeSpan Income Fund to be held at 6803 South Tucson
Way, Englewood, Colorado 80112, at 10:00 A.M., Denver time, on June 9, 1998, or
any adjournments thereof (the "Meeting"). It is expected that the mailing of
this Proxy Statement and Prospectus will commence on or about April 8, 1998.
At the Meeting, shareholders of LifeSpan Income Fund will be asked to approve an
Agreement and Plan of Reorganization (the "Reorganization Agreement") between
the Company on behalf of LifeSpan Income Fund and Oppenheimer Integrity Funds
(the "Trust") on behalf of Oppenheimer Bond Fund ("Bond Fund"), and the
transactions contemplated thereby including (a) the transfer of substantially
all the assets of LifeSpan Income Fund to Bond Fund in exchange for Class A,
Class B and Class C shares of Bond Fund, (b) the distribution of such shares to
the Class A, Class B and Class C shareholders of LifeSpan Income Fund in
complete liquidation of LifeSpan Income Fund, and (c) the cancellation of the
outstanding shares of LifeSpan Income Fund (the "Proposal" or the
"Reorganization").
Bond Fund currently offers Class A shares with a sales charge imposed at the
time of purchase. There is no initial sales charge on purchases of Class B or
Class C shares; however, a contingent deferred sales charge may be imposed,
depending on when the shares are sold. The Class A, Class B and Class C shares
issued pursuant to the Reorganization will be issued at net asset value without
a
-1-
<PAGE>
sales charge and no contingent deferred sales charge will be
imposed on any LifeSpan Income Fund shares exchanged in the
Reorganization. However, any contingent deferred sales charge
which applies to LifeSpan Income Fund shares will continue to
apply
to Bond Fund shares received in the reorganization. Additional
information with respect to these charges by Bond Fund is set
forth
herein, in the Prospectus of Bond Fund accompanying this Proxy
Statement and Prospectus and in the Bond Fund Statement of
Additional Information, both of which are incorporated herein by
reference.
Record Date; Vote Required; Share Information
The Board of Directors of the Company has fixed the close of business on March
10, 1998 as the record date (the "Record Date") for the determination of
shareholders entitled to notice of, and to vote at, the Meeting. An affirmative
vote of the holders of a "majority of the outstanding voting securities" as
defined in the Investment Company Act of 1940, as amended (the "Investment
Company Act") of all of the Class A, Class B and Class C shares in the aggregate
of LifeSpan Income Fund is required to approve the Reorganization. That level of
vote is defined in the Investment Company Act as the vote of the holders of the
lesser of: (i) 67% or more of the voting securities present or represented by
proxy at the shareholders meeting, if the holders of more than 50% of the
outstanding voting securities are present or represented by proxy, or (ii) more
than 50% of the outstanding voting securities. Each shareholder will be entitled
to one vote for each share and a fractional vote for each fractional share held
of record at the close of business on the Record Date. Only shareholders of
LifeSpan Income Fund will vote on the Reorganization. The vote of shareholders
of Bond Fund is not being solicited.
At the close of business on the Record Date, there were _______________ shares
of LifeSpan Income Fund issued and outstanding, consisting of _________________
Class A shares,_____________ Class B shares and_________________ Class C shares.
At the close of business on the Record Date, there
were_________________ shares of Bond Fund issued and outstanding, consisting
of______________ Class A shares, _____________Class B shares and______________
Class C shares. The presence in person or by proxy of the holders of a majority
of the shares of all classes constitutes a quorum for the transaction of
business at the Meeting. To the knowledge of LifeSpan Income Fund, as of the
Record Date, no person owned of record or beneficially owned 5% or more of its
outstanding shares except for_________________, which owned of record
_______________ Class ___ shares of LifeSpan Income Fund as of such date (_____%
of the outstanding Class ___ shares of LifeSpan Income Fund). As of the Record
Date, to the knowledge of Bond Fund, no person owned of record or beneficially
owned 5% or more of its outstanding shares except for ________________ which
-2-
<PAGE>
owned of record_____________ Class ____ shares of Bond Fund as of such date
(____% of the outstanding Class ___ shares of Bond
Fund).
In addition, as of the Record Date, the Directors and officers of LifeSpan
Income Fund and the Trustees and Officers of Bond Fund owned less than 1% of the
outstanding shares of either LifeSpan
Income Fund or Bond Fund, respectively.
Proxies
The enclosed form of proxy, if properly executed and returned, will be voted (or
counted as an abstention or withheld from voting) in accordance with the choices
specified thereon, and will be included in determining whether there is quorum
to conduct the Meeting. The proxy will be voted in favor of the Proposal unless
a choice is indicated to vote against or to abstain from voting on the Proposal.
Shares owned of record by broker-dealers for the benefit of their customers
("street account shares") will be voted by the broker-dealer based on
instructions received from its customers. If no instructions are received, the
broker-dealer may (if permitted under applicable stock exchange rules), as
record holder, vote such shares on the Proposal in the same proportion as that
broker-dealer votes street account shares for which voting instructions were
received in time to be voted. Broker "non-votes" exist where a proxy received
from a broker indicates that the broker does not have discretionary authority to
vote the shares on the matter. Shares represented in person or by proxy
(including shares which abstain or do not vote on the Proposal, including broker
"non- votes") will be counted for purposes of determining the number of shares
that are present and are entitled to vote on the Proposal, but will not be
counted as a vote in favor of such Proposal. Accordingly, an abstention from
voting on the Proposal or a broker "non-vote" will have the same legal effect as
a vote against the Proposal. If a shareholder executes and returns a proxy but
fails to indicate how the votes should be cast, the proxy will be voted in favor
of the Proposal. The proxy may be revoked at any time prior to the voting
thereof by: (i) writing to the Secretary of LifeSpan Income Fund at Two World
Trade Center, New York, New York 10048-0203 (if received in time to be acted
upon); (ii) attending the Meeting and voting in person; or (iii) signing and
returning a new proxy (if returned and received in time to be voted).
Costs of the Solicitation and the Reorganization
All expenses of this solicitation, including the cost of printing and mailing
this Proxy Statement and Prospectus, will be borne by LifeSpan Income Fund. Any
documents such as existing prospectuses or annual reports that are included in
that mailing will be a cost of the Fund issuing the document. In addition to the
solicitation of proxies by mail, proxies may be solicited by officers of
-3-
<PAGE>
LifeSpan Income Fund or officers and employees of OppenheimerFunds Services,
personally or by telephone or telegraph; any expenses so incurred will be borne
by OppenheimerFunds Services. Proxies may also be solicited by a proxy
solicitation firm hired at LifeSpan Income Fund's expense for such purpose.
Brokerage houses, banks and other fiduciaries may be requested to forward
soliciting material to the beneficial owners of shares of LifeSpan Income Fund
and to obtain authorization for the execution of proxies. For those services, if
any, they will be reimbursed by LifeSpan Income Fund for their reasonable
out-of-pocket expenses.
With respect to the Reorganization, LifeSpan Income Fund and Bond Fund will bear
the cost of their respective tax opinions. Any other out-of-pocket expenses of
LifeSpan Income Fund and Bond Fund associated with the Reorganization, including
legal, accounting and transfer agent expenses, will be borne by LifeSpan Income
Fund and Bond Fund, respectively, in the amounts so incurred by each.
COMPARATIVE FEE TABLES
Shareholder Transaction Expenses. LifeSpan Income Fund and Bond Fund each pay a
variety of expenses for management of their assets, administration, distribution
of their shares and other services, and those expenses are reflected in each
Fund's net asset value per share. Shareholders pay other expenses directly, such
as sales charges. The following table is provided to help you compare the direct
expenses of investing in each class of either LifeSpan Income Fund, Bond Fund or
the surviving Bond Fund after giving effect to the Reorganization.
LifeSpan Income Fund
Shareholder Transaction Expenses
Class A Class B Class C
Shares Shares Shares
Maximum Sales Charge 5.75% None None
on Purchases
(as a % of
offering price)
Maximum None(1) 5% in the 1% if
Deferred Sales ` first year shares are
Charge (as a % declining to redeemed
of the lower of the 1% in the within 12
original offering price sixth year and months of
or redemption proceeds) eliminated purchase(2)
thereafter(2)
Maximum Sales Charge
on Reinvested Dividends None None None
Exchange Fee None None None
-4-
<PAGE>
Redemption Fee None(3) None(3) None(3)
Bond Fund and Bond Fund as Surviving Fund
Shareholder Transaction Expenses
Class A Class B Class C
Shares Shares Shares
Maximum Sales Charge 4.75% None None
on Purchases
(as a % of
offering price)
Maximum None(1) 5% in the 1% if
Deferred Sales ` first year shares are
Charge (as a % declining to redeemed
of the lower of the 1% in the within 12
original offering price sixth year and months of
or redemption proceeds) eliminated purchase(2)
thereafter(2)
Maximum Sales Charge
on Reinvested Dividends None None None
Exchange Fee None None None
Redemption Fee None(3) None(3) None(3)
(1) If you invest more than $1 million ($500,000 or more for purchases by
"Retirement Plans," as defined in "Class A Contingent Deferred Sales Charge" in
each Fund's Prospectus) in Class A shares, you may have to pay a sales charge of
up to 1% if you sell your shares within 12 calendar months (18 months for shares
purchased prior to May 1, 1997)from the end of the calendar month during which
you purchased those shares.
(2) See "How to Buy Shares - Buying Class B Shares" and "How to Buy Shares -
Buying Class C Shares" in each Fund's Prospectus.
(3) There is a $10 transaction fee for redemptions paid by Federal Fund wire,
but not for redemptions paid by check or by ACH wire transfer through
AccountLink, or, in the case of Bond Fund, for which checkwriting privileges are
used (see "How to Sell
Shares").
Annual Fund Operating Expenses. The following tables are the operating expenses
of Class A, Class B and Class C shares of LifeSpan Income Fund and the operating
expenses of Class A, Class B and Class C shares of Bond Fund. These are based on
expenses for the twelve month period ended December 31, 1997. The expense
numbers for LifeSpan Income Fund are unaudited. The pro forma information is an
estimate of the business expenses of the surviving Bond Fund after giving effect
to the Reorganization. All amounts shown are a percentage of net assets of each
class of each
-5-
<PAGE>
of the Funds.
LifeSpan Income Fund* Bond Fund
Class A Class B Class C Class A Class B Class C
Management Fees 0.75% 0.75% 0.75% 0.75% 0.75% 0.75%
12b-1 Plan Fees 0.25% 1.00% 1.00% 0.25% 1.00% 1.00%
Other Expenses 0.32% 0.33% 0.39% 0.27% 0.27% 0.27%
Total Fund Operating 1.32% 2.08% 2.14% 1.27% 2.02% 2.02%
Expenses
Pro Forma Surviving Bond Fund
Class A Class B Class C
Management Fees 0.74% 0.74% 0.74%
12b-1 Plan Fees 0.25% 1.00% 1.00%
Other Expenses 0.27% 0.26% 0.26%
Total Fund Operating 1.26% 2.00% 2.00%
Expenses
- -----------------
* Unaudited
The 12b-1 fees for Class A shares of LifeSpan Income Fund and Bond Fund are
service plan fees. The service plan fees are a maximum of 0.25% of average
annual net assets of Class A shares of each
Fund.
The 12b-1 fees for Class B and Class C shares of each of the Funds are
Distribution and Service Plan fees which include a service fee
of 0.25% and an asset-based sales charge of 0.75%.
Examples. To try and show the effect of the expenses on an investment over time,
the hypothetical examples shown below have been created. Assume that you make a
$1,000 investment in Class A, Class B and Class C shares of LifeSpan Income
Fund, or Class A, Class B and Class C shares of Bond Fund, or Class A, Class B
and Class C of the pro forma surviving Bond Fund and that the annual return is
5% and that the operating expenses for each Fund are the ones shown in the chart
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 each period
shown.
1 year 3 years 5 years 10 years*
LifeSpan Income Fund $70 $97 $126 $207
Class A Shares $71 $95 $132 $204
Class B Shares $32 $67 $115 $247
Class C Shares
Bond Fund
Class A Shares $60 $86 $114 $194
Class B Shares $71 $93 $129 $198
Class C Shares $31 $63 $109 $235
Pro Forma Surviving
-6-
<PAGE>
Bond Fund
Class A Shares $60 $86 $113 $193
Class B Shares $70 $93 $128 $196
Class C Shares $30 $63 $108 $233
If you did not redeem your investment, it would incur the
following
expenses:
1 year 3 years 5 years 10 years*
LifeSpan Income Fund $70 $97 $126 $207
Class A Shares $21 $65 $112 $204
Class B Shares $22 $67 $115 $247
Class C Shares
Bond Fund
Class A Shares $60 $86 $114 $194
Class B Shares $21 $63 $109 $198
Class C Shares $21 $63 $109 $235
Pro Forma Surviving
Bond Fund
Class A Shares $60 $86 $113 $193
Class B Shares $20 $63 $108 $196
Class C Shares $20 $63 $108 $233
* 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 each of the Funds automatically converts your Class B shares into Class
A shares after 6 years. Long term Class B and C shareholders could pay the
economic equivalent of more than the maximum front-end sales charge allowed
under applicable regulations, because of the effect of the asset-based sales
charge and contingent deferred sales charge. The automatic conversion of Class B
shares to Class A Shares is designed to minimize the likelihood that this will
occur.
The examples show the effect of expenses on an investment, but are not meant to
state or predict actual or expected costs or investment returns of the Funds,
all of which may be more or less
than the amounts shown.
SYNOPSIS
The following is a synopsis of certain information contained in or incorporated
by reference in this Proxy Statement and Prospectus
-7-
<PAGE>
and presents key considerations for shareholders of LifeSpan Income Fund to
assist them in determining whether to approve the Reorganization. This synopsis
is only a summary and is qualified in its entirety by the more detailed
information contained in or incorporated by reference in this Proxy Statement
and Prospectus and by the Reorganization Agreement, a copy of which is attached
as Exhibit A hereto. Shareholders should carefully review this Proxy Statement
and Prospectus and the Reorganization Agreement in their entirety and, in
particular, the current Prospectus of Bond Fund which accompanies this Proxy
Statement and Prospectus and is incorporated herein by reference.
Parties to the Reorganization
Oppenheimer Series Fund, Inc. (defined above as the Company) was organized in
1981 as a multi-series Maryland corporation which currently has five series. The
Company is governed by Articles of Incorporation and By-Laws and is managed
under the direction of a Board of Directors. LifeSpan Income Fund is a
diversified series of the Company. Oppenheimer Integrity Funds (defined above as
the "Trust") was organized in 1982 as a multi-series Massachusetts business
trust and Bond Fund is a series of that Trust. The Trust is governed by a
Declaration of Trust and By-Laws and is managed under the direction of a Board
of Trustees. The Company is governed by applicable Maryland law, whereas the
Trust is governed by applicable Massachusetts law. Both Funds are governed by
applicable federal law. Oppenheimer Series Fund, Inc. and Oppenheimer Integrity
Funds are open-end, diversified management investment companies. Oppenheimer
Integrity Funds have an unlimited number of authorized shares of beneficial
interest. LifeSpan Income Fund is located at Two World Trade Center, New York,
New York 10048-0203 and Bond Fund is located at 6803 South Tucson Way,
Englewood, CO 80112. The Company is governed by a Board of Directors and the
Trust is governed by a Board of Trustees (defined above as the "Board").
OppenheimerFunds, Inc. (the "Manager") whose address is Two World Trade Center,
New York, New York 10048-0203, acts as investment adviser to LifeSpan Income
Fund and Bond Fund (collectively referred to herein as the "Funds"). Additional
information about the parties is set forth below.
Shares to be Issued
All shareholders of LifeSpan Income Fund who own Class A shares will receive
Class A shares of Bond Fund in exchange for their Class A shares of LifeSpan
Income Fund. Shareholders of LifeSpan Income Fund who own Class B shares will
receive Class B shares of Bond Fund in exchange for their Class B shares of
LifeSpan Income Fund. Shareholders of LifeSpan Income Fund who own Class C
shares will receive Class C shares of Bond Fund in exchange for their Class C
shares of LifeSpan Income Fund. The voting rights of
-8-
<PAGE>
shares of each Fund are substantially the same. See "Rights of
Shareholders" below for more information.
The Reorganization
The Reorganization Agreement provides for the transfer of
substantially all the assets of LifeSpan Income Fund to Bond Fund in exchange
for Class A, Class B and Class C shares of Bond
Fund.
The net asset value of Bond Fund Class A, Class B and Class C shares issued in
the exchange will equal the value of the assets of LifeSpan Income Fund received
by Bond Fund. In conjunction with the Closing of the Reorganization, presently
scheduled for May 29, 1998, LifeSpan Income Fund will distribute the Class A,
Class B and Class C shares of Bond Fund received by LifeSpan Income Fund on the
Closing Date to holders of Class A, Class B and Class C shares of LifeSpan
Income Fund, respectively. As a result of the Reorganization, each Class A,
Class B and Class C LifeSpan Income Fund shareholder will receive the number of
full and fractional Bond Fund Class A, Class B and Class C shares that equals in
value such shareholder's pro rata interest in the assets transferred to Bond
Fund as of the Valuation Date. The Board of the Company has determined that the
interests of existing LifeSpan Income Fund shareholders will not be diluted as a
result of the Reorganization. For the reasons set forth below under "The
Reorganization Reasons for the Reorganization," the Board, including the
directors who are not "interested persons" of Oppenheimer Series Fund, Inc. as
that term is defined in the Investment Company Act (the "Independent
Directors"), has concluded that the Reorganization is in the best interests of
LifeSpan Income Fund and its shareholders and recommends approval of the
Reorganization by LifeSpan Income Fund shareholders. If the Reorganization is
not approved, LifeSpan Income Fund will continue in existence and the Board will
determine whether to pursue alternative actions.
Reasons for the Reorganization
The Manager proposed to the Board a reorganization of LifeSpan Income Fund into
Bond Fund so that shareholders of LifeSpan Income Fund may become shareholders
of a larger but similar Fund, which is anticipated to have lower expenses after
such Reorganization. The Board considered pro forma information which indicated
the expense ratio of a combined Fund would be lower than that of LifeSpan Income
Fund, as shown above under "Comparative Fee Table."
The Board also considered that the Reorganization would be a tax free
reorganization, and there would be no sales charge imposed in effecting the
Reorganization. The Board concluded that the Reorganization would not result in
dilution to shareholders of
LifeSpan Income Fund.
-9-
<PAGE>
Tax Consequences of the Reorganization
In the opinion of KPMG Peat Marwick LLP, tax adviser to both
Funds,
the Reorganization will qualify as a tax-free reorganization for
Federal income tax purposes. As a result, it is expected that
no
gain or loss will be recognized by either Fund, or by the
shareholders of either Fund for Federal income tax purposes as a
result of the Reorganization. For further information about the
tax consequences of the Reorganization, see "Approval of the
Reorganization - Tax Aspects" below.
Investment Objectives and Policies
LifeSpan Income Fund
LifeSpan Income Fund seeks high current income, with opportunities for capital
appreciation. The Fund allocates its assets among two broad classes of
investments, which are stocks and bonds. The Fund invests at least 75% of its
assets in bonds. OppenheimerFunds, Inc., the Fund's investment adviser (referred
to as the "Manager") will invest the Fund's stock component in growth and income
stocks. The bond class includes several varieties of fixed-income instruments.
The Fund's bond investments are diversified among three bond components:
government and corporate bonds, high yield/high risk bonds (also called "junk
bonds") and short-term bonds. For hedging purposes, the Fund can also sell
covered call options on securities, stock or bond indices and foreign currency,
and may purchase and sell certain kinds of futures contracts, forward contracts
and options on futures, broadly-based stock or bond indices and foreign
currency, or enter into interest rate swap agreements.
Bond Fund
Bond Fund seeks a high level of current income by investing mainly in debt
instruments. Under normal market conditions Bond Fund invests at least 65% of
its assets in foreign and domestic investment grade debt securities, U.S.
Government Securities, and money market instruments. The Fund may invest up to
35% of its total assets in debt securities rated less than investment grade or,
if unrated, judged by the Manager to be of comparable quality to such
lower-rated securities (collectively, "lower-grade securities", also called
"junk bonds"). For hedging purposes, the Fund may purchase and sell certain
kinds of futures contracts, put and call options, forward contracts, and options
on futures, broadly-based stock or bond indices and foreign currency, or enter
into interest rate swap agreements.
Investment Advisory and Distribution and Service Plan Fees
Investment Advisory Fees. The terms and conditions of the
-10-
<PAGE>
Investment Advisory Agreement of each Fund are similar. Both Funds obtain
investment management services from the Manager. The management fee is computed
on the net asset value of each Fund as of the close of business each day and
payable monthly at the following annual rates: LifeSpan Income Fund pays 0.75%
of the average annual net assets up to $250 million and 0.65% of average annual
net assets over $250 million. Bond Fund pays 0.75% of the first $200 million of
average annual net assets, 0.72% of the next $200 million of average annual net
assets and 0.69% of the next $200 million of average annual net assets, 0.66% of
the next $200 million of average annual net assets, 0.60% of the next $200
million of average net assets and .50% of average annual net assets in excess of
$1 billion.
For LifeSpan Income Fund, the Manager employs BEA Associates ("BEA") which
provides investment advisory services to the high yield/high risk bond component
of the Fund (the "Subadviser"). The Manager manages the remaining components
using its own investment management personnel. Pursuant to the Sub-Advisory
Agreement, the Manager pays BEA the following fees: quarterly payments at the
annual rates of 0.45% of the first $25 million of combined average daily net
assets allocated to BEA, 0.40% of the next $25 million, 0.35% of the next $50
million and 0.25% of the assets in excess of $100 million. For purposes of
calculation of the fees payable to BEA, the net asset value of those portions of
the assets of each Oppenheimer fund subadvised by BEA are aggregated.
Distribution and Service Fees. LifeSpan Income Fund and Bond
Fund
have both adopted Service Plans for their respective Class A
shares. Both Service Plans provide for reimbursement to the
Distributor for a portion of its costs incurred in connection
with
the personal service and maintenance of accounts that hold
Class A
shares. Under each plan, payment 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.
LifeSpan Income Fund and Bond Fund have each adopted Distribution and Service
Plans (the "Plans") for Class B and Class C shares under which each Fund pays
the Distributor for its services in connection with distributing Class B and
Class C shares and servicing accounts. Under each Plan, the Fund pays the
Distributor an asset-based sales charge of 0.75% per year of Class B shares and
on Class C shares. The Funds also each pay the Distributor a service fee of
0.25% per year, each of which is computed on the average annual net assets of
Class B and Class C shares determined as of the close of each regular business
day of each Fund. The Distribution and Service Plans for Class B and Class C
shares of LifeSpan Income Fund and of Bond Fund are compensation plans whereby
payments by the Funds are made at a fixed rate as specified above and the Funds'
payments are not limited to reimbursing the Distributor's costs. The terms of
the respective Plans for each
-11-
<PAGE>
Fund are substantially the same.
Purchases, Exchanges and Redemptions
LifeSpan Income Fund and Bond Fund are part of the
OppenheimerFunds
complex of mutual funds. The procedures for purchases,
exchanges
and redemptions of shares of the Funds are substantially the
same.
Shares of either Fund may be exchanged for shares of the same
class
of other Oppenheimer funds offering such shares.
LifeSpan Income Fund has a maximum initial sales charge of 5.75% on Class A
shares. Bond Fund has a maximum initial sales charge of 4.75% on Class A shares.
Investors who purchase more than $1 million ($500,000 or more for purchases by
"Retirement Plans" as defined in "Class A Contingent Deferred Sales Charge" in
each Fund's Prospectus) in Class A shares pay no initial sales charge but may
have to pay a sales charge of up to 1% if shares are sold within 12 calendar
months (18 months for shares purchased prior to May 1, 1997) from the end of the
calendar month during which shares are purchased. Each of the Funds has a
contingent deferred sales charge imposed on the proceeds of Class B shares
redeemed within six years of buying them. The contingent deferred sales charge
("CDSC") varies depending on how long you hold your shares. Each of the Funds
has a contingent deferred sales charge of 1% imposed on the proceeds of Class C
shares if redeemed within twelve months of their purchase. Class A, Class B and
Class C shares of Bond Fund received in the Reorganization will be issued at net
asset value, without a sales charge and no CDSC will be imposed on any LifeSpan
Income Fund shares exchanged for Bond Fund shares as a result of the
Reorganization. However, any CDSC which applies to LifeSpan Income Fund shares
will continue to apply to Bond Fund shares received in the reorganization.
Services available to shareholders of both Funds include purchase and redemption
of shares through OppenheimerFunds AccountLink and PhoneLink (an automated
telephone system), telephone redemptions, and exchanges by telephone to other
Oppenheimer funds which offer Class A, Class B and Class C shares, and
reinvestment privileges. Please see "Shareholder Services" below and each Fund's
Prospectus for further information.
PRINCIPAL RISK FACTORS
In evaluating whether to approve the Reorganization and invest in Bond Fund,
shareholders should carefully consider the following risk factors, the
information set forth in this Proxy Statement and Prospectus and the more
complete description of risk factors set forth in the documents incorporated by
reference herein, including the Prospectuses of the Funds and their respective
Statements of Additional Information.
Stock Investment Risks. All investments carry risks to some
degree,
-12-
<PAGE>
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 affect the value of both Funds'
investments, their investment performance, and the prices of their shares.
LifeSpan Income Fund invests approximately 25% of its assets in stocks,
therefore the value of the Fund's portfolio will be affected by changes in the
stock markets. This market risk will affect the Fund's net asset value per
share, which will fluctuate as the value of the Fund's portfolio securities
change. Not all stock prices change uniformly or at the same time, and other
factors can affect a particular stock's price (for example, poor earnings
reports by an issuer, loss of major customers, major litigation against an
issuer, or changes in government regulations affecting an industry). Not all of
these factors can be predicted. Changes in the overall market conditions and
prices can occur at any time. LifeSpan Income Fund attempts to limit certain
market risks by diversifying its investments, that is, by not holding a
substantial amount of the stock of any one company, and by not investing too
great a percentage of the Fund's assets in any one company.
Interest Rate Risks. Debt securities are subject to changes in their values due
to changes in prevailing interest rates. When prevailing interest rates fall,
the value of already-issued debt securities generally rise. When interest rates
rise, the values of already-issued debt securities generally decline. The
magnitude of these fluctuations will often be greater for longer-term debt
securities than shorter-term debt securities. Each 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. Each Fund has the ability to
invest its assets in high-yield securities. If the Funds were to invest in
high-yield securities, those securities may be subject to greater market
fluctuation and risk of loss of income and principal than lower yielding,
investment grade securities. There are additional risks of investing in lower
grade securities that are described in the prospectus for each Fund.
Foreign Securities Risks. There are risks of foreign investing
that
increase the risk of investing in both LifeSpan Income Fund and
in
Bond Fund and also increase the operating costs of both Funds.
For
example, foreign issuers are not required to use
generally-accepted
accounting principles. If foreign securities are not registered
for sale in the U.S. under U.S. securities laws, the issuer does
not have to comply with the disclosure requirements of U.S.
laws,
which are generally more stringent than foreign laws. The
values
of foreign securities investments will be affected by other
factors, including exchange control regulations or currency
-13-
<PAGE>
blockage and possible expropriation or nationalization of assets. There are
risks of changes in foreign currency values. Because LifeSpan Income Fund and
Bond Fund may purchase securities denominated in foreign currencies, a 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 of that Fund denominated in that currency.
There may also be changes in governmental administration or economic or monetary
policy in the U.S. or abroad that can affect foreign investing. In addition, it
is generally more difficult to obtain court judgments outside the United States
if that Fund has to sue a foreign broker or issuer. Additional costs may be
incurred because foreign broker commissions are generally higher than U.S.
rates, and there are additional custodial costs associated with holding
securities abroad. More information about the risks and potential rewards of
investing in foreign securities is contained in the Statement of Additional
Information of each Fund.
Derivative Investments Risks. Both Funds may invest in a number of different
kinds of "derivative" investments. In general, a "derivative" investment is a
specially designed investment whose performance is linked to the performance of
another investment or security. The company issuing the instrument may fail to
pay the amount due on the maturity of the instrument. Also, the underlying
investment or security on which the derivative is based, and the derivative
itself, may not perform the way the Manager expected it to perform. The
performance of derivative investments may also be influenced by stock market and
interest rate changes in the U.S. and abroad. All of this can mean that the Fund
may realize less principal or income from the investment than expected. Certain
derivative investments held by the Funds may trade in the over-the counter
market and may be illiquid.
Hedging Instruments Risks. Each Fund may use certain 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.
Losses could also be experienced 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 has special tax effects on
the Funds. 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
-14-
<PAGE>
between the U.S. dollar and a foreign currency. To limit its
exposure in foreign currency exchange contracts, the Funds limit
their exposure to the amount of its assets denominated in
foreign
currency. Interest rate swaps are subject to risk that the other
party will fail to meet its obligations (or that the underlying
issue will fail to pay on time), as well as interest rate
risks.
A Fund could be obligated to pay more under its swap agreements
than it received under them, as a result of interest rate
changes.
Lower-Grade Securities Risks. The Funds can invest in high-yield, below
investment grade debt securities (including both rated and unrated securities).
These "lower-grade" securities are commonly known as "junk bonds". All corporate
debt securities (whether foreign or domestic) are subject to some degree of
credit risk. High yield, lower-grade securities, whether rated or unrated, often
have speculative characteristics and special risks that make them riskier
investments than investment grade securities. They may be subject to greater
market fluctuations and risk of loss of income and principal than lower
yielding, investment grade securities. There may be less of a market for them
and therefore they may be harder to sell at an acceptable price. There is a
relatively greater possibility that the issuer's earnings may be insufficient to
make the payments of interest due on the bonds. The issuer's low
creditworthiness may increase the potential for its insolvency. For foreign
lower-grade debt securities, these risks are in addition to the risks of
investing in foreign securities, described above. These risks mean that the Fund
may not achieve the expected income from lower-grade securities, and that the
Fund's net asset value per share may be affected by declines in value of these
securities.
APPROVAL OF THE REORGANIZATION
(The Proposal)
Reasons for the Reorganization
At a meeting of the Board of Directors of the Company held on December 11, 1997,
the Directors reviewed and discussed materials relevant to the proposed
Reorganization. The Board, including the Independent Directors, unanimously
approved the Reorganization and recommended to shareholders of LifeSpan Income
Fund that they approve the Reorganization. Both Funds offer Class A, Class B and
Class C shares and the terms and conditions of their offer, sale, redemption and
exchange, distribution arrangements, expenses borne separately by each class and
other related matters are essentially the same. The Board considered that this
will facilitate an exchange. In the reorganization, Class A, Class B and Class C
shareholders of LifeSpan Income Fund will receive Class A, Class B and Class C
shares, respectively, of Bond Fund.
-15-
<PAGE>
In considering the proposed Reorganization, the Board reviewed information which
demonstrated that LifeSpan Income Fund is a smaller Fund, with $30.1 million in
net assets as of October 31, 1997. In comparison, Bond Fund had $239.8 million
of net assets as of October 31, 1997. It is not anticipated that LifeSpan Income
Fund will increase substantially in size in the near future. After the
Reorganization, the shareholders of LifeSpan Income Fund will be shareholders of
a larger Fund and will likely incur lower operating, transfer agency and other
expenses. Thus economies of scale may benefit shareholders of LifeSpan Income
Fund.
Among several other factors, the Board focused on the similar investment
objectives of the two Funds. Oppenheimer LifeSpan Income Fund seeks high current
income, with opportunities for capital appreciation. Bond Fund seeks a high
level of current income by investing mainly in debt instruments. The investment
techniques and strategies of the Funds are similar with respect to purchasing
debt securities, mortgage-backed securities and collateralized mortgage-backed
securities, asset-backed securities, hedging instruments, when issued and
delayed delivery transactions, repurchase agreements, illiquid and restricted
securities, loans of portfolio securities, and derivative investments. The only
major differences between the Funds regarding permitted investments is that Bond
Fund may purchase zero coupon securities, and LifeSpan Income Fund may invest up
to 35% of its assets in equity securities of U.S. and foreign issuers, may
invest in inverse floating rate instruments and warrants and rights.
Accordingly, the Board determined that investment objectives and techniques were
comparable.
The Board, in reviewing financial information, considered the investment
advisory fee rate of both Funds (also known as the "management fee rate"). The
management fee rates for both Funds is set forth in "Synopsis - Investment
Advisory and Distribution and Service Plan Fees" above. LifeSpan Income Fund's
management fee for its fiscal year ended October 31, 1997 was 0.75% of average
annual net assets for Class A, Class B and Class C shares. Bond Fund's
management fee for the fiscal year ended December 31, 1997 was 0.75% of the
average annual net assets for Class A, Class B and Class C shares. If the two
Funds were combined, shareholders of Bond Fund would have a reduced management
fee of approximately 0.01% for Class A, Class B and Class C shares. The Board
considered pro forma information which indicated that the expense ratio of a
combined Fund would therefore be lower than that of LifeSpan Income Fund.
In addition to the above, the Board also considered information with respect to
the historical performance of LifeSpan Income Fund and Bond Fund, including the
performance information contained in
Exhibit B to this Proxy Statement.
-16-
<PAGE>
The Board also considered that the Reorganization is expected
to be
a tax free reorganization, and there would be no sales charge
imposed in effecting the Reorganization. The Board concluded
that
the Reorganization would not result in dilution of the
interests of
existing shareholders of LifeSpan Income Fund.
The Reorganization
The Reorganization Agreement (a copy of which is set forth in full as Exhibit A
to this Proxy Statement and Prospectus) contemplates a reorganization under
which (i) all of the assets of LifeSpan Income Fund other than the cash reserve
described below (the "Cash Reserve") will be transferred to Bond Fund in
exchange for Class A, Class B and Class C shares of Bond Fund, (ii) these shares
will be distributed among the shareholders of LifeSpan Income Fund in complete
liquidation of LifeSpan Income Fund, (iii) the outstanding shares of LifeSpan
Income Fund will be canceled. Bond Fund will not assume any of LifeSpan Income
Fund's liabilities except for portfolio securities purchased which have not
settled and outstanding shareholder redemption and dividend checks.
The result of effectuating the Reorganization would be that: (i)
Bond Fund will add to its gross assets all of the assets (net of
any liability for portfolio securities purchased but not settled
and outstanding shareholder redemption and dividend checks) of
LifeSpan Income Fund other than its Cash Reserve; and (ii) the
shareholders of LifeSpan Income Fund as of the close of
business on
the Closing Date will become shareholders of either Class A,
Class
B or Class C shares of Bond Fund.
Shareholders of LifeSpan Income Fund who vote their Class A, Class B and Class C
shares in favor of the Reorganization, will be electing in effect to redeem
their shares of LifeSpan Income Fund(at net asset value on the Valuation Date
referred to below under "Method of Carrying Out the Reorganization Plan,"
calculated after subtracting the Cash Reserve) and to reinvest the proceeds in
Class A, Class B or Class C shares of Bond Fund at net asset value without sales
charge and without recognition of taxable gain or loss for Federal income tax
purposes (see "Tax Aspects of the Reorganization" below). The Cash Reserve is
that amount retained by LifeSpan Income Fund which is deemed sufficient in the
discretion of that Fund's Board for the payment of: (a) LifeSpan Income Fund's
expenses of liquidation, and (b) its liabilities, other than those assumed by
Bond Fund. LifeSpan Income Fund and Bond Fund will bear all of their respective
expenses associated with the Reorganization, as set forth under "Costs of the
Solicitation and the Reorganization" above. Management estimates that such
expenses associated with the Reorganization to be borne by LifeSpan Income Fund
will not exceed $34,039. Liabilities as of the date of the transfer of assets
will consist primarily of accrued but unpaid normal operating expenses of
LifeSpan Income
-17-
<PAGE>
Fund, excluding the cost of any portfolio securities purchased
but
not yet settled and outstanding shareholder redemption and
dividend
checks. See "Method of Carrying Out the Reorganization Plan"
below.
The Reorganization Agreement provides for coordination between the Funds as to
their respective portfolios so that, after the Closing, Bond Fund will be in
compliance with all of its investment policies and restrictions. LifeSpan Income
Fund will recognize capital gain or loss on any sales made pursuant to this
paragraph.
Tax Aspects of the Reorganization
Immediately prior to the Valuation Date referred to in the Reorganization
Agreement, LifeSpan Income Fund will pay a dividend or dividends which, together
with all previous dividends, will have the effect of distributing to LifeSpan
Income Fund's shareholders all of LifeSpan Income Fund's investment company
taxable income for taxable years ending on or prior to the Closing Date
(computed without regard to any deduction for dividends paid) and all of its net
capital gain, if any, realized in taxable years ending on or prior to the
Closing Date (after reduction for any available capital loss carry-forward).
Such dividends will be included in the taxable income of LifeSpan Income Fund's
shareholders as ordinary income and capital gain, respectively.
The exchange of the assets of LifeSpan Income Fund for Class A, Class B and
Class C shares of Bond Fund and the assumption by Bond Fund of certain
liabilities of LifeSpan Income Fund is intended to
qualify for Federal income tax purposes as a tax-free
reorganization under Section 368(a)(1) of the Internal Revenue Code of 1986, as
amended (the "Code"). LifeSpan Income Fund has represented to KPMG Peat Marwick
LLP, tax adviser to LifeSpan Income Fund, that there is no plan or intention by
any Fund shareholder who owns 5% or more of LifeSpan Income Fund's outstanding
shares, and, to LifeSpan Income Fund's best knowledge, there is no plan or
intention on the part of the remaining LifeSpan Income Fund shareholders, to
redeem, sell, exchange or otherwise dispose of a number of Bond Fund Class A,
Class B or Class C shares received in the transaction that would reduce LifeSpan
Income Fund shareholders' ownership of Bond Fund shares to a number of shares
having a value, as of the Closing Date, of less than 50% of the value of all the
formerly outstanding LifeSpan Income Fund shares as of the same date. Bond Fund
and LifeSpan Income Fund have each represented to KPMG Peat Marwick LLP, that,
as of the Closing Date, it will qualify as a regulated investment company or
will meet the diversification test of Section 368(a)(2)(F)(ii) of the Code.
As a condition to the closing of the Reorganization, Bond Fund and LifeSpan
Income Fund will receive the opinion of KPMG Peat Marwick LLP to the effect
that, based on the Reorganization Agreement, the
-18-
<PAGE>
above representations, existing provisions of the Code, Treasury
Regulations issued thereunder, current Revenue Rulings, Revenue
Procedures and court decisions, for Federal income tax
purposes:
1. The transactions contemplated by the Reorganization
Agreement
will qualify as a tax-free "reorganization" within the
meaning
of Section 368(a)(1) of the Code.
2. LifeSpan Income Fund and Bond Fund will each qualify as "a party to a
reorganization" within the meaning of Section 368(b)(2) of the Code.
3. No gain or loss will be recognized by the shareholders of LifeSpan Income
Fund upon the distribution of Class A, Class B or Class C shares of
beneficial interest in Bond Fund to the shareholders of LifeSpan Income
Fund pursuant to Section 354 of the Code.
4. Under Section 361(a) of the Code no gain or loss will be recognized by
LifeSpan Income Fund by reason of the transfer of its assets solely in
exchange for Class A, Class B or Class C shares of Bond Fund.
5. Under Section 1032 of the Code no gain or loss will be recognized by Bond
Fund by reason of the transfer of LifeSpan Income Fund's assets solely in
exchange for Class A, Class B or
Class C shares of Bond Fund.
6. The shareholders of LifeSpan Income Fund will have the same
tax
basis and holding period for the shares of beneficial
interest
in Bond Fund that they receive as they had for LifeSpan
Income
Fund stock that they previously held, pursuant to Sections
358(a) and 1223(1) of the Code, respectively.
7. The securities transferred by LifeSpan Income Fund to Bond Fund will have
the same tax basis and holding period in the hands of Bond Fund as they had
for LifeSpan Income Fund, pursuant to Sections 362(b) and 1223(1) of the
Code, respectively.
Shareholders of LifeSpan Income Fund should consult their tax
advisors regarding the effect, if any, of the Reorganization in
light of their individual circumstances. Since the foregoing
discussion relates only to the Federal income tax consequences
of
the Reorganization, shareholders of LifeSpan Income Fund should
also consult their tax advisors as to state and local tax
consequences, if any, of the Reorganization.
Capitalization Table (Unaudited)
The table below sets forth the capitalization of LifeSpan Income Fund and Bond
Fund and indicates the pro forma combined
-19-
<PAGE>
capitalization as of December 31, 1997 as if the Reorganization
had
occurred on that date.
December 31, 1997
Net
Asset
Shares Value
Net Assets Outstanding Per
Share
LifeSpan Income Fund
Class A $29,300,773 2,642,551 $11.10
Class B $ 880,281 79,058 $11.13
Class C $ 34,796 3,127 $11.13
Bond Fund
Class A $190,705,711 17,383,073 $10.97
Class B $ 48,254,895 4,399,924 $10.97
Class C $ 9,188,036 837,017 $10.98
Bond Fund
(Pro Forma Surviving Fund)
Class A $220,036,484 20,056,799 $10.97
Class B $ 49,135,176 4,480,168 $10.97
Class C $ 9,222,832 840,186 $10.98
Reflects issuance of 2,673,726 of Class A shares, 80,244 of Class B shares and
3,169 of Class C shares of Bond Fund in a tax-free exchange for the net assets
of LifeSpan Income Fund, aggregating
$30,245,850.
The pro forma ratio of expenses to average annual net assets of the Class A
shares at December 31, 1997 would have been 1.26%. The pro forma ratio of
expenses to average net assets of Class B shares at December 31, 1997 would have
been 2.00%. The pro forma ratio of expenses to average net assets of Class C
shares at December 31, 1997 would have been 2.00%.
COMPARISON BETWEEN
LifeSpan Income Fund AND
Bond Fund
Information about LifeSpan Income Fund and Bond Fund is
presented
below. Additional information about Bond Fund is set forth in
its
Prospectus which accompanies this Proxy Statement and
Prospectus.
More information about both Funds is set forth in documents that
may be obtained upon request of the transfer agent or upon
review
at the offices of the SEC. See "Additional Information- Public
Information."
-20-
<PAGE>
Investment Objectives and Policies
Bond Fund. Bond Fund seeks a high level of current income by investing mainly in
debt instruments. Under normal market conditions, the Fund invests at least 65%
of its total assets in investment grade debt securities, U.S. Government
Securities, and money market instruments. Investment-grade debt securities are
those rated in one of the four highest categories by Standard & Poor's
Corporation ("Standard & Poor's"), Moody's Investors Service, Inc. ("Moody's"),
Fitch Investors Service, Inc. or other nationally-recognized rating
organization. Debt securities (often referred to as "fixed-income securities")
are used by issuers to borrow money from investors. The issuer promises to pay
the investor interest at a fixed or variable rate, and to pay back the amount it
borrowed (the "principal") at maturity. Some debt securities, such as zero
coupon bonds do not pay current interest. The Fund may invest up to 35% of its
total assets in debt securities rated less than investment grade or, if unrated,
judged by the Manager to be of comparable quality to such lower-rated securities
(collectively, "lower-grade securities"). Lower-grade securities include
securities rated BB, B, CCC, CC and D by Standard & Poor's or Ba, B, Caa, Ca and
C by Moody's. Lower-grade securities (often called "junk bonds") are considered
speculative and involve greater risk.
When investing the Fund's assets, the Manager considers many factors, including
current developments and trends in both the economy and the financial markets.
The Fund may try to hedge against losses in the value of its portfolio of
securities by using hedging strategies described below. The Manager may employ
special investment techniques, also described below. Additional information
about the securities the Fund may invest in, the hedging strategies the Fund may
employ and the special investment techniques may be found under the same
headings in the Bond Fund Statement of Additional Information.
LifeSpan Income Fund. LifeSpan Income Fund seeks high current income, with
opportunities for capital appreciation. The Fund is an asset allocation fund
which seeks to achieve its investment objective by allocating its assets among
two broad classes of investments-stocks and bonds. The stock class includes
growth and income type securities. The Fund normally allocates 25% of its assets
to the stock component. The bond class includes several varieties of
fixed-income instruments. Allocating assets among different types of investments
allows this Fund to take advantage of a greater variety of investment
opportunities than funds that invest in only one asset class, but also subjects
the Fund to the risks of those types of investments.
The Manager has the ability to allocate the Fund's assets within
specified ranges. The Fund's normal allocation (which is 25% in
-21-
<PAGE>
stocks and 75% in bonds) indicates the benchmark for its combination of
investments in each asset class over time. As market and economic conditions
change, however, the Manager may adjust the asset mix between the stock and bond
classes within a normal asset allocation range as long as the relative risk and
return characteristics of this Fund remain distinct and this Fund's investment
objective is preserved. The Manager will review normal allocations between the
stock and bond classes quarterly and, if necessary, will rebalance the
investment allocation at that time. Additional adjustments may be made if an
asset allocation shift of 5% or more is warranted.
Permitted Investments by Both LifeSpan Income Fund and Bond Fund
Foreign Securities. Each Fund may invest in debt securities issued or guaranteed
by foreign companies, and debt securities of foreign governments or their
agencies. These foreign securities may include debt obligations such as
government bonds, debentures issued by companies, as well as notes. Some of
these debt securities may have variable interest rates or "floating" interest
rates that change in different market conditions. Those changes will affect the
income the Fund receives. LifeSpan Income Fund may also invest up to 15% of the
stock component of the portfolio in stocks of foreign issuers that generally
have a substantial portion of their business in the U.S.
ADRs, EDRs and GDRs. Both Funds may invest a portion of their
assets in ADRs, EDRs and GDRs. These are receipts issued by a
U.S.
bank or trust company which evidence ownership of underlying
securities of foreign companies. ADRs are traded on domestic
exchanges or in the U.S. over-the-counter market and, generally,
are in registered form. EDRs and GDRs are receipts evidencing
an
arrangement with a non-U.S. bank similar to that for ADRs and
are
designed for use in non-U.S. securities markets.
Convertible Securities. LifeSpan Income Fund may invest in
convertible securities. Convertible securities are bonds,
preferred stocks and other securities that normally pay a fixed
rate of interest or dividend and give the owner the option to
convert the security into common stock. While the value of
convertible securities depends in part on interest rate changes and the credit
quality of the issuer, the price will also change based on the price of the
underlying stock. While convertible securities generally have less potential for
gain than common stock, their income provides a cushion against the stock
price's declines. They generally pay less income than non-convertible bonds. The
Manager generally analyzes these investments from the perspective of the growth
potential of the underlying stock and treats them as "equity substitutes."
-22-
<PAGE>
Hedging. Each Fund may purchase and sell certain kinds of futures contracts,
forward contracts, and options on futures, broadly-based stock or bond indices
and foreign currencies, or enter into interest rate swap agreements. LifeSpan
Income Fund may sell covered call options and may purchase put options on
Futures. These are all referred to as "hedging instruments." While each Fund
currently does not engage extensively in hedging, each Fund may use these
instruments for hedging purposes and , in the case of covered calls, non-hedging
purposes. The hedging instruments the Funds may use are described below and in
greater detail in "Other Investment Techniques and Strategies" section in each
Fund's respective Statement of Additional Information.
The Funds may use hedging instruments for a number of purposes. Each Fund may do
so to try to manage its exposure to the possibility that the prices of its
portfolio securities may decline, or to establish a position in the securities
market as a temporary substitute for purchasing individual securities. Each Fund
may do so to try to manage its exposure to changing interest rates. Some of
these strategies, such as selling futures, buying puts and writing covered
calls, hedge a Fund's portfolio against price fluctuations. Other hedging
strategies, such as buying futures and call options, tend to increase a Funds'
exposure to the securities market.
Forward Contracts. Forward contracts are used by both Funds to try to manage
foreign currency risks on foreign investments. Foreign currency options are used
to try to protect against declines in the dollar value of foreign securities the
Funds own, or to protect against an increase in the dollar cost of buying
foreign securities. Writing covered call options may also provide income to the
Funds for liquidity purposes or to raise cash to distribute to shareholders.
Futures. Both Funds may buy and sell futures contracts that
relate
to (1) foreign currencies (these are referred to as "Forward
Contracts" and are discussed above),(2) financial indices, such
as
U.S. or foreign government securities indices, corporate debt
securities indices or equity securities indices (these are
referred
to as Financial Futures) and (3) interest rates (those are
referred
to as Interest Rate Futures). Both Funds may use futures for
hedging purposes and LifeSpan Income Fund may use futures for
non-
hedging purposes. These types of Futures are described in
"Hedging" in the Statement of Additional Information of each
Fund.
Covered Call Options and Options on Futures. Both Funds may write (that is,
sell) covered call options on securities, indices and foreign currencies for
hedging or liquidity purposes and write call options on Futures for hedging and
non-hedging purposes. Each call the Funds write must be "covered". This means
the Fund must own the investment on which the call was written or it must own
other
-23-
<PAGE>
securities that are acceptable for the escrow arrangements required for calls.
When either Fund writes a call, it receives cash (called a premium). The call
gives the buyer the ability to buy the investment on which the call was written
from the Fund at the call price during the period in which the call may be
exercised. If the value of the investment does not rise above the call price, it
is likely that the call will lapse without being exercised, while the Fund keeps
the cash premium (and the investment). Up to 50% of Bond Fund's total assets may
be subject to calls. Bond Fund may also buy call options on securities indices,
foreign currencies, or Futures, or to terminate its obligation on a call the
Fund previously wrote.
Both Funds may purchase and sell put options on Futures. Buying a put on an
investment gives the Fund the right to sell the investment at a set price to a
seller of a put on that
investment.
LifeSpan Income Fund may sell a put on Futures only if the puts
are
covered by segregated liquid assets.
LifeSpan Income Fund may sell covered call options that are traded on U.S. or
foreign securities or commodity exchanges as well as over the counter markets.
In the case of foreign currency options, they may be quoted by major recognized
dealers in those options.
Bond Fund may purchase put options. Bond Fund may buy puts that relate to
securities, indices, Futures, or foreign currencies. The Fund may buy a put on a
security whether or not the Fund owns the particular security in its portfolio.
The Fund may sell a put on securities, indices, Futures, or foreign currencies,
but only if the puts are covered by segregated liquid assets. The Bond Fund will
not write puts if more than 50% of the Fund's net assets would have to be
segregated to cover put obligations.
A call or put may be purchased by Bond Fund only if, after the purchase, the
value of all call and put options held by the Bond Fund will not exceed 5% of
the Fund's total assets. The Fund may buy and sell put and call options that are
traded on U.S. or foreign securities or commodity exchanges or are traded in the
over-the-counter markets. In the case of foreign currency options, they may be
quoted by major recognized dealers in those options. Options traded in the
over-the-counter market may be "illiquid," and therefore may be subject to the
Fund's restrictions on illiquid investments.
Both Funds may enter into interest rate swaps both for hedging and to seek to
increase total return. 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 swap a right to receive floating rate interest
payments for fixed rate payments. The Fund enters into swaps only on a net
basis, which means the two payment streams are netted out, with the Fund
-24-
<PAGE>
receiving or paying, as the case may be, only the net amount of
the
two payments. The Fund will segregate liquid assets of any type
(such as cash, U.S. Government, equity or debt securities) to
cover
any amounts it could owe under swaps that exceed the amounts it
is
entitled to receive, and it will adjust that amount daily, as
needed. The Bond Fund may not enter into swaps with respect to
more than 25% of its total assets.
Loans of Portfolio Securities. To raise cash for liquidity
purposes, both Funds may lend their portfolio securities to
brokers, dealers and other financial institutions. Both Funds must receive
collateral for a loan. Bond Fund limits these loans to not more than 25% of the
value of the Fund's total assets. LifeSpan Income Fund limits these loans to not
more than 33-1/3% of the Fund's assets (taken at market value). Neither Fund
presently intends to lend its portfolio securities, but if they do the value of
the securities borrowed is not expected to exceed 5% of each Fund's total assets
in the coming year.
Illiquid and Restricted Securities. Both of the Funds may invest in illiquid and
restricted securities. 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. Bond Fund will not invest more
than 10% of its net assets in illiquid and restricted securities (the Board of
Bond Fund may increase that limit to 15%). LifeSpan Income Fund will not invest
more than 15% of its net assets in illiquid and restricted securities. The
percentage limitation on these investments does not apply to certain restricted
securities that are eligible for resale to qualified institutional purchasers.
The Manager monitors holdings of such securities on an ongoing basis and at
times a Fund may be required to sell some holdings to maintain adequate
liquidity.
Derivative Investments. Both Funds can invest in a number of different kinds of
"derivative investments." Each Fund may use some types of derivatives for
hedging purposes, and may invest in others to seek income. 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. Both Funds may not purchase or sell
physical commodities; however they may purchase and sell foreign currency and
engage in hedging transactions. The Funds may purchase and sell foreign currency
in hedging transactions. This policy also does not prevent the Funds from buying
or selling options and futures contracts or from investing in securities or
other instruments backed by physical commodities. In the broadest sense,
exchange-traded options and futures contracts may be
-25-
<PAGE>
considered "derivative investments". Each 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 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.
Bond 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.
Repurchase Agreements. Each of the Funds may enter into
repurchase
agreements. In a repurchase transaction, the Fund buys a
security
and simultaneously sells it to the vendor for delivery at a
future
date. Repurchase agreements must be fully collaterized.
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. Bond Fund will not enter into a repurchase
agreement that will cause more than 10% of the Fund's net assets to be subject
to repurchase agreements maturing in more than seven days. LifeSpan Income Fund
will not enter into a repurchase agreement that will cause more than 15% of its
net assets to be subject to repurchase agreements maturing in more than seven
days. There is no limit on the amount of the Fund's net assets that may be
subject to repurchase agreements of seven days or less.
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. LifeSpan Income Fund may invest up to 5% of its
total assets in warrants or rights. That 5% limitation does not apply to
warrants acquired as part of units with other securities or that are
-26-
<PAGE>
attached to other securities. No more than 2% of LifeSpan Income 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. Bond Fund does not invest in
Warrants and Rights.
"When-Issued" and Delayed Delivery Transactions. Both Funds 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.
U.S. Government Securities. Both Funds may invest in U.S.
Government Securities which include debt securities issued or
guaranteed by the U.S. Government or its agencies and
instrumentalities. Certain U.S. Government Securities, including
U.S. Treasury bills, notes and bonds, and mortgage participation
certificates guaranteed by the Government National Mortgage
Association ("Ginnie Mae") are supported by the full faith and
credit of the U.S. Government, which in general terms means that
the U.S. Treasury stands behind the obligation to pay principal
and
interest.
Ginnie Mae certificates are one type of mortgage-related U.S.
Government Security the Funds may invest in. The Funds may also
invest in other mortgage-related U.S. Government Securities that
are issued or guaranteed by federal agencies or
government-sponsored entities but which are not supported by the
full faith and credit of the U.S. Government. Those securities
include obligations supported by the right of the issuer to
borrow
from the U.S. Treasury, such as obligations of the Federal Home
Loan Mortgage Corporation ("Freddie Mac"), obligations supported
only by the credit of the instrumentality, such as the Federal
National Mortgage Association ("Fannie Mae") or the Student Loan
Marketing Association, and obligations supported by the
discretionary authority of the U.S. Government to repurchase
certain obligations of U.S. Government agencies or
instrumentalities such as the Federal Land Banks and the Federal
Home Loan Banks. Other U.S. Government Securities the Funds may
invest in are collateralized mortgage obligations ("CMOs").
The value of U.S. Government Securities will fluctuate until they mature
depending on prevailing interest rates. Because the yields on U.S. Government
Securities are generally lower than on corporate debt securities, when the Funds
hold U.S. Government Securities each may attempt to increase the income it can
earn from them by writing covered call options against them, when market
conditions are appropriate. Writing covered calls is explained above, under
"Hedging."
-27-
<PAGE>
Lower-Grade Debt Securities. Both Funds may invest in
"lower-grade"
debt securities which generally offer higher income potential
than
investment grade securities. "Lower-grade" securities are those
rated below "BBB" by Standard & Poor's Corporation("Standard &
Poor's") or "Baa" by Moody's Investors Services, Inc.
("Moody's")
or similar ratings given by other domestic or foreign rating organizations, or
for securities that are not rated by a nationally-recognized rating organization
but the Manager judges them to be comparable to lower-rated securities.
Mortgage-Backed Securities, CMOs and REMICS. Certain
mortgage-backed securities, whether issued by the U.S. Government or by private
issuers, "pass-through" to investors the interest and principal payments
generated by a pool of mortgages assembled for sale by government agencies.
Pass-through mortgage-backed securities entail the risk that principal may be
repaid at any time because of prepayments on the underlying mortgages. As a
result, these securities may be subject to greater price and yield volatility
than traditional fixed-income securities that have a fixed maturity and interest
rate.
Both Funds may invest in collateralized mortgage-backed obligations ("CMOs"),
which generally are obligations fully collateralized by a portfolio of mortgages
or mortgage-related securities. LifeSpan Income Fund may also invest in real
estate mortgage investment conduits (REMICS)but it does not intend to acquire
"residual" interest in them. Payments of the interest and principal generated by
the pool of mortgages relating to the CMOs and REMICS are passed through to the
holders as the payments are received. CMOs and REMICS are issued with a variety
of classes or series which have different maturities. Certain CMOs and REMICS
may be more volatile and less liquid than other types of mortgage-related
securities, because of the possibility of the early repayment of principal due
to prepayments on the underlying mortgage loans.
o "Stripped" Securities. Both Funds may also invest in CMOs that are "stripped."
LifeSpan Income Fund may also invest in REMICS that are "stripped". That means
that the security is divided into two parts, one of which receives some or all
of the principal payments (and is known as a "principal-only" security, or
"P/O") and the other which receives some or all of the interest (and is known as
an "interest-only" security, or "I/O"). P/Os and I/Os are generally referred to
as "derivative investments", discussed further above.
The yield to maturity on the class that receives only interest is extremely
sensitive to the rate of payment of the principal on the underlying mortgages.
Principal prepayments increase that sensitivity. Stripped securities that pay
"interest only" are therefore subject to greater price volatility when interest
rates change, and they have the additional risk that if the underlying
-28-
<PAGE>
mortgages are prepaid, a Fund will lose the anticipated cash flow from the
interest on the prepaid mortgages. That risk is increased when general interest
rates fall, and in times of rapidly falling interest rates, a Fund might receive
back less than its investment.
The value of "principal only" securities generally increases as interest rates
decline and prepayment rates rise. The price of these securities is typically
more volatile than that of coupon-bearing bonds of the same maturity.
Private-issuer stripped securities are generally purchased and sold by
institutional investors through investment banking firms. At present,
established trading markets have not yet developed for these securities.
Therefore, most private-issuer stripped securities may be deemed "illiquid." If
either Fund holds illiquid stripped securities, the amount it can hold will be
subject to that Fund's investment policy limiting investments in illiquid
securities to 10% for Bond Fund, and 15% for LifeSpan Income Fund.
Bond Fund may also enter into "forward roll" transactions with mortgage-backed
securities. The Fund sells mortgage-backed securities it holds to banks or other
buyers and simultaneously agrees to repurchase a similar security from that
party at a later date at an agreed-upon price. Forward rolls are considered to
be a borrowing. The Fund is required to segregate liquid assets with its
custodian bank in an amount equal to its obligation under the forward roll. The
main risk of this investment strategy is risk of default by the counterparty.
Asset-Backed Securities. Both Funds may invest in "asset-backed"
securities. These represent interests in pools of consumer
loans
and other trade receivables, similar to mortgage-backed securities. They are
issued by trusts and "special purpose corporations." They are backed by a pool
of assets, such as credit card or auto loan receivables, which are the
obligations of a number of different parties. The income from the underlying
pool is passed through to holders, such as a Fund. These securities may be
supported by a credit enhancement, such as a letter of credit, a guarantee or a
preference right. However, the extent of the credit enhancement may be different
for different securities and generally applies to only a fraction of the
security's value. These securities present special risks. For example, in the
case of credit card receivables, the issuer of the security may have no security
interest in the related collateral.
Inverse Floating Rate Instruments. LifeSpan Income Fund may
invest
in inverse floating rate debt instruments ("inverse floaters"),
including leveraged inverse floaters and inverse floating rate
mortgage-backed securities, such as inverse floating rate
"interest
only" stripped mortgage-backed securities. The interest rate on
inverse floaters resets in the opposite direction from the
market
-29-
<PAGE>
rate of interest to which the inverse floater is indexed. An inverse floater may
be considered to be leveraged to the extent that its interest rate varies by a
magnitude that exceeds the magnitude of the change in the index rate of
interest. The higher degree of leverage inherent in inverse floaters is
associated with greater volatility in their market values.
Structured Notes. Both Funds may invest in structured notes. A structured note
is a debt security having an interest rate or principal repayment requirement
based on the performance of a benchmark asset or market, such as stock prices,
currency exchange rates or commodity prices. They provide exposure to the
benchmark market while fixing the maximum loss if that market does not perform
as expected. Depending on the terms of the note, a Fund could lose all or part
of the interest and principal that would be payable on a comparable conventional
note, and the Fund's loss could not exceed that amount.
Short-Term Debt Securities. Under normal market conditions, both Funds may
invest in short-term debt securities, such as money market instruments and U.S.
Government securities. When the Manager believes it is appropriate (for example,
for temporary defensive purposes during unstable market conditions), a Fund can
hold cash or invest without limit in money market instruments.
A
Fund will invest in high quality, short-term money market instruments such as
U.S. Treasury and agency obligations; commercial paper (short-term, unsecured,
negotiable promissory notes of a domestic or foreign company); short-term debt
obligations of corporate issuers; and certificates of deposit and bankers'
acceptances (time drafts drawn on commercial banks usually in connection with
international transactions) of domestic or
foreign banks and savings and loan associations.
Eurodollar and Yankee Dollar Bank Obligations. LifeSpan Income
Fund
may invest in obligations of foreign branches of U.S. banks
(referred to as Eurodollar obligations) and U.S. branches of
foreign banks (referred to as Yankee Dollars) as well as foreign
branches of foreign banks. These investments entail risks that
are
different from investment in securities of U.S. banks.
Small, Unseasoned Companies. LifeSpan Income Fund may invest in
securities of small, unseasoned companies. These are companies
that
have been in operation less than three years, including the
operations of any predecessors. Securities of these companies
may
have limited liquidity (which means that the Fund may have
difficulty selling them at an acceptable price when it wants to)
and the price of these securities may be volatile.
Zero Coupon Securities. Bond Fund may invest in zero coupon
securities. These securities, which may be issued by the U.S.
government, its agencies or instrumentalities or by private
-30-
<PAGE>
issuers, are purchased at a substantial discount from their face value. They are
subject to greater fluctuations in market value as interest rates change than
debt securities that pay interest periodically. Interest accrues on zero coupon
bonds even though cash is not actually received.
Preferred Stocks. Bond Fund may invest in preferred stocks.
Preferred stock, unlike common stock, generally offers a stated
dividend rate payable from the corporation's earnings. Such
preferred stock dividends may be cumulative or non-cumulative,
fixed, participating, or auction rate. If interest rates rise,
a
fixed dividend on preferred stocks may be less attractive,
causing
the price of preferred stocks to decline. The rights to
payment of
preferred stocks are generally subordinate to rights associated
with a corporation's debt securities.
Investment Restrictions
LifeSpan Income Fund and Bond Fund have certain investment restrictions that,
together with their investment objectives, are fundamental policies, changeable
only by shareholder approval. Set forth below is a summary of the investment
restrictions which are different for each Fund. Other investment restrictions
for each Fund are substantially the same. Unless the Prospectus of the Fund
states that a percentage restriction applies on an ongoing basis, it applies
only at the time that Fund makes an investment and the Fund need not sell
securities to meet the percentage limits if the value of the investment
increases in proportion to the size of the Fund.
Bond Fund - Investment Restrictions. Bond Fund cannot do the
following:
1. The Fund cannot make short sales except for sales "against
the
box";
2. The Fund cannot borrow money or enter into reverse repurchase agreements,
except that the Fund may borrow money from banks and enter into reverse
repurchase agreements as a temporary measure for extraordinary or emergency
purposes (but not for the purpose of making investments), provided that the
aggregate amount of all such borrowings and commitments under such agreements
does not, at the time of borrowing or of entering into such an agreement, exceed
10% of the Fund's total assets taken at current market value; the Fund will not
purchase additional portfolio securities at any time that the aggregate amount
of its borrowings and its commitments under reverse repurchase agreements
exceeds 5% of the Fund's net assets (for purposes of this restriction, entering
into portfolio lending agreements shall not be deemed to constitute borrowing
money); and
3. The Fund cannot concentrate its investments in any particular
-31-
<PAGE>
industry except that it may invest up to 25% of the value of its total assets in
the securities of issuers in any one industry (of the utility companies, gas,
electric, water and telephone will each
be considered as a separate industry); and
4. 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 (1) more than 5% of the Fund's total assets would be
invested in the securities of that issuer, or (2) the Fund would own more than
10% of that issuer's voting securities.
LifeSpan Income Fund - Investment Restrictions. LifeSpan Income
Fund cannot do the following:
1. Borrow money, except for emergency or extraordinary purposes including (i)
from banks for temporary or short-term purposes or for the clearance of
transactions in amounts not to exceed 33 1/3% of the value of the Fund's total
assets (including the amount borrowed) taken at market value, (ii) in connection
with the redemption of Fund shares or to finance failed settlements of portfolio
trades without immediately liquidating portfolio securities or other assets; and
(iii) in order to fulfill commitments or plans to purchase additional securities
pending the anticipated sale of other portfolio securities or assets, but only
if after each such borrowing there is asset coverage of at least 300% as defined
in the Investment Company Act. For purposes of this investment restriction,
reverse repurchase agreements, mortgage dollar rolls, short sales, futures
contracts, options on futures contracts, securities or indices and forward
commitment transactions shall not constitute borrowing.
2. A Fund cannot make loans, except that the Fund (1) may lend portfolio
securities in accordance with the Fund's investment policies up to 33-1/3% of
the Fund's total assets taken at market value, (2) enter into repurchase
agreements, and (3) purchase all or a portion of an issue publicly distributed
bonds, debentures or other similar obligations.
3. A Fund cannot purchase the securities of issuers conducting their principal
activity in the same industry if, immediately after such purchase, the value of
its investments in such industry would exceed 25% of its total assets taken at
market value at the time of such investment. This limitation does not apply to
investments in obligations of the U.S. Government or any of its agencies,
instrumentalities or authorities. The Funds have undertaken, as a matter of
non-fundamental policy, to apply this restriction to 25% or more of their
assets.
4. With respect to 75% of total assets, purchase securities of
an
issuer (other than the U.S. Government, its agencies,
-32-
<PAGE>
instrumentalities or authorities), if:(a)such purchase would cause more than 5%
of the Fund's total assets taken at market value to be invested in the
securities of such issuer; or (b)such purchase would at the time result in more
than 10% of the outstanding voting securities of such issuer being held by the
Fund.
Description of Brokerage Practices
The brokerage practices of the Funds are the same. Subject to the provisions of
each Fund's Investment Advisory Agreement, the procedures and rules described
above, allocations of brokerage are generally made by the Manager's portfolio
traders based upon recommendations from the Manager's portfolio managers. In
certain instances, portfolio managers may directly place trades and allocate
brokerage, also subject to the provisions of each 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 and the
Manager. Transactions in securities other than those for which an exchange is
the primary market are generally done with principals or market makers.
Brokerage commissions are paid primarily for effecting transactions in listed
securities or for certain fixed-income agency transactions in the secondary
market and are otherwise paid only if it appears likely that a better price or
execution can be obtained.
When either 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.
The research services provided by a particular broker may be useful 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 either Fund and one or more of such other accounts. Such research, which may
be supplied by a third party at the instance of a broker, includes information
and analyses on particular companies and industries as well as market or
economic trends and portfolio strategy, receipt of market quotations for
portfolio evaluations, information systems, computer hardware and similar
products and services. If a research service also assists the Manager in a
non-research capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to the Manager in
the investment decision-making process may be paid in commission dollars. The
Boards of each Fund permit the Manager to use
-33-
<PAGE>
concessions on fixed-price offerings to obtain research, in the same manner as
is permitted for agency transactions. The Boards also permit the Manager to use
stated commissions on secondary fixed-income agency trades to obtain research
where the broker has represented to Manager that: (i) the trade is not from or
for the broker's own inventory, (ii) the trade was executed by the broker on an
agency basis at the stated commission, and (iii) the trade is not a riskless
principal transaction.
The research services provided by brokers broaden the scope and supplement the
research activities of the Manager, by making available additional views for
consideration and comparisons, and enabling the Manager to obtain market
information for the valuation of securities held in the each Fund's portfolio or
being considered for purchase. The Manager provides information as to the
commissions paid to brokers furnishing such services, together with the
Manager's representation that the amount of such commissions was reasonably
related to the value or benefit of such services.
During LifeSpan Income Fund's fiscal periods ended December 31,1995 and October
31, 1996 and its fiscal year ended October 31, 1997, total brokerage commissions
paid by the Fund (not including spreads or concessions on principal transactions
on a net trade basis) were $12,083,$3,639 and $6,349 respectively. Of that
amount, during the fiscal year ended October 31, 1997, $6,340 was paid to
brokers as commissions in return for research services; the aggregate dollar
amount of those transactions was $3,430,340. The transactions giving rise to
those commissions were allocated in accordance with the Manager's internal
allocation procedures.
During Bond Fund's fiscal years ended December 31, 1995, 1996 and 1997, total
brokerage commissions paid by the Fund (not including spreads or concessions on
principal transactions on a net trade basis) were $3,742, $13,094 and $21,630,
respectively. Of that amount, during the fiscal year ended December 31, 1997,
$568 was paid to brokers as commissions in return for research services; the
aggregate dollar amount of those transactions was $2,366,847. The transactions
giving rise to those commissions were allocated in accordance with the Manager's
internal allocation procedures.
Please refer to the Statement of Additional Information for each Fund for
further information on each Fund's brokerage practices.
Expense Ratios and Performance
The ratio of expenses to average annual net assets for LifeSpan
Income Fund for the fiscal year ended October 31, 1997 for its
Class A, Class B and Class C shares was 1.45%, 2.18% and 2.20%,
respectively. The ratio of expenses to average annual net assets
for Bond Fund for the fiscal year ended December 31, 1997 for
its
Class A, Class B and Class C were 1.27%, 2.02% and 2.02%,
-34-
<PAGE>
respectively. Further details are set forth above under
"Comparative Fee Tables", and in LifeSpan Income Fund's Annual
Report as of October 31, 1997, and Bond Fund's Annual Report as
of
December 31, 1997, which are included in the Statement of
Additional Information. The performance of the Funds for the
1,3,5
and 10 year periods ended December 31, 1997 is set forth in
Exhibit
B.
Shareholder Services
The policies of LifeSpan Income Fund and Bond Fund with respect to minimum
initial investments and subsequent investments by its shareholders are the same.
Both LifeSpan Income Fund and Bond Fund offer the following privileges: (i)
Right of Accumulation, (ii) Letter of Intent, (iii) reinvestment of dividends
and distributions at net asset value, (iv) net asset value purchases by certain
individuals and entities, (v) Asset Builder (automatic investment) Plans, (vi)
Automatic Withdrawal and Exchange Plans for shareholders who own shares of the
Fund valued at $5,000 or more, (vii) AccountLink and PhoneLink arrangements,
(viii) exchanges of shares for shares of the same class of certain other Funds
at net asset value, and (ix) telephone redemption and exchange privileges.
Shareholders may purchase shares through OppenheimerFunds
AccountLink, which links a shareholder account to an account at a bank or
financial institution and enables shareholders to send money electronically
between those accounts to perform a number of types of account transactions.
This includes the purchase of shares through the automated telephone system
(PhoneLink). Exchanges can also be made by telephone, or automatically through
PhoneLink. After AccountLink privileges have been established with a bank
account, shares may be purchased by telephone in an amount up to $100,000.
Shares of either Fund may be exchanged for shares of certain Oppenheimer funds
at net asset value per share; however, shares of a particular class may be
exchanged only for shares of the same class of other Oppenheimer funds.
Shareholders of the Funds may redeem their shares by written request or by
telephone request in an amount up to $50,000 in any seven-day period.
Shareholders may arrange to have share redemption proceeds wired to a
pre-designated account at a U.S. bank or other financial institution that is an
ACH member, through AccountLink. There is no dollar limit on telephone
redemption proceeds sent to a bank account when AccountLink has been
established. Shareholders may also redeem shares automatically by telephone by
using PhoneLink. Shareholders of each Fund may also have the Transfer Agent send
redemption proceeds of $2,500 or more by Federal Funds wire to a designated
commercial bank which is a member of the Federal Reserve wire system.
Shareholders of the Funds have up to six months to reinvest redemption proceeds
of their Class A shares which they purchase subject to a sales charge or their
Class B shares on which they paid a contingent deferred sales charge, in Class A
shares of
-35-
<PAGE>
the Funds or other Oppenheimer funds without paying a sales charge. LifeSpan
Income Fund may redeem accounts with less than 100 shares. Bond Fund may redeem
accounts if the account value has fallen below $1,000 for reasons other than
market value fluctuations. Both Funds offer Automatic Withdrawal and Automatic
Exchange Plans under certain conditions.
Rights of Shareholders
The shares of each Fund, including shares of each class, entitle the holder to
one vote per share on the election of directors of the Company or trustees of
the Trust, as the case my be, and all other matters submitted to shareholders of
the Fund. Each share of the Fund represents an interest in the Fund
proportionately equal to the interest of each other share of the same class and
entitle the holder to one vote per share (and a fractional vote for a fractional
share) on matters submitted to their vote at shareholders' meetings.
Shareholders of each Fund vote together with the shareholders of other series of
the Company or the Trust, as the case may be, in the aggregate on certain
matters at shareholders' meetings, such as the election of Directors or
Trustees, as the case may be, and ratification of appointment of auditors.
Shareholders of a particular series or class vote separately on proposals which
affect that series or class, and shareholders of a series or class which is not
affected by that matter are not entitled to vote on the proposal. For example,
only shareholders of a series, such as a Fund, vote exclusively on any material
amendment to the Investment Advisory Agreement with respect to the series. Only
shareholders of a class of a series vote on certain amendments to the
Distribution and/or Service Plans if the amendments affect only that class. Each
Board is authorized to create new series and classes of series. Each Board may
reclassify unissued shares of the Funds into additional series or classes of
shares. Each Board may also divide or combine the shares of a class into a
greater or lesser number of shares without thereby changing the proportionate
beneficial interest of a shareholder in each Fund. Shares do not have cumulative
voting rights or preemptive or subscription rights. Shares may be voted in
person or by proxy. Each share has one vote at shareholder meetings, with
fractional shares voting proportionately. Shares of a particular class vote
together on matters that affect that class. Most amendments to the Articles of
Incorporation in the case of LifeSpan Income Fund or Declaration of Trust in the
case of Bond Fund require the approval of a "majority" of the outstanding voting
securities (as defined in the Investment Company Act) of the Company's or
Trust's shares without regard to class.
Class A, Class B and Class C shares of LifeSpan Income Fund and the Class A,
Class B and Class C shares of Bond Fund which LifeSpan Income Fund shareholders
will receive in the Reorganization participate equally in the Funds' dividends
and distributions and
-36-
<PAGE>
in the Funds' net assets upon liquidation, after taking into
account the different expenses paid by each class.
Distributions
and dividends for each class will be different and Class B and Class C dividends
and distributions will be lower than Class A dividends.
It is not contemplated that the Trust or Company will hold
regular
annual meetings of shareholders. Under the Investment Company Act, shareholders
of LifeSpan Income Fund do not have rights of appraisal as a result of the
transactions contemplated by the Reorganization Agreement. However, they have
the right at any time prior to the consummation of such transaction to redeem
their shares at net asset value, less any applicable contingent deferred sales
charge. Shareholders of both of the Funds have the right, under certain
circumstances, to remove a Director or Trustee, as the case may be, and will be
assisted in communicating with other shareholders for such purpose.
LifeSpan Income Fund is a series of the Company, which is a corporation
organized under the laws of the state of Maryland. As a general matter,
shareholders of a corporation will not be liable to the corporation or its
creditors with respect to their interests in the corporation as long as their
shares have been paid for and the requisite corporate formalities have been
observed, both in the organization of the corporation and in the conduct of its
business. Under Massachusetts law, shareholders of a business trust could, under
certain circumstances, be held personally liable for the obligations of the
business trust. However, the Declaration of Trust under which the Trust was
established disclaims shareholder liability for acts or obligations of the Fund
and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Fund or the Trustees.
The Declaration of Trust provides for indemnification out of the Bond Fund's
property for all losses and expenses of any shareholder held personally liable
for the obligation of the Fund. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is considered remote since it
is limited to circumstances in which the Fund itself would be unable to meet its
obligations. A substantial number of mutual funds in the United States are
organized as Massachusetts business trusts.
Organization and History
Oppenheimer Series Fund, Inc. was organized in 1981 as a multi-
series Maryland corporation. LifeSpan Income Fund is a series of
that Company. Oppenheimer Integrity Funds was organized in 1982
as
a multi-series Massachusetts business trust and Bond Fund is a
series of that Trust. Oppenheimer Integrity Funds currently has
one series (the Bond Fund). Oppenheimer Integrity Funds is
governed by a Board of Trustees. Oppenheimer Series Fund Inc.
and
Oppenheimer Integrity Funds are open-end, diversified management
-37-
<PAGE>
investment companies. Oppenheimer Integrity Funds have an
unlimited number of authorized shares of beneficial interest.
Oppenheimer Series Fund, Inc. presently has five series,
including
the Funds. Oppenheimer Series Fund, Inc. is governed by a Board
of
Directors.
Management and Distribution Arrangements
The Manager, located at Two World Trade Center, New York, New York 10048-0203,
acts as the investment adviser for both LifeSpan Income Fund and Bond Fund. The
terms and conditions of the Investment Advisory Agreement for each Fund are
substantially the same. The monthly management fee payable to the Manager by
each Fund and 12b- 1 Distribution and Service Plan fees paid by each Fund with
respect to Class A, Class B and Class C shares are set forth under "Synopsis -
Investment Advisory and Distribution and Service Plan Fees" along with the fees
paid by the Manger to the Subadvisers for LifeSpan Income Fund.
Pursuant to each Investment Advisory Agreement, the Manager supervises the
investment operations of the Funds and the composition of their portfolios, and
furnishes advice and recommendations with respect to investments, investment
policies
and the purchase and sale of securities. Both Investment Advisory Agreements
require the Manager to provide LifeSpan Income Fund and Bond 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 administration for the Funds, including the compilation and
maintenance of records with respect to their operations, the preparation and
filing of specified reports, and composition of proxy materials and registration
statements for continuous public sale of shares of each Fund.
BEA acts as Subadviser to LifeSpan Income Fund. The Subadviser is responsible
for choosing the Fund's investments and its duties and responsibilities are set
forth in the agreement with the
Manager.
The Manager, not LifeSpan Income Fund, pays the Subadviser. BEA began providing
management services to institutional clients in 1984. BEA is a partnership
between Credit Suisse Capital Corporation and CS Advisors Corp.
Expenses not expressly assumed by the Manager under each Fund's
Investment Advisory Agreement or by OppenheimerFunds Distributor, Inc., the
Funds' distributor (the "Distributor"), under the General Distributor's
Agreement are paid by the Funds. The Investment Advisory Agreements list
examples of expenses paid by the Funds, the major categories of which relate to
interest, taxes, brokerage commissions, certain fees to Directors or Trustees,
as the case may be, legal and audit expenses, custodian and transfer agent
expenses, share issuance costs, certain printing and registration
-38-
<PAGE>
costs and non-recurring expenses, including litigation costs. The Funds'
Investment Advisory Agreements contain no expense limitation. The management fee
paid by LifeSpan Income Fund for the fiscal year ended October 31, 1997 was
$212,649. For the fiscal year ended December 31, 1997, the management fee paid
by Bond Fund was $1,751,986.
The Funds' Investment Advisory Agreements contain no expense
limitation.
The Manager is controlled by Oppenheimer Acquisition Corp., a holding company
owned in part by senior management of the Manager and ultimately controlled by
Massachusetts Mutual Life Insurance Company, a mutual life insurance company
that also advises pension plans and investment companies. The Manager has
operated as an investment company adviser since 1959. The Manager and its
affiliates currently advise investment companies with combined net assets
aggregating over $75 billion as of December 31, 1997, with more than 3.5 million
shareholder accounts. OppenheimerFunds Services, a division of the Manager, acts
as transfer and shareholder servicing agent on an at-cost basis for LifeSpan
Income Fund and Bond Fund and for certain other open-end Funds managed by the
Manager and its affiliates.
The Distributor, under a General Distributor's Agreement for each of the Funds,
acts as the principal underwriter in the continuous public offering of Class A,
Class B and Class C shares of each Fund. During LifeSpan Income Fund's fiscal
year ended October 31, 1997, the aggregate sales charges on sales of LifeSpan
Income Fund's Class A shares were $19,537, of which the Distributor and an
affiliated broker-dealer retained in the aggregate $13,796. During LifeSpan
Income Fund's fiscal year ended October 31,1997, the contingent deferred sales
charges collected on LifeSpan Income Fund's Class B shares totaled $5,923, all
of which the Distributor retained. During the Fund's fiscal year ended October
31, 1997 there were no contingent deferred sales charges collected on the Fund's
Class C shares. For the fiscal year ended December 31, 1997, the aggregate
amount of sales charges on sales of Bond Fund's Class A shares was $346,782, of
which $134,951 was retained by the Distributor and an affiliated broker-dealer.
Contingent deferred sales charges collected by the Distributor on the redemption
of Class B and Class C shares for the fiscal year ended December 31, 1997
totaled $156,781 and $1,757, respectively, all of which was retained by the
Distributor. For additional information about distribution of the Funds' shares
and the payments made by the Funds to the Distributor in connection with such
activities, please refer to "Distribution and Service Plans" in each Fund's
Statement of Addition Information.
-39-
<PAGE>
Purchase of Additional Shares
Class A shares of LifeSpan Income Fund may be purchased with an initial sales
charge of 5.75% for purchases of less than $25,000. The sales charge of 5.75% is
reduced for purchases of LifeSpan Income Fund's Class A shares of $25,000 or
more. Class A shares of Bond Fund may be purchased with an initial sales charge
of 4.75% for purchases of less than $50,000. The sales charge of 4.75% is
reduced for purchases of Bond Fund's Class A shares of $50,000 or more. For
purchases of Class A shares of either fund of $1 million or more ($500,000 or
more for purchases by "Retirement Plans", as defined in each Fund's prospectus)
if those shares are redeemed within 12 calendar months (18 months for shares
purchased prior to May 1, 1997) of the end of the calendar month of their
purchase, a contingent sales charge may be deducted from the redemption
proceeds. Class B shares of LifeSpan Income Fund and Bond Fund are sold at net
asset value without an initial sales charge, however, if Class B shares of
either Fund are redeemed within six years of the end of the calendar month of
their purchase, a contingent deferred sales charge may be deducted of up to 5%,
depending upon how long such shares had been held. Class C shares of either Fund
may be purchased without an initial sales charge, but if sold within 12 months
of buying them, a contingent deferred sales charge of 1% may be deducted.
The initial sales charge and contingent deferred sales charge on Class A shares,
Class B shares and Class C shares of Bond Fund will only affect shareholders of
LifeSpan Income Fund to the extent that they desire to make additional purchases
of shares of Bond Fund in addition to the shares which they will receive as a
result of the Reorganization. The Class A, Class B and Class C shares to be
issued under the Reorganization Agreement will be issued by Bond Fund at net
asset value. Future dividends and capital gain distributions of Bond Fund, if
any, may be reinvested without sales charge. The contingent deferred sales
charge for each class of shares for both Funds is the same. If Class A, Class B
or Class C shares of LifeSpan Income Fund are currently subject to a contingent
deferred sales change, the Bond Fund shares issued in the Reorganization will
continue to be subject to the same contingent deferred sales charge. Any
LifeSpan Income Fund shareholder who is entitled to a reduced sales charge on
additional purchases by reason of a Letter of Intent or Right of Accumulation
based upon holdings of shares of LifeSpan Income Fund will continue to be
entitled to a reduced sales charge on any future purchase of shares of Bond
Fund.
Dividends and Distributions
LifeSpan Income Fund declares dividends from net investment income on each
regular business day and pays such dividends to shareholders monthly. LifeSpan
Income Fund may also make
-40-
<PAGE>
distributions annually in December out of any net short-term or long-term
capital gains. Bond Fund declares and pays dividends and capital gains
distributions, if any, monthly. Dividends are paid separately for each class of
shares and normally, the dividends on Class A shares are generally expected to
be higher than for Class B and Class C shares because the expenses allocable to
Class B and Class C shares will generally be higher than for Class A shares.
From time to time, Bond Fund may adopt the practice, to the extent consistent
with the amount of the Fund's net investment income and other distributable
income, of attempting to pay dividends on Class A shares at a constant level,
although the amount of such dividends may be subject to change from time to
time, depending on market conditions, the composition of the Bond Fund's
portfolio and expenses borne by the Bond Fund or borne separately by that Class.
A practice of attempting to pay dividends on Class A shares at a constant level
would require the Manager, consistent with the Fund's investment objective and
investment restrictions, to monitor the Fund's portfolio and select higher
yielding securities when deemed appropriate to maintain necessary net investment
income levels. If Bond Fund, from time to time, seeks to pay dividends on Class
A shares at a target level, Bond Fund anticipates it would pay dividends at the
target dividend level from net investment income and other distributable income
without any impact on Bond Fund's Class A net asset value per share. The Board
of Trustees of Bond Fund could change the Fund's targeted dividend level at any
time, without prior notice to shareholders. Bond Fund would not otherwise have a
fixed dividend rate. Regardless, there can be no assurance as to the payment of
any dividends or the realization of any capital gains. There is no fixed
dividend rate for LifeSpan Income Fund and there can be no assurance that
LifeSpan Income Fund will pay any dividends or distributions.
METHOD OF CARRYING OUT THE REORGANIZATION
The consummation of the transactions contemplated by the Reorganization
Agreement is contingent upon the approval of the Reorganization by the
shareholders of LifeSpan Income Fund and the receipt of the opinions and
certificates set forth in Sections 10 and 11 of the Reorganization Agreement and
the occurrence of the events described in those Sections. Under the
Reorganization Agreement, all the assets of LifeSpan Income Fund, excluding the
Cash Reserve, will be delivered to Bond Fund in exchange for Class A, Class B
and Class C shares of Bond Fund. The Cash Reserve to be retained by LifeSpan
Income Fund will be sufficient in the discretion of the Board for the payment of
LifeSpan Income Fund's liabilities, and LifeSpan Income Fund's expenses of
liquidation.
Assuming the shareholders of LifeSpan Income Fund approve the Reorganization,
the actual exchange of assets is expected to take
-41-
<PAGE>
place on May 29, 1998, or as soon thereafter as is practicable (the "Closing
Date") on the basis of net asset values as of the close of business on the
business day preceding the Closing Date (the "Valuation Date"). Under the
Reorganization Agreement, all redemptions of shares of LifeSpan Income Fund
shall be permanently suspended at the close of business on the Valuation Date;
only redemption requests received in proper form on or prior to the close of
business on that date shall be fulfilled by it; redemption requests received by
LifeSpan Income Fund after that date will be treated as requests for redemptions
of Class A, Class B or Class C shares of Bond Fund to be distributed to the
shareholders requesting redemption. The exchange of assets for shares will be
done on the basis of the per share net asset value of the Class A, Class B and
Class C shares of Bond Fund, and the value of the assets of LifeSpan Income Fund
to be transferred as of the close of business on the Valuation Date, valued in
the manner used by Bond Fund in the valuation of assets. Bond Fund is not
assuming any of the liabilities of LifeSpan Income Fund, except for portfolio
securities purchased which have not settled and outstanding shareholder
redemption and dividend checks.
The net asset value of the shares transferred by Bond Fund to LifeSpan Income
Fund will be the same as the value of the assets received by Bond Fund. For
example, if, on the Valuation Date, LifeSpan Income Fund were to have securities
with a market value of $95,000 and cash in the amount of $10,000 (of which
$5,000 was to be retained by it as the Cash Reserve), the value of the assets
which would be transferred to Bond Fund would be $100,000. If the net asset
value per share of Bond Fund were $10 per share at the close of business on the
Valuation Date, the number of shares to be issued would be 10,000 ($100,000 /
$10). These 10,000 shares of Bond Fund would be distributed to the former
shareholders of LifeSpan Income Fund. This example is given for illustration
purposes only and does not bear any relationship to the dollar amounts or shares
expected to be involved in the Reorganization.
Following the Closing Date, LifeSpan Income Fund will distribute on a pro rata
basis to its shareholders of record on the Valuation Date the Class A, Class B
and Class C shares of Bond Fund received by LifeSpan Income Fund at the Closing,
in liquidation of the outstanding shares of LifeSpan Income Fund, and the
outstanding shares of LifeSpan Income Fund will be canceled. To assist LifeSpan
Income Fund in this distribution, Bond Fund will, in accordance with a
shareholder list supplied by LifeSpan Income Fund, cause its transfer agent to
credit and confirm an appropriate number of shares of Bond Fund to each
shareholder of LifeSpan Income Fund. Certificates for Class A shares of Bond
Fund will be issued upon written request of a former shareholder of LifeSpan
Income Fund but only for whole shares with fractional shares credited to the
name of the shareholder on the books of Bond Fund and only for shares
represented by certificates are delivered for
42
<PAGE>
cancellation. Former Class A shareholders of LifeSpan Income Fund who wish
certificates representing their shares of Bond Fund must, after receipt of their
confirmations, make a written request to OppenheimerFunds Services, P.O. Box
5270, Denver, Colorado 80217. Shareholders of LifeSpan Income Fund holding
certificates representing their shares will not be required to surrender their
certificates to anyone in connection with the Reorganization. After the
Reorganization, however, it will be necessary for such shareholders to surrender
such certificates in order to redeem, transfer, pledge or exchange any shares of
Bond Fund.
Under the Reorganization Agreement, within one year after the Closing Date,
LifeSpan Income Fund shall: (a) either pay or make provision for all of its
debts and taxes; and (b) either (i) transfer any remaining amount of the Cash
Reserve to Bond Fund, if such remaining amount is not material (as defined
below) or (ii) distribute such remaining amount to the shareholders of LifeSpan
Income Fund who were such on the Valuation Date. Such remaining amount shall be
deemed to be material if the amount to be distributed, after deducting the
estimated expenses of the distribution, equals or exceeds one cent per share of
the number of LifeSpan Income Fund shares outstanding on the Valuation Date.
Within one year after the Closing Date, LifeSpan Income Fund will complete its
liquidation.
The obligations of either LifeSpan Income Fund or Bond Fund under the Agreement
shall be subject to the right of either Fund to abandon and terminate the
Reorganization Agreement without liability if the other party breaches any
material provision of the Reorganization Agreement or, if prior to the Closing,
any material legal, administrative or other proceeding shall be instituted or
threatened (i) seeking to restrain or otherwise prohibit the transactions
contemplated by the Reorganization Agreement and/or (ii) asserting a material
liability of either party, which proceeding has not been terminated or the
threat thereto removed prior to the Closing Date.
In the event that the Reorganization Agreement is not
consummated
for any reason, the Board will consider and may submit to the
shareholders other alternatives.
ADDITIONAL INFORMATION
Financial Information
The Reorganization will be accounted for by the surviving Fund
in
its financial statements similar to a pooling without
restatement.
Further financial information as to LifeSpan Income Fund is
contained in its current Prospectus, which is available without
charge from OppenheimerFunds Services, the Transfer Agent, P.O.
Box
43
<PAGE>
5270, Denver, Colorado 80217, and is incorporated herein by reference, and in
its Annual Report as of October 31, 1997, which are included in its Statement of
Additional Information. Financial information for Bond Fund is contained in its
current Prospectus accompanying this Proxy Statement and Prospectus and
incorporated herein by reference, and in its Annual Report as of December 31,
1997 which are included in its Statement of Additional Information.
Public Information
Additional information about LifeSpan Income Fund and Bond Fund is available, as
applicable, in the following documents which are incorporated herein by
reference: (i) Bond Fund's Prospectus dated April 30, 1997 accompanying this
Proxy Statement and incorporated herein; (ii) LifeSpan Income Fund's Prospectus
dated February 19, 1998, which may be obtained without charge by writing to
OppenheimerFunds Services, P.O. Box 5270, Denver, Colorado 80217; (iii) Bond
Fund's Annual Report as of December 31, 1997, which may be obtained without
charge by writing to OppenheimerFunds Services at the address indicated above;
and (iv) LifeSpan Income Fund's Annual Report as of October 31, 1997, which may
be obtained without charge by writing to OppenheimerFunds Services at the
address indicated above. All of the foregoing documents may be obtained by
calling the toll-free number on the cover of this Proxy Statement and
Prospectus.
Additional information about the following matters is contained in the Statement
of Additional Information relating to this Reorganization, which incorporates by
reference the Bond Fund Statement of Additional Information dated April 30,
1997, and LifeSpan Income Fund's Prospectus and Statement of Additional
Information dated February 19, 1998; the organization and operation of Bond Fund
and LifeSpan Income Fund; more information on investment policies, practices and
risks; information about the the Trust's Board and the Company's Board and their
responsibilities; a further description of the services provided by Bond Fund's
and LifeSpan Income Fund's Manager, Distributor, and transfer and shareholder
servicing agent; dividend policies; tax matters; an explanation of the method of
determining the offering price of the shares and/or contingent deferred sales
charges, as applicable of Class A, Class B and Class C shares of Bond Fund and
LifeSpan Income Fund; purchase, redemption and exchange programs; the different
expenses paid by each class of shares; and distribution arrangements.
The Trust on behalf of Bond Fund and the Company of behalf of LifeSpan Income
Fund are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended, and in accordance therewith, file reports and other
information with the SEC. Proxy material, reports and other information about
LifeSpan Income Fund and Bond Fund which are of public record can be
44
<PAGE>
inspected and copied at public reference facilities maintained by the SEC in
Washington, D.C. and certain of its regional offices, and copies of such
materials can be obtained at prescribed rates from the Public Reference Branch,
Office of Consumer Affairs and Information Services, SEC, Washington, D.C.
20549.
OTHER BUSINESS
Management of LifeSpan Income Fund knows of no business other than the matters
specified above which will be presented at the
Meeting.
Since matters not known at the time of the solicitation may come before the
Meeting, the proxy as solicited confers discretionary authority with respect to
such matters as properly come before the Meeting, including any adjournment or
adjournments thereof, and it is the intention of the persons named as
attorneys-in-fact in the proxy to vote this proxy in accordance with their
judgment on such matters.
By Order of the Board of Directors
Andrew J. Donohue, Secretary
April 1, 1998 305
45
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") dated as of May 29,
1998, by and between Oppenheimer LifeSpan Income Fund("LifeSpan Income Fund"), a
series of Oppenheimer Series
Fund,
Inc., a Maryland corporation (the "Company"),and Bond Fund
("Bond
Fund"), a series of Oppenheimer Integrity Funds, a Massachusetts
business trust (the "Trust").
W I T N E S S E T H:
WHEREAS, the parties are each a series of an open-end
investment company of the management type; and
WHEREAS, the parties hereto desire to provide for the reorganization
pursuant to Section 368(a)(1) of the Internal Revenue Code of 1986, as amended
(the "Code"), of LifeSpan Income Fund through the acquisition by Bond Fund of
substantially all of the assets of LifeSpan Income Fund in exchange for the
voting shares of beneficial interest ("shares") of Class A, Class B and Class C
shares of Bond Fund and the assumption by Bond Fund of certain liabilities of
LifeSpan Income Fund, which Class A, Class B and Class C shares of Bond Fund are
to be distributed by LifeSpan Income Fund pro rata to its shareholders in
complete liquidation of LifeSpan Income Fund and complete cancellation of its
shares;
NOW, THEREFORE, in consideration of the mutual promises
herein
contained, the parties hereto agree as follows:
1. The parties hereto hereby adopt this Agreement and
Plan
of Reorganization (the "Agreement") pursuant to Section 368(a)(1) of the Code as
follows: The reorganization will be comprised of the acquisition by Bond Fund of
substantially all of the properties and assets of LifeSpan Income Fund in
exchange for Class A, Class B and Class C shares of Bond Fund and the assumption
by Bond Fund of certain liabilities of LifeSpan Income Fund, followed by the
distribution of such Class A, Class B and Class C shares of Bond Fund shares to
the Class A, Class B and Class C shareholders of LifeSpan Income Fund in
exchange for their Class A, Class B and Class C shares of LifeSpan Income Fund,
all upon and subject to the terms of the Agreement hereinafter set forth.
The share transfer books of LifeSpan Income Fund will be permanently
closed at the close of business on the Valuation Date (as hereinafter defined)
and only redemption requests received in proper form on or prior to the close of
business on the Valuation Date shall be fulfilled by LifeSpan Income Fund;
redemption requests received by LifeSpan Income Fund after that date shall be
A-1
<PAGE>
treated as requests for the redemption of the shares of Bond
Fund
to be distributed to the shareholder in question as provided in
Section 5.
2. On the Closing Date (as hereinafter defined), all of the assets of
LifeSpan Income Fund on that date, excluding a cash reserve (the "Cash Reserve")
to be retained by LifeSpan Income Fund sufficient in its discretion for the
payment of the expenses of LifeSpan Income Fund's dissolution and its
liabilities, but not in excess of the amount contemplated by Section 10E, shall
be delivered as provided in Section 8 to Bond Fund, in exchange for and against
delivery to LifeSpan Income Fund on the Closing Date of a number of Class A,
Class B and Class C shares of Bond Fund, having an aggregate net asset value
equal to the value of the assets of LifeSpan Income Fund so transferred and
delivered.
3. The net asset value of Class A, Class B and Class C shares of Bond Fund
and the value of the assets of LifeSpan Income Fund to be transferred shall in
each case be determined as of the close of business of the New York Stock
Exchange on the Valuation Date. The computation of the net asset value of the
Class A, Class B and Class C shares of Bond Fund and the Class A, Class B and
Class C shares of LifeSpan Income Fund shall be done in the manner used by Bond
Fund and LifeSpan Income Fund, respectively, in the computation of such net
asset value per share as set forth in their respective prospectuses. The methods
used by Bond Fund in such computation shall be applied to the valuation of the
assets of LifeSpan Income Fund to be transferred to Bond Fund.
LifeSpan Income Fund shall declare and pay, immediately prior to the
Valuation Date, a dividend or dividends which, together with all previous such
dividends, shall have the effect of distributing to LifeSpan Income Fund's
shareholders all of LifeSpan Income Fund's investment company taxable income for
taxable years ending on or prior to the Closing Date (computed without regard to
any dividends paid) and all of its net capital gain, if any, realized in taxable
years ending on or prior to the Closing Date (after reduction for any capital
loss carry-forward).
4. The closing (the "Closing") shall be at the offices of OppenheimerFunds,
Inc. (the "Agent"), Two World Trade Center, 34th Floor, New York, New York
10048, at 4:00 P.M. New York time on May 29, 1998 or at such other time or place
as the parties may designate or as provided below (the "Closing Date"). The
business day preceding the Closing Date is herein referred to as the "Valuation
Date."
In the event that on the Valuation Date either party has, pursuant to the
Investment Company Act of 1940, as amended (the "Act"), or any rule, regulation
or order thereunder, suspended the redemption of its shares or postponed payment
therefore, the
A-2
<PAGE>
Closing Date shall be postponed until the first business day
after
the date when both parties have ceased such suspension or
postponement; provided, however, that if such suspension shall
continue for a period of 60 days beyond the Valuation Date, then
the other party to the Agreement shall be permitted to terminate
the Agreement without liability to either party for such
termination.
5. In conjunction with the Closing, LifeSpan Income Fund shall distribute
on a pro rata basis to the shareholders of LifeSpan Income Fund on the Valuation
Date the Class A, Class B and Class C shares of Bond Fund received by LifeSpan
Income Fund on the Closing Date in exchange for the assets of LifeSpan Income
Fund in complete liquidation of LifeSpan Income Fund; for the purpose of the
distribution by LifeSpan Income Fund of Class A, Class B and Class C shares of
Bond Fund to its shareholders, Bond Fund will promptly cause its transfer agent
to: (a) credit an appropriate number of Class A, Class B and Class C shares of
Bond Fund on the books of Bond Fund to each Class A, Class B and Class C
shareholder, respectively of LifeSpan Income Fund in accordance with a list (the
"Shareholder List") of its shareholders received from LifeSpan Income Fund; and
(b) confirm an appropriate number of Class A, Class B and Class C shares of Bond
Fund to each shareholder of LifeSpan Income Fund; certificates for Class A,
Class B and Class C shares of Bond Fund will be issued upon written request of a
former shareholder of LifeSpan Income Fund but only for whole shares, with
fractional shares credited to the name of the shareholder on the books of Bond
Fund.
The Shareholder List shall indicate, as of the close
of
business on the Valuation Date, the name and address of each
shareholder of LifeSpan Income Fund, indicating his or her share
balance. LifeSpan Income Fund agrees to supply the Shareholder
List to Bond Fund not later than the Closing Date.
Shareholders of
LifeSpan Income Fund holding certificates representing their
shares
shall not be required to surrender their certificates to anyone
in
connection with the reorganization. After the Closing Date,
however, it will be necessary for such shareholders to surrender
their certificates in order to redeem, transfer or pledge the
shares of Bond Fund which they received.
6. Within one year after the Closing Date, LifeSpan Income Fund shall (a)
either pay or make provision for payment of all of its liabilities and taxes,
and (b) either (i) transfer any remaining amount of the Cash Reserve to Bond
Fund, if such remaining amount (as reduced by the estimated cost of distributing
it to shareholders) is not material (as defined below) or (ii) distribute such
remaining amount to the shareholders of LifeSpan Income Fund on the Valuation
Date. Such remaining amount shall be deemed to be material if the amount to be
distributed, after deduction of the estimated expenses of the distribution,
equals or
A-3
<PAGE>
exceeds one cent per share of LifeSpan Income Fund outstanding
on
the Valuation Date.
7. Prior to the Closing Date, there shall be coordination between the
parties as to their respective portfolios so that, after the Closing, Bond Fund
will be in compliance with all of its investment policies and restrictions.
Promptly after the
Closing,
LifeSpan Income Fund shall deliver to Bond Fund two copies of a list setting
forth the securities then owned by LifeSpan Income Fund. Promptly after the
Closing, LifeSpan Income Fund shall provide Bond Fund a list setting forth the
respective federal income tax bases thereof.
8. Portfolio securities or written evidence acceptable to Bond Fund of
record ownership thereof by The Depository Trust Company or through the Federal
Reserve Book Entry System or any other depository approved by LifeSpan Income
Fund pursuant to Rule 17f-4 and Rule 17f-5 under the Act shall be endorsed and
delivered, or transferred by appropriate transfer or assignment documents, by
LifeSpan Income Fund on the Closing Date to Bond Fund, or at its direction, to
its custodian bank, in proper form for transfer in such condition as to
constitute good delivery thereof in accordance with the custom of brokers and
shall be accompanied by all necessary state transfer stamps, if any. The cash
delivered shall be in the form of certified or bank cashiers' checks or by bank
wire or intra-bank transfer payable to the order of Bond Fund for the account of
Bond Fund. Shares of Bond Fund representing the number of shares of Bond Fund
being delivered against the assets of LifeSpan Income Fund, registered in the
name of LifeSpan Income Fund, shall be transferred to LifeSpan Income Fund on
the Closing Date. Such shares shall thereupon be assigned by LifeSpan Income
Fund to its shareholders so that the shares of Bond Fund may be distributed as
provided in Section 5.
If, at the Closing Date, LifeSpan Income Fund is unable in the
ordinary course of business to make delivery under this Section 8 to Bond Fund
of any of its portfolio securities or cash for the reason that any of such
securities purchased by LifeSpan Income Fund, or the cash proceeds of a sale of
portfolio securities, prior to the Closing Date have not yet been delivered to
it or LifeSpan Income Fund's custodian, then the delivery requirements of this
Section 8 with respect to said undelivered securities or cash will be waived and
LifeSpan Income Fund will deliver to Bond Fund by or on the Closing Date and
with respect to said undelivered securities or cash executed copies of an
agreement or agreements of assignment in a form reasonably satisfactory to Bond
Fund, together with such other documents, including a due bill or due bills and
brokers' confirmation slips as may reasonably be required by Bond Fund.
9. Bond Fund shall not assume the liabilities (except for
A-4
<PAGE>
portfolio securities purchased which have not settled and for shareholder
redemption and dividend checks outstanding) of LifeSpan Income Fund, but
LifeSpan Income Fund will, nevertheless, use its best efforts to discharge all
known liabilities, so far as may be possible, prior to the Closing Date. The
cost of printing and mailing the proxies and proxy statements will be borne by
LifeSpan Income Fund. LifeSpan Income Fund and Bond Fund will bear the cost of
their respective tax opinion. Any documents such as existing prospectuses or
annual reports that are included in that mailing will be a cost of the Fund
issuing the document. Any other out-of-pocket expenses of Bond Fund and LifeSpan
Income Fund associated with this reorganization, including legal, accounting and
transfer agent expenses, will be borne by LifeSpan Income Fund and Bond Fund,
respectively, in the amounts so incurred by each.
10. The obligations of Bond Fund hereunder shall be subject
to the following conditions:
A. The Board of Trustees of the Trust shall have authorized the
execution of the Agreement, and the shareholders of LifeSpan Income Fund shall
have approved the Agreement and the transactions contemplated thereby, and
LifeSpan Income Fund shall have furnished to Bond Fund copies of resolutions to
that effect certified by the Secretary or an Assistant Secretary of the Company;
such shareholder approval shall have been by the affirmative vote of "a majority
of the outstanding voting securities" (as defined in the Act) of LifeSpan Income
Fund at a meeting for which proxies have been solicited by the Proxy Statement
and Prospectus (as hereinafter defined).
B. Bond Fund shall have received an opinion dated the Closing Date
of counsel to LifeSpan Income Fund, to the effect that (i) LifeSpan Income Fund
is a series of the Company which is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland with full
powers to carry on its business as then being conducted and to enter into and
perform the Agreement (Maryland counsel may be relied upon for this opinion);
and (ii) that all action necessary to make the Agreement, according to its
terms, valid, binding and enforceable on LifeSpan Income Fund and to authorize
effectively the transactions contemplated by the Agreement have been taken by
LifeSpan Income Fund.
C. The representations and warranties of LifeSpan
Income Fund contained herein shall be true and correct at and
as of
the Closing Date, and Bond Fund shall have been furnished with a
certificate of the President, or a Vice President, or the
Secretary
or the Assistant Secretary or the Treasurer of the Company,
dated
the Closing Date, to that effect.
D. On the Closing Date, LifeSpan Income Fund shall
A-5
<PAGE>
have furnished to Bond Fund a certificate of the Treasurer or
Assistant Treasurer of the Company as to the amount of the
capital
loss carry-over and net unrealized appreciation or
depreciation, if
any, with respect to LifeSpan Income Fund as of the Closing
Date.
E. The Cash Reserve shall not exceed 10% of the
value
of the net assets, nor 30% in value of the gross assets, of
LifeSpan Income Fund at the close of business on the Valuation
Date.
F. A Registration Statement on Form N-14 filed by the Company under
the Securities Act of 1933, as amended (the "1933 Act"), containing a
preliminary form of the Proxy Statement and Prospectus, shall have become
effective under the 1933 Act not
later than May 29, 1998.
G. On the Closing Date, Bond Fund shall have received a letter from
Andrew J. Donohue or other senior executive officer of OppenheimerFunds, Inc.
acceptable to Bond Fund, stating that nothing has come to his or her attention
which in his or her judgment would indicate that as of the Closing Date there
were any material actual or contingent liabilities of LifeSpan Income Fund
arising out of litigation brought against LifeSpan Income Fund or claims
asserted against it, or pending or to the best of his or her knowledge
threatened claims or litigation not reflected in or apparent from the most
recent audited financial statements and footnotes thereto of LifeSpan Income
Fund delivered to Bond Fund. Such letter may also include such additional
statements relating to the scope of the review conducted by such person and his
or her responsibilities and liabilities as are not unreasonable under the
circumstances.
H. Bond Fund shall have received an opinion, dated
the
Closing Date, of KPMG Peat Marwick LLP, to the same effect as
the
opinion contemplated by Section 11.E of the Agreement.
I. Bond Fund shall have received at the closing all of the assets of
LifeSpan Income Fund to be conveyed hereunder, which assets shall be free and
clear of all liens, encumbrances, security interests, restrictions and
limitations whatsoever.
11. The obligations of LifeSpan Income Fund hereunder shall be subject to
the following conditions:
A. The Board of Directors of the Company shall have authorized the
execution of the Agreement, and the transactions contemplated thereby, and Bond
Fund shall have furnished to LifeSpan Income Fund copies of resolutions to that
effect certified by the Secretary or an Assistant Secretary of the Trust.
B. LifeSpan Income Fund's shareholders shall have
A-6
<PAGE>
approved the Agreement and the transactions contemplated hereby, by an
affirmative vote of "a majority of the outstanding voting securities" (as
defined in the Act) of LifeSpan Income Fund, and LifeSpan Income Fund shall have
furnished Bond Fund copies of resolutions to that effect certified by the
Secretary or an Assistant Secretary of the Company.
C. LifeSpan Income Fund shall have received an opinion dated the
Closing Date of counsel to Bond Fund, to the effect that (i) Bond Fund is a
series of the Trust which is duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts with full powers to
carry on its business as then being conducted and to enter into and perform the
Agreement (Massachusetts counsel may be relied upon for this opinion); (ii) all
action necessary to make the Agreement, according to its terms, valid, binding
and enforceable upon Bond Fund and to authorize effectively the transactions
contemplated by the Agreement have been taken by Bond Fund, and (iii) the shares
of Bond Fund to be issued hereunder are duly authorized and when issued will be
validly issued, fully-paid and non-assessable, except as set forth in Bond
Fund's Registration Statement.
D. The representations and warranties of Bond Fund contained herein
shall be true and correct at and as of the Closing Date, and LifeSpan Income
Fund shall have been furnished with a certificate of the President, a Vice
President or the Secretary or an Assistant Secretary or the Treasurer of the
Trust to that effect dated the Closing Date.
E. LifeSpan Income Fund shall have received an opinion of KPMG Peat
Marwick LLP to the effect that the Federal tax consequences of the transaction,
if carried out in the manner outlined in this Plan of Reorganization and in
accordance with (i) LifeSpan Income Fund's representation that there is no plan
or intention by any Fund shareholder who owns 5% or more of LifeSpan Income
Fund's outstanding shares, and, to LifeSpan Income Fund's best knowledge, there
is no plan or intention on the part of the remaining Fund shareholders, to
redeem, sell, exchange or otherwise dispose of a number of Bond Fund shares
received in the transaction that would reduce LifeSpan Income Fund shareholders'
ownership of Bond Fund shares to a number of shares having a value, as of the
Closing Date, of less than 50% of the value of all of the formerly outstanding
Fund shares as of the same date, and (ii) the representation by each of LifeSpan
Income Fund and Bond Fund that, as of the Closing Date, LifeSpan Income Fund and
Bond Fund will meet the diversification test of Section 368(a)(2)(F)(ii) of the
Code, will be as follows:
1. The transactions contemplated by the
Agreement
will qualify as a tax-free "reorganization" within the meaning
of
Section 368(a)(1) of the Code, and under the regulations
A-7
<PAGE>
promulgated thereunder.
2. LifeSpan Income Fund and Bond Fund will each qualify as a
"party to a reorganization" within the meaning of Section 368(b)(2) of the Code.
3. No gain or loss will be recognized by the shareholders of
LifeSpan Income Fund upon the distribution of shares of beneficial interest in
Bond Fund to the shareholders of LifeSpan Income Fund pursuant to Section 354 of
the Code.
4. Under Section 361(a) of the Code no gain or loss will be
recognized by LifeSpan Income Fund by reason of the transfer of substantially
all its assets in exchange for shares of
Bond Fund.
5. Under Section 1032 of the Code no gain or loss will be
recognized by Bond Fund by reason of the transfer of substantially all LifeSpan
Income Fund's assets in exchange for Class A, Class B and Class C shares of Bond
Fund and Bond Fund's assumption of certain liabilities of LifeSpan Income Fund.
6. The shareholders of LifeSpan Income Fund will have the
same tax basis and holding period for the Class A, Class B or Class C shares of
beneficial interest in Bond Fund that they receive as they had for LifeSpan
Income Fund shares that they previously held, pursuant to Section 358(a) and
1223(1), respectively, of the Code.
7. The securities transferred by LifeSpan Income Fund to Bond
Fund will have the same tax basis and holding period in the hands of Bond Fund
as they had for LifeSpan Income Fund, pursuant to Section 362(b) and 1223(1),
respectively, of the Code.
F. The Cash Reserve shall not exceed 10% of the
value
of the net assets, nor 30% in value of the gross assets, of
LifeSpan Income Fund at the close of business on the Valuation
Date.
G. A Registration Statement on Form N-14 filed by the Company under
the 1933 Act, containing a preliminary form of the Proxy Statement and
Prospectus, shall have become effective under
the 1933 Act not later than May 29, 1998.
H. On the Closing Date, LifeSpan Income Fund shall
have received a letter of Andrew J. Donohue or other senior
executive officer of OppenheimerFunds, Inc. acceptable to
LifeSpan
Income Fund, stating that nothing has come to his or her
attention
which in his or her judgment would indicate that as of the
Closing
Date there were any material actual or contingent liabilities of
Bond Fund arising out of litigation brought against Bond Fund or
A-8
<PAGE>
claims asserted against it, or pending or, to the best of his or her knowledge,
threatened claims or litigation not reflected in or apparent by the most recent
audited financial statements and footnotes thereto of Bond Fund delivered to
LifeSpan Income
Fund.
Such letter may also include such additional statements
relating to
the scope of the review conducted by such person and his or her
responsibilities and liabilities as are not unreasonable under
the
circumstances.
I. LifeSpan Income Fund shall acknowledge receipt of
the shares of Bond Fund.
12. The Company on behalf of LifeSpan Income Fund hereby represents and
warrants that:
A. The financial statements of LifeSpan Income Fund as at October
31, 1997(audited) heretofore furnished to Bond Fund, present fairly the
financial position, results of operations, and changes in net assets of LifeSpan
Income Fund as of that date, in conformity with generally accepted accounting
principles applied on a basis consistent with the preceding year; and that from
October 31, 1997 through the date hereof there have not been, and through the
Closing Date there will not be, any material adverse change in the business or
financial condition of LifeSpan Income Fund, it being agreed that a decrease in
the size of LifeSpan Income Fund due to a diminution in the value of its
portfolio and/or redemption of its shares shall not be considered a material
adverse change;
B. Contingent upon approval of the Agreement and the transactions
contemplated thereby by LifeSpan Income Fund's shareholders, LifeSpan Income
Fund has authority to transfer all of the assets of LifeSpan Income Fund to be
conveyed hereunder free and clear of all liens, encumbrances, security
interests, restrictions and limitations whatsoever;
C. The Prospectus, as amended and supplemented, contained in
LifeSpan Income Fund's Registration Statement under the 1933 Act, as amended, is
true, correct and complete, conforms to the requirements of the 1933 Act and
does not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading. The Registration Statement, as amended, was, as of the
date of the filing of the last Post-Effective Amendment, true, correct and
complete, conformed to the requirements of the 1933 Act and did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
D. There is no material contingent liability of
LifeSpan Income Fund and no material claim and no material
legal,
A-9
<PAGE>
administrative or other proceedings pending or, to the
knowledge of
LifeSpan Income Fund, threatened against LifeSpan Income Fund,
not
reflected in such Prospectus;
E. Except for this Agreement, there are no material
contracts outstanding to which LifeSpan Income Fund is a party
other than those ordinary in the conduct of its business;
F. LifeSpan Income Fund is a series of the Company which is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Maryland; and has all necessary and material Federal and state
authorizations to own all of its assets and to carry on its business as now
being conducted; and the Company is duly registered under the Act and such
registration has not been rescinded or revoked and is in full force and effect;
G. All Federal and other tax returns and reports of LifeSpan Income
Fund required by law to be filed have been filed, and all Federal and other
taxes shown due on said returns and reports have been paid or provision shall
have been made for the payment thereof and to the best of the knowledge of
LifeSpan Income Fund no such return is currently under audit and no assessment
has been asserted with respect to such returns and to the extent such tax
returns with respect to the taxable year of LifeSpan Income Fund ended October
31, 1997 have not been filed, such returns will be filed when required and the
amount of tax shown as due thereon shall be paid when due; and
H. LifeSpan Income Fund has elected to be treated as a regulated
investment company and, for each fiscal year of its operations, LifeSpan Income
Fund has met the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company and LifeSpan Income Fund intends to
meet such requirements with respect to its current taxable year.
13. The Trust on behalf of Bond Fund hereby represents and warrants that:
A. The financial statements of Bond Fund as at December 31, 1997
(audited) heretofore furnished to LifeSpan Income Fund, present fairly the
financial position, results of operations, and changes in net assets of Bond
Fund, as of that date, in conformity with generally accepted accounting
principles applied on a basis consistent with the preceding year; and that from
__________, 199_ through the date hereof there have not been, and through the
Closing Date there will not be, any material adverse changes in the business or
financial condition of Bond Fund, it being understood that a decrease in the
size of Bond Fund due to a diminution in the value of its portfolio and/or
redemption of its shares shall not be considered a material or adverse change;
A-10
<PAGE>
B. The Prospectus contained in the Trust's
Registration Statement under the 1933 Act, is true, correct and
complete, conforms to the requirements of the 1933 Act and does
not
contain any untrue statement of a material fact or omit to
state a
material fact required to be stated therein or necessary to make
the statements therein not misleading. The Registration
Statement,
as amended, was, as of the date of the filing of the last Post-
Effective Amendment, true, correct and complete, conformed to
the
requirements of the 1933 Act and did not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements
therein not misleading;
C. Except for this Agreement, there is no material contingent
liability of Bond Fund and no material claim and no material legal,
administrative or other proceedings pending or, to the knowledge of Bond Fund,
threatened against Bond Fund, not reflected in such Prospectus;
D. Except for this Agreement, there are no material
contracts outstanding to which Bond Fund is a party other than
those ordinary in the conduct of its business;
E. Bond Fund is a series of the Trust which is a
Massachusetts business trust duly organized, validly existing
and
in good standing under the laws of the Commonwealth of Massachusetts; has all
necessary and material Federal and state authorizations to own all its
properties and assets and to carry on its business as now being conducted; the
shares of Bond Fund which it issues to LifeSpan Income Fund pursuant to the
Agreement will be duly authorized, validly issued, fully-paid and
non-assessable, except as otherwise set forth in Bond Fund's Registration
Statement; and will conform to the description thereof contained in Bond Fund's
Registration Statement, will be duly registered under the 1933 Act and in the
states where registration is required; and Bond Fund is duly registered under
the Act and such registration has not been revoked or rescinded and is in full
force and effect;
F. All Federal and other tax returns and reports of
Bond Fund required by law to be filed have been filed, and all
Federal and other taxes shown due on said returns and reports
have
been paid or provision shall have been made for the payment
thereof
and to the best of the knowledge of Bond Fund no such return is
currently under audit and no assessment has been asserted with
respect to such returns and to the extent such tax returns with
respect to the taxable year of Bond Fund ended December 31, 1997
have not been filed, such returns will be filed when required
and
the amount of tax shown as due thereon shall be paid when due;
G. Bond Fund has elected to be treated as a
regulated
investment company and, for each fiscal year of its operations,
A-11
<PAGE>
Bond Fund has met the requirements of Subchapter M of the Code for qualification
and treatment as a regulated investment company and Bond Fund intends to meet
such requirements with respect to its current taxable year;
H. Bond Fund has no plan or intention (i) to dispose of any of the
assets transferred by LifeSpan Income Fund, other than in the ordinary course of
business, or (ii) to redeem or reacquire any of the shares issued by it in the
reorganization other than pursuant to valid requests of shareholders; and
I. After consummation of the transactions
contemplated
by the Agreement, Bond Fund intends to operate its business in a
substantially unchanged manner.
14. Each party hereby represents to the other that no broker or finder has
been employed by it with respect to the Agreement or the transactions
contemplated hereby. Each party also represents and warrants to the other that
the information concerning it in the Proxy Statement and Prospectus will not as
of its date contain any untrue statement of a material fact or omit to state a
fact necessary to make the statements concerning it therein not misleading and
that the financial statements concerning it will present the information shown
fairly in accordance with generally accepted accounting principles applied on a
basis consistent with the preceding year. Each party also represents and
warrants to the other that the Agreement is valid, binding and enforceable in
accordance with its terms and that the execution, delivery and performance of
the Agreement will not result in any violation of, or be in conflict with, any
provision of any charter, by-laws, contract, agreement, judgment, decree or
order to which it is subject or to which it is a party. Bond Fund hereby
represents to and covenants with LifeSpan Income Fund that, if the
reorganization becomes effective, Bond Fund will treat each shareholder of
LifeSpan Income Fund who received any of Bond Fund's shares as a result of the
reorganization as having made the minimum initial purchase of shares of Bond
Fund received by such shareholder for the purpose of making additional
investments in shares of Bond Fund, regardless of the value of the shares of
Bond Fund received.
15. Bond Fund agrees that it will prepare and file a Registration Statement
on Form N-14 under the 1933 Act which shall contain a preliminary form of proxy
statement and prospectus contemplated by Rule 145 under the 1933 Act. The final
form of such proxy statement and prospectus is referred to in the Agreement as
the "Proxy Statement and Prospectus." Each party agrees that it will use its
best efforts to have such Registration Statement declared effective and to
supply such information concerning itself for inclusion in the Proxy Statement
and Prospectus as may be necessary or desirable in this connection. Oppenheimer
LifeSpan Income Fund covenants and agrees, as soon as practicable and, upon
A-12
<PAGE>
closing, to cause the cancellation of its outstanding shares.
16. The obligations of the parties under the Agreement shall be subject to
the right of either party to abandon and terminate the Agreement without
liability if the other party breaches any material provision of the Agreement or
if any material legal, administrative or other proceeding shall be instituted or
threatened between the date of the Agreement and the Closing Date (i) seeking to
restrain or otherwise prohibit the transactions contemplated hereby and/or (ii)
asserting a material liability of either party, which proceeding has not been
terminated or the threat thereof removed prior to the Closing Date.
17. The Agreement may be executed in several counterparts, each of which
shall be deemed an original, but all taken together shall constitute one
Agreement. The rights and obligations of each party pursuant to the Agreement
shall not be assignable.
18. All prior or contemporaneous agreements and representations are merged
into the Agreement, which constitutes the entire contract between the parties
hereto. No amendment or modification hereof shall be of any force and effect
unless in writing and signed by the parties and no party shall be deemed to have
waived any provision herein for its benefit unless it executes a written
acknowledgment of such waiver.
19. LifeSpan Income Fund understands that the obligations of Bond Fund
under the Agreement are not binding upon any Trustee or shareholder of Bond Fund
personally, but bind only Bond Fund and Bond Fund's property. LifeSpan Income
Fund represents that it has notice of the provisions of the Declaration of Trust
of the Trust disclaiming shareholder and trustee liability for acts or
obligations of Bond Fund.
IN WITNESS WHEREOF, each of the parties has caused the Agreement to be
executed and attested by its officers thereunto duly authorized on the date
first set forth above.
OPPENHEIMER INTEGRITY FUNDS
on behalf of
OPPENHEIMER BOND FUND
By:____________________________
Andrew J. Donohue, Secretary
A-13
<PAGE>
OPPENHEIMER SERIES FUND, INC.
on behalf of
OPPENHEIMER LIFESPAN INCOME FUND
By:_________________________________
Andrew J. Donohue, Secretary
B-1
<PAGE>
Exhibit B
Average Annual Total Returns
for the Periods Ended 12/31/97
1-year 3-year 5-year 10-year
Bond Fund Class A Shares(1) 4.90% 8.75% 6.40% -
LifeSpan Income Fund Class A Shares(1) 5.36% - - -
Bond Fund Class B Shares(2) 4.41% 8.87% - -
LifeSpan Income Fund Class B Shares(2) 5.98% - - -
Bond Fund Class C Shares(3) 8.39% - - -
LifeSpan Income Fund Class C Shares(3) 10.58% - - -
Total Returns include change in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
An explanation of the different performance calculations is in each Fund's
Prospectus.
(1) Class A returns include the current maximum initial sales charge of 5.75%
for LifeSpan Income Fund and the current maximum initial sales charge of 4.75%
for Bond Fund.
(2) Class B returns include the applicable contingent deferred sales charge of
5% (1-year) and 3% (3-year). Class B shares are subject to an annual 0.75%
asset-based sales charge.
(3) Class C returns reflect the 1% contingent deferred sales charge for the
1-year result. Class C shares are subject to an annual
0.75% asset-based sales charge.
B-1
<PAGE>
OPPENHEIMER BOND FUND
6803 South Tucson Way, Englewood, Colorado 80112
1-800-525-7048
PART B
STATEMENT OF ADDITIONAL INFORMATION
April 1, 1998
This Statement of Additional Information of Oppenheimer Bond Fund consists
of this cover page and the following documents:
1. Statement of Additional Information of Oppenheimer Bond Fund
dated April 30, 1997.
2. Prospectus of Oppenheimer LifeSpan Income Fund dated
February
19, 1998.
3. Statement of Additional Information of Oppenheimer LifeSpan Income Fund dated
February 19, 1998.
4. Oppenheimer Bond Fund's Annual Report as of December 31, 1997.
5. Oppenheimer LifeSpan Income Fund's Annual Report as of
October
31, 1997.
6. Pro Forma Financial Statements, including Pro Forma
Statement
of Investments of Oppenheimer LifeSpan Income Fund into
Oppenheimer
Bond Fund.
This Statement of Additional Information (the "Additional Statement") is
not a Prospectus. This Additional Statement should be read in conjunction with
the Proxy Statement and Prospectus of Oppenheimer Bond Fund dated April 1, 1998,
which may be obtained by written request to OppenheimerFunds Services, P.O. Box
5270, Denver, Colorado 80217, or by calling OppenheimerFunds Services at the
toll-free number shown above.
MERGE\305.#1
LifeSpan Income Fund
Proxy for Special Shareholders Meeting To Be Held June 9, 1998
Your shareholder vote is important!
Your prompt response can save your Fund the expense of another mailing.
Please mark your proxy on the reverse side, date and sign it, and return it
promptly in the accompanying envelope which requires no postage if mailed in the
United States.
Please detach at perforation before mailing.
- --------------------------------------------------------------------------------
LifeSpan Income Fund
Proxy For Special Shareholders Meeting to be held June 9, 1998
The undersigned shareholder of LifeSpan Income Fund, a series of Oppenheimer
Series Fund, Inc. (the "Fund"), does hereby appoint Robert J. Bishop, George C.
Bowen, Andrew J. Donohue and Scott T. Farrar, and each of them, as
attorneys-in-fact and proxies of the undersigned, with full power of
substitution, to attend the Special Meeting of the Shareholders of the Fund to
be held on June 9, 1998, at 6803 South Tucson Way, Englewood, Colorado 80112 at
10:00 A.M., Denver time, and at all adjournments thereof, and to vote the shares
held in the name of the undersigned on the record date for said meeting on the
Proposal specified on the reverse side. Said attorneys-in-fact shall vote in
accordance with their best judgment as to any other matter.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS WHO RECOMMENDS A VOTE FOR
THE PROPOSAL ON THE REVERSE SIDE. THE SHARES REPRESENTED HEREBY WILL BE VOTED AS
INDICATED ON THE REVERSE SIDE OR FOR IF NO CHOICE IS INDICATED.
(Over)
305
<PAGE>
LifeSpan Income Fund
Proxy for Special Shareholders Meeting To Be Held June 9, 1998
Your shareholder vote is important!
Your prompt response can save your Fund money. Please vote, sign and mail your
proxy ballot (this card) in the enclosed postage-paid envelope today, no matter
how many shares you own. A majority of the Fund's shares must be represented in
person or by proxy. Please vote your proxy so your Fund can avoid the expense of
another mailing.
Please detach at perforation before mailing.
- --------------------------------------------------------------------------------
1. The Proposal: To approve an Agreement and Plan of Reorganization between
Oppenheimer Series Fund, Inc. on behalf of the Fund and Oppenheimer Integrity
Funds on behalf of Oppenheimer Bond Fund ("Bond Fund"), and the transactions
contemplated thereby, including (a) the transfer of substantially all the assets
of the Fund in exchange for shares of Bond Fund, (b) the distribution of such
shares to the shareholders of the Fund in complete liquidation of the Fund, and
(c) the cancellation of the outstanding shares of the Fund.
o FOR o AGAINST o ABSTAIN
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR ON THIS PROXY. When signing as
custodian, attorney, executor, administrator, trustee, etc., please give your
full title as such. All joint owners should sign this proxy. If the account is
registered in the name of a corporation, partnership or other entity, a duly
authorized individual must sign on its behalf and give his or her title.
Dated: _________________________,
1998
(Month) (Day)
----------------------------------------
Signature(s)
----------------------------------------
Signature(s)
Please read both sides of this
ballot
(Over)
305
merge\305.bal
<PAGE>
OPPENHEIMER BOND FUND
6803 South Tucson Way, Englewood, Colorado 80112
1-800-525-7048
Statement of Additional Information dated April 30, 1997.
This Statement of Additional Information of Oppenheimer Bond Fund is not a
Prospectus. This document contains additional information about the Fund and
supplements information in the Prospectus dated April 30, 1997. It should be
read together with the Prospectus which may be obtained by writing to the Fund's
Transfer Agent, OppenheimerFunds Services, at P.O. Box 5270, Denver, Colorado
80217 or by calling the Transfer Agent at the toll-free number shown above.
Contents
Page
About the Fund
Investment Objective and Policies......................................2
Investment Policies and Strategies..................................2
Other Investment Techniques and Strategies..........................8
Other Investment Restrictions......................................19
How the Fund is Managed...............................................20
Organization and History..............................................20
Trustees and Officers of the Fund.....................................21
The Manager and Its Affiliates........................................26
Brokerage Policies of the Fund........................................28
Performance of the Fund...............................................29
Distribution and Service Plans........................................34
About Your Account
How to Buy Shares.....................................................36
How to Sell Shares....................................................44
How to Exchange Shares................................................47
Dividends, Capital Gains and Taxes....................................49
Additional Information About the Fund.................................51
Financial Information About the Fund
Independent Auditors' Report..........................................51
Financial Statements..................................................53
Appendix A: Corporate Industry Classification........................A-1
-1-
<PAGE>
ABOUT THE FUND
Investment Objective And Policies
Investment Policies and Strategies. The investment objectives and policies of
the Fund are discussed in the Prospectus. Set forth below is supplemental
information about those policies, and the types of securities in which the Fund
invests as well as the strategies the Fund may use to try to achieve its
objective. Certain capitalized terms used in this Statement of Additional
Information are defined in the Prospectus.
o Debt Securities. All debt securities are subject to two types of risk:
credit risk and interest rate risk (these are in addition to other investment
risks that may affect a particular security).
o Credit Risk. Credit risk relates to the ability of the issuer to meet
interest or principal payments or both as they become due. Generally, higher
yielding bonds are subject to credit risk to a greater extent than higher
quality bonds.
o Interest Rate Risk. Interest rate risk refers to the fluctuations in
value of fixed-income securities resulting solely from the inverse relationship
between price and yield of outstanding fixed-income securities. An increase in
interest rates will generally reduce the market value of fixed-income
investments, and a decline in interest rates will tend to increase their value.
In addition, debt securities with longer maturities, which tend to produce
higher yields, are subject to potentially greater capital appreciation and
depreciation than obligations with shorter maturities. Fluctuations in the
market value of fixed-income securities subsequent to their acquisition will not
affect the interest payable on those securities, and thus the cash income from
such securities, but will be reflected in the valuations of those securities
used to compute the Fund's net asset values.
o Commercial Paper. The Fund's commercial paper investments, in addition
to those described in the Prospectus, include the following:
Variable Amount Master Demand Notes. Master demand notes are corporate
obligations which permit the investment of fluctuating amounts by the Fund at
varying rates of interest pursuant to direct arrangements between the Fund, as
lender, and the borrower. They permit daily changes in the amounts borrowed. The
Fund has the right to increase the amount under the note at any time up to the
full amount provided by the note agreement, or to decrease the amount, and the
borrower may prepay up to the full amount of the note without penalty. These
notes may or may not be backed by bank letters of credit. Because these notes
are direct lending arrangements between the lender and borrower, it is not
generally contemplated that they will be traded. There is no secondary market
for these notes, although they are redeemable (and thus immediately repayable by
the borrower) at principal amount, plus accrued interest, at any time.
Accordingly, the Fund's right to redeem such notes is dependent upon the ability
of the borrower to pay principal and interest on demand. The Fund has no
limitations on the type of issuer from whom these notes will be purchased;
however, in connection with such purchases and on an ongoing basis, the Manager
will consider the earning power, cash flow and other liquidity ratios of the
issuer, and its ability to pay principal and interest on demand, including a
situation in which all holders of such notes made demand simultaneously.
Investments in master demand notes are subject to the limitation on investments
by the Fund in illiquid securities, described in the Prospectus.
-2-
<PAGE>
Floating Rate/Variable Rate Notes. Some of the notes the Fund may purchase
may have variable or floating interest rates. Variable rates are adjustable at
stated periodic intervals; floating rates are automatically adjusted according
to a specified market rate for such investments, such as the percentage of the
prime rate of a bank, or the 91-day U.S. Treasury Bill rate. Such obligations
may be secured by bank letters of credit or other credit support arrangements.
o Participation Interests. The Fund may invest in participation interests,
subject to the limitation, described in "Illiquid and Restricted Securities" in
the Prospectus on investments by the Fund in illiquid investments. Participation
interests provide the Fund an undivided interest in a loan made by the issuing
financial institution in the proportion that the Fund's participation interest
bears to the total principal amount of the loan. No more than 5% of the Fund's
net assets can be invested in participation interests of the same borrowers. The
issuing financial institution may have no obligation to the Fund other than to
pay the Fund the proportionate amount of the principal and interest payments it
receives. Participation interests are primarily dependent upon the
creditworthiness of the borrowing corporation, which is obligated to make
payments of principal and interest on the loan, and there is a risk that such
borrowers may have difficulty making payments. In the event the borrower fails
to pay scheduled interest or principal payments, the Fund could experience a
reduction in its income and might experience a decline in the value of that
participation interest and in the net asset value of its shares. In the event of
a failure by the financial institution to perform its obligation in connection
with the participation agreement, the Fund might incur certain costs and delays
in realizing payment or may suffer a loss of principal and/or interest.
o Bank Obligations and Instruments Secured Thereby. The bank obligations
the Fund may invest in include time deposits, certificates of deposit, and
bankers' acceptances if they are: (i) obligations of a domestic bank with total
assets of at least $1 billion or (ii) obligations of a foreign bank with total
assets of at least U.S. $1 billion. The Fund may also invest in instruments
secured by such obligations (e.g., debt which is guaranteed by the bank). For
purposes of this section, the term "bank" includes commercial banks, savings
banks, and savings and loan associations which may or may not be members of the
Federal Deposit Insurance Corporation.
Time deposits are non-negotiable deposits in a bank for a specified period
of time at a stated interest rate, whether or not subject to withdrawal
penalties. However, time deposits, other than those maturing in seven days or
less, that are subject to withdrawal penalties are subject to the limitation on
investments by the Fund in illiquid investments, set forth in the Prospectus
under "Illiquid and Restricted Securities."
Banker's acceptances are marketable short-term credit instruments used to
finance the import, export, transfer or storage of goods. They are deemed
"accepted" when a bank guarantees their payment at maturity.
|X| Securities of Foreign Governments and Companies. As stated in the
Prospectus, the Fund
may invest in debt obligations (which may be dominated in U.S. dollars or
non-U.S. currencies) issued or
guaranteed by foreign corporations, certain supranational entities (described
below) and foreign
governments or their agencies or instrumentalities.
The percentage of the Fund's assets that will be allocated to foreign
securities will vary from time to time depending on, among other things, the
relative yields of foreign and U.S. securities, the economies of foreign
countries, the condition of such countries' financial markets, the interest rate
climate of such
-3-
<PAGE>
countries and the relationship of such countries' currency to the U.S. dollar.
The Manager will consider an issuer's affiliation, if any, with a foreign
government as one of the factors in determining whether to purchase any
particular foreign security. These factors are judged on the basis of
fundamental economic criteria (e.g., relative inflation levels and trends,
growth rate forecasts, balance of payments status, and economic policies) as
well as technical and political data. The Fund's portfolio of foreign securities
may include those of a number of foreign countries or, depending upon market
conditions, those of a single country.
Investments in foreign securities offer potential benefits not available
from investments solely in securities of domestic issuers, by offering 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 bond or other markets that do not move in a manner parallel
to U.S. markets. From time to time, 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 reimposed.
Securities of foreign issuers that are represented by American depository
receipts, or that are only listed on a U.S. securities exchange, or are only
traded in the U.S. over-the-counter market are not considered "foreign
securities," because they are not subject to many of the special considerations
and risks (discussed below) that apply to foreign securities traded and held
abroad. If the Fund's securities are held abroad, the countries in which such
securities may be held and the sub-custodians holding must be approved by the
Fund's Board of Trustees if required under applicable SEC rules.
The obligations of foreign governmental entities may or may not be
supported by the full faith and credit of a foreign government. Obligations of
"supranational entities" include those of international organizations designated
or supported by governmental entities to promote economic reconstruction or
development and of international banking institutions and related government
agencies. Examples include the International Bank for Reconstruction and
Development (the "World Bank"), the European Coal and Steel Community, the Asian
Development Bank and the Inter-American Development Bank. The governmental
members, or "stockholders," of these entities usually make initial capital
contributions to the supranational entity and in many cases are committed to
make additional capital contributions if the supranational entity is unable to
repay its borrowings. Each supranational entity's lending activities are limited
to a percentage of its total capital (including "callable capital" contributed
by members at the entity's call), reserves and net income. There is no assurance
that foreign governments will be able or willing to honor their commitments.
Investing in foreign securities involves considerations and possible risks
not typically associated with investing in securities in the U.S. The values of
foreign securities will be affected by changes in currency rates or exchange
control regulations or currency blockage, application of foreign tax laws,
including withholding taxes, changes in governmental administration or economic
or monetary policy (in the U.S. or abroad) or changed circumstances in dealings
between nations. There may be a lack of public information about foreign
issuers. Foreign countries may not have financial reporting, accounting and
auditing standards comparable to those that apply to U.S. issuers. Costs will be
incurred in connection with conversions between various currencies. Foreign
brokerage commissions are generally higher than commissions in the U.S., and
foreign securities markets may be less liquid, more volatile and less subject to
governmental regulation than in the U.S. They may have increased delays in
settling portfolio transactions. Investments in foreign countries could be
affected by other factors not generally thought to
-4-
<PAGE>
be present in the U.S., including expropriation or nationalization, confiscatory
taxation and potential difficulties in enforcing contractual obligations, and
could be subject to extended settlement periods.
Because the Fund may purchase securities denominated in foreign
currencies, a change in the value of any such currency against the U.S. dollar
will result in a change in the U.S. dollar value of the Fund's assets and its
income available for distribution. In addition, although a portion of the Fund's
investment income may be received or realized in foreign currencies, the Fund
will be required to compute and distribute its income in U.S. dollars, and
absorb the cost of currency fluctuations. The Fund may engage in foreign
currency exchange transactions for hedging purposes to protect against changes
in future exchange rates. See "Other Investment Techniques and Strategies
Hedging," below.
The values of foreign investments and the investment income derived from
them may also be affected unfavorably by changes in currency exchange control
regulations. Although the Fund will invest only in securities denominated in
foreign currencies that at the time of investment do not have significant
government-imposed restrictions on conversion into U.S. dollars, there can be no
assurance against subsequent imposition of currency controls. In addition, the
values of foreign securities will fluctuate in response to a variety of factors,
including changes in U.S. and foreign interest rates.
o U.S. Government Securities. U.S. Government Securities are debt
obligations issued or
guaranteed by the U.S. Government or one of its agencies or
instrumentalities, and include "zero coupon"
Treasury securities and mortgage-backed securities and CMOs.
o Mortgage-Backed Securities. These securities represent participation
interests in pools of residential mortgage loans which are guaranteed by
agencies or instrumentalities of the U.S. Government. Such securities differ
from conventional debt securities which generally provide for periodic payment
of interest in fixed or determinable amounts (usually semi-annually) with
principal payments at maturity or specified call dates. Some mortgage-backed
securities in which the Fund may invest may be backed by the full faith and
credit of the U.S. Treasury (e.g., direct pass-through certificates of
Government National Mortgage Association); some are supported by the right of
the issuer to borrow from the U.S. Government (e.g., obligations of Federal Home
Loan Mortgage Corporation); and some are backed by only the credit of the issuer
itself. Those guarantees do not extend to the value of or yield of the
mortgage-backed securities themselves or to the net asset value of the Fund's
shares. Any of these government agencies may also issue collateralized
mortgage-backed obligations ("CMOs"), discussed below.
The yield on mortgage-backed securities is based on the average expected
life of the underlying pool of mortgage loans. The actual life of any particular
pool will be shortened by any unscheduled or early payments of principal and
interest. Principal prepayments generally result from the sale of the underlying
property or the refinancing or foreclosure of underlying mortgages. The
occurrence of prepayments is affected by a wide range of economic, demographic
and social factors and, accordingly, it is not possible to predict accurately
the average life of a particular pool. Yield on such pools is usually computed
by using the historical record of prepayments for that pool, or, in the case of
newly-issued mortgages, the prepayment history of similar pools. The actual
prepayment experience of a pool of mortgage loans may cause the yield realized
by the Fund to differ from the yield calculated on the basis of the expected
average life of the pool.
Prepayments tend to increase during periods of falling interest rates,
while during periods of rising interest rates prepayments will most likely
decline. When prevailing interest rates rise, the value of a pass-through
security may decrease as do the values of other debt securities, but, when
prevailing interest rates decline, the value of a pass-through security is not
likely to rise to the extent that the value of other debt securities rise,
because of the prepayment feature of pass-through securities. The Fund's
reinvestment of scheduled principal payments and unscheduled prepayments it
receives may occur at times when available investments offer higher or lower
rates than the original investment, thus affecting the yield of the Fund.
Monthly interest payments received by the Fund have a compounding effect which
may increase the yield to the Fund more than debt obligations that pay interest
semi-annually. Because of those factors, mortgage-backed securities may be less
effective than Treasury bonds of similar maturity at maintaining yields during
periods of declining interest rates. The Fund may purchase mortgage-backed
securities at par, at a premium or at a discount. Accelerated prepayments
adversely affect yields for pass-through securities purchased at a premium
(i.e., at a price in excess of their principal amount) and may involve
additional risk of loss of principal because the premium may not have been fully
amortized at the time the obligation is repaid. The opposite is true for
pass-through securities purchased at a discount.
The Fund may invest in "stripped" mortgage backed securities, in which the
principal and interest portions of the security are separated and sold. Stripped
mortgage-backed securities usually have at least two classes each of which
receives different proportions of interest and principal distributions on the
underlying pool of mortgage assets. One common variety of stripped
mortgage-backed security has one class that receives some of the interest and
most of the principal, while the other class receives most of the interest and
remainder of the principal. In some cases, one class will receive all of the
interest (the "interest-only" or "IO" class), while the other class will receive
all of the principal (the "principal-only" or "PO" class). Interest only
securities are extremely sensitive to interest rate changes, and prepayments of
principal on the underlying mortgage assets. An increase in principal payments
or prepayments will reduce the income available to the IO security. In other
types of CMOs, the underlying principal payments may apply to various classes in
a particular order, and therefore the value of certain classes or "tranches" of
such securities may be more volatile than the value of the pool as a whole, and
losses may be more severe than on other classes.
Mortgage-backed securities may be less effective than debt obligations of
similar maturity at maintaining yields during periods of declining interest
rates. As new types of mortgage-related securities are developed and offered to
investors, the Manager will, subject to the direction of the Board of Trustees
and consistent with the Fund's investment objective and policies, consider
making investments in such new types of mortgage-related securities.
o GNMA Certificates. Certificates of Government National Mortgage
Association ("GNMA") are mortgage-backed securities of GNMA that evidence an
undivided interest in a pool or pools of mortgages ("GNMA Certificates"). The
GNMA Certificates that the Fund may purchase are of the "modified pass-through"
type, which entitle the holder to receive timely payment of all interest and
principal payments due on the mortgage pool, net of fees paid to the "issuer"
and GNMA, regardless of whether the mortgagor actually makes the payments when
due.
The National Housing Act authorizes GNMA to guarantee the timely payment
of principal and interest on securities backed by a pool of mortgages insured by
the Federal Housing Administration ("FHA") or guaranteed by the Veterans
Administration ("VA"). The GNMA guarantee is backed by the full faith and credit
of the U.S. Government. GNMA is also empowered to borrow without limitation from
the U.S. Treasury if necessary to make any payments required under its
guarantee.
-5-
<PAGE>
The average life of a GNMA Certificate is likely to be substantially
shorter than the original maturity of the mortgages underlying the securities.
Prepayments of principal by mortgagors and mortgage foreclosures will usually
result in the return of the greater part of principal investment long before the
maturity of the mortgages in the pool. Foreclosures impose no risk to principal
investment because of the GNMA guarantee, except to the extent that the Fund has
purchased the certificates at a premium in the secondary market.
o FNMA Securities. The Federal National Mortgage Association ("FNMA") was
established to create a secondary market in mortgages insured by the FHA. FNMA
issues guaranteed mortgage pass-through certificates ("FNMA Certificates"). FNMA
Certificates resemble GNMA Certificates in that each FNMA Certificate represents
a pro rata share of all interest and principal payments made and owed on the
underlying pool. FNMA guarantees timely payment of interest and principal on
FNMA Certificates. The FNMA guarantee is not backed by the full faith and credit
of the U.S. Government.
o FHLMC Securities. The Federal Home Loan Mortgage Corporation ("FHLMC")
was created to promote development of a nationwide secondary market for
conventional residential mortgages. FHLMC issues two types of mortgage
pass-through certificates ("FHLMC Certificates"): mortgage participation
certificates ("PCs") and guaranteed mortgage certificates ("GMCs"). PCs resemble
GNMA Certificates in that each PC represents a pro rata share of all interest
and principal payments made and owed on the underlying pool. FHLMC guarantees
timely monthly payment of interest on PCs and the ultimate payment of principal.
The FHLMC guarantee is not backed by the full faith and credit of the U.S.
Government.
GMCs also represent a pro rata interest in a pool of mortgages. However,
these instruments pay interest semi-annually and return principal once a year in
guaranteed minimum payments. The expected average life of these securities is
approximately ten years. The FHLMC guarantee is not backed by the full faith and
credit of the U.S. Government.
o Collateralized Mortgage-Backed Obligations ("CMOs"). CMOs are
fully-collateralized bonds that are the general obligations of the issuer
thereof, either the U.S. Government, a U.S. government instrumentality, or a
private issuer, which may be a domestic or foreign corporation. Such bonds
generally are secured by an assignment to a trustee (under the indenture
pursuant to which the bonds are issued) of collateral consisting of a pool of
mortgages. Payments with respect to the underlying mortgages generally are made
to the trustee under the indenture. Payments of principal and interest on the
underlying mortgages are not passed through to the holders of the CMOs as such
(i.e., the character of payments of principal and interest is not passed
through, and therefore payments to holders of CMOs attributable to interest paid
and principal repaid on the underlying mortgages do not necessarily constitute
income and return of capital, respectively, to such holders), but such payments
are dedicated to payment of interest on and repayment of principal of the CMOs.
CMOs often are issued in two or more classes with different characteristics such
as varying maturities and stated rates of interest. Because interest and
principal payments on the underlying mortgages are not passed through to holders
of CMOs, CMOs of varying maturities may be secured by the same pool of
mortgages, the payments on which are used to pay interest on each class and to
retire successive maturities in sequence. Unlike other mortgage-backed
securities (discussed above), CMOs are designed to be retired as the underlying
mortgages are repaid. In the event of prepayment on such mortgages, the class of
CMO first to mature generally will be paid down. Therefore, although in most
cases the issuer of CMOs will not supply additional collateral in the event of
such prepayment, there will be sufficient collateral to secure CMOs that remain
outstanding.
-6-
<PAGE>
o Asset-Backed Securities. The value of an asset-backed security is
affected by changes in the market's perception of the asset backing the
security, the creditworthiness of the servicing agent for the loan pool, the
originator of the loans, or the financial institution providing any credit
enhancement, and is also affected if any credit enhancement has been exhausted.
The risks of investing in asset-backed securities are ultimately dependent upon
payment of consumer loans by the individual borrowers. As a purchaser of an
asset-backed security, the Fund would generally have no recourse to the entity
that originated the loans in the event of default by a borrower. The underlying
loans are subject to prepayments, which shorten the weighted average life of
asset-backed securities and may lower their return, in the same manner as
described above for the prepayments of a pool of mortgage loans underlying
mortgage-backed securities.
Other Investment Techniques And Strategies
o Hedging with Options and Futures Contracts. The Fund may employ one or
more types of 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, 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) purchase puts on
such Futures or securities, or (iii) write calls on securities held by it or on
Futures. When hedging to attempt to protect against the possibility that
portfolio securities are not fully included in a rise in value of the debt
securities market, the Fund may: (i) purchase Futures, or (ii) purchase calls on
such Futures or on securities. Covered calls and puts may also be written on
debt securities to attempt to increase the Fund's income. When hedging to
protect against declines in the dollar value of a foreign currency-denominated
security, the Fund may: (a) purchase puts on that foreign currency and on
foreign currency Futures, (b) write calls on that currency or on such Futures,
or (c) enter into Forward Contracts at a lower rate than the spot ("cash") rate.
The Fund's strategy of hedging with Futures and options on Futures will be
incidental to the Fund's activities in the underlying cash market. Additional
Information about the Hedging Instruments the Fund may use is provided below. At
present, the Fund does not intend to enter into Futures, Forward Contracts and
options on Futures if, after any such purchase, the sum of margin deposits on
Futures and premiums paid on Futures options exceeds 5% of the value of the
Fund's total assets. In the future, the Fund may employ Hedging Instruments and
strategies that are not presently contemplated but which may be developed, to
the extent such investment methods are consistent with the Fund's investment
objective, legally permissible and adequately disclosed.
o Writing Call Options. The Fund may write (i.e. sell) call options
("calls") on debt securities that are traded on U.S. and foreign securities
exchanges and over-the-counter markets, to enhance income through the receipt of
premiums from expired calls and any net profits from closing purchase
transactions. After any such sale up to 50% of the Fund's total assets may be
subject to calls. All such calls written by the Fund must be "covered" while the
call is outstanding (i.e. the Fund must own the securities subject to the call
or other securities acceptable for applicable escrow requirements). Calls on
Futures (discussed below) must be covered by deliverable securities or by liquid
assets segregated to satisfy the Futures contract. When the Fund writes a call
on a security it receives a premium and agrees to sell the callable investment
to a purchaser of a corresponding call on the same security during the call
period (usually not more than 9 months) at a fixed exercise price (which may
differ from the market price of the underlying security), regardless of market
price changes during the call period. The Fund has retained the risk of loss
should the price of the underlying security decline during the call period,
which may be offset to some extent by the premium.
-7-
<PAGE>
To terminate its obligation on a call it has written, the Fund may
purchase a corresponding call in a "closing purchase transaction." A profit or
loss will be realized, depending upon whether the net of the amount of the
option transaction costs and the premium received on the call written was more
or less than the price of the call subsequently purchased. A profit may also be
realized if the call lapses unexercised, because the Fund retains the underlying
investment and the premium received. Any such profits are considered short-term
capital gains for Federal income tax purposes, and when distributed by the Fund
are taxable as ordinary income. If the Fund could not effect a closing purchase
transaction due to lack of a market, it would have to hold the callable
investments until the call lapsed or was exercised.
The Fund may also write calls on Futures without owning a futures contract
or a deliverable bond, provided that at the time the call is written, the Fund
covers the call by segregating in escrow an equivalent dollar amount of 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 require the Fund to deliver a futures
contract; it would simply put the Fund in a short futures position, which is
permitted by the Fund's hedging policies.
o Writing Put Options. The Fund may write put options on debt securities
or Futures but only if such puts are covered by segregated liquid assets. The
Fund will not write puts if, as a result, more than 50% of the Fund's net assets
would be required to be segregated to cover such put obligations. In writing
puts, there is the risk that the Fund may be required to buy the underlying
security at a disadvantageous price. A put option on securities gives the
purchaser the right to sell, and the writer the obligation to buy, the
underlying investment at the exercise price during the option period. Writing a
put covered by segregated liquid assets equal to the exercise price of the put
has the same economic effect to the Fund as writing a covered call. The premium
the Fund receives from writing a put option represents a profit, as long as the
price of the underlying investment remains above the exercise price. However,
the Fund has also assumed the obligation during the option period to buy the
underlying investment from the buyer of the put at the exercise price, even
though the value of the investment may fall below the exercise price. If the put
lapses unexercised, the Fund (as the writer of the put) realizes a gain in the
amount of the premium. If the put is exercised, the Fund must fulfill its
obligation to purchase the underlying investment at the exercise price, which
will usually exceed the market value of the investment at that time. In that
case, the Fund may incur a loss, equal to the sum of the current market value of
the underlying investment and the premium received minus the sum of the exercise
price and any transaction costs incurred.
When writing put options on securities, to secure its obligation to pay
for the underlying security, the Fund will deposit in escrow liquid assets with
a value equal to or greater than the exercise price of the put option. The Fund
therefore forgoes the opportunity of investing the segregated assets or writing
calls against those assets. As long as the obligation of the Fund as the put
writer continues, it may be assigned an exercise notice by the broker-dealer
through whom such option was sold, requiring the Fund to take delivery of the
underlying security against payment of the exercise price. The Fund has no
control over when it may be required to purchase the underlying security, since
it may be assigned an exercise notice at any time prior to the termination of
its obligation as the writer of the put. This obligation terminates upon
expiration of the put, or such earlier time at which the Fund effects a closing
purchase transaction by purchasing a put of the same series as that previously
sold. Once the Fund has been assigned an exercise notice, it is thereafter not
allowed to effect a closing purchase transaction.
The Fund may effect a closing purchase transaction to realize a profit on
an outstanding put option it has written or to prevent an underlying security
from being put. Furthermore, effecting such a closing
-8-
<PAGE>
purchase transaction will permit the Fund to write another put option to the
extent that the exercise price thereof is secured by the deposited assets, or to
utilize the proceeds from the sale of such assets for other investments by the
Fund. The Fund will realize a profit or loss from a closing purchase transaction
if the cost of the transaction is less or more than the premium received from
writing the option. As above for writing covered calls, any and all such profits
described herein from writing puts are considered short-term gains for Federal
tax purposes, and when distributed by the Fund, are taxable as ordinary income.
The Trustees have adopted a non-fundamental policy that the Fund may only
purchase call options and put options with a value of up to 5% of its net
assets.
o Purchasing Puts and Calls. The Fund may purchase calls in order to
protect against the possibility that the Fund's portfolio will not fully
participate in an anticipated rise in value of the long-term debt securities
market. When the Fund purchases a call, it pays a premium (other than in a
closing purchase transaction) and, except as to calls on bond 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 put, it pays a premium and 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).
Purchasing either a put on Interest Rate Futures or on debt securities it
does not own permits the Fund either to resell the put or to 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. When the Fund purchases a put on an Interest
rate Future or debt security not held by it, the put protects the Fund to the
extent that the prices of the underlying Future or debt securities move in a
similar pattern of the debt securities in the Fund's portfolio.
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
-9-
<PAGE>
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.
o Options on Foreign Currencies. 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
quoted by major recognized dealers in such options, for the purpose of
protecting against declines in the dollar value of foreign securities and
against increases in the dollar cost of foreign securities to be acquired. If a
rise is anticipated 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.
o Futures. The Fund may buy and sell Futures. No price is paid or received
upon the purchase or sale of an Interest Rate Future or a foreign currency
exchange contract ("Forward Contract"), discussed below. An Interest Rate Future
obligates the seller to deliver and the purchaser to take a specific type of
debt security at a specific future date for a fixed price. That obligation may
be satisfied by actual delivery of the debt security or by entering into an
offsetting contract. A securities index assigns relative values to the
securities included in that index and is used as a basis for trading long-term
Financial Futures contracts. Financial Futures reflect the price movements of
securities included in the index. They differ from Interest Rate Futures in that
settlement is made in cash rather than by delivery of the underlying investment.
Upon entering into a Futures transaction, the Fund will be required to
deposit an initial margin payment in cash or U.S. Treasury bills with the
futures commission merchant (the "futures broker"). The initial margin will be
deposited with the Fund's Custodian in an account registered in the futures
broker's name; however the futures broker can gain access to that account only
under specified conditions. As the Future is marked to market to reflect changes
in its market value, subsequent margin payments, called variation margin, will
be made to or by the futures broker on a daily basis.
-10-
<PAGE>
At any time prior to the expiration of the Future, if the Fund elects to
close out its position by taking an opposite position, a final determination of
variation margin is made, additional cash is required to be paid by or released
to the Fund, and any loss or gain is realized for tax purposes. Although
Interest Rate Futures by their terms call for settlement by delivery or
acquisition of debt securities, in most cases the obligation is fulfilled by
entering into an offsetting position. All futures transactions are effected
through a clearinghouse associated with the exchange on which the contracts are
traded.
o 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.
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
enter into a "cross hedge," unless it is denominated in a currency or currencies
that the Manager believes will have price movements that tend to correlate
closely with the currency in which the investment being hedged is denominated.
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
-11-
<PAGE>
currency, or when the Fund anticipates receipt of dividend payments in a foreign
currency, the Fund may desire to "lock-in" the U.S. dollar price of the security
or the U.S. dollar equivalent of such payment by entering into a Forward
Contract, for a fixed amount of U.S. dollars per unit of foreign currency, for
the purchase or sale of the amount of foreign currency involved in the
underlying transaction ("transaction hedge"). The Fund will thereby be able to
protect itself against a possible loss resulting from an adverse change in the
relationship between the currency exchange rates during the period between the
date on which the security is purchased or sold, or on which the payment is
declared, and the date on which such payments are made or received.
The Fund may also use Forward Contracts to lock in the U.S. dollar value
of portfolio positions ("position hedge"). In a position hedge, for example,
when the Fund believes that foreign currency may suffer a substantial decline
against the U.S. dollar, it may enter into a forward sale contract to sell an
amount of that foreign currency approximating the value of some or all of the
Fund's portfolio securities denominated in such foreign currency, or when the
Fund believes that the U.S. dollar may suffer a substantial decline against a
foreign currency, it may enter into a forward purchase contract to buy that
foreign currency for a fixed dollar amount. In this situation the Fund may, in
the alternative, enter into a forward contract to sell a different foreign
currency for a fixed U.S. dollar amount where the Fund believes that the U.S.
dollar value of the currency to be sold pursuant to the forward contract will
fall whenever there is a decline in the U.S. dollar value of the currency in
which portfolio securities of the Fund are denominated ("cross hedge").
The Fund will identify to the Custodian liquid securities of any type
including equity and debt securities of any grade having a value equal to the
aggregate net amount of the Fund's exposure under forward contracts entered into
with respect to position hedges and cross hedges. If the value of such
securities 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 obligations with respect to such contracts. As an alternative, the Fund
may purchase a call option permitting the Fund to purchase the amount of foreign
currency being hedged by a forward sale contract at a price no higher than the
forward contract price, or the Fund may purchase a put option permitting the
Fund to sell the amount of foreign currency subject to a forward purchase
contract at a price as high or higher than the forward contract price.
Unanticipated changes in currency prices may result in poorer overall
performance for the Fund than if it had not entered into such contracts.
The precise matching of the Forward Contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of these securities between the date the Forward Contract
is entered into and the date it is sold. Accordingly, it may be necessary for
the Fund to purchase additional foreign currency on the spot (i.e., cash) market
(and bear the expense of such purchase), if the market value of the security is
less than the amount of foreign currency the Fund is obligated to deliver and if
a decision is made to sell the security and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some of the
foreign currency received upon the sale of the portfolio security if its market
value exceeds the amount of foreign currency the Fund is obligated to deliver.
The projection of short-term currency market movements is extremely difficult,
and the successful execution of a short-term hedging strategy is highly
uncertain. Forward Contracts involve the risk that anticipated currency
movements will not be accurately predicted, causing the Fund to sustain losses
on these contracts and transactions costs.
-12-
<PAGE>
At or before the maturity of a Forward Contract requiring the Fund to sell
a currency, the Fund may either sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly, the Fund may
close out a Forward Contract requiring it to purchase a specified currency by
entering into a second contract entitling it to sell the same amount of the same
currency on the maturity date of the first contract. The Fund would realize a
gain or loss as a result of entering into such an offsetting Forward Contract
under either circumstance to the extent the exchange rate or rates between the
currencies involved moved between the execution dates of the first contract and
offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with factors
such as the currencies involved, the length of the contract period and the
market conditions then prevailing. Because Forward Contracts are usually entered
into on a principal basis, no fees or commissions are involved. Because such
contracts are not traded on an exchange, the Fund must evaluate the credit and
performance risk of each particular counterparty under a Forward Contract.
Although the Fund values its assets daily in terms of U.S. dollars, it
does not intend to
convert its holdings of foreign currencies into U.S. dollars on a daily basis.
The Fund may convert foreign currency from time to time, and investors should be
aware of the costs of currency conversion. Foreign exchange dealers do not
charge a fee for conversion, but they do seek to realize a profit based on the
difference between the prices at which they buy and sell various currencies.
Thus, a dealer may offer to sell a foreign currency to the Fund at one rate,
while offering a lesser rate of exchange should the Fund desire to resell that
currency to the dealer.
o Interest Rate Swap Transactions. Swap agreements entail both interest
rate risk and credit risk. There is a risk that, based on movements of interest
rates in the future, the payments made by the Fund under a swap agreement will
have been greater than those received by it. Credit risk arises from the
possibility that the counterparty will default. If the counterparty to an
interest rate swap defaults, the Fund's loss will consist of the net amount of
contractual interest payments that the Fund has not yet received. The Manager
will monitor the creditworthiness of counterparties to the Fund's interest rate
swap transactions on an ongoing basis. The Fund will enter into swap
transactions with appropriate counterparties pursuant to master netting
agreements.
A master netting agreement provides that all swaps done between the Fund
and that counterparty under that master agreement shall be regarded as parts of
an integral agreement. If on any date amounts are payable in the same currency
in respect of one or more swap transactions, the net amount payable on that date
in that currency shall be paid. In addition, the master netting agreement may
provide that if one party defaults generally or on one swap, the counterparty
may terminate the swaps with that party. Under such agreements, if there is a
default resulting in a loss to one party, the measure of that party's damages is
calculated by reference to the average cost of a replacement swap with respect
to each swap (i.e., the mark-to-market value at the time of the termination of
each swap). The gains and losses on all swaps are then netted, and the result is
the counterparty's gain or loss on termination. The termination of all swaps and
the netting of gains and losses on termination is generally referred to as
"aggregation".
o Additional Information About Hedging Instruments and Their Use. The
Fund's Custodian, or
a securities depository acting for the Custodian, will act as the Fund's
escrow agent, through the facilities
-13-
<PAGE>
of the Options Clearing Corporation ("OCC"), as to the investments on which the
Fund has written options traded on exchanges or as to other acceptable escrow
securities, so that no margin will be required for such transactions. OCC will
release the securities on the expiration of the option or upon the Fund's
entering into a closing transaction. An option position may be closed out only
on a market which provides secondary trading for options of the same series, and
there is no assurance that a liquid secondary market will exist for any
particular option.
The Fund's option activities may affect its turnover rate and brokerage
commissions. The exercise by the Fund of puts on securities will cause the sale
of related investments, increasing portfolio turnover. Although such exercise is
within the Fund's control, holding a put might cause the Fund to sell the
related investments for reasons which would not exist in the absence of the put.
The Fund will pay a brokerage commission each time it buys a put or call, sells
a call, or buys or sells an underlying investment in connection with the
exercise of a put or call. Such commissions may be higher than those which would
apply to direct purchases or sales of such underlying investments. Premiums paid
for options are small in relation to the market value of the related
investments, and consequently, put 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.
When the Fund writes an over-the-counter ("OTC") option, it will enter
into an arrangement with a primary U.S. Government securities dealer, which
would establish a formula price at which the Fund would have the absolute right
to repurchase that OTC option. That formula price would generally be based on a
multiple of the premium received for the option, plus the amount by which the
option is exercisable below the market price of the underlying security (that
is, the extent to which the option is "in-the-money"). When the Fund writes an
OTC option, it will treat as illiquid (for purposes of the limit on its assets
that may be invested in illiquid securities, stated in the Prospectus) the
mark-to-market value of any OTC option held by it unless subject to a buy-back
agreement with the executing broker. The Securities and Exchange Commission
("SEC") is evaluating whether OTC options should be considered liquid
securities, and the procedure described above could be affected by the outcome
of that evaluation.
o Regulatory Aspects of Hedging Instruments. The Fund is required to
operate within certain guidelines and restrictions with respect to its use of
Futures and options on Futures established by the Commodity Futures Trading
Commission ("CFTC"). In particular the Fund is exempted from registration with
the CFTC as a "commodity pool operator" if the Fund complies with the
requirements of Rule 4.5 adopted by the CFTC. The Rule does not limit the
percentage of the Fund's assets that may be used for Futures margin and related
options premiums for a bona fide hedging position.
However, under the Rule
the Fund must limit its aggregate 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 Futures options positions solely for
"bona fide hedging purposes" within the meaning and intent of the applicable
provisions of the Commodity Exchange Act.
Transactions in options by the Fund are subject to limitations established
by each of the exchanges governing the maximum number of options which may be
written or held by a single investor or group of investors acting in concert,
regardless of whether the options were written or purchased on the same or
different exchanges or are held in one or more accounts or through one or more
exchanges or brokers. Thus, the number of options which the Fund may write or
hold may be affected by options written or held by other entities, including
other investment companies having the same or an affiliated investment adviser.
-14-
<PAGE>
Position limits also apply to Futures. An exchange may order the liquidation of
positions found to be in violation of those limits and may impose certain other
sanctions. Due to requirements under the Investment Company Act, when the Fund
purchases a Future, the Fund will maintain, in a segregated account or accounts
with its custodian bank, liquid securities of any type including equity and debt
securities of any grade in an amount equal to the market value of the securities
underlying such Future, less the margin deposit applicable to it.
o Tax Aspects of Covered Calls and Hedging Instruments. The Fund intends
to qualify as a "regulated investment company" under the Internal Revenue Code
(although it reserves the right not to qualify). That qualification enables the
Fund to "pass through" its income and realized capital gains to shareholders
without 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 Bond
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 mark-to-market treatment.
Certain Forward Contracts entered into by the Fund may result in
"straddles" for Federal income tax purposes. The straddle rules may affect the
character of gains (or losses) realized by the Fund on straddle positions.
Generally, a loss sustained on the disposition of a position making up a
straddle is allowed only to the extent such loss exceeds any unrecognized gain
in the offsetting positions making up the straddle. Disallowed loss is generally
allowed at the point where there is no unrecognized gain in the offsetting
positions making up the straddle, or the offsetting position is disposed of.
Under the Internal Revenue Code, gains or losses attributable to
fluctuations in exchange rates that occur between the time the Fund accrues
interest or other receivables or accrues expenses or other liabilities
denominated in a foreign currency and the time the Fund actually collects such
receivables or pays such liabilities generally are treated as ordinary income or
ordinary loss. Similarly, on disposition of debt securities denominated in a
foreign currency and on disposition of foreign currency forward contracts, gains
or losses attributable to fluctuations in the value of a foreign currency
between the date of acquisition of the security or contract and the date of
disposition also are treated as ordinary gain or loss. Currency gains
-15-
<PAGE>
and losses are offset against market gains and losses before determining a net
"Section 988" gain or loss under the Internal Revenue Code, which may increase
or decrease the amount of the Fund's investment company income available for
distribution to its shareholders.
o Possible Risk Factors in Hedging. In addition to the risks with respect
to options discussed in the Prospectus and above, there is a risk when hedging
by selling Futures to attempt to protect against decline in value of the Fund's
portfolio securities (due to an increase in interest rates) that the prices of
such Futures will correlate imperfectly with the behavior of the cash (i.e.,
market value) prices of the Fund's securities. The ordinary spreads between
prices in the cash and futures markets are subject to distortions due to
differences in the natures of those markets. First, all participants in the
futures markets are subject to margin deposit and maintenance requirements.
Rather than meeting additional margin deposit requirements, investors may close
out futures contracts through offsetting transactions which could distort the
normal relationship between the cash and futures markets. Second, the liquidity
of the futures markets depend on participants entering into offsetting
transactions rather than making or taking delivery. To the extent participants
decide to make or take delivery, liquidity in the futures markets could be
reduced, thus producing distortion. Third, from the point of view of
speculators, the deposit requirements in the futures markets are less onerous
than margin requirements in the securities markets. Therefore, increased
participation by speculators in the futures markets may cause temporary price
distortions.
o Repurchase Agreements. In a repurchase transaction, the Fund acquires a
security from, and simultaneously resells it to, an approved vendor (a U.S.
commercial bank, the U.S. branch of a foreign bank or a broker-dealer which has
been designated a primary dealer in government securities, which must meet the
credit requirements set by the Trust's Board of Trustees from time to time), for
delivery on an agreed upon future date. The resale price exceeds the purchase
price by an amount that reflects an agreed-upon interest rate effective for the
period during which the repurchase agreement is in effect. The majority of these
transactions run from day to day, and delivery pursuant to 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 collateral's value must equal
or exceed the repurchase price to fully collateralize the repayment obligation.
Additionally, the Manager will impose creditworthiness requirements to confirm
that the vendor is financially sound and will continuously monitor the
collateral's value.
o Illiquid and Restricted Securities. To enable the Fund to sell
restricted securities not registered under the Securities Act of 1933, the Fund
may have to cause those securities to be registered. The expenses of
registration of restricted securities may be negotiated by the Fund with the
issuer at the time such securities are purchased by the Fund, if such
registration is required before such securities may be sold publicly. When
registration must be arranged because the Fund wishes to sell the security, a
considerable period may elapse between the time the decision is made to sell the
securities and the time the Fund would be permitted to sell them. The Fund would
bear the risks of any downward price fluctuation during that period. The Fund
may also acquire, through private placements, securities having contractual
restrictions on their resale, which might limit the Fund's ability to dispose of
such securities and might lower the amount realizable upon the sale of such
securities.
The Fund has percentage limitations that apply to purchases of restricted
securities, as stated in the Prospectus. Those percentage restrictions do not
limit purchases of restricted securities that are eligible for sale to qualified
institutional purchasers pursuant to Rule 144A under the Securities Act of 1933,
-16-
<PAGE>
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.
o 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 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. Either type of interest may be shared with
the borrower. The Fund may also pay reasonable finder's, custodian and
administrative fees. In connection with securities lending, the Fund might
experience risks of delay in receiving additional collateral, or risks of delay
in recovery of securities, or loss of rights in the collateral should the
borrower fail financially. 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.
o 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
securities 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
-17-
<PAGE>
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.
Other Investment Restrictions
The Fund's most significant investment restrictions are set forth in the
Prospectus. There are additional investment restrictions that the Fund must
follow that are also fundamental policies. Fundamental policies and the Fund's
investment objective, cannot be changed without the vote of a "majority" of the
Fund's outstanding voting securities. Under the Investment Company Act, such a
"majority" vote is defined as the vote of the holders of the lesser of (i) 67%
or more of the shares present or represented by proxy at a shareholder meeting,
if the holders of more than 50% of the outstanding shares are present, or (ii)
more than 50% of the outstanding shares.
Under these additional restrictions, the Trust may not, on behalf of the
Fund do any of the following:
o The Fund may not act as an underwriter, except to the extent that, in
connection with the disposition of portfolio securities, the Fund may be
deemed an underwriter under applicable laws;
o The Fund may not invest in oil, gas or other mineral leases, rights,
royalty contracts or exploration or development programs, real estate or
real estate mortgage loans (this restriction does not prevent the Fund
from purchasing securities secured or issued by companies investing or
dealing in real estate and by companies that are not principally engaged
in the business of buying and selling such leases, rights, contracts or
programs);
o The Fund may not make loans other than by investing in obligations in
which the Fund may invest consistent with its investment objective and
policies and other than repurchase agreements and loans of portfolio
securities;
o The Fund may not pledge, mortgage or hypothecate its assets, except
that, to secure permitted borrowings, it may pledge securities having a
market value at the time of the pledge not exceeding
-18-
<PAGE>
15% of the cost of the Fund's total assets and except in connection with
permitted transactions in options, futures contracts and options on
futures contracts, and except for reverse repurchase agreements and
securities lending;
o The Fund may not purchase or retain securities of any issuer if, to the
knowledge of the Trust, more than 5% of such issuer's securities are
beneficially owned by officers and trustees of the Trust or officers and
directors of Massachusetts Mutual Life Insurance Company ("MassMutual")
who individually beneficially own more than 1/2 of 1% of the securities of
such issuer; and
o The Fund may not make loans to an officer, trustee or employee of the
Trust or to any officer, director or employee of MassMutual, or to
MassMutual.
In addition to the investment restrictions described above and those
contained in the Prospectus, the Trustees of the Trust have voluntarily adopted
certain policies and restrictions which are observed in the conduct of the
affairs of the Fund. These represent intentions of the Trustees based upon
current circumstances. They differ from fundamental investment policies in that
the following additional investment restrictions may be changed or amended by
action of the Trustees without requiring prior notice to or approval of
shareholders. In accordance with such nonfundamental policies and guidelines,
the Fund may not: (1) invest for the purpose of exercising control over, or
management of, any company; (2) purchase any security of a company which
(including any predecessor, controlling person, general partner and guarantor)
has a record of less than three years of continuous operations or relevant
business experience , if such purchase would cause more than 5% of the current
value of the Fund's assets to be invested in such companies; and (3) invest in
securities of other investment companies, except by purchase in the open market
where no commission or profit to a sponsor or dealer results from such purchase
other than the customary broker's commission, except when such purchase is part
of a plan of merger, consolidation, reorganization or acquisition.
For purposes of the Fund's policy not to concentrate investments as
described in the investment restrictions in the Prospectus, the Fund has adopted
the industry classifications set forth in Appendix A to this Statement of
Additional Information. This policy is not a fundamental policy.
How the Fund is Managed
Organization and History. The Fund is one of two series of Oppenheimer Integrity
Funds (the "Trust"). This Statement of Additional Information may be used with
the Fund's Prospectus only to offer shares of the Fund. The Trust was
established in 1982 as MassMutual Liquid Assets Trust and changed its name to
MassMutual Integrity Funds on April 15, 1988. The Fund was reorganized from a
closed-end investment company known as MassMutual Income Investors, Inc. into a
series of the Trust on April 15, 1988. On March 29, 1991, the Trust changed its
name from MassMutual Integrity Funds to Oppenheimer Integrity Funds and the Fund
changed its name from MassMutual Investment Grade Bond Fund to Oppenheimer
Investment Grade Bond Fund. On July 10, 1995, the Fund changed its name to
Oppenheimer Bond Fund.
Each share of the Fund represents an interest in the Fund proportionately
equal to the interest of each other share of the same class and entitle the
holder to one vote per share (and a fractional vote for a fractional share) on
matters submitted to their vote at shareholders' meetings. Shareholders of the
Fund and of the Trust's other series vote together in the aggregate on certain
matters at shareholders' meetings,
-19-
<PAGE>
such as the election of Trustees and ratification of appointment of auditors for
the Trust. Shareholders of a particular series or class vote separately on
proposals which affect that series or class, and shareholders of a series or
class which is not affected by that matter are not entitled to vote on the
proposal. For example, only shareholders of a series, such as the Fund, vote
exclusively on any material amendment to the investment advisory agreement with
respect to the series. Only shareholders of a class of a series vote on certain
amendments to the Distribution and/or Service Plans if the amendments affect
only that class.
The Trustees are authorized to create new series and classes of series.
The Trustees may reclassify
unissued shares of the Trust or its series or classes into additional series or
classes of shares. The Trustees may also divide or combine the shares of a class
into a greater or lesser number of shares without thereby changing the
proportionate beneficial interest of a shareholder in the Fund. Shares do not
have cumulative voting rights or preemptive or subscription rights. Shares may
be voted in person or by proxy.
As a Massachusetts business trust, the Trust is not required to hold, and
does not plan to hold, regular annual meetings of shareholders. The Trust 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
Trust, 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 at least 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 Trust valued at $25,000 or more or holding at
least 1% of the Trust'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 Trust's shareholder list
available to the applicants or mail their communication to all other
shareholders at the applicant's expense, or the Trustees may take such other
action as set forth under Section 16(c) of the Investment Company Act.
The Trust's Declaration of Trust contains an express disclaimer of
shareholder or Trustee liability for the Trust'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 Trust) to be held personally liable as a "partner"
under certain circumstances, the risk of a Trust 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 during the past five years are set forth below. All of the
Trustees are also Trustees, Directors or Managing General Partners of 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
-20-
<PAGE>
Equity Income Fund, Oppenheimer Integrity Funds, Oppenheimer International
Bond Fund, Oppenheimer
High Yield 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 Real
Asset Fund, Oppenheimer Variable Account Funds, Panorama Series Fund, Inc. and
The New York Tax-Exempt Income Fund, Inc., (the "Denver-based Oppenheimer
funds"), except for Mr. Fossel and Ms. Macaskill who are not Trustees or
Directors Oppenheimer Integrity Funds, Oppenheimer Strategic Income Fund,
Oppenheimer Variable Account Funds and Panorama Series Fund, Inc. Mr. Fossel
also is not a trustee of Centennial New York Tax Exempt Trust and he is not a
Managing General Partner of Centennial America Fund, L.P. Ms. Macaskill is
President and Mr. Swain is Chairman of the Denver-based Oppenheimer funds.
Messrs. Bishop, Bowen, Donohue, Farrar and Zack hold similar positions as
officers of all such funds. As of April 2, 1997, the Trustees and officers of
the Fund as a group owned less than 1% of the Fund's outstanding Class A shares,
none of the Fund's outstanding Class B shares and none of the Fund's outstanding
Class C shares. The foregoing statement does not reflect ownership of shares
held of record by an employee benefit plan for employees of the Manager (for
which plan one of the Trustees and officers listed below, Mr. Donohue, is a
trustee), other than the shares beneficially owned under that plan by the
officers of the Fund listed below.
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: 82
197 Desert Lakes Drive, Palm Springs, California 92264
Management Consultant.
Charles Conrad, Jr., Trustee; Age: 66
1501 Quail Street, Newport Beach, CA 92660
Chairman and CEO of Universal Space Lines, Inc. (a space services management
company); formerly
Vice President of McDonnell Douglas Space Systems Co. and associated with the
National Aeronautics
and Space Administration.
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 SSI, Chairman, Chief
Executive and Officer and director of SFSI, Vice President and director of OAC
and a director of OppenheimerFunds, Inc.
- --------
*A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
-21-
<PAGE>
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: 75
2552 East Alameda, Denver, Colorado 80209
Formerly the 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).
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: 63 6803
South Tucson Way, Englewood, Colorado 80112 Vice Chairman of the Manager;
formerly President and director of Centennial Asset Management Corporation, an
investment adviser subsidiary of the Manager ("Centennial") and Chairman of the
Board of SSI.
Bridget A. Macaskill, President; 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.
Andrew J. Donohue, Vice President and Secretary; Age: 46
Executive Vice President, General Counsel and a Director of the Manager, the
Distributor, HarbourView, SSI, SFSI, Oppenheimer Partnership Holdings, Inc. and
MultiSource Services, Inc. (a broker-dealer); President and a director of
Centennial; President and a director of Oppenheimer Real Asset Management, Inc.;
General Counsel of OAC; an officer of other Oppenheimer funds.
George C. Bowen, Vice President, Assistant Secretary and Treasurer; Age: 60 6803
Tucson Way, Englewood, Colorado 80112 Senior Vice President and Treasurer of the
Manager; Vice President and Treasurer of the Distributor and HarbourView; Senior
Vice President, Treasurer, Assistant Secretary and a director of Centennial;
President, Treasurer and a director of Centennial Capital Corporation; Senior
Vice President, Treasurer and Secretary of SSI; Vice President, Treasurer and
Secretary of SFSI; Treasurer of OAC; Treasurer of
- --------
*A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
-22-
<PAGE>
Oppenheimer Partnership Holdings, Inc.; Vice President and Treasurer of
Oppenheimer Real Asset Management, Inc.; Chief Executive Officer, Treasurer and
a director of MultiSource Services, Inc. (a broker-dealer); an officer of other
Oppenheimer funds.
David P. Negri, Vice President and Portfolio Manager; Age: 42
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager; an officer of other Oppenheimer funds.
David Rosenberg, Vice President and Portfolio Manager; Age 38 Two World Trade
Center, New York, New York 10048-0203 Vice President of the Manager; an officer
of other Oppenheimer funds; formerly Vice President and Senior Portfolio Manager
for Delaware Investment Advisors.
Robert G. Zack, Assistant Secretary; Age: 48
Two World Trade Center, New York, New York 10048-0203
Senior Vice President and Associate General Counsel of the Manager, Assistant
Secretary of SSI and SFSI;
an officer of other Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer; Age: 38
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting; an officer of other
Oppenheimer funds; formerly a Fund Controller of the Manager.
Scott Farrar, Assistant Treasurer; Age: 31
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting; an officer of other
Oppenheimer funds.
o Remuneration of Trustees. The officers of the Fund and certain Trustees of the
Fund (Mr. Swain) who is affiliated with the Manager receives no salary or fee
from the Fund. Mr. Fossel did not receive any salary or fees from the Fund prior
to January 1, 1997. The remaining Trustees of the Fund received the compensation
shown below. Mr. Freedman became a Trustee June 27, 1996 and received no
compensation from the Fund before that date. The compensation from the Fund was
paid during fiscal year ended December 31, 1996. The compensation from all of
the other Denver-based Oppenheimer funds includes the Fund and is compensation
received as a director, trustee, managing general partner or member of a
committee of the Board of those funds during the calendar year 1996.
Compensation is paid for services in the positions listed beneath their names:
-23-
<PAGE>
Total Compensation
Aggregate From All
Compensation Denver-based
Name and Position from Fund OppenheimerFunds1
Robert G. Avis $727 $58,003
Trustee
William A. Baker $1,000 $79,715
Audit and Review Committee
Chairman and Trustee
Charles Conrad, Jr. $937 $74,717
Audit and Review Committee
Member and Trustee
C. Howard Kast $930 $74,173
Risk Management
Oversight Committee Member
and Trustee
Raymond J. Kalinowski $930 $74,173
Oversight Committee Member
and Trustee
Robert M. Kirchner $937 $74,717
Audit and Review Committee
Member and Trustee
Ned M. Steel $728 $58,003
Trustee
Sam Freedman $370 $29,502
Trustee
- -------------
1For the 1996 calendar year.
o Major Shareholders. As of March 21, 1997, the only entities that owned
of record or were known by the Fund to own beneficially 5% or more of any class
of the Fund's outstanding shares was (i)Merrill Lynch Fenner & Smith, 4800 Deer
Lake Drive E FL3, Jacksonville, FL 32246-6484 who owned 245,242.000 Class B
shares (approximately 6.65% of the Fund's Class B shares then outstanding) (ii)
RPSS TR IRA FBO Shirley Einhorn, 10662 SW 79th Terrace, Miami, FL 33173-2912,
who owned 25,361.197 Class C shares (approximately 5.85% of the Fund's Class C
shares then outstanding); and (iii) Merrill Lynch Fenner & Smith, 4800 Deer Lake
Drive E FL3, Jacksonville, FL 32246-6484 who owned 63,598.000 Class C shares
(approximately 13.77% of the Fund's Class C shares then outstanding).
-24-
<PAGE>
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
("MassMutual"). OAC is also owned in part by certain of the Manager's
directors and officers, some of
whom also serve as officers of the Trust, and one of whom (Mr. James C.
Swain) serve as Trustees of the
Trust.
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.
o The Investment Advisory Agreement. Under the investment advisory
agreement dated July 10, 1995 between the Trust on behalf of the Fund and the
Manager, the Fund pays a management fee to the Manager at the annual rate of:
.75% of the first $200 million of average annual net assets; .72% of the next
$200 million; .69% of the next $200 million; .66% of the next $200 million; .60%
of the next $200 million; and .50% of average annual net assets in excess of $1
billion. Under the prior investment advisory agreement between the Trust on
behalf of the Fund and the Manager, the Fund paid a management fee to the
Manager at the annual rate of: .50% of the first $100 million of average annual
net assets; .45% of the next $200 million; .40% of the next $200 million; and
.35% of average annual net assets in excess of $500 million. The investment
advisory agreement, dated July 10, 1995, between the Trust on behalf of the Fund
and the Manager 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 Distributors 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.
The advisory agreement provides that in the absence of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
reckless disregard for its obligations and duties under the advisory agreement,
the Manager is not liable for any loss resulting from a good faith error or
omission on its part with respect to any of its duties thereunder. The advisory
agreement permits the Manager to act as investment adviser for any other person,
firm or corporation and to use the name "Oppenheimer" in connection with 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 advisory agreement is subject to annual approval by the
Board of Trustees, who may terminate the advisory agreement on sixty days'
notice approved by a majority of the Trustees.
The Investment Advisory Agreement contains no expense limitation. However,
because of state regulations limiting fund expenses that previously applied, the
Manager had voluntarily undertaken that the
-25-
<PAGE>
Fund's total expenses in any fiscal year (including the investment advisory fee
but exclusive of taxes, interest, brokerage commissions, distribution plan
payments and any extraordinary non-recurring expenses, including litigation)
would not exceed the most stringent state regulatory limitation applicable to
the Fund. Due to changes in federal securities laws, such state regulations no
longer apply and the Manager's undertaking is therefore inapplicable and has
been withdrawn. During the Fund's last fiscal year, the Fund's expenses did not
exceed the most stringent state regulatory limit and the voluntary undertaking
was not invoked.
Prior to July 10, 1995, MassMutual served as investment sub-adviser (the
"Sub-Adviser") to the Fund pursuant to a sub-advisory agreement between the
Manager and MassMutual
dated March 28, 1991.
Under the sub-advisory agreement, MassMutual was responsible for managing the
Fund's portfolio of securities and making investment decisions with respect to
the Fund's investments, subject to the Fund's investment objective, policies and
restrictions. The Sub-Adviser's fee was
paid by the Manager. The sub-
advisory agreement was subject to the same renewal, termination and standard of
care provisions as the investment advisory agreement. On July 10, 1995, the
Fund's shareholders approved a new investment advisory agreement with the
Manager, at the fee rate set forth in the Prospectus, under which the Manager
performs the investment decision-making functions previously performed by the
Sub-Adviser. The sub- advisory agreement terminated effective July 10, 1995
after shareholders approved the investment advisory agreement with the Manager.
For the fiscal years ended December 31, 1994, 1995 and 1996, the advisory
fees paid to the Manager were $522,205, $820,507 and $1,640,483, respectively,
of which $362,287 and $201,877, respectively, were paid by the Manager to the
Sub-Adviser for the fiscal years ended December 31, 1994 and December 31, 1995.
o The Distributor. Under the General Distributor's Agreement between the
Trust and the Distributor, 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 (other than those paid under the Class
A, Class B and Class C Distribution and Service Plans), including advertising
and the cost of printing and mailing prospectuses (other than those furnished to
existing shareholders), are borne by the Distributor. During the Fund's fiscal
years ended December 31, 1994, 1995 and 1996, the aggregate amount of sales
charges on sales of the Fund's Class A shares was $143,088, $166,065 and
$299,893, respectively, of which the Distributor and on an affiliate, MassMutual
Investor Services, Inc. ("MMLISI") retained in the aggregate $67,090, $59,442
and $117,612 in those respective years. For the fiscal year ended December 31,
1996, the Distributor paid $308,922 to broker-dealers on the sales of the Funds'
Class B shares, $18,267 of which went to MMLISI. In addition, the Distributor
collected $125,164 from contingent deferred sales charges assessed on Class B
shares. For the fiscal year ended December 31, 1996, the Distributor paid
$24,281 to broker-dealers on the sales of the Funds' Class C shares. In
addition, the Distributor collected $12,706 from contingent deferred sales
charges assessed on Class C shares. For additional information about
distribution of the Fund's shares, payment made by the Fund to the Distributor,
and expenses connected with such activities, refer to "Distribution and Service
Plans," below.
o The Transfer Agent. OppenheimerFunds Services, an operating division of the
Manager which is 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.
-26-
<PAGE>
Brokerage Policies Of The Fund
Brokerage Provisions of the Investment Advisory Agreements. One of the duties of
the Manager under the advisory agreement is to arrange the portfolio
transactions of the Fund. In doing so, the Manager is authorized by the advisory
agreement to employ broker-dealers ("brokers"), 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 or base its selection on
"posted" rates, 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
provisions of the advisory agreement and the interests and policies of the Fund
as established by the Trust's 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
and dealers which provide brokerage and/or research services for the Fund and/or
the other accounts over which it 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. Most
purchases made by the Fund are principal transactions at net prices, and the
Fund incurs little or no brokerage costs. During the fiscal year ended December
31, 1994, no brokerage commissions were paid by the Fund. Of that amount, during
the fiscal year ended December 31, 1995 and 1996, $3,742 and $13,094,
respectively in brokerage commissions were paid by the Fund for research
services.
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 upon recommendations from the Manager's portfolio managers. In certain
instances portfolio managers may directly place trades and allocate brokerage,
also subject to the provisions of the advisory agreement and the procedures and
rules described above. In either case, brokerage is allocated under the
supervision of the Manager's executive officers. Transactions in securities
other than those for which an exchange is the primary market are generally done
with principals or market makers. Brokerage commissions are paid primarily for
effecting transactions in listed securities or for certain fixed-income agency
trades in the secondary market, and are otherwise paid only if it appears likely
that a better price or execution can be obtained. When the Fund engages in an
option transaction, ordinarily the same broker will be used for the purchase or
sale of the option and any transaction in the securities to which the option
relates. When possible, concurrent orders to purchase or sell the same security
by more than one of the accounts managed by the Manager or its affiliates are
combined. The transactions effected pursuant to such combined orders are
averaged as to price and allocated in accordance with the purchase or sale
orders actually placed for each account.
Most purchases of money market instruments and debt obligations are
principal transactions at net prices. Instead of using a broker for those
transactions, the Fund normally deals directly with the selling or purchasing
principal or market maker unless it determines that a better price or execution
can be obtained by using a broker. Purchases of these securities from
underwriters include a commission or concession paid by the issuer to the
underwriter. Most purchases from dealers include a spread between
-27-
<PAGE>
the bid and asked prices. The Fund seeks to obtain prompt execution of these
orders at the most favorable
net price.
The research services provided by a particular broker may be useful only
to one or more of the advisory accounts of the Manager and its affiliates, and
investment research received for the commissions of those other accounts may be
useful both to the Fund and one or more of such other accounts. Such research,
which may be supplied by a third party at the instance of a broker, includes
information and analyses on particular companies and industries as well as
market or economic trends and portfolio strategy, receipt of market quotations
for portfolio evaluations, information systems, computer hardware and similar
products and services. If a research service also assists the Manager in a
non-research capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to the Manager in
the investment decision-making process may be paid in commission dollars. The
Board of Trustees has permitted the Manager to use concessions on fixed-price
offerings to obtain research, in the same manner as is permitted for agency
transactions. The Board has also permitted the Manager to use stated commissions
on secondary fixed-income agency trades to obtain research where the broker has
represented to Manager that (i) the trade is not from or for the broker's own
inventory, (ii) the trade was executed by the broker on an agency basis at the
stated commission, and (iii) the trade is not a riskless principal transaction.
The research services provided by brokers broadens 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 fiscal year ended December 31, 1996, total brokerage
commissions paid by the Fund (not including spreads or concessions on principal
transactions on a net trade basis) was $13,094. Of that amount, during the same
period, no brokerage commissions were paid to dealers for research services
(including special research, statistical information and execution).
Performance of the Fund
Yield and Total Return Information. As described in the Prospectus, from time to
time the "standardized yield," "dividend yield," "average annual total return",
"total return," "cumulative total return," "total return at net asset value" and
"cumulative total return at net asset value" of an investment in a class of
shares of the Fund may be advertised. An explanation of how yields and total
returns are calculated for each class and the components of those calculations
is set forth below.
The Fund's advertisement of its performance data must, under applicable
rules of the Securities and Exchange Commission, include the average annual
total returns for each 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
-28-
<PAGE>
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 on its shares. 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 a particular class.
o Standardized Yields.
o Yield. The Fund's "yield" (referred to as "standardized yield") for a
given 30-day period for a class of shares is calculated using the following
formula set forth in rules adopted by the Securities and Exchange Commission
that apply to all funds (other than money market funds) that quote yields:
Standardized ~ Yield ~ = ~ 2~ [~ (~ {a-b} over cd ~ +~ 1~ ) SUP 6~ -~ 1~ ]
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense
reimbursements).
c = the average daily number of shares of that class outstanding
during the 30-day period that were entitled to receive
dividends.
d = the maximum offering price per share of that class on the
last day of the period, adjusted for undistributed net
investment income.
The standardized yield of a class of shares for a 30-day period may differ
from its yield for any other period. The SEC formula assumes that the
standardized yield for a 30-day period occurs at a constant rate for a six-month
period and is annualized at the end of the six-month period. This standardized
yield is not based on actual distributions paid by the Fund to shareholders in
the 30-day period, but is a hypothetical yield based upon the net investment
income from the Fund's portfolio investments calculated for that period. The
standardized yield may differ from the "dividend yield" of that class, described
below. Additionally, because each class of shares is subject to different
expenses, it is likely that the standardized yields of the Fund's classes of
shares will differ. For the 30-day period ended December 31, 1996, the
standardized yields for the Fund's Class A, Class B and Class C shares were
6.61%, 6.19% and 6.19%, respectively.
o Dividend Yield and Distribution Return. From time to time the Fund may
quote a "dividend yield" or a "distribution return" for each class. Dividend
yield is based on the dividends paid on shares of a class from net investment
income during a stated period. Distribution return includes dividends derived
from net investment income and from realized capital gains declared during a
stated period. Under those calculations, the dividends and/or distributions for
that class declared during a stated period of one year or less (for example, 30
days) are added together, and the sum is divided by the maximum offering price
per share of that class) on the last day of the period. When the result is
annualized for a period of less than one year, the "dividend yield" is
calculated as follows:
-29-
<PAGE>
Dividend ~ Yield ~of~ the~ Class~ = ~ {Dividends~ of~ the~ Class} over {Max. ~
Offering ~ Price ~ of~ the~ Class~ (last ~ day ~ of ~ period)} ~ DIV ~ {Number ~
of ~ days~ (accrual ~ period)}~x~365
The maximum offering price for Class A shares includes the maximum
front-end sales charge. For Class B and Class C shares, the maximum offering
price is the net asset value per share, without considering the effect of
contingent deferred sales charges.
From time to time similar yield or distribution return calculations may
also be made using the Class A net asset value (instead of its maximum offering
price) at the end of the period. The dividend yields on Class A shares for
distribution made on December 29, 1996 covering the 31-day period ended December
31, 1996, were 7.16% and 7.51% when calculated at maximum offering price and at
net asset value, respectively. The dividend yield on Class B shares for the
30-day period ended December 31, 1996, was 6.76% when calculated at net asset
value. The dividend yield on Class C shares for the 30-day period ended December
31, 1996 was 6.76% when calculated at net asset value.
o Total Return Information.
o Average Annual Total Returns. The "average annual total return" of each
class is an average annual compounded rate of return for each year in a
specified number of years. It is the rate of return based on the change in value
of a hypothetical initial investment of $1,000 ("P" in the formula below) held
for a number of years ("n") to achieve an Ending Redeemable Value ("ERV") of
that investment, according to the following formula: LEFT ( {~ERV~} OVER P~
right) SUP {1/n}~-1~=~Average~Annual~Total~ Return
o Cumulative Total Returns. The cumulative "total return" calculation
measures the change in value of a hypothetical investment of $1,000 over an
entire period of years. Its calculation uses some of the same factors as average
annual total return, but it does not average the rate of return on an annual
basis. Cumulative total return is determined as follows: { ERV ~- ~ P } OVER P ~
= ~ Total ~ Return
In calculating total returns for Class A shares, the current maximum sales
charge of 4.75% (as a percentage of the offering price) is deducted from the
initial investment ("P") (unless the return is shown at net asset value, as
described below). For Class B shares, the payment of the applicable contingent
deferred sales charge (of 5.0% for the first year, 4.0% for the second year,
3.0% for the third and fourth years, 2.0% for the fifth year, 1.0% in the sixth
year and none thereafter), is applied, as described in the Prospectus. For Class
C shares, the payment of the 1% contingent deferred sales charge for shares
redeemed within 12 months of purchase is applied, as described in the
Prospectus. 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
for the one and five year periods ended December 31, 1996 were -0.12% and 5.75%,
respectively. The cumulative "total return" on Class A shares for the fiscal
period from April 15, 1988 (inception of the class) to December 31, 1996 was
90.53%. The "average annual total returns" on an investment in Class B shares
for the one year period ended December
-30-
<PAGE>
31, 1996 and for the fiscal period from May 1, 1993 (inception of the class),
through December 31, 1996 were -0.88% and 16.83%, respectively. The "average
annual total returns" on an investment in Class C shares for the fiscal period
from July 11, 1995 (inception of the class) through December 31, 1996 was 7.91%.
o Total Returns at Net Asset Value. From time to time the Fund may also
quote an "average annual total return at net asset value" or a cumulative "total
return at net asset value" for Class A, Class B and 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 returns at net asset value on the Fund's Class A shares for the
fiscal year ended December 31, 1996, and for the period from April 15, 1988 to
December 31, 1996 were 4.87% and 100.03%, respectively. The cumulative total
return at net asset value on the Fund's Class B shares for the fiscal year-ended
December 31, 1996 and for the period from May 1, 1993 through December 31, 1996
were 3.99% and 19.72%, respectively. The cumulative total return at net asset
value on the Fund's Class C shares for the fiscal year-ended December 31, 1996
and for the period from July 11, 1995 through December 31, 1996 the cumulative
total return on an investment in Class C shares of the Fund were 4.00% and
7.91%, respectively.
Total return information may be useful to investors in reviewing the
performance of the Fund's Class A, Class B and Class C shares. However, when
comparing total return of an investment in Class A, Class B or Class C shares of
the Fund, a number of factors should be considered before using such information
as a basis for comparison with other investments.
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's classes is
ranked against (i) all other funds, excluding money market funds, and (ii) all
other general bond funds. The Lipper performance rankings are based on total
return that includes the reinvestment of capital gains distributions and income
dividends but does not take sales charges or taxes into consideration.
For periods ending December 31, 1996 the Fund's performance may also be
compared to the performance of the Lipper General Bond Fund Index, which is a
net asset value weighted index of general bond funds compiled by Lipper. It is
calculated with adjustments for income dividends and capital gains distributions
as of the ex-dividend date.
From time to time, the Fund may include in its advertisements and sales
literature performance information about the Fund cited in other newspapers and
periodicals, such as The New York Times, which may include performance
quotations from other sources, including Lipper.
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 Morningstar 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 or Class's three, five and ten-year average annual total
returns (when available). Risk and return are combined to
-31-
<PAGE>
produce star rankings reflecting performance relative to the average fund in a
fund's category. Five stars is the "highest" ranking (top 10%), four stars is
"above average" (next 22.5%), three stars is "average" (next 35%), two stars is
"below average" (next 22.5%) and one star is "lowest" (bottom 10%). The current
ranking is a weighted average of the 3, 5 and 10 year rankings (if available).
Morningstar ranks the Class A, Class B and Class C shares of the Fund in
relation to other taxable bond funds. Rankings are subject to change.
The Fund may also compare its performance to that of other funds in its
Morningstar Category. In addition to its star ranking, Morningstar also
categorizes and compares a fund's 3-year performance based on Morningstar's
classification of the fund's investments and investment style, rather than how a
fund defines its investment objective. Morningstar's four broad categories
(domestic equity, international equity, municipal bond and taxable bond) are
each further subdivided into categories based on types of investments and
investment styles. Those comparisons by Morningstar are based on the same risk
and return measurements as its star rankings but do not consider the effect of
sales charges.
The total return on an investment in the Fund's Class A, Class B or Class
C shares may be compared with the performance for the same period of one or more
of the following indices: the Consumer Price Index, the Salomon Brothers World
Government Bond Fund Index, the Salomon Brothers High Grade Corporate Bond
Index, the Lehman Brothers Government/Corporate Bond Index, the Lehman Brothers
Aggregate Bond Index, and the J.P. Morgan Government Bond Index. The Consumer
Price Index is generally considered to be a measure of inflation. The Salomon
Brothers World Government Bond Index generally represents the performance of
government debt securities of various markets throughout the world, including
the United States. The Salomon Brothers High Grade Corporate Bond Index
generally represents the performance of high grade long-term corporate bonds,
and the Lehman Brothers Government/Corporate Bond Index generally represents the
performance of intermediate and long-term government and investment grade
corporate debt securities. The Lehman Brothers Aggregate Bond Index generally
represents the performance of the general fixed-rate investment grade debt
market. The J.P. Morgan Government Bond Index generally represents the
performance of government bonds issued by various countries including the United
States. Each index includes a factor for the reinvestment of interest 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
shares 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 OppenheimerFunds, other than performance rankings of the
OppenheimerFunds themselves. Those ratings or rankings of shareholder/investor
services by third parties may compare the OppenheimerFunds' services to those of
other mutual fund families selected by the rating or ranking services and may be
based upon the opinions
-32-
<PAGE>
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 under Rule 12b-1 of the
Investment Company Act, pursuant to which the Fund will make 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, 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 Plan for the
Class C shares, that vote was cast by the Manager as the sole initial holder of
Class C shares of the Fund).
In addition, under the Plans, the Manager and the Distributor, in their
sole discretion, from time to time may use their own resources (which, in the
case of the Manager, may include profits from the advisory fee it receives from
the Fund) to make payments to brokers, dealers or other financial institutions
(each is referred to as a "Recipient" under the Plans) for distribution and
administrative services they perform. 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.
None of the Plans may be amended to increase materially the amount of payments
to be made unless such amendment is approved by shareholders of the class
affected by the amendment. In addition, because Class B shares of the Fund
automatically convert into Class A shares after six years, the Fund is required
to obtain the approval of Class B as well as Class A shareholders for a proposed
amendment to the Class A Plan that would materially increase the amount to be
paid by Class A shareholders under the Class A Plan. Such approval must be by a
"majority" of the Class A and Class B shares (as defined in the Investment
Company Act), voting separately by class. All material amendments must be
approved by the Independent Trustees.
While the Plans are in effect, the Treasurer of the Trust shall provide
separate written reports to the Trust's Board of Trustees at least quarterly
stating generally the amounts of all payments made pursuant to each Plan and the
purpose for which the payments were made. The Class B and Class C reports also
include a description of the services rendered in connection with the
distribution of Class B and Class C shares. The Class A reports include the
identity of each Recipient that received any such payment. Those reports,
including the allocations on which they are based, 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 Trust who are not "interested persons" of
the Trust 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.
-33-
<PAGE>
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.
Initially, the Board of Trustees has set the fees at the maximum rate and set no
minimum amount.
For the fiscal year ended December 31, 1996, payments under the Class A
Plan totaled $439,791, all of which was paid by the Distributor to Recipients,
including $176,747 paid to MMLISI. Any unreimbursed expenses incurred by the
Distributor with respect to Class A shares for any fiscal year may not be
recovered in subsequent fiscal years. Payments received by the Distributor under
the Plan for Class A shares will not be used to pay any interest expense,
carrying charges, or other financial costs, or allocation of overhead by the
Distributor.
The Class B and Class C Plans allows the service fee payments to be paid
by the Distributor to Recipients in advance for the first year Class B and Class
C shares are outstanding, and thereafter on a quarterly basis, as described in
the Prospectus. The services rendered by Recipients in connection with personal
services and the maintenance of Class B and Class C shareholder accounts may
include but shall not be limited to, the following: answering routine inquiries
from the Recipient's customers concerning the Fund, assisting in the
establishment and maintenance of accounts or sub-accounts in the Fund and
processing share redemption transactions, making the Fund's investment plans and
dividend payment options available, and providing such other information and
services in connection with the rendering of personal services and/or the
maintenance of accounts, as the Distributor or the Fund may reasonably request.
The advance payment is based on the net asset value of the Class B and Class C
shares sold. An exchange of shares does not entitle the Recipient to an advance
service fee payment. In the event Class B or Class C shares are redeemed during
the first year that the shares are outstanding, the Recipient will be obligated
to repay a pro rata portion of the advance payment for those shares to the
Distributor. Service fee payments made under the Class B Plan during the fiscal
year ended December 31, 1996 totaled $380,746, of which $5,806 OFDI paid to an
affiliate, and $309,560 was retained by the Distributor. Service fee payments
made under the Class C Plan during fiscal year ended the December 31, 1996
totaled $34,043, of which $20,276 was retained by the Distributor.
Although the Class B and Class C Plans permit the Distributor to retain
both the asset-based sales charge and the service fee on Class B shares, or to
pay Recipients the service fee on a quarterly basis without payment in advance,
the Distributor 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 or Class C Plan by the Board. Initially, the Board has set no
minimum holding period. All payments under the Class B and Class C Plans are
subject to the limitations imposed by the Conduct Rules of the National
Association of Securities Dealers, Inc. on payments of asset-based sales charges
and service fees. The Distributor anticipates that it will take a number of
years for it to recoup (from the Fund's payments to the Distributor under the
Class B Plan and recoveries of the contingent deferred sales charge collected on
redeemed Class B shares) the Class B sales commissions paid to authorized
brokers or dealers.
Asset-based sales charge payments are designed to permit an investor to
purchase shares of the Fund without paying a front-end sales load and at the
same time permit the Distributor to compensate Recipients in connection with the
sale of Class B and Class C shares of the Fund. The Distributor retains the
asset-based sales charge on Class B shares. As to Class C shares, the
Distributor retains the asset-based sales charge during the first year shares
are outstanding, and pays the asset-based sales charge as an ongoing commission
to the dealer on Class C shares outstanding for a year or more. Under the Class
B and
-34-
<PAGE>
Class C Plans, the asset-based sales charge is paid to compensate the
Distributor for its services, described below, to the Fund.
The Class B and Class C Plans provide for the Distributor to be
compensated at a flat rate, whether the Distributor's distribution expenses are
more or less than the amounts paid by the Fund during that period. Such payments
are made in recognition that the Distributor (i) pays sales commissions to
authorized brokers and dealers at the time of sale and pays service fees as
described in the Prospectus, (ii) may finance such commissions and/or the
advance of the service fee payment to Recipients under those Plans, or may
provide such financing from its own resources or from an affiliate, (iii)
employs personnel to support distribution of shares, and (iv) may bear the costs
of sales literature, advertising and prospectuses (other than those furnished to
current shareholders) and state "blue sky" registration fees and certain other
distribution expenses.
Other distribution assistance rendered by the Distributor and Recipients
under the Class B and Class C Plans may include, but shall not be limited to,
the following: distributing sales literature and prospectuses other than those
furnished to current Class B or Class C shareholders, and providing such other
information and services in connection with the distribution of Class B or Class
C shares as the Distributor or the Fund may reasonably request. The Class B and
Class C Plans further provide that such other distribution assistance may
include distribution assistance and administrative support services rendered in
connection with Class B or Class C shares acquired (i) by purchase, (ii) in
exchange for shares of another investment company for which the Distributor
serves as distributor or sub-distributor, or (iii) pursuant to a plan of
reorganization to which the Fund is a party.
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 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 (i) any order for $500,000 or more of Class B shares or
(ii) any order for $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 Class B and Class C shares will be reduced
by additional expenses borne solely by that class, including the asset-based
sales charge to which Class B and Class C shares are subject.
The conversion of Class B shares to Class A shares after six years is
subject to the continuing availability of a private letter ruling from the
Internal Revenue Service, or an opinion of counsel or tax
-35-
<PAGE>
adviser, to the effect that the conversion of Class B shares does not constitute
a taxable event for the holder under Federal income tax law. If such a revenue
ruling or opinion is no longer available, the automatic conversion feature may
be suspended, in which event no further conversions of Class B shares would
occur while such suspension remained in effect. Although Class B shares could
then be exchanged for Class A shares on the basis of relative net asset value of
the two classes, without the imposition of a sales charge or fee, such exchange
could constitute a taxable event for the holder, and absent such exchange, Class
B shares might continue to be subject to the asset-based sales charge for longer
than six years.
The methodology for calculating the net asset value, dividends and
distributions of the Fund's Class A, Class B and Class C shares recognizes two
types of expenses. General expenses that do not pertain specifically to any
class are allocated pro rata to the shares of each class, based on the
percentage of the net assets of such class to the Fund's total assets, and then
equally to each outstanding share within a given class. Such general expenses
include (i) management fees, (ii) legal, bookkeeping and audit fees, (iii)
printing and mailing costs of shareholder reports, Prospectuses, Statements of
Additional Information and other materials for current shareholders, (iv) fees
to unaffiliated Trustees, (v) custodian expenses, (vi) share issuance costs,
(vii) organization and start-up costs, (viii) interest, taxes and brokerage
commissions, and (ix) non-recurring expenses, such as litigation costs. Other
expenses that are directly attributable to a class are allocated equally to each
outstanding share within that class. Such expenses include (i) Distribution and
Service Plan fees, (ii) incremental transfer and shareholder servicing agent
fees and expenses, (iii) registration fees and (iv) shareholder meeting
expenses, to the extent that such expenses pertain to a specific class rather
than to the Fund as a whole.
Determination of Net Asset Value Per Share. The net asset values per share of
Class A, Class B and Class C 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 value of the Fund's net assets attributable to
that class by the number of shares of that class that are outstanding. The
Exchange normally closes at 4:00 P.M., New York time, but may close earlier on
some days (for example, in case of weather emergencies or on days falling before
a holiday). The Exchange's most recent annual holiday schedule (which is subject
to change) states that it will close on New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. It may also close on other days. Trading may occur in debt
securities and in foreign securities when the Exchange is closed, including
weekends and holidays, or after the close of the Exchange on a regular business
day. The Fund may invest a substantial portion of its assets in foreign
securities primarily listed on foreign exchanges or in foreign over-the-counter
markets that may trade on Saturdays or customary U.S. business holidays on which
the Exchange is closed. Because the Fund's net asset value will not be
calculated on those days, the Fund's net asset value per share may be
significantly affected on such days when shareholders may not purchase or redeem
shares.
The Trust's Board of Trustees has established procedures for the valuation
of the Trust's securities generally as follows: (i) equity securities traded on
a U.S. securities exchange or on NASDAQ for which last sale information is
regularly reported are valued at the last reported sale price on their primary
exchange or NASDAQ that day (or, in the absence of sales that day, at values
based on the last sale prices of the preceding trading day or closing "bid"
prices that day); (ii) securities traded on a foreign securities exchange are
valued generally at the last sales price available to the pricing service
approved by the Trust'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
-36-
<PAGE>
basis of reasonable inquiry; (iii) long-term debt securities having a remaining
maturity in excess of 60 days are valued at the mean between the "bid" and "ask"
prices determined by a portfolio pricing service approved by the Trust'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 one year or less when issued, which have a
remaining maturity of 60 days or less are valued at the mean between the "bid"
and "ask" prices determined by a pricing service approved by the Trust'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 debt securities
that had a maturity of no more than 397 days when issued that have a remaining
maturity of 60 days or less are valued at cost, adjusted for amortization of
premiums and accretion of discounts; and (vi) securities (including restricted
securities) not having readily-available market quotations are valued at fair
value under the Board's procedures. If the Manager is unable to locate two
market makers willing to give quotes (see (ii), (iii) and (iv) above), the
security may be priced at the mean between the "bid" and "ask" prices provided
by a single active market maker (which in certain cases may be the "bid" price
if no "ask" price is available).
Trading in securities on European and Asian exchanges and over-the-counter
markets is normally completed before the close of the New York Stock Exchange.
Events affecting the values of foreign securities traded in securities markets
that occur between the time their prices are determined and the close of the
Exchange will not be reflected in the Fund's calculation of net asset value
unless the Board of Trustees, the Manager, and/or the Sub-Adviser, 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 in the London foreign exchange market
closing price that day, as provided by a reliable bank, dealer or pricing
service.
In the case of U.S. Government Securities, mortgage-backed securities,
foreign government securities and corporate bonds, when last sale information is
not generally available, such pricing procedures may include "matrix"
comparisons to the prices for comparable instruments on the basis of quality,
yield, maturity, and other special factors involved. the Manager and/or the
Sub-Advisor may use pricing services approved by the Board of Trustees to price
U.S. Government Securities or mortgage-backed securities for which the last sale
information is not generally available. The Manager and /or Sub- Advisor will
monitor the accuracy of such pricing services which may include comparing prices
used for portfolio evaluation to actual sales prices of selected securities.
Calls, puts and Futures held by the Fund are valued at the last sales
price on the principal exchange on which they are traded, or on NASDAQ, as
applicable, as determined by a pricing service approved by the Board of 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).
-37-
<PAGE>
AccountLink. When shares are purchased through AccountLink, each purchase must
be at least $25.00. Shares will be purchased on the regular business day the
Distributor is instructed to initiate the Automated Clearing House transfer to
buy shares. Dividends will begin to accrue on shares purchased by the proceeds
of ACH transfers on the business day the Fund receives Federal Funds for the
purchase through the ACH system before the close of The New York Stock Exchange.
The Exchange normally closes at 4:00 P.M., but may close earlier on certain
days. If Federal Funds are received on a business day after the close of the
Exchange, the shares will be purchased and dividends will begin to accrue on the
next regular business day. The proceeds of ACH transfers are normally received
by the Fund 3 days after the transfers are initiated. The Distributor and the
Fund are not responsible for any delays in purchasing shares resulting from
delays in ACH transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced sales charge
rate may be obtained for Class A shares under Right of Accumulation and Letters
of Intent because of the economies of sales efforts and expenses realized by the
Distributor, dealers and brokers making such sales. No sales charge is imposed
in certain circumstances described in the Prospectus because the Distributor or
dealer or broker incurs little or no selling expenses. The term "immediate
family" refers to one's spouse, children, grandchildren, grandparents, aunts,
uncles, nieces and nephews, parents, parents-in-law, sons- and daughters-in-law,
siblings, a sibling's spouse and a spouse's siblings.
o The Oppenheimer Funds. The Oppenheimer funds are those mutual funds for
which the Distributor acts as the distributor or the sub-distributor and include
the following:
Oppenheimer 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 Multiple Strategies Fund
Oppenheimer Total Return Fund, Inc. Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund Oppenheimer Champion Income Fund Oppenheimer Bond
Fund Oppenheimer U.S. Government Trust Oppenheimer Limited-Term Government Fund
Oppenheimer Global Fund Oppenheimer Global Emerging Growth Fund Oppenheimer
Global Growth & Income Fund Oppenheimer Gold & Special Minerals Fund Oppenheimer
Developing Markets Fund Oppenheimer Real Asset Fund Oppenheimer Strategic Income
Fund Oppenheimer Strategic Short-Term Income Fund Oppenheimer Strategic Income &
Growth Fund Oppenheimer International Bond Fund Oppenheimer International Growth
Fund Oppenheimer Enterprise Fund Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc. Oppenheimer Quest Opportunity Value Fund,
Inc. Oppenheimer Quest Growth & Income Value Fund
-38-
<PAGE>
Oppenheimer Quest Officers Value Fund Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Capital Value Fund, Inc.
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. Oppenheimer World Bond
Fund Oppenheimer Bond Fund for Growth Rochester Fund Municipals Limited Term New
York Municipal Fund* Oppenheimer Disciplined Value Fund Oppenheimer Disciplined
Allocation Fund Oppenheimer Life Span Balanced Fund Oppenheimer Life Span Growth
Fund Oppenheimer Life Span Income Fund
* Shares of the Fund are not presently exchangeable for shares of Limited
Term New York Municipal Fund
prior to May 1, 1997.
There is an initial sales charge on the purchase of Class A shares of each
of the OppenheimerFunds except Money Market Funds (under certain circumstances
described herein, redemption proceeds of Money Market Fund shares may be subject
to a contingent deferred sales charge).
o Letters of Intent. A Letter of Intent (referred to as a "Letter") is an
investor's statement in writing to the Distributor of the intention to purchase
Class A shares or Class A and Class B shares of the Fund (and other Oppenheimer
funds) during a 13-month period (the "Letter of Intent period"), which may, at
the investor's request, include purchases made up to 90 days prior to the date
of the Letter. The Letter states the investor's intention to make the aggregate
amount of purchases of shares which, when added to the investor's holdings of
shares of those funds, will equal or exceed the amount specified in the Letter.
Purchases made by reinvestment of dividends or distributions of capital gains
and purchases made at net asset value without sales charge do not count toward
satisfying the amount of the Letter. A Letter enables an investor to count the
Class A and Class B shares purchased under the Letter to obtain the reduced
sales charge rate on purchases of Class A shares of the Fund (and other
Oppenheimer funds) that applies under the Right of Accumulation to current
purchases of Class A shares. Each purchase of Class A shares under
-39-
<PAGE>
the Letter will be made at the public offering price (including the sales
charge) that applies to a single lump-sum purchase of shares in the amount
intended to be purchased under the Letter.
In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of Intent
period, when added to the value (at offering price) of the investor's holdings
of shares on the last day of that period, do not equal or exceed the intended
purchase amount, the investor agrees to pay the additional amount of sales
charge applicable to such purchases, as set forth in "Terms of Escrow," below
(as those terms may be amended from time to time). The investor agrees that
shares equal in value to 5% of the intended purchase amount will be held in
escrow by the Transfer Agent subject to the Terms of Escrow. Also, the investor
agrees to be bound by the terms of the Prospectus, this Statement of Additional
Information and the Application used for such Letter of Intent, and if such
terms are amended, as they may be from time to time by the Fund, that those
amendments will apply automatically to existing Letters of Intent.
For purchases of shares of the Fund and other Oppenheimer funds by
OppenheimerFunds prototype 401(k) plans under a Letter of Intent, the Transfer
Agent will not hold shares in escrow. If the intended purchase amount under the
Letter entered into by an OppenheimerFunds prototype 401(k) plan is not
purchased by the plan by the end of the Letter of Intent period, there will be
no adjustment of commissions paid to the broker-dealer or financial institution
of record for accounts held in the name of that plan.
If the total eligible purchases made during the Letter of Intent period do
not equal or exceed the intended purchase amount, the commissions previously
paid to the dealer of record for the account and the amount of sales charge
retained by the Distributor will be adjusted to the rates applicable to actual
purchases. If total eligible purchases during the Letter of Intent period exceed
the intended purchase amount and exceed the amount needed to qualify for the
next sales charge rate reduction set forth in the applicable prospectus, the
sales charges paid will be adjusted to the lower rate, but only if and when the
dealer returns to the Distributor the excess of the amount of commissions
allowed or paid to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the Distributor
will be used to purchase additional shares for the investor's account at the net
asset value per share in effect on the date of such purchase, promptly after the
Distributor's receipt thereof.
In determining the total amount of purchases made under a Letter, shares
redeemed by the investor prior to the termination of the Letter of Intent period
will be deducted. It is the responsibility of the dealer of record and/or the
investor to advise the Distributor about the Letter in placing any purchase
orders for the investor during the Letter of Intent period. All of such
purchases must be made through the Distributor.
o Terms of Escrow that Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if necessary) made
pursuant to a Letter, shares of the Fund equal in value up to 5% of the intended
purchase amount specified in the letter shall be held in escrow by the Transfer
Agent. For example, if the intended purchase amount specified under the Letter
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.
-40-
<PAGE>
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 of other Oppenheimer funds acquired subject to
a contingent deferred sales charge, and (c) Class A shares or Class B shares
acquired in exchange for either (i) Class A shares of one of the other
Oppenheimer funds that were acquired subject to a Class A initial or contingent
deferred sales charge or (ii) Class B shares of one of the other Oppenheimer
funds that were acquired subject to a contingent deferred sales charge.
6. Shares held in escrow hereunder will automatically be exchanged for
shares of another fund to which an exchange is requested, as described in the
section of the Prospectus entitled "How to Exchange Shares," and the escrow will
be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a bank account, a
check (minimum $25) for the initial purchase must accompany the application.
Shares purchased by Asset Builder Plan payments from bank accounts are subject
to the redemption restrictions for recent purchases described in "Shareholder
Account Rules and Policies," in the Prospectus. Asset Builder Plans also enable
shareholders of Oppenheimer Cash Reserves to use those accounts for monthly
automatic purchases of shares of up to four other Oppenheimer funds. If you make
payments from your bank account to purchase shares of the Fund, your bank
account will be automatically debited normally four to five business days prior
to the investment dates selected in the Account Application. Neither the
Distributor, the Transfer Agent nor the Fund shall be responsible or any delays
in purchasing shares resulting from delays in ACH transmission.
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.
-41-
<PAGE>
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.
Checkwriting. When a check is presented to the Bank for clearance, the Bank will
ask the Fund to redeem a sufficient number of full and fractional shares in the
shareholder's account to cover the amount of the check. This enables the
shareholder to continue receiving dividends on those shares until the check is
presented to the Fund. Checks may not be presented for payment at the offices of
the Bank or the Fund's Custodian. This limitation does not affect the use of
checks for the payment of bills or to obtain cash at other banks. The Fund
reserves the right to amend, suspend or discontinue offering checkwriting
privileges at any time without prior notice.
By choosing the Checkwriting privilege, whether you do so by signing the
Account Application or by completing a Checkwriting card, the individuals
signing (1) represent that they are either the registered owner(s) of the shares
of the Fund, or are an officer, general partner, trustee or other fiduciary or
agent, as applicable, duly authorized to act on behalf of such registered
owner(s); (2) authorize the Fund, its Transfer Agent and any bank through which
the Fund's drafts ("checks") are payable (the "Bank"), to pay all checks drawn
on the Fund account of such person(s) and to effect a redemption of sufficient
shares in that account to cover payment of such checks; (3) specifically
acknowledge(s) that if you choose to permit a single signature on checks drawn
against joint accounts, or accounts for corporations, partnerships, trusts or
other entities, the signature of any one signatory on a check will be sufficient
to authorize payment of that check and redemption from an account even if that
account is registered in the names of more than one person or even if more than
one authorized signature appears on the Checkwriting card on the Application, as
applicable; and (4) understand(s) that the Checkwriting privilege may be
terminated or amended at any time by the Fund and/or the Bank and neither shall
incur any liability for such amendment or termination or for effecting
redemptions to pay checks reasonably believed to be genuine, or for returning or
not paying checks which have not been accepted for any reason.
Retirement Plans. In describing certain types of employee benefit plans that may
purchase Class A shares without being subject to the Class A contingent deferred
sales charge, the term "employee benefit plan" means any plan or arrangement,
whether or not "qualified" under the Internal Revenue Code, including, medical
savings accounts, payroll deduction plans or similar plans in which Class A
shares are purchased by a fiduciary or other person for the account of
participants who are employees of a single employer or of affiliated employers,
if the Fund account is registered in the name of the fiduciary or other person
for the benefit of participants in the plan.
The term "group retirement plan" means any qualified or non-qualified
retirement plan (including 457 plan, SEPs, SARSEPs, 403(b) plans, and SIMPLE
plans) for employees of a corporation or a sole proprietorship, members and
employees of a partnership or association or other organized group of persons
(the members of which may include other groups), if the group has made special
arrangements with the Distributor and all members of the group participating in
the plan purchase Class A shares of the Fund through a single investment dealer,
broker or other financial institution designated by the group.
-42-
<PAGE>
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below
supplements the terms and conditions for redemptions set forth in the
Prospectus.
o 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 Trust may determine that it would be detrimental to the best
interests of the remaining shareholders of the Fund to make payment of a
redemption order wholly or partly in cash. In that case, the Fund may pay the
redemption proceeds in whole or in part by a distribution "in kind" of
securities from the portfolio of the Fund, in lieu of cash, in conformity with
applicable rules of the Securities and Exchange Commission. The Fund has elected
to be governed by Rule 18f-1 under the Investment Company Act, pursuant to which
the Fund is obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net assets of the Fund during any 90-day period for any
one shareholder. If shares are redeemed in kind, the redeeming shareholder might
incur brokerage or other costs in selling the securities for cash. The method of
valuing securities used to make redemptions in kind will be the same as the
method the Fund uses to value its portfolio securities described above under
"Determination of Net Asset Value Per Share" and that valuation will be made as
of the time the redemption price is determined.
o Involuntary Redemptions. The Trust'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 $1,000 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.
Reinvestment Privilege. Within six months of a redemption, a shareholder may
reinvest all or part of the redemption proceeds of (i) Class A shares that you
purchased subject to an initial sales charge, or the Class A contingent deferred
sales charge when you redeemed them or (ii) Class B shares that were subject to
the Class B contingent deferred sales charge when you redeemed them, without
sales charge. 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
such privilege at the time of reinvestment. This privilege is not available for
Class C shares. 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.
-43-
<PAGE>
Transfers of Shares. Shares are not subject to the payment of a contingent
deferred sales charge of any class at the time of transfer to the name of
another person or entity (whether the transfer occurs by absolute assignment,
gift or bequest, not involving, directly or indirectly, a public sale). The
transferred shares will remain subject to the contingent deferred sales charge,
calculated as if the transferee shareholder had acquired the transferred shares
in the same manner and at the same time as the transferring shareholder. If less
than all shares held in an account are transferred, and some but not all shares
in the account would be subject to a contingent deferred sales charge if
redeemed at the time of transfer, the priorities described in the Prospectus
under "How to Buy Shares" for the imposition of the Class A, 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 account in their own name) in
OppenheimerFunds-sponsored prototype pension, profit-sharing or 401(k) plans may
not directly redeem or exchange shares held for their account under those plans.
The employer or plan administrator must sign the request. Distributions from
pension and profit sharing plans are subject to special requirements under the
Internal Revenue Code and certain documents (available from the Transfer Agent)
must be completed before the distribution may be made. Distributions from
retirement plans are subject to withholding requirements under the Internal
Revenue Code, and IRS Form W-4P (available from the Transfer Agent) must be
submitted to the Transfer Agent with the distribution request, or the
distribution may be delayed. Unless the shareholder has provided the Transfer
Agent with a certified tax identification number, the Internal Revenue Code
requires that tax be withheld from any distribution even if the shareholder
elects not to have tax withheld. The Fund, the Manager, the Distributor, the
Trustee and the Transfer Agent assume no responsibility to determine whether a
distribution satisfies the conditions of applicable tax laws and will not be
responsible for any tax penalties assessed in connection with a distribution.
Special Arrangements for Repurchase of Shares from Dealers and Brokers. The
Distributor is the Fund's agent to repurchase its shares from authorized dealers
or brokers on behalf of their customers. The shareholder should contact the
broker or dealer to arrange their type of redemption. The repurchase price per
share will be the net asset value next computed after the Distributor receives
the order placed by the dealer or broker, except that if the Distributor
receives a repurchase order from a dealer or broker after the close of The New
York Stock Exchange on a regular business day, it will be processed at that
day's net asset value if the order was received by the dealer or broker from its
customers prior to the time the Exchange closes (normally, that is 4:00 P.M.,
but may be earlier on some days) and the order was transmitted to and received
by the Distributor prior to its close of business that day (normally 5:00 P.M.).
Ordinarily, for accounts redeemed by a broker-dealer under this procedure,
payment will be made within three business days after the shares have been
redeemed upon the Distributor's receipt of the required redemption documents in
proper form, with the signature(s) of the registered owners guaranteed on the
redemption document as described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of the Fund
valued at $5,000 or
more can authorize the Transfer Agent to redeem shares (minimum $50)
automatically on a monthly,
-44-
<PAGE>
quarterly, semi-annual or annual basis under an Automatic Withdrawal Plan.
Shares will be redeemed three business days prior to the date requested by the
shareholder for receipt of the payment. Automatic withdrawals of up to $1,500
per month may be requested by telephone if payments are to be made by check
payable to all shareholders of record and sent to the address of record for the
account (and if the address has not been changed within the prior 30 days).
Required minimum distributions from OppenheimerFunds-sponsored retirement plans
may not be arranged on this basis. Payments are normally made by check, but
shareholders having AccountLink privileges (see "How To Buy Shares") may arrange
to have Automatic Withdrawal Plan payments transferred to the bank account
designated on the OppenheimerFunds New Account Application or
signature-guaranteed instructions. Shares are normally redeemed pursuant to an
Automatic Withdrawal Plan three business days before the date you select in the
Account Application. If a contingent deferred sales charge applies to the
redemption, the amount of the check or payment will be reduced accordingly. The
Fund cannot guarantee receipt of 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 ad Class C Contingent Deferred Sales
Charge").
By requesting an Automatic Withdrawal or Exchange Plan, the shareholder
agrees to the terms and conditions applicable to such plans, as stated below as
well as the Prospectus. These provisions may be amended from time to time by the
Fund and/or the Distributor. When adopted, such amendments will automatically
apply to existing Plans.
o Automatic Exchange Plans. Shareholders can authorize the Transfer Agent
(on the OppenheimerFunds Application or signature-guaranteed instructions) to
exchange a pre-determined amount of shares of the Fund for shares (of the same
class) of other Oppenheimer funds automatically on a monthly, quarterly,
semi-annual or annual basis under an Automatic Exchange Plan. The minimum amount
that may be exchanged to each other fund account is $25. Exchanges made under
these plans are subject to the restrictions that apply to exchanges as set forth
in "How to Exchange Shares" in the Prospectus and below in this Statement of
Additional Information.
o Automatic Withdrawal Plans. Fund shares will be redeemed as necessary to
meet withdrawal payments. Shares acquired without a sales charge will be
redeemed first and thereafter shares acquired with reinvested dividends and
capital gains distributions will be redeemed next, followed by shares acquired
with a sales charge, to the extent necessary to make withdrawal payments.
Depending upon the amount withdrawn, the investor's principal may be depleted.
Payments made under withdrawal plans should not be considered as a yield or
income on your investment.
The Transfer Agent will administer the investor's Automatic Withdrawal
Plan (the "Plan") as agent for the investor (the "Planholder") who executed the
Plan authorization and application submitted to the Transfer Agent. The Transfer
Agent and the Fund shall incur no liability to the Planholder for any action
taken or omitted by the Transfer Agent 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.
-45-
<PAGE>
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 (the receipt of payment on the date selected cannot be guaranteed),
according to the choice specified in writing by the Planholder.
The amount and the interval of disbursement payments and the address to
which checks are to be mailed or AccountLink payments are to be sent may be
changed at any time by the Planholder by writing to the Transfer Agent. The
Planholder should allow at least two weeks' time in mailing such notification
for the requested change to be put in effect. The Planholder may, at any time,
instruct the Transfer Agent by written notice (in proper form in accordance with
the requirements of the then-current Prospectus of the Fund) to redeem all, or
any part of, the shares held under the Plan. In that case, the Transfer Agent
will redeem the number of shares requested at the net asset value per share in
effect in accordance with the Fund's usual redemption procedures and will mail a
check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by writing to the
Transfer Agent. A Plan may also be terminated at any time by the Transfer Agent
upon receiving directions to that effect from the Fund. The Transfer Agent will
also terminate a Plan upon receipt of evidence satisfactory to it of the death
or legal incapacity of the Planholder. Upon termination of a Plan by the
Transfer Agent or the Fund, shares that have not been redeemed from the account
will be held in uncertificated form in the name of the Planholder, and the
account will continue as a dividend-reinvestment, uncertificated account unless
and until proper instructions are received from the Planholder or his or her
executor or guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt, the Planholder
may request issuance of a portion of the shares in certificated form. Upon
written request from the Planholder, the Transfer Agent will determine the
number of shares for which a certificate may be issued without causing the
withdrawal checks to stop because of exhaustion of uncertificated shares needed
to continue payments. However, should such uncertificated shares become
exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the Fund, the
Planholder will be deemed to have appointed any successor transfer agent to act
as agent in administering the Plan.
How to Exchange Shares
As stated in the Prospectus, shares of a particular class of Oppenheimer
funds having more than one class of shares may be exchanged only for shares of
the same class of other Oppenheimer funds. Shares of the Oppenheimer funds that
have a single class without a class designation are deemed "Class
-46-
<PAGE>
A" shares for this purpose. All of the Oppenheimer funds offer Class A shares,
but certain other Oppenheimer funds do not.
All Oppenheimer funds offer Class A, Class B and Class 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.
For accounts established on or before March 8, 1996 holding Class M shares
of Oppenheimer Bond Fund for Growth, Class M shares can be exchanged only for
Class A shares of other Oppenheimer funds. Exchanges to Class M shares of
Oppenheimer Bond Fund for Growth are permitted for Class A shares of Oppenheimer
Money Market Fund, Inc. or Oppenheimer Cash Reserves that were acquired by
exchange from Class M shares. Otherwise no exchanges of any class of any
Oppenheimer fund into Class M shares are permitted.
Class A shares of Oppenheimer funds may be exchanged at net asset value
for shares of any Money Market Fund. Shares of any Money Market Fund purchased
without a sales charge may be exchanged for shares of Oppenheimer funds offered
with a sales charge upon payment of the sales charge (or, if applicable, may be
used to purchase shares of Oppenheimer funds subject to a contingent deferred
sales charge). However, shares of Oppenheimer Money Market Fund, Inc. purchased
with the redemption proceeds of shares of other mutual funds (other than funds
managed by the Manager or its subsidiaries) redeemed within the 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 OppenheimerFunds 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 OppenheimerFunds. 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 OppenheimerFunds
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 Class
-47-
<PAGE>
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, open an account in, and acknowledge receipt of a
prospectus for, 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 request 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
Dividends and Distributions. Dividends will be payable on shares held of record
at the time of the previous determination of net asset value, or as otherwise
described in "How to Buy Shares." Daily dividends on newly purchased shares will
not be declared or paid until such time as Federal Funds (funds credited to a
member bank's account at the Federal Reserve Bank) are available from the
purchase payment for such shares. Normally, purchase checks received from
investors are converted to Federal Funds on the next business day. Dividends
will be declared on shares repurchased by a dealer or broker for four
-48-
<PAGE>
business days following the trade date (i.e., to and including the day prior to
settlement of the repurchase). If all shares in an account are redeemed, all
dividends accrued on shares of the same class in the account will be paid
together with the redemption proceeds.
Dividends, distributions and the proceeds of the redemption of Fund shares
represented by checks returned to the Transfer Agent by the Postal Service as
undeliverable will be invested in shares of Oppenheimer Money Market Fund, Inc.,
as promptly as possible after the return of such checks to the Transfer Agent,
in order to enable the investor to earn a return on otherwise idle funds.
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 which 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 shares held for 45 days or less. To the extent
the Fund's dividends are derived from its gross income from option premiums,
interest income or short-term gains from the sale of securities, or dividends
from foreign corporations, its dividends will not qualify for the deduction. It
is expected that for the most part the Fund's dividends will not qualify,
because of the nature of the investments held by the Fund in its portfolio.
The amount of a class's distributions may vary from time to time depending
on market conditions, the composition of the Fund's portfolio, and expenses
borne by the Fund or borne separately by a class, as described in "Alternative
Sales Arrangements -- Class A, Class B and Class C," above. Dividends are
calculated in the same manner, at the same time and on the same day for shares
of each class. However, dividends on Class B and Class C shares are expected to
be lower as a result of the asset-based sales charge on Class B and Class C
shares, and Class B and Class C dividends will also differ in amount as a
consequence of any difference in net asset value between Class A, Class B and
Class C shares.
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 Trust's
Board and the Manager might determine in a particular year that it would be in
the best interest of shareholders for the Fund not to make such distributions at
the required levels and to pay the excise tax on the undistributed amounts. That
would reduce the amount of income or capital gains available for distribution to
shareholders.
Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect to
reinvest all dividends and/or capital gains distributions in shares of the same
class of any of the other Oppenheimer funds listed in "Reduced Sales Charges"
above at net asset value without sales charge. To elect this option, 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 OppenheimerFunds may be
invested in shares of this Fund on the same basis.
-49-
<PAGE>
Additional Information About The Fund
The Custodian. The Bank of New York is the Custodian of the Fund's assets. The
Custodian's responsibilities include safeguarding and controlling the Fund's
portfolio securities and handling the delivery of such securities to and from
the Fund. The Manager has represented to the Fund that the banking relationships
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 Fund's cash balances with the Custodian in
excess of $100,000 are not protected by Federal deposit insurance. Those
uninsured balances at times may be substantial.
Independent Auditors. The independent auditors of the Fund audit the Fund's
financial statements and perform other related audit services. They also act as
auditors for the Manager and certain other funds advised by the Manager and its
affiliates.
-50-
<PAGE>
Appendix A: Corporate Industry Classifications
Aerospace/Defense Air Transportation Auto Parts Distribution Automotive Bank
Holding Companies Banks Beverages Broadcasting Broker-Dealers Building Materials
Cable Television Chemicals Commercial Finance Computer Hardware Computer
Software Conglomerates Consumer Finance Containers Convenience Stores Department
Stores Diversified Financial Diversified Media Drug Stores Drug Wholesalers
Durable Household Goods Education Electric Utilities Electrical Equipment
Electronics Energy Services & Producers Entertainment/Film Environmental
Food
Gas Utilities
Gold
Health Care/Drugs Health Care/Supplies & Services Homebuilders/Real Estate
Hotel/Gaming Industrial Services Insurance Leasing & Factoring Leisure
Manufacturing Metals/Mining Nondurable Household Goods Oil - Integrated Paper
Publishing/Printing Railroads Restaurants Savings & Loans Shipping Special
Purpose Financial Specialty Retailing Steel Supermarkets Telecommunications
Technology Telephone - Utility Textile/Apparel Tobacco Toys Trucking
A-1
<PAGE>
Investment Adviser
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
Legal Counsel
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202-4918
A-2
<PAGE>
<PAGE>
OPPENHEIMER
LifeSpan Funds
Prospectus Dated February 19, 1998
The Oppenheimer LifeSpan Funds are three individual asset allocation mutual
funds having different objectives. Each Fund's assets are invested, in differing
proportions, in two broad asset classes -- stock and bonds -- with investments
in those classes allocated to a number of different types of securities, or
"components."
Oppenheimer LifeSpan Growth Fund seeks long-term capital appreciation. It
invests in a strategically allocated portfolio consisting primarily of stocks.
Current income is not a primary consideration.
Oppenheimer LifeSpan Balanced Fund seeks a blend of capital appreciation and
income. It invests in a strategically allocated portfolio of stocks and bonds
with a slightly stronger emphasis on stocks.
Oppenheimer LifeSpan Income Fund seeks high current income, with opportunities
for capital appreciation. It invests in a strategically allocated portfolio
consisting primarily of bond instruments.
Please refer to "Investment Policies and Strategies" for more information
about the types of securities each Fund invests in and to "Investment Risks" for
a discussion of the risks of investing in the Funds.
This Prospectus explains concisely what you should know before investing
in the Funds. Please read this Prospectus carefully and keep it for future
reference. You can find more detailed information about each Fund in the
February 19, 1998 Statement of Additional Information. For a free copy, call
OppenheimerFunds Services, the Funds' Transfer Agent, at 1-800-525-7048, or
write to the Transfer Agent at the address on the back cover. The Statement of
Additional Information has been filed with the Securities and Exchange
Commission ("SEC") and is incorporated into this Prospectus by reference (which
means that it is legally part of this Prospectus).
(logo) OppenheimerFunds
Shares of the Funds are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the F.D.I.C. or any other agency, and
involve investment risks, including the possible loss of the principal amount
invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents
A B O U T T H E F U N D S
Expenses
A Brief Overview of the Funds
Financial Highlights
Investment Objectives and Policies
Investment Risks
Investment Techniques and Strategies
How the Funds are Managed
Performance of the Funds
A B O U T Y O U R A C C O U N T
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
A-1 Appendix A: Description of Securities Ratings
B-1 Appendix B: Special Sales Charge Arrangements
<PAGE>
A B O U T T H E F U N D S
Expenses
Each Fund pays a variety of expenses directly for management of its assets,
administration, distribution of its shares and other services and those expenses
are subtracted from the Fund's assets to calculate the Fund's net asset value
per share. All shareholders therefore pay those expenses indirectly.
Shareholders pay other expenses directly, such as sales charges and account
transaction charges. The following tables are provided to help you understand
your direct expenses of investing in a Fund and the share of a Fund's business
operating expenses that you will bear indirectly.
o Shareholder Transaction Expenses are charges you pay when you buy or
sell shares of a Fund. Please refer to "About Your Account" starting on page __
for an explanation of how and when these charges apply.
Class A Class B Class C
Shares Shares Shares
- --------------------------------------------------------------------------------
Maximum Sales Charge on Purchases 5.75% None None
(as a % of offering price)
- --------------------------------------------------------------------------------
Maximum Deferred Sales Charge None(1) 5% in the 1% if shares
(as a % of the lower of the original first year, are redeemed
offering price or redemption proceeds) declining to within 12
1% in the months of
6th year and purchase(2)
eliminated
thereafter(2)
- --------------------------------------------------------------------------------
Maximum Sales Charge on None None None
Reinvested Dividends
- --------------------------------------------------------------------------------
Exchange Fee None None None
- --------------------------------------------------------------------------------
Redemption Fee None(3) None(3) None(3)
(1) If you invest $1 million or more ($500,000 or more for purchases by
"Retirement Plans," as defined in "Class A Contingent Deferred Sales Charge" on
page __) in Class A shares, you may have to pay a sales charge of up to 1% if
you sell your shares within 12 calendar months (18 months for shares purchased
prior to May 1, 1997) from the end of the calendar month during which you
purchased those shares. See "How to Buy Shares -- Buying Class A Shares" below.
(2) See "How to Buy Shares -- Buying Class B Shares," and "How to Buy Shares --
Buying Class C Shares" below for more information on the contingent deferred
sales charges. (3) There is a $10 transaction fee for redemption proceeds paid
by Federal Funds wire, but not for redemptions paid by check or ACH transfer
through AccountLink.
o Annual Fund Operating Expenses are paid out of a Fund's assets and
represent the Fund's expenses in operating its business. For example, each Fund
pays management fees to its investment advisor, OppenheimerFunds, Inc. (which is
referred to in this Prospectus as the "Manager"). The rates of the Manager's
fees are set forth in "How the Funds are Managed" below. A Fund has other
regular expenses for services, such as transfer agent fees, custodial fees paid
to the bank that holds the Fund's portfolio securities, audit fees and legal
expenses. Those expenses are detailed in a Fund's Financial Statements in the
Statement of Additional Information.
Annual Fund Operating Expenses (as a Percentage of Average Net Assets)
Class A Class B Class C
Shares Shares Shares
- -------------------------------------------------------------------------------
Management Fees
- -------------------------------------------------------------------------------
LifeSpan Growth Fund 0.85% 0.85% 0.85%
- -------------------------------------------------------------------------------
LifeSpan Balanced Fund 0.85% 0.85% 0.85%
- -------------------------------------------------------------------------------
LifeSpan Income Fund 0.75% 0.75% 0.75%
- -------------------------------------------------------------------------------
12b-1 Plan Fees
- -------------------------------------------------------------------------------
LifeSpan Growth Fund 0.25% 1.00% 1.00%
- -------------------------------------------------------------------------------
LifeSpan Balanced Fund 0.25% 1.00% 1.00%
- -------------------------------------------------------------------------------
LifeSpan Income Fund 0.25% 1.00% 1.00%
- -------------------------------------------------------------------------------
Other Expenses
- -------------------------------------------------------------------------------
LifeSpan Growth Fund 0.40% 0.42% 0.44%
- -------------------------------------------------------------------------------
LifeSpan Balanced Fund 0.32% 0.33% 0.31%
- -------------------------------------------------------------------------------
LifeSpan Income Fund 0.45% 0.43% 0.45%
- -------------------------------------------------------------------------------
Total Fund Operating Expenses
- ------------------------------------------------------------------------------
Growth Fund 1.50% 2.27% 2.29%
- -------------------------------------------------------------------------------
Balanced Fund 1.42% 2.18% 2.16%
- -------------------------------------------------------------------------------
Income Fund 1.45% 2.18% 2.20%
The numbers for the Class A, Class B and Class C shares in the chart above
are based on each Fund's expenses during the fiscal year ended October 31, 1997.
These amounts are shown as a percentage of the average net assets of each class
of each Fund's shares for that period.
The 12b-1 Plan Fees for Class A shares are the service fees (which can be
up to a maximum of 0.25% of average annual net assets of that class). For Class
B and Class C shares, 12b-1 Plan Fees include the service fees (which can be up
to a maximum of 0.25%) and an annual asset-based sales charge of 0.75%. These
plans are described in greater detail in "How to Buy Shares."
The actual expenses for each class of shares in future years may be more
or less than the numbers in the chart, depending on a number of factors,
including the actual amount of a Fund's assets represented by each class of
shares.
o Examples. To try to show the effect of these expenses on an investment
over time, we have created the hypothetical examples shown below. Assume that
you make a $1,000 investment in each class of shares of each Fund, and each
Fund's annual return is 5%, and that its operating expenses for each class are
the ones shown in the Annual Fund Operating Expenses table above. If you were to
redeem your shares at the end of each period shown below, your investment would
incur the following expenses by the end of 1, 3, 5 and 10 years:
1 year 3 years 5 years 10 years*
- -------------------------------------------------------------------------------
Class A Shares
- -------------------------------------------------------------------------------
LifeSpan Growth Fund $72 $102 $135 $226
- -----------------------------------------------------------------------------
LifeSpan Balanced Fund $71 $100 $131 $218
- -----------------------------------------------------------------------------
LifeSpan Income Fund $71 $101 $132 $221
- -----------------------------------------------------------------------------
1 year 3 years 5 years 10 years*
- ------------------------------------------------------------------------------
Class B Shares
- ------------------------------------------------------------------------------
LifeSpan Growth Fund $73 $101 $142 $223
- ------------------------------------------------------------------------------
LifeSpan Balanced Fund $72 $ 98 $137 $214
- ------------------------------------------------------------------------------
LifeSpan Income Fund $72 $ 98 $137 $216
- ------------------------------------------------------------------------------
1 year 3 years 5 years 10 years*
- ------------------------------------------------------------------------------
Class C Shares
- ------------------------------------------------------------------------------
LifeSpan Growth Fund $33 $ 72 $123 $263
- ------------------------------------------------------------------------------
LifeSpan Balanced Fund $32 $ 68 $116 $249
- ------------------------------------------------------------------------------
LifeSpan Income Fund $32 $ 69 $118 $253
If you did not redeem your investment, it would incur the following
expenses:
1 year 3 years 5 years 10 years*
- ------------------------------------------------------------------------------
Class A Shares
- ------------------------------------------------------------------------------
LifeSpan Growth Fund $72 $102 $135 $226
- ------------------------------------------------------------------------------
LifeSpan Balanced Fund $71 $100 $131 $218
- ------------------------------------------------------------------------------
LifeSpan Income Fund $71 $101 $132 $221
- ------------------------------------------------------------------------------
1 year 3 years 5 years 10 years*
- ------------------------------------------------------------------------------
Class B Shares
- ------------------------------------------------------------------------------
LifeSpan Growth Fund $23 $71 $122 $223
- ------------------------------------------------------------------------------
LifeSpan Balanced Fund $22 $68 $117 $214
- ------------------------------------------------------------------------------
LifeSpan Income Fund $22 $68 $117 $216
- ------------------------------------------------------------------------------
1 year 3 years 5 years 10 years*
- ------------------------------------------------------------------------------
Class C Shares
- ------------------------------------------------------------------------------
LifeSpan Growth Fund $23 $72 $123 $263
- ------------------------------------------------------------------------------
LifeSpan Balanced Fund $22 $68 $116 $249
- ------------------------------------------------------------------------------
LifeSpan Income Fund $22 $69 $118 $253
*In the examples on the previous page, expenses include the Class A initial
sales charge and the applicable Class B or Class C contingent deferred sales
charge. In the examplew above, Class A expenses include the initial sales
charge, but Class B and Class C expenses do not include contingent deferred
sales charges. The Class B expenses in years 7 through 10 are based on the Class
A expenses shown above, because a Fund automatically converts your Class B
shares into Class A shares after 6 years. Because of the effect of the
asset-based sales charge and the contingent deferred sales charge imposed on
Class B and Class C shares, long-term Class B and Class C shareholders could pay
the economic equivalent of more than the maximum front-end sales charge allowed
under applicable regulations. For Class B shareholders, the automatic conversion
of Class B shares into Class A shares is designed to minimize the likelihood
that this will occur. Please refer to "How to Buy Shares" for more information.
These examples show the effect of expenses on an investment, but are not
meant to state or predict actual or expected costs or investment returns of the
Funds, which may be more or less than the amounts shown.
A Brief Overview of the Funds
Some of the important facts about each Fund are summarized below, with
references to the section of this Prospectus where more complete information can
be found. You should carefully read the entire Prospectus before making a
decision about investing in a Fund. Keep the Prospectus for reference after you
invest, particularly for information about your account, such as how to sell or
exchange shares.
o What are the Funds' Investment Objectives? Each LifeSpan Fund has its own
investment objective: LifeSpan Growth Fund seeks long-term capital appreciation.
Current income is not a primary consideration.
LifeSpan Balanced Fund seeks a blend of capital appreciation and income.
LifeSpan Income Fund seeks high current income, with opportunities for capital
appreciation.
o What do the Funds Invest In? Each Fund is an asset allocation fund and
seeks to achieve its investment objective by allocating its assets among two
broad classes of investments-stocks and bonds. The stock class includes equity
securities of all types. The bond class includes all varieties of fixed-income
instruments.
The Manager diversifies each Fund's stock class by allocating the Fund's
stock portfolio among four stock components: international stocks, value/growth
stocks, growth and income stocks and small-capitalized growth stocks (small
cap). Each stock component may invest a portion of its assets in bonds to
enhance appreciation or income.
The Manager diversifies a Fund's bond class by allocating the Fund's bond
portfolio among three bond components: government and corporate bonds, high
yield/high risk bonds (also called "junk bonds") and short-term bonds.
There is no requirement that the Manager allocate a Fund's assets among
all stock or bond components at all times. Each Fund's normal allocation is
shown in the chart on page __ but the allocation ranges are subject to change.
The Funds' investments are more fully explained in "Investment Objectives and
Policies," starting on page __.
o Who Manages the Funds? The Funds' investment advisor is
OppenheimerFunds, Inc., which (including subsidiaries) advises investment
company portfolios having over $75 billion in assets at December 31, 1997. The
Funds' Board of Directors, elected by shareholders, oversees the investment
advisor and the portfolio managers. The Manager is paid an advisory fee by each
Fund, based on its net assets. The Manager has engaged three Subadvisers to
manage specific components of each Fund: Babson-Stewart Ivory International
manages the assets in the international components; BEA Associates manages the
high yield/high risk components; and Pilgrim Baxter & Associates Ltd. manages
the small cap stocks components. The Manager manages the remaining components
using its own investment management personnel. Please refer to "How the Funds
are Managed," starting on page __ for more information about the Manager, the
Subadvisers and their fees.
o How Risky are the Funds? All investments carry risks to some degree.
Allocating assets among different types of investments allows each Fund to take
advantage of opportunities in different types of investments, but also subjects
the Fund to the risks of those investment types. Stock values fluctuate in
response to the activities of individual companies and general market economic
conditions. The values of bonds fluctuate based on changes in interest rates and
in the credit quality of the issuer. A Fund's investments in foreign securities
are subject to additional risks associated with investing abroad. Non-investment
grade securities may have speculative characteristics and be subject to a
greater credit risk than investment grade securities. These changes affect the
value of a Fund's investments and its share prices for each class of its shares.
LifeSpan Growth Fund, a stock fund, is expected to be more volatile than
LifeSpan Balanced Fund, an income and growth fund, which in turn is generally
expected to be more volatile than LifeSpan Income Fund.
While the Manager and Subadvisers try to reduce risks by diversifying
investments, by carefully researching securities before they are purchased and
in some cases the Manager may use hedging techniques, there is no guarantee of
success in achieving a Fund's objective. Your shares may be worth more or less
than their original cost when you redeem them. Please refer to "Investment
Risks" starting on page __ for a more complete discussion of each Fund's
investment risks.
o How Can I Buy Shares? You can buy shares through your dealer or
financial institution, or you can purchase shares directly through the
Distributor by completing an Application or by using an Automatic Investment
Plan under AccountLink. Please refer to "How To Buy Shares" beginning on page __
for more details.
o Will I Pay a Sales Charge to Buy Shares? Each Fund has three classes of
shares. Each class of shares has the same investment portfolio, but different
expenses. Class A shares are offered with a front-end sales charge, starting at
5.75% and reduced for larger purchases. Class B and Class C shares are offered
without front-end sales charges, but may be subject to a contingent deferred
sales charge if redeemed within 6 years or 12 months, respectively, of purchase.
There is also an annual asset-based sales charge on Class B and Class C shares.
Please review "How To Buy Shares" starting on page __ for more details,
including a discussion about factors you and your financial advisor should
consider in determining which class may be appropriate for you.
o How Can I Sell My Shares? Shares can be redeemed by mail or by telephone
call to the Transfer Agent on any business day or through your dealer. Please
refer to "How To Sell Shares" on page __. Each Fund also offers exchange
privileges to other Oppenheimer funds, described in "How to Exchange Shares" on
page __.
o How Have the Funds Performed? Each Fund measures its performance by
quoting its average annual total returns and cumulative total returns, and in
the case of LifeSpan Income Fund, its yield which measure historical
performance. Those yields and returns can be compared to the yields and returns
(over similar periods) of other funds. Of course, other funds may have different
objectives, investments, and levels of risk. Each Fund's performance can also be
compared to broad market indices, which we have done on pages __. Please
remember that past performance does not guarantee future results.
Financial Highlights
The tables on the following pages present selected audited financial information
about the Funds, including per share data and expense ratios and other data
based on each Fund's respective average net assets. The information for the
Funds' fiscal year ended October 31, 1997 and fiscal period ended October 31,
1996 has been audited by KPMG Peat Marwick LLP, the Funds' independent auditors,
whose report for the fiscal year ended October 31, 1997 is included in the
Statement of Additional Information. The information in the tables for the
fiscal periods prior to 1996 was audited by the Funds' previous independent
auditors.
-3-
<PAGE>
<TABLE>
<CAPTION>
LIFESPAN GROWTH FUND CLASS A
FINANCIAL HIGHLIGHTS ----------------------------------------
PERIOD ENDED
YEAR ENDED OCTOBER 31, DECEMBER 31,
1997 1996(3) 1995(4)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $12.78 $11.39 $10.00
- -----------------------------------------------------------------------------------
Income from investment operations:
Net investment income .24 .18 .16
Net realized and unrealized gain 1.35 1.34 1.63
------ ------ -----
Total income from investment
operations 1.59 1.52 1.79
- -----------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.08) (.09) (.17)
Distributions from net realized gain (.62) (.04) (.23)
------ ----- ------
Total dividends and distributions
to shareholders (.70) (.13) (.40)
- -----------------------------------------------------------------------------------
Net asset value, end of period $13.67 $12.78 $11.39
====== ====== ======
- -----------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 12.96% 13.37% 18.02%
- -----------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $53,318 $43,980 $34,368
- -----------------------------------------------------------------------------------
Average net assets (in thousands) $49,213 $39,576 $29,046
- -----------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.91% 1.81%(6) 2.32%(6)
Expenses 1.50%(7) 1.61%(6) 1.55%(6)
- -----------------------------------------------------------------------------------
Portfolio turnover rate(8) 66.0% 64.2% 71.8%
Average brokerage commission rate(9) $0.0069 $0.0059 --
</TABLE>
1. For the period from May 1, 1996 (inception of offering) to October 31, 1996.
2. For the period from October 2, 1995 (inception of offering) to December 31,
1995. 3. For the ten months ended October 31, 1996. The Fund changed its fiscal
year end from December 31 to October 31. On March 18, 1996, OppenheimerFunds,
Inc. became the investment advisor to the Fund. 4. For the period from May 1,
1995 (commencement of operations) to December 31, 1995. 5. Assumes a
hypothetical initial investment on the business day before the first day of the
fiscal period (or inception of offering), with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Sales
charges are not reflected in the total returns. Total returns are not annualized
for periods of less than one full year.
8
<PAGE>
<TABLE>
<CAPTION>
CLASS B CLASS C
- ----------------------------------------- ---------------
PERIOD ENDED
YEAR ENDED OCTOBER 31, DECEMBER 31, YEAR ENDED OCTOBER 31,
1997 1996(3) 1995(2) 1997 1996(1)
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
$12.81 $11.47 $11.14 $12.74 $12.49
- ---------------------------------------------------------------------
.14 .08 .03 .14 .11
1.35 1.36 .56 1.34 .27
------ ------ ------ ------ ------
1.49 1.44 .59 1.48 .38
- ---------------------------------------------------------------------
(.06) (.06) (.03) (.07) (.09)
(.62) (.04) (.23) (.62) (.04)
------ ------ ------ ------ ------
(.68) (.10) (.26) (.69) (.13)
- ---------------------------------------------------------------------
$13.62 $12.81 $11.47 $13.53 $12.74
====== ====== ====== ====== ======
- ---------------------------------------------------------------------
12.07% 12.58% 5.34% 12.05% 3.04%
- ---------------------------------------------------------------------
$5,391 $2,405 $561 $1,209 $141
- ---------------------------------------------------------------------
$3,925 $1,475 $230 $722 $54
- ---------------------------------------------------------------------
1.14% 1.11%(6) 1.70%(6) 1.11% 1.32%(6)
2.27%(7) 2.37%(6) 2.30%(6) 2.29%(7) 2.43%(6)
- ---------------------------------------------------------------------
66.0% 64.2% 71.8% 66.0% 64.2%
$0.0069 $0.0059 -- $0.0069 $0.0059
</TABLE>
6. Annualized.
7. The expense ratio reflects the effect of expenses paid indirectly by the
Fund. 8. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended October 31, 1997 were $39,384,627 and $31,934,908, respectively. 9. Total
brokerage commissions paid on applicable purchases and sales of portfolio
securities for the period, divided by the total number of related shares
purchased and sold. Generally, non-U.S. commissions are lower than U.S.
commissions when expressed as cents per share but higher when expressed as a
percentage of transactions because of the lower per-share prices of many
non-U.S. securities.
9
<PAGE>
<TABLE>
<CAPTION>
LIFESPAN BALANCED FUND CLASS A
FINANCIAL HIGHLIGHTS ---------------------------------------
PERIOD ENDED
YEAR ENDED OCTOBER 31, DECEMBER 31,
1997 1996(3) 1995(4)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $11.90 $11.05 $10.00
- ----------------------------------------------------------------------------------
Income from investment operations:
Net investment income .37 .29 .24
Net realized and unrealized gain 1.08 .81 1.29
------ ------ ------
Total income from investment
operations 1.45 1.10 1.53
- ----------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.37) (.22) (.25)
Distributions from net realized gain (.32) (.03) (.23)
------ ------ ------
Total dividends and distributions
to shareholders (.69) (.25) (.48)
- ----------------------------------------------------------------------------------
Net asset value, end of period $12.66 $11.90 $11.05
====== ====== ======
- ----------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 12.66% 10.04% 15.33%
- ----------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $62,262 $52,104 $41,861
- ----------------------------------------------------------------------------------
Average net assets (in thousands) $57,769 $47,116 $37,417
- ----------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 3.08% 3.15%(6) 3.47%(6)
Expenses 1.42%(7) 1.56%(6) 1.55%(6)
- ----------------------------------------------------------------------------------
Portfolio turnover rate(8) 59.7% 61.0% 76.3%
Average brokerage commission rate(9) $0.0067 $0.0078 --
</TABLE>
1. For the period from May 1, 1996 (inception of offering) to October 31, 1996.
2. For the period from October 2, 1995 (inception of offering) to December 31,
1995. 3. For the ten months ended October 31, 1996. The Fund changed its fiscal
year end from December 31 to October 31. On March 18, 1996, OppenheimerFunds,
Inc. became the investment advisor to the Fund. 4. For the period from May 1,
1995 (commencement of operations) to December 31, 1995. 5. Assumes a
hypothetical initial investment on the business day before the first day of the
fiscal period (or inception of offering), with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Sales
charges are not reflected in the total returns. Total returns are not annualized
for periods of less than one full year.
10
<PAGE>
<TABLE>
<CAPTION>
CLASS B CLASS C
- ----------------------------------------- ----------------------
PERIOD ENDED
YEAR ENDED OCTOBER 31, DECEMBER 31, YEAR ENDED OCTOBER 31,
1997 1996(3) 1995(2) 1997 1996(1)
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
$11.98 $11.16 $10.95 $11.88 $11.74
- ----------------------------------------------------------------------
.27 .20 .05 .28 .13
1.08 .82 .45 1.07 .24
------ ------ ------ ------ ------
1.35 1.02 .50 1.35 .37
- ----------------------------------------------------------------------
(.29) (.17) (.06) (.29) (.20)
(.32) (.03) (.23) (.32) (.03)
----- ----- ------ ------ ------
(.61) (.20) (.29) (.61) (.23)
- ----------------------------------------------------------------------
$12.72 $11.98 $11.16 $12.62 $11.88
====== ====== ======
- ----------------------------------------------------------------------
11.70% 9.22% 4.49% 11.73% 3.21%
- ----------------------------------------------------------------------
$4,762 $1,893 $441 $683 $828
- ----------------------------------------------------------------------
$3,504 $1,225 $247 $879 $551
- ----------------------------------------------------------------------
2.31% 2.41%(6) 3.01%(6) 2.37% 2.53%(6)
2.18%(7) 2.32%(6) 2.30%(6) 2.16%(7) 2.27%(6)
- ----------------------------------------------------------------------
59.7% 61.0% 76.3% 59.7% 61.0%
$0.0067 $0.0078 -- $0.0067 $0.0078
</TABLE>
6. Annualized.
7. The expense ratio reflects the effect of expenses paid indirectly by the
Fund. 8. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended October 31, 1997 were $42,186,840 and $34,319,496, respectively. 9. Total
brokerage commissions paid on applicable purchases and sales of portfolio
securities for the period, divided by the total number of related shares
purchased and sold. Generally, non-U.S. commissions are lower than U.S.
commissions when expressed as cents per share but higher when expressed as a
percentage of transactions because of the lower per-share prices of many
non-U.S. securities.
11
<PAGE>
<TABLE>
<CAPTION>
LIFESPAN INCOME FUND CLASS A
FINANCIAL HIGHLIGHTS ---------------------------------------
PERIOD ENDED
YEAR ENDED OCTOBER 31, DECEMBER 31,
1997 1996(3) 1995(4)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.65 $10.70 $10.00
- ----------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .59 .48 .37
Net realized and unrealized gain (loss) .56 (.02) .73
------ ------ ------
Total income from investment
operations 1.15 .46 1.10
- ----------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.59) (.48) (.36)
Distributions from net realized gain (.15) (.03) (.04)
------ ------ ------
Total dividends and distributions
to shareholders (.74) (.51) (.40)
- ----------------------------------------------------------------------------------
Net asset value, end of period $11.06 $10.65 $10.70
------ ------ ------
------ ------ ------
- ----------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 11.30% 4.45% 11.22%
- ----------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $29,206 $26,328 $24,619
- ----------------------------------------------------------------------------------
Average net assets (in thousands) $27,678 $25,463 $22,128
- ----------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.49% 5.43%(6) 5.35%(6)
Expenses 1.45%(7) 1.56%(6) 1.50%(6)
- ----------------------------------------------------------------------------------
Portfolio turnover rate(8) 39.6% 75.3% 45.8%
Average brokerage commission rate(9) $0.0681 $0.0694 --
</TABLE>
1. For the period from May 1, 1996 (inception of offering) to October 31, 1996.
2. For the period from October 2, 1995 (inception of offering) to December 31,
1995. 3. For the ten months ended October 31, 1996. The Fund changed its fiscal
year end from December 31 to October 31. On March 18, 1996, OppenheimerFunds,
Inc. became the investment advisor to the Fund. 4. For the period from May 1,
1995 (commencement of operations) to December 31, 1995. 5. Assumes a
hypothetical initial investment on the business day before the first day of the
fiscal period (or inception of offering), with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Sales
charges are not reflected in the total returns. Total returns are not annualized
for periods of less than one full year.
12
<PAGE>
<TABLE>
<CAPTION>
CLASS B CLASS C
- -------------------------------------- ----------------------
PERIOD ENDED
YEAR ENDED OCTOBER 31, DECEMBER 31, YEAR ENDED OCTOBER 31,
1997 1996(3) 1995(2) 1997 1996(1)
- -------------------------------------------------------------------
<S> <C> <C> <C> <C>
$10.69 $10.74 $10.45 $10.66 $10.53
- ----------------------------------------------------------------
.51 .41 .12 .55 .25
.57 (.02) .32 .58 .16
- ------ ------ ------ ------ -----
1.08 .39 .44 1.13 .41
- ----------------------------------------------------------------
(.51) (.41) (.11) (.54) (.25)
(.15) (.03) (.04) (.15) (.03)
- ------ ------ ------
(.66) (.44) (.15) (.69) (.28)
- ----------------------------------------------------------------
$11.11 $10.69 $10.74 $11.10 $10.66
====== ====== ====== ====== ======
- ----------------------------------------------------------------
10.51% 3.69% 4.30% 11.03% 3.96%
- ----------------------------------------------------------------
$816 $456 $192 $32 $1
- ----------------------------------------------------------------
$677 $350 $107 $20 $1
- ----------------------------------------------------------------
4.69% 4.93%(6) 5.23%(6) 4.64% 4.68%(6)
2.18%(7) 2.31%(6) 2.25%(6) 2.20%(7) 2.25%(6)
- -----------------------------------------------------------------------------------------------------------------------------------
39.6% 75.3% 45.8% 39.6% 75.3%
$0.0681 $0.0694 -- $0.0681 $0.0694
</TABLE>
6. Annualized.
7. The expense ratio reflects the effect of expenses paid indirectly by the
Fund. 8. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended October 31, 1997 were $12,166,241 and $10,297,628, respectively. 9. Total
brokerage commissions paid on applicable purchases and sales of portfolio
securities for the period, divided by the total number of related shares
purchased and sold.
13
<PAGE>
Investment Objectives and Policies
Objectives. Each LifeSpan Fund has its own investment objective:
LifeSpan Growth Fund seeks long-term capital appreciation. Current income is not
a primary consideration.
LifeSpan Balanced Fund seeks a blend of capital appreciation and income.
LifeSpan Income Fund seeks high current income, with opportunities for capital
appreciation.
Investment Policies and Strategies. Each Fund is an asset allocation fund and
seeks to achieve its investment objective by allocating its assets among two
broad classes of investments-stocks and bonds. The stock class includes equity
securities of many types. The bond class includes several varieties of
fixed-income instruments. Allocating assets among different types of investments
allows each Fund to take advantage of a greater variety of investment
opportunities than funds that invest in only one asset class, but also subjects
the Fund to the risks of those types of investments. The general risks of stock
and bond investments are discussed in "Investment Risks" below.
The Manager has the ability to allocate a Fund's assets within specified
ranges. A Fund's normal allocation indicates the benchmark for its combination
of investments in each asset class over time. As market and economic conditions
change, however, the Manager may adjust the asset mix between the stock and bond
classes within a normal asset allocation range as long as the relative risk and
return characteristics of the three Funds remain distinct and each Fund's
investment objective is preserved. The Manager will review normal allocations
between the stock and bond classes quarterly and, if necessary, will rebalance
the investment allocation at that time. Additional adjustments may be made if an
asset allocation shift of 5% or more is warranted.
o The Asset Class Components. The Manager will diversify each Fund's
investments among four stock components: international stocks, value/growth
stocks, growth and income stocks and small-capitalized growth stocks ("small
cap" stocks). Each stock component is also permitted to invest a portion of its
assets in bonds when the Manager or relevant Subadviser determines that
increased flexibility in portfolio management is desirable to enhance
appreciation or income.
The Manager will diversify a Fund's bond investments among three bond
components: government and corporate bonds, high yield/high risk bonds (also
called "junk bonds") and short-term bonds. Although the Balanced Fund will
normally invest 25% of its assets in fixed-income senior securities, there is no
other requirement that the Manager allocate a Fund's assets among all stock or
bond components at all times. These stock and bond components have been selected
because the Manager believes that this additional level of asset diversification
will provide each Fund with the potential for higher returns with lower overall
volatility. Each Fund's normal allocation is shown in the chart below.
<TABLE>
<CAPTION>
Asset Classes and Components
LifeSpan LifeSpan LifeSpan
Growth Fund Balanced Fund Income Fund
-----------------------------------------------------------------
Normal Normal Normal
Allocation Range Allocation Range Allocation Range
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
Stocks 80% 70-90% 60% 50-70% 25% 15-35%
- ---------------------------------------------------------------------------------------------
International 20% 15-25% 15% 5-20% 0% 0%
- ---------------------------------------------------------------------------------------------
Value/Growth 20% 15-30% 15% 10-25% 0% 0%
- ---------------------------------------------------------------------------------------------
Growth/Income 20% 15-30% 15% 10-25% 25% 15-35%
- ---------------------------------------------------------------------------------------------
Small Cap 20% 15-25% 15% 5-20% 0% 0%
- ---------------------------------------------------------------------------------------------
Bonds 20% 10-30% 40% 30-50% 75% 65-85%
- ---------------------------------------------------------------------------------------------
Government/Corporate 10% 5-15% 15% 10-25% 35% 30-45%
- ---------------------------------------------------------------------------------------------
High Yield/High Risk Bonds 10% 5-15% 15% 5-20% 15% 5-20%
- ---------------------------------------------------------------------------------------------
Short Term Bonds 0% 0% 10% 5-20% 25% 15-30%
</TABLE>
All percentage limitations apply at the time of purchase of a security. The
Manager may rebalance the asset allocations quarterly to realign them in
response to market conditions. Once the Manager has determined the weightings of
the stock and bond asset classes and the components of each Fund, the Manager or
the relevant Subadviser will then select the individual securities to be
included in each component. It is important to note that the types of securities
normally held in each component are not exclusive to that component; other
components may hold foreign securities besides the International component, for
example. Therefore the percentage allocation ranges do not limit a Fund's
holdings of particular types of securities to a particular component.
The Manager has engaged three subadvisers (each is referred to as a
"Subadviser") to manage certain components of each Fund's investment portfolio.
Each Subadviser manages the portion of a Fund's assets in the particular
component assigned to it by the Manager. The Manager has assigned the management
of the components as follows:
Subadviser Component Managed by Subadviser
- -------------------------------------------------------------------
Babson-Stewart Ivory International International Stocks
- -------------------------------------------------------------------
Pilgrim Baxter & Associates, Ltd. Small Cap Stocks
- -------------------------------------------------------------------
BEA Associates High Yield/High Risk Bonds
The Manager manages the remaining components using its own investment
management personnel. See "How the Funds Are Managed" for additional
information.
o Stock Investments. Each Fund will invest the portion of its assets which
are allocated to stock investments among four components, each of which invests
principally in equity securities. Each differs with respect to investment
criteria and characteristics as described below:
o International Component. This component seeks long-term growth of
capital primarily through a diversified portfolio of marketable international
equity securities. The investments in the international component will be
allocated among several countries. In addition, up to 25% of the assets in this
component may be invested in stocks and bonds of companies based in emerging
countries. The component's assets generally will be invested in equity
securities of seasoned companies that are listed on foreign stock exchanges and
which the Subadviser considers to have attractive characteristics as to
profitability, growth and financial resources. "Seasoned" companies are those
known for the quality and acceptance of their products or services and for their
ability to generate profits. There are no issuer capitalization requirements for
investments. Stocks are purchased on the basis of fundamental and valuation
analyses, but investments are not based on the Subadviser's integration of any
particular analytical disciplines.
Consistent with the provisions of the Investment Company Act, the
component's assets may be invested in the securities of closed-end investment
companies that invest in foreign securities. A portion of the international
component's investments may be held in corporate bonds and government securities
of foreign issuers and cash and short-term instruments. The special risks of
investing in foreign securities and emerging markets are described in
"Investment Risks" below.
o Value/Growth Component. This component seeks to achieve long-term growth
of capital by investing primarily in common stocks with low price-earnings
ratios and better than anticipated earnings. Realization of current income is
not a primary consideration. Stocks with low price-earnings ratios and favorable
earnings surprises are identified by the Manager using fundamental securities
analysis to select individual stocks for purchase. When the price/earnings ratio
of a stock held by the value/growth component moves significantly above the
multiple of the overall stock market, or the company reports a material earnings
disappointment, the Manager may consider selling the stock. Up to 15% of the
component's assets may be invested in stocks of foreign issuers that generally
have a substantial portion of their business in the United States, and in
American Depository Receipts ("ADRs"). A portion of the component's assets may
be held in cash and in short-term investments.
o Growth/Income Component. This component seeks to enhance each Fund's
total return through capital appreciation and dividend income by investing
primarily in common stocks with low price-earnings ratios,
better-than-anticipated earnings and better than market average dividend yields.
Stocks with low price-earnings ratios (for example, below the price-earnings
ratio of the S&P 500 Index), favorable earnings surprises and above-average
yields are identified by the Manager using fundamental securities analysis to
select individual stocks for this component. When the price-earnings ratio of a
stock held by the component moves significantly above the multiple of the
overall stock market, or the company reports a material earnings disappointment,
or when the yield drops significantly below the market yield, normally that
stock will be sold.
Up to 15% of the component's assets may be invested in stocks of foreign
issuers that generally have a substantial portion of their business in the
United States, and in ADRs. A portion of the component's investments may be held
in investment grade or below investment grade convertible securities, corporate
bonds and U.S. Government securities, cash and short-term instruments.
o Small Cap Component. This component seeks long-term growth of capital by
investing primarily in stocks of companies with relatively small market
capitalization, typically between $250 million to $2 billion. Capitalization is
the aggregate value of a company's stock, or its price per share times the
number of shares outstanding. Current income is a secondary consideration. When
selecting individual securities for the component's portfolio, the Subadviser
seeks companies that have an outlook for strong growth in earnings and the
potential for significant capital appreciation, particularly in industry
segments that are experiencing rapid growth. Securities will be sold when the
Subadviser believes that anticipated appreciation is no longer probable and that
alternative investments offer superior appreciation prospects, or the risk of a
decline in market price is too great. Historical results tend to confirm the
benefits of investing in companies with small capitalizations. A portion of the
component's investments may also be held in cash and short-term instruments.
o Bond Investments. Each Fund will invest those assets which are allocated
to the bond class among three components. Each component invests in an array of
fixed-income securities as described below. The LifeSpan Balanced Fund will
invest at least 25% of its assets in fixed-income senior securities.
o Government/Corporate Component. This component seeks current income and
the potential for capital appreciation by investment primarily in fixed-income
debt securities, including investment grade corporate debt obligations of
foreign and U.S. issuers and securities issued by the U.S. Government and its
agencies and instrumentalities and by foreign governments. Although the
component may invest in securities with maturities across the entire slope of
the yield curve, including long bonds (having maturities of 10 or more years),
intermediate notes (with maturities of 3 to 10 years) and short term notes (with
maturities of 1 to 3 years), the Manager expects that normally the component
will have an intermediate average maturity and duration.
The Manager may take into account prepayment features when determining the
maturity of an investment. The Manager's investment strategy includes the
purchase of bonds that are underpriced relative to other debt securities having
similar risk profiles. The Manager evaluates a broad array of factors, including
maturity, creditworthiness, cash flow certainty and interest rate volatility,
and compares yields in relation to trends in the economy, the financial and
commodity markets and prevailing interest rates. The component may also invest a
portion of its assets in cash and short-term instruments.
o High Yield/High Risk Bond Component. This component seeks to earn as
high a level of current income as is consistent with the risks associated with
high yield investments. The component's assets are invested primarily in bonds
that are rated BB or lower by Standard & Poor's Corporation ("Standard and
Poor's")or Ba or lower by Moody's Investors Service, Inc. ("Moody's") or, if not
rated, that are deemed by the Subadviser to be of comparable quality to rated
securities in those categories. These are commonly referred to as "junk bonds."
This component may invest in bonds that are in default. Bonds in default are not
making interest or principal payments on the date due.
The Subadviser employs an active sector rotational style utilizing all
sectors of the high yield market, with an emphasis on diversification to control
risk. The Subadviser typically favors higher quality companies in the
non-investment grade market, senior debt over junior debt, and secured over
unsecured investments. The Subadviser screens individual securities for such
characteristics as minimum yield and issue size, issue liquidity and financial
and operational strength. In-depth credit research will then be conducted to
arrive at a core group of securities within the high yield universe for the
component. Continuous credit monitoring and adherence to sell disciplines
associated with both price appreciation and depreciation are utilized to seek
the overall yield and price objectives of the component. The component may also
invest a portion of its assets in cash and short-term instruments. The special
risks of investing in below-investment grade securities are described in
"Investment Risks" below.
o Short-Term Bond Component. This component seeks a high level of current
income consistent with prudent investment risk and preservation of capital by
investing primarily in debt obligations of foreign and U.S. issuers and
securities issued by the U.S. Government and its agencies and instrumentalities
and by foreign governments. This component invests primarily in fixed-income
securities generally maturing within five years of date of purchase, or in
securities having prepayment or similar features which, in the view of the
Manager, give the instrument a remaining effective maturity of up to five years.
It is anticipated that the average dollar weighted maturity of the component
will generally range between two and three years.
The Manager's investment management process incorporates analysis of an
issuer's debt service capability, financial flexibility and liquidity, as well
as the fundamental trends and the outlook for an issuer and its industry. Credit
risk management is also an important factor. The Manager conducts credit
research, and carefully selects individual issues and attempts to broadly
diversify portfolio holdings by industry sector and issuer. The Manager believes
that determination of an issuer's attractiveness relative to alternative issues
and/or valuations within the marketplace are important considerations in its
investment decision-making. The component may also invest a portion of its
assets in cash and money market securities.
o Can a Fund's Investment Objective and Policies Change? Each Fund has an
investment objective, described above, as well as investment policies it follows
to try to achieve its objective. Additionally, each Fund uses certain investment
techniques and strategies in carrying out those investment policies. A Fund's
investment policies and practices are not "fundamental" unless this Prospectus
or the Statement of Additional Information indicates that a particular policy is
"fundamental." Each Fund's investment objective is not a fundamental policy.
Fund shareholders will be given 30 days' advance written notice of a change to a
Fund's investment objective.
Fundamental policies are those that cannot be changed without the approval
of a "majority" of a Fund's outstanding voting shares. The term "majority" is
defined in the Investment Company Act to be a particular percentage of
outstanding voting shares (and this term is explained in the Statement of
Additional Information). A Fund's Board of Directors may change non-fundamental
policies without shareholder approval, although significant changes will be
described in amendments to this Prospectus.
o Portfolio Turnover. "Portfolio turnover" describes the rate at which a
Fund traded its portfolio securities during a fiscal year. For example, if a
Fund sold all of its securities during the year, its portfolio turnover rate
would be 100%. Portfolio turnover affects brokerage costs a Fund pays.
Investment Risks
All investments carry risks to some degree, whether they are risks that market
prices of the investment will fluctuate (this is known as "market risk") or that
the underlying issuer will experience financial difficulties and may default on
its obligation under a fixed-income investment to pay interest and repay
principal (this is referred to as "credit risk"). These general investment risks
and the special risks of certain types of investments that a Fund may hold are
described below. They affect the value of a Fund's investments, its investment
performance, and the prices of its shares. These risks collectively form the
risk profile of a Fund.
Because of the types of securities each Fund invests in and the investment
techniques each Fund uses differ, each Fund has a different risk profile. The
LifeSpan Growth Fund and LifeSpan Balanced Fund are designed for investors who
are investing for the long term but not seeking assured income. The LifeSpan
Income Fund is designed for investors having a greater emphasis on income rather
than growth. While the Manager and Subadvisers try to reduce risks by
diversifying investments, by carefully researching securities before they are
purchased, and in some cases by using hedging strategies, changes in securities
market prices can occur at any time, and there is no assurance that the Funds
will achieve their investment objectives. When you redeem your shares, they may
be worth more or less than what you paid for them.
o Stock Investment Risks. Each Fund may invest in common stocks, preferred
stocks, convertible securities, warrants and other equity securities of domestic
or foreign companies of any size. At times, the stock markets can be volatile,
and stock prices can change substantially. This market risk will affect a Fund's
net asset values per share, which will fluctuate as the values of the Fund's
portfolio securities change. Not all stock prices change uniformly or at the
same time, not all stock markets move in the same direction at the same time,
and other factors can affect a particular stock's prices (for example, poor
earnings reports by an issuer, loss of major customers, major litigation against
an issuer, or changes in government regulations affecting an industry). Not all
of these factors can be predicted.
Each Fund attempts to limit market risks by diversifying its investments,
that is, by not holding a substantial amount of stock of any one company and by
not investing too great a percentage of a Fund's assets in any one company. Also
the Funds do not concentrate their investments in any one industry or group of
industries.
o Interest Rate Risks. In addition to credit risks, described below, debt
securities are subject to changes in their value due to changes in prevailing
interest rates. When prevailing interest rates fall, the values of
already-issued debt securities generally rise. When interest rates rise, the
values of already-issued debt securities generally decline. The magnitude of
these fluctuations will often be greater for longer-term debt securities than
shorter-term debt securities. Changes in the value of securities held by a Fund
mean that the Fund's share prices can go up or down when interest rates change,
because of the effect of the change on the value of the Fund's portfolio of debt
securities.
o Special Risks of Lower-Grade Securities. Each Fund can invest in
high-yield, below investment grade debt securities (including both rated and
unrated securities). These "lower-grade" securities are commonly known as "junk
bonds."
All corporate debt securities (whether foreign or domestic) are subject to
some degree of credit risk. High yield, lower-grade securities, whether rated or
unrated, often have speculative characteristics and special risks that make them
riskier investments than investment grade securities. They may be subject to
greater market fluctuations and risk of loss of income and principal than lower
yielding, investment grade securities. There may be less of a market for them
and therefore they may be harder to sell at an acceptable price. There is a
relatively greater possibility that the issuer's earnings may be insufficient to
make the payments of interest due on the bonds. The issuer's low
creditworthiness may increase the potential for its insolvency. For foreign
lower-grade debt securities, these risks are in addition to the risks of
investing in foreign securities, described below. These risks mean that a Fund
may not achieve the expected income from lower-grade securities, and that a
Fund's net asset value per share may be affected by declines in value of these
securities.
o Special Risks of Hedging Instruments. The use of hedging instruments
requires special skills and knowledge of investment techniques that are
different from what is required for normal portfolio management. If the Manager
or a Subadviser uses a hedging instrument at the wrong time or judges market
conditions incorrectly, hedging strategies may reduce a Fund's return. A Fund
could also experience losses if the prices of its futures and options positions
were not correlated with its other investments or if it could not close out a
position because of an illiquid market for the future or option.
Options trading involves the payment of premiums, and options, futures and
forward contracts are subject to special tax rules that may affect the amount,
timing and character of a Fund's income and distributions. There are also
special risks in particular hedging strategies. For example, if a covered call
written by a Fund is exercised on an investment that has increased in value, the
Fund will be required to sell the investment at the call price and will not be
able to realize any profit if the investment has increased in value above the
call price. In writing puts, there is a risk that a Fund may be required to buy
the underlying security at a disadvantageous price. The use of Forward Contracts
may reduce the gain that would otherwise result from a change in the
relationship between the U.S. dollar and a foreign currency. Interest rate swaps
are subject to the risk that the other party will fail to meet its obligations
(or that the underlying issuer will fail to pay on time), as well as interest
rate risks. A Fund could be obligated to pay more under its swap agreements than
it receives under them, as a result of interest rate changes. These risks are
described in greater detail in the Statement of Additional Information.
o Special Risks of Derivative Investments. Each Fund may invest in
different kinds of derivative investments, as described below, which entail
special risks. The company issuing the instrument may fail to pay the amount due
on the maturity of the instrument. Also, the underlying investment or security
might not perform the way the Manager or relevant Subadviser expected it to
perform. Markets, underlying securities and indices may move in a direction not
anticipated by the Manager or relevant Subadviser. Performance of derivative
investments may also be influenced by interest rate and stock market changes in
the U.S. and abroad. All of this can mean that a Fund will realize less
principal or income from the investment than expected. Certain derivative
investments held by a Fund may be illiquid. Please refer to "Illiquid and
Restricted Securities" below.
o Foreign Securities Risks. While foreign securities offer special
investment opportunities, there are special risks. Because each Fund may
purchase securities denominated in foreign currencies or traded primarily in
foreign markets, a change in the value of a foreign currency against the U.S.
dollar will result in a change in the U.S. dollar value of those foreign
securities. Foreign issuers are not required to use generally-accepted
accounting principles that apply to U.S. issuers. If foreign securities are not
registered for sale in the U.S. under U.S. securities laws, the issuer does not
have to comply with the disclosure requirements that U.S. companies are subject
to. The value of foreign investments may be affected by other factors, including
exchange control regulations, expropriation or nationalization of a company's
assets, foreign taxes, delays in settlement of transactions, changes in
governmental, economic or monetary policy in the U.S. or abroad, or other
political and economic factors.
In addition, it is generally more difficult to obtain court judgements
outside the U.S. if a Fund were to sue a foreign issuer or broker. Additional
costs may be incurred because foreign brokerage commissions are generally higher
than U.S. rates, and there are additional custodial costs associated with
holding securities abroad. More information about the risks and potential
rewards of investing in foreign securities is contained in the Statement of
Additional Information.
o Emerging Market Investments Risks. Investments in emerging market
countries may involve risks in addition to those identified above for
investments in foreign securities. Securities issued by emerging market
countries and by companies located in those countries may be subject to extended
settlement periods, and a Fund might not receive principal and/or income on a
timely basis. Its net asset values could be affected. Emerging market countries
may have smaller, less well-developed markets and exchanges; there may be a lack
of liquidity for emerging market securities; interest rates and foreign currency
exchange rates may be more volatile; sovereign limitations on foreign
investments may be more likely to be imposed; there may be significant balance
of payment deficits; and their economies and markets may respond in a more
volatile manner to economic changes than those of developed countries.
Investment Techniques and Strategies
The Funds may also use the investment techniques and strategies described below,
which involve certain risks. The Statement of Additional Information contains
more detailed information about these practices, including limitations on their
use that may help to reduce some of the risks.
o Investing in Lower-Grade Securities. Lower-grade debt securities
generally offer higher income potential than investment grade securities.
"Lower-grade" securities have a rating below "BBB" by Standard & Poor's or "Baa"
by Moody's or similar ratings by other domestic or foreign rating organizations,
or they are not rated by a nationally-recognized rating organization but the
Manager or Sub-Adviser judges them to be comparable to lower-rated securities. A
Fund may invest in securities rated as low as "D" by Standard & Poor's or "C" by
Moody's. Appendix A to this Prospectus describes the rating categories of
Moody's and Standard & Poor's. There are special risks associated with investing
in lower-grade securities, discussed in "Investment Risks," above.
As of October 31, 1997, each Fund's portfolio included fixed income
securities in the following rating categories of Standard & Poor's or if
unrated, determined by the Manager to be comparable to the category indicated
(the amounts shown are the dollar-weighted average values of the bonds in each
category measured as a percentage of the Fund's total assets):
o LifeSpan Growth Fund: AAA, 0.00%; AA+, 0.12%; AA, 0.07%; AA-, 0.15%; A+,
0.26%; A, 0.43%; A-, 0.33%; BBB+, 0.42%; BBB, 0.80%; BBB-, 0.55%; BB+, 0.61%;
BB, 0.31%; BB-, 1.07%; B+, 2.11%; B, 2.54%; B-, 1.84%; CCC+, 0.21%; CCC, 0.24%;
CCC-, 0.00%; CC, 0.12%; C, 0.00%; D, 0.00%, not rated, 0.52%.
o LifeSpan Balanced Fund : AAA, 0.00%; AA+, 0.27%; AA, 0.20%; AA-, 0.46%;
A+, 0.99%; A, 1.64%; A-, 1.21%; BBB+, 0.87%; BBB, 1.54%;BBB-, 1.46%; BB+, 1.36%;
BB, 0.52%; BB-, 1.62%; B+, 3.66%; B, 3.96%; B-, 2.94%; CCC+, 0.33%; CCC, 0.40%;
CCC-, 0.09%; CC, 0.00%; C, 0.16%; D, 0.00%, not rated, 0.62%.
o LifeSpan Income Fund: AAA, 0.00%; AA+, 0.74%; AA, 0.60%; AA-, 1.39%; A+,
2.93%; A, 4.75%; A-, 3.77%; BBB+, 1.75%; BBB, 4.30%; BBB-, 3.99%; BB+, 2.52%;
BB, 0.53%; BB-, 1.95%; B+, 3.47%; B, 4.60%; B-, 3.22%; CCC+, 0.37%; CCC, 0.34%;
CCC-, 0.00%; CC, 0.00%; C, 0.18%; D, 0.00%, not rated, 0.90%.
The allocation of the Funds' assets in securities in the different rating
categories will vary over time, and the proportion listed above should not be
viewed as representing the Fund's current or future proportionate ownership of
securities in particular rating categories. Appendix A to this Prospectus
describes the rating categories.
o Investing in Emerging Market Countries. Babson-Stewart Ivory
International ("Babson-Stewart"), as the Subadviser to the international
component, may invest a portion of a Fund's assets in companies located in
emerging countries. The Subadviser considers emerging countries to include any
country that is defined as an emerging or developing economy by the
International Bank for Reconstruction and Development, the International Finance
Committee, The United Nations or its authorities, or the MSCI Emerging Markets
Index. There are special risks associated with investing in emerging markets,
discussed in "Investment Risks," above.
o ADRs, EDRs and GDRs. Each Fund may invest in ADRs, EDRs and GDRs. ADRs
are receipts issued by a U.S. bank or trust company which evidence ownership of
underlying securities of foreign corporations. ADRs are traded on domestic
exchanges or in the U.S. over-the-counter market and, generally, are in
registered form. To the extent a Fund acquires ADRs through banks which do not
have a contractual relationship with the foreign issuer of the security
underlying the ADR to issue and service that ADR, there may be an increased
possibility that the Fund would not become aware of and be able to respond in a
timely manner to corporate actions such as stock splits or rights offerings
involving the foreign issuer. A Fund may also invest in EDRs and GDRs, which are
receipts evidencing an arrangement with a non-U.S. bank similar to that for ADRs
and are designed for use in non-U.S. securities markets. EDRs and GDRs are not
necessarily quoted in the same currency as the underlying security.
o Eurodollars and Yankee Dollars. The Funds may also invest in obligations
of foreign branches of U.S. banks (denominated in Eurodollars) and U.S. branches
of foreign banks ("Yankee dollars") as well as foreign branches of foreign
banks. These investments involve risks that are different from investment in
securities of U.S. banks, including potential unfavorable political and economic
developments, different tax provisions, seizure of foreign deposits, currency
controls, interest limitations or other governmental restrictions which might
affect payment of principal or interest.
o U.S. Government Securities. U.S. Government Securities include debt
securities issued or guaranteed by the U.S. Government or its agencies and
instrumentalities. Certain U.S. Government Securities, including U.S. Treasury
bills, notes and bonds, and mortgage participation certificates guaranteed by
the Government National Mortgage Association ("Ginnie Mae") are supported by the
full faith and credit of the U.S. Government, which in general terms means that
the U.S. Treasury stands behind the obligation to pay principal and interest.
Ginnie Mae certificates are one type of mortgage-related U.S. Government
Security a Fund may invest in. Other mortgage-related U.S. Government Securities
the Funds invest in that are issued or guaranteed by federal agencies or
government-sponsored entities are not supported by the full faith and credit of
the U.S. Government. Those securities include obligations supported by the right
of the issuer to borrow from the U.S. Treasury, such as obligations of Federal
Home Loan Mortgage Corporation ("Freddie Mac"), obligations supported only by
the credit of the instrumentality, such as Federal National Mortgage Association
("Fannie Mae") or the Student Loan Marketing Association and obligations
supported by the discretionary authority of the U.S. Government to repurchase
certain obligations of U.S. Government agencies or instrumentalities such as the
Federal Land Banks and the Federal Home Loan Banks. Other U.S. Government
Securities a Fund may invest in are collateralized mortgage obligations
("CMOs").
The value of U.S. Government Securities will fluctuate until they mature
depending on prevailing interest rates. Because the yields on U.S. Government
Securities are generally lower than on corporate debt securities, when a Fund
holds U.S. Government Securities it may attempt to increase the income it can
earn from them by writing covered call options against them, when market
conditions are appropriate. Writing covered calls is explained below, under
"Hedging."
o Short-Term Debt Securities. Each Fund may invest in high quality,
short-term money market instruments such as U.S. Treasury and agency
obligations; commercial paper (short-term, unsecured, negotiable promissory
notes of a domestic or foreign company); short-term debt obligations of
corporate issuers; and certificates of deposit and bankers' acceptances (time
drafts drawn on commercial banks usually in connection with international
transactions) of banks and savings and loan associations. While the LifeSpan
Income Fund may use these investments primarily for income purposes, each Fund
may invest in these securities in greater amounts for temporary defensive
purposes when market conditions are unstable, or for liquidity purposes.
o Mortgage-Backed Securities, CMOs and REMICs. Certain mortgage-backed
securities, whether issued by the U.S. Government or by private issuers,
"pass-through" to investors the interest and principal payments generated by a
pool of mortgages assembled for sale by government agencies. Pass-through
mortgage-backed securities entail the risk that principal may be repaid at any
time because of prepayments on the underlying mortgages. That may result in
greater price and yield volatility than traditional fixed-income securities that
have a fixed maturity and interest rate.
Each Fund may also invest in CMOs, which generally are obligations fully
collateralized by a portfolio of mortgages or mortgage-related securities, and
in real estate mortgage investment conduits ("REMICs"). Payment of the interest
and principal generated by the pool of mortgages on CMOs and REMICs are passed
through to the holders as the payments are received. CMOs and REMICs are issued
with a variety of classes or series which have different maturities. Certain
CMOs and REMICs may be more volatile and less liquid than other types of
mortgage-related securities, because of the possibility of the prepayment of
principal due to prepayments on the underlying mortgage loans. The Funds do not
intend to acquire "residual" interests in REMICs.
o "Stripped" Securities. Each Fund may also invest in CMOs and REMICs that
are "stripped." That means that the security is divided into two parts, one of
which receives some or all of the principal payments (and is known as a
"principal-only" security or "P/O") and the other which receives some or all of
the interest (and is known as an "interest-only" security, or "I/O"). P/Os and
I/Os are generally referred to as "derivative investments," discussed further
below.
The yield to maturity on the class that receives only interest is
extremely sensitive to the rate of payment of the principal on the underlying
mortgages. Principal prepayments increase that sensitivity. Stripped securities
that pay "interest only" are therefore subject to greater price volatility when
interest rates change, and they have the additional risk that if the underlying
mortgages are prepaid, a Fund will lose the anticipated cash flow from the
interest on the prepaid mortgages. That risk is increased when general interest
rates fall, and in times of rapidly falling interest rates, a Fund might receive
back less than its investment.
The value of "principal only" securities generally increases as interest
rates decline and prepayment rates rise. The price of these securities is
typically more volatile than that of coupon-bearing bonds of the same maturity.
Private-issuer stripped securities are generally purchased and sold by
institutional investors through investment banking firms. At present,
established trading markets have not yet developed for these securities.
Therefore, most private-issuer stripped securities may be deemed "illiquid." If
a Fund holds illiquid stripped securities, the amount it can hold will be
subject to the Fund's investment policy limiting investments in illiquid
securities to 15% of the Fund's net assets, discussed below.
o Asset-Backed Securities. A Fund may invest in "asset-backed" securities.
These represent interests in pools of consumer loans and other trade
receivables, similar to mortgage-backed securities. They are issued by trusts
and "special purpose corporations." They are backed by a pool of assets, such as
credit card or auto loan receivables, which are the obligations of a number of
different parties. The income from the underlying pool is passed through to
holders, such as one of the Funds. These securities may be supported by a credit
enhancement, such as a letter of credit, a guarantee or a preference right.
However, the extent of the credit enhancement may be different for different
securities and generally applies to only a fraction of the security's value.
These securities present special risks. For example, in the case of credit card
receivables, the issuer of the security may have no security interest in the
related collateral.
o Structured Notes. A structured note is a debt security having an
interest rate or principal repayment requirement based on the performance of a
benchmark asset or market, such as stock prices, currency exchange rates or
commodity prices. They provide exposure to the benchmark market while fixing the
maximum loss if that market does not perform as expected. Depending on the terms
of the note, a Fund could forego all or part of the interest and principal that
would be payable on a comparable conventional note, and the Fund's loss could
not exceed that amount.
o Inverse Floating Rate Instruments. The Funds may invest in inverse
floating rate debt instruments ("inverse floaters"), including leveraged inverse
floaters and inverse floating rate mortgage-backed securities, such as inverse
floating rate "interest only" stripped mortgage-backed securities. The interest
rate on inverse floaters resets in the opposite direction from the market rate
of interest to which the inverse floater is indexed. An inverse floater may be
considered to be leveraged to the extent that its interest rate varies by a
magnitude that exceeds the magnitude of the change in the index rate of
interest. The higher degree of leverage inherent in inverse floaters is
associated with greater volatility in their market values.
o Warrants and Rights. Warrants basically are options to purchase stock at
set prices that are valid for a limited period of time. Rights are similar to
warrants but normally have a short duration and are distributed directly by the
issuer to its shareholders. A Fund may invest up to 5% of its total assets in
warrants or rights. That 5% limitation does not apply to warrants a Fund has
acquired as part of units with other securities or that are attached to other
securities. No more than 2% of a Fund's total assets may be invested in warrants
that are not listed on either The New York Stock Exchange or The American Stock
Exchange. For further details, see "Warrants and Rights" in the Statement of
Additional Information.
o Small, Unseasoned Companies. Each Fund may invest in securities of
small, unseasoned companies. These are companies that have been in operation
less than three years, including the operations of any predecessors. Securities
of these companies may have limited liquidity (which means that a Fund may have
difficulty selling them at an acceptable price when it wants to) and the price
of these securities may be volatile. See "Investing in Small, Unseasoned
Companies" in the Statement of Additional Information for a further discussion
of the risks involved in such investments.
o Loans of Portfolio Securities. To attempt to increase its income or
raise cash for liquidity purposes, each Fund may lend its portfolio securities,
other than in repurchase transactions, to brokers, dealers and other financial
institutions. A Fund must receive collateral for a loan. As a matter of
fundamental policy, these loans are limited to not more than 33-1/3% of the
Fund's total assets (taken at market value) and are subject to other conditions
described in the Statement of Additional Information. The Funds presently do not
intend to engage in loans of securities, but if a Fund does so it does not
intend to lend securities in amounts that will exceed 5% of the Fund's total
assets in the coming year.
o When-Issued and Delayed Delivery Transactions. Each Fund may purchase
securities on a "when-issued" basis and may purchase or sell securities on a
"delayed delivery" basis. These terms refer to securities that have been created
and for which a market exists, but which are not available for immediate
delivery. There may be a risk of loss to a Fund if the value of the security
declines prior to the settlement date.
o Repurchase Agreements. Each Fund may enter into repurchase agreements. In
a repurchase transaction, a Fund buys a security and simultaneously sells it to
the vendor for delivery at a future date. Repurchase agreements must be fully
collateralized. However, if the vendor fails to pay the resale price on the
delivery date, a Fund may experience costs in disposing of the collateral and
may experience losses if there is any delay in doing so.
o Illiquid and Restricted Securities. Under the policies established by the
Funds' Board of Directors, the Manager determines the liquidity of certain of
the Funds' investments. Investments may be illiquid because of the absence of an
active trading market, making it difficult to value them or dispose of them
promptly at an acceptable price. A restricted security is one that has a
contractual restriction on its resale or which cannot be sold publicly until it
is registered under the Securities Act of 1933. Each Fund cannot invest more
than 15% of its net assets in illiquid securities (including repurchase
agreements having a maturity beyond 7 days, securities that are not readily
marketable, certain restricted securities, over-the-counter options and
privately-issued stripped mortgage-backed securities. Each Fund cannot invest
more than 15% of its total assets in restricted securities. Illiquid securities
include repurchase agreements maturing in more than seven days or certain
participation interests other than those with puts exercisable within seven
days. The Manager monitors holdings of illiquid securities on an ongoing basis
and at times a Fund may be required to sell some holdings to maintain adequate
liquidity.
o Hedging. Each Fund may write covered call options on securities, stock
or bond indices and foreign currency. Each may purchase and sell certain kinds
of futures contracts, forward contracts, and options on futures, broadly-based
stock or bond indices and foreign currency, or enter into interest rate swap
agreements. These are all referred to as "hedging instruments." While the Funds
currently do not engage extensively in hedging, a Fund may use these instruments
for hedging and non-hedging purposes as described below.
A Fund may write covered call options and buy and sell futures and forward
contracts for a number of purposes. It may do so to try to manage its exposure
to the possibility that the prices of its portfolio securities may decline, or
to establish a position in the securities market as a temporary substitute for
purchasing individual securities. It may do so to try to manage its exposure to
changing interest rates. Some of these strategies, such as selling futures and
writing covered calls, hedge a Fund's portfolio against price fluctuations.
Other hedging strategies, such as buying futures, tend to increase a
Fund's exposure to the securities market. Forward contracts may be used to try
to manage foreign currency risks on a Fund's foreign investments. Foreign
currency options may be used to try to protect against declines in the dollar
value of foreign securities a Fund owns, or to protect against an increase in
the dollar cost of buying foreign securities. Writing covered call options may
also provide income to a Fund for liquidity purposes, defensive reasons, or to
raise cash to distribute to shareholders. Hedging strategies entail special
risks, described in "Investment Risks," above.
o Futures. A Fund may buy and sell futures contracts for hedging and
non-hedging purposes that relate to (1) foreign currencies (these are referred
to as "Forward Contracts" and are discussed below), (2) financial indices, such
as U.S. or foreign government securities indices, corporate debt securities
indices or equity securities indices (these are referred to as Financial
Futures), and (3) interest rates (these are referred to as Interest Rate
Futures). These types of Futures are described in "Hedging" in the Statement of
Additional Information.
o Covered Call Options and Options on Futures. A Fund may write (that is,
sell) call options on securities, indices and foreign currencies for hedging
purposes and write call options on Futures for hedging and non-hedging purposes,
but only if all such calls are "covered." This means a Fund must own the
security subject to the call while the call is outstanding or, in the case of
calls on futures or indices, segregate appropriate liquid assets. When a Fund
writes a call, it receives cash (called a premium). The call gives the buyer the
ability to buy the investment on which the call was written from a Fund at the
call price during the period in which the call may be exercised. If the value of
the investment does not rise above the call price, it is likely that the call
will lapse without being exercised, while the Fund keeps the cash premium (and
the investment).
A Fund may purchase put options on Futures. Buying a put on an investment
gives a Fund the right to sell the investment at a set price to a seller of a
put on that investment. A Fund may sell a put on Futures, but only if the puts
are covered by segregated liquid assets.
A Fund may sell covered call options that are traded on U.S. or foreign
securities or commodity exchanges or are traded in the over-the-counter markets.
In the case of foreign currency options, they may be quoted by major recognized
dealers in those options. Options traded in the over-the-counter market may be
"illiquid," and therefore may be subject to a Fund's restrictions on illiquid
investments.
o Forward Contracts. Forward Contracts are foreign currency exchange
contracts. They are used to buy or sell foreign currency for future delivery at
a fixed price. A Fund may use them to try to "lock in" the U.S. dollar price of
a security denominated in a foreign currency that the Fund has purchased or
sold, or to protect against possible losses from changes in the relative value
of the U.S. dollar and a foreign currency. A Fund may also use "cross hedging,"
where the Fund hedges against changes in currencies other than the currency in
which a security it holds is denominated. No Fund will speculate in foreign
exchange.
o Interest Rate Swaps. A Fund may enter into interest rate swaps both for
hedging and to seek to increase total return. In an interest rate swap, a Fund
and another party exchange their right to receive, or their obligation to pay,
interest on a security. For example, they may swap a right to receive floating
rate interest payments for fixed rate payments. A Fund enters into swaps only on
a net basis, which means the two payment streams are netted out, with the Fund
receiving or paying, as the case may be, only the net amount of the two
payments. A Fund will segregate liquid assets of any type (such as cash, U.S.
Government, equity or debt securities) to cover any amounts it could owe under
swaps that exceed the amounts it is entitled to receive, and it will adjust that
amount daily, as needed.
o Derivative Investments. Each Fund can invest in a number of different
kinds of "derivative" investments. In general, a "derivative investment" is a
specially designed investment whose performance is linked to the performance of
another investment or security, such as an option, future, index, currency or
commodity. A Fund may not purchase or sell physical commodities; however, a Fund
may purchase and sell foreign currency in hedging transactions. This shall not
prevent a Fund from buying or selling options and futures contracts or from
investing in securities or other instruments backed by physical commodities.
There are special risks of investing in derivatives, described in "Investment
Risks," above.
Derivative investments used by a Fund are used in some cases for hedging
purposes and in other cases to seek income. In the broadest sense,
exchange-traded options and futures contracts (discussed in "Hedging," above)
may be considered "derivative investments."
"Index-linked" or "commodity-linked" notes are debt securities that call
for interest payments or repayment of principal in different terms than a
typical note where the borrower agrees to pay a fixed sum on the maturity of the
note. Principal or interest payments on an index-linked note depend on the
performance of one or more market indices, such as the S&P 500 Index or a
weighted index of commodity futures, such as crude oil, gasoline and natural
gas. A Fund may invest in "debt exchangeable for common stock" of an issuer or
"equity-linked" debt securities of an issuer. At maturity, the principal amount
of the debt security is exchanged for common stock of the issuer or is payable
in an amount based on the issuer's common stock price at the time of maturity.
In either case there is a risk that the amount payable at maturity will be less
than the expected principal amount of the debt.
Other Investment Restrictions. The Funds have other investment restrictions
which are "fundamental" policies. Among these fundamental policies, each Fund
cannot do any of the following:
o A Fund cannot borrow money, except for emergency or extraordinary
purposes including (i) from banks for temporary or short-term purposes or for
the clearance of transactions, in amounts not to exceed 33-1/3% of the value of
the Fund's total assets (including the amount borrowed) taken at market value,
(ii) in connection with the redemption of Fund shares or to finance failed
settlements of portfolio trades without immediately liquidating portfolio
securities or other assets; and (iii) in order to fulfill commitments or plans
to purchase additional securities pending the anticipated sale of other
portfolio securities or assets, but only if after each such borrowing there is
asset coverage of at least 300% as defined in the Investment Company Act. For
purposes of this investment restriction, mortgage dollar rolls, futures
contracts, options on futures contracts, securities or indices and forward
commitment transactions shall not constitute borrowing.
o A Fund cannot make loans, except that the Fund (1) may lend portfolio
securities in accordance with the Fund's investment policies up to 33-1/3% of
the Fund's total assets taken at market value, (2) enter into repurchase
agreements, and (3) purchase all or a portion of an issue of publicly
distributed bonds, debentures or other similar obligations.
o A Fund cannot purchase the securities of issuers conducting their
principal activity in the same industry if, immediately after such purchase, the
value of its investments in such industry would exceed 25% of its total assets
taken at market value at the time of such investment. This limitation does not
apply to investments in obligations of the U.S. Government or any of its
agencies, instrumentalities or authorities. The Funds have undertaken, as a
matter of non-fundamental policy, to apply this restriction to 25% or more of
their assets.
o With respect to 75% of its total assets, a Fund cannot purchase
securities of an issuer (other than the U.S. Government, its agencies,
instrumentalities or authorities), if: (a) such purchase would cause more than
5% of the Fund's total assets taken at market value to be invested in the
securities of such issuer; or (b) such purchase would at the time result in more
than 10% of the outstanding voting securities of such issuer being held by the
Fund.
Unless the Prospectus states that a percentage restriction applies on an
ongoing basis, it applies only at the time a Fund makes an investment, and the
Fund need not sell securities to meet the percentage limits if the value of the
investment increases in proportion to the size of the Fund. Additional
investment restrictions are listed in "Other Investment Restrictions" in the
Statement of Additional Information.
How the Funds are Managed
Organization and History. Each of the Funds is a series of Oppenheimer Series
Fund, Inc. (the "Company"), which was organized in 1981 as a Maryland
corporation. It is an open-end management investment company. Organized as a
series fund, the Company presently has five series, each of which is
diversified, including the three LifeSpan Funds. Prior to March 18, 1996, the
LifeSpan Funds were called CMIA LifeSpan Capital Appreciation Fund, CMIA
LifeSpan Balanced Fund and CMIA LifeSpan Diversified Income Fund.
The Company (including the Funds) is governed by a Board of Directors,
which is responsible for protecting the interests of shareholders under Maryland
law. The Directors meet periodically throughout the year to oversee each Fund's
activities, review its performance, and review the actions of the Manager and
the Subadvisers. "Directors and Officers of the Fund" in the Statement of
Additional Information names the Directors and officers of the Funds and
provides more information about them. Although the Funds will not normally hold
annual meetings of shareholders, they may hold shareholder meetings from time to
time on important matters, and shareholders have the right to call a meeting to
remove a Director or to take other action described in the Company's Articles of
Incorporation.
The Board of Directors has the power, without shareholder approval, to
divide unissued shares of the Company into two or more classes. The Board has
done so, and each Fund currently has three classes of shares, Class A, Class B
and Class C. All classes invest in the same investment portfolio. Each class has
its own dividends and distributions, and pays certain expenses which may be
different for the different classes. Each class may have a different net asset
value. Each share has one vote at shareholder meetings, with fractional shares
voting proportionally on matters submitted to the vote of shareholders. Shares
of each class may have separate voting rights on matters in which interests of
one class are different from interests of another class, and shares of a
particular class vote as a class on matters that affect that class alone. Shares
are freely transferrable. Please refer to "How the Funds are Managed" in the
Statement of Additional Information for further information on voting of shares.
The Board of Directors of the Company has determined that (i) it is in the
best interest of shareholders of Oppenheimer LifeSpan Growth Fund that the Fund
reorganize with and into Oppenheimer Disciplined Value Fund, a series of the
Company, (ii) it is in the best interest of shareholders of Oppenheimer LifeSpan
Balanced Fund that the Fund reorganize with and into Oppenheimer Disciplined
Allocation Fund, a series of the Company, and (iii) it is in the best interest
of shareholders of Oppenheimer LifeSpan Income Fund that the Fund reorganize
with and into the Oppenheimer Bond Fund series of Oppenheimer Integrity Funds.
The Board unanimously approved the terms of an Agreement and Plan of
Reorganization to be entered into between each reorganizing fund (the
"Reorganization Plan") and the transactions contemplated (the transactions are
referred to as the "Reorganization"). The Board further determined that the
Reorganization should be submitted to the Funds' shareholders for approval, and
recommended that shareholders approve the Reorganization.
Pursuant to the Reorganization Plan (i) substantially all of the assets of
each Fund would be exchanged for Class A, Class B and Class C shares of the
respective acquiring fund, (ii) the Class A, Class B and Class C shares of the
acquiring funds would be distributed to the shareholders of the respective Fund
and, (iii) the outstanding shares of each Fund would be canceled. It is expected
that the Reorganization will be tax-free, pursuant to Section 368(a)(1) of the
Internal Revenue Code of 1986, as amended ,and each Fund will request an opinion
of tax counsel to that effect.
A meeting of the shareholders of the Funds is expected to be held to vote
on the Reorganization. Approval of the Reorganization requires the affirmative
vote of a majority of the outstanding shares of each Fund (the term "majority"
is defined in the Investment Company Act as a special majority. It is also
explained in the Statement of Additional Information). There is no assurance
that a Fund's shareholders will approve the Reorganization with respect to that
Fund. Details about the proposed Reorganization of each Fund will be contained
in a proxy statement and other soliciting materials which will be sent to each
Fund's shareholders of record on a date to be determined.
The Manager, the Subadvisers and their Affiliates. The Funds are managed by the
Manager, OppenheimerFunds, Inc., which supervises each Fund's investment program
and handles its day-to-day business. The Manager carries out its duties, subject
to the policies established by the Board of Directors, under a separate
Investment Advisory Agreement for each Fund which state the Manager's
responsibilities. The Investment Advisory Agreements set forth the rates of the
management fees paid by a Fund to the Manager, and describes the expenses that a
Fund is responsible to pay to conduct its business.
o The Manager. The Manager has operated as an investment adviser since
1959. The Manager (including subsidiaries) currently manages investment
companies, including other Oppenheimer funds, with assets of more than $75
billion as of December 31, 1997, and with more than 3.5 million shareholder
accounts. The Manager is owned by Oppenheimer Acquisition Corp., a holding
company that is owned in part by senior officers of the Manager and controlled
by Massachusetts Mutual Life Insurance Company.
The management services provided to the Funds by the Manager, and the
services provided by the Distributor and the Transfer Agent to shareholders,
depend on the smooth functioning of their computer systems. Many computer
software systems in use today cannot distinguish the year 2000 from the year
1900 because of the way dates are encoded and calculated. That failure could
have a negative impact on handling securities trades, pricing and account
services. The Manager, the Distributor and Transfer Agent have been actively
working on necessary changes to their computer systems to deal with the year
2000 and expect that their systems will be adapted in time for that event,
although there cannot be assurance of success.
The Subadvisers. The Manager has engaged the following three Subadvisers
to provide day-to-day portfolio management for certain components of the Funds:
o Babson-Stewart, One Memorial Drive, Cambridge, MA 02142, the Subadviser
to the international component, was established in 1987. The general partners of
Babson-Stewart are David L. Babson & Co., which is an indirect subsidiary of
Massachusetts Mutual Life Insurance Company, and Stewart Ivory & Co., Ltd. As of
December 31, 1997, Babson-Stewart had approximately $4.5 billion in assets under
management.
o BEA Associates, One Citicorp Center, 153 East 53rd Street, 57th Floor,
New York, NY 10022, the Subadviser to the high yield/high risk bond component,
has been providing fixed-income and equity management services to institutional
clients since 1984. BEA is a partnership between Credit Suisse Capital
Corporation and CS Advisors Corp. As of December 31, 1997, BEA Associates,
together with its global affiliate, had over $128 billion in assets under
management.
o Pilgrim Baxter & Associates, Ltd. ("Pilgrim Baxter"), 825 Duportail
Road, Wayne, PA 19087, the Subadviser to the small cap component, was
established in 1982 to provide specialized equity management for institutional
investors including other investment companies. Pilgrim Baxter is a wholly-owned
subsidiary of United Asset Management Corporation. As of December 31, 1997,
Pilgrim Baxter had over $16 billion in assets under management.
Each Subadviser is responsible for choosing the investments of its
respective component for each Fund and its duties and responsibilities are set
forth in its respective contract with the Manager. The Manager, not the Funds,
pay the Subadvisers.
o Portfolio Managers. The Manager supervises each Fund's investment
program and regularly reviews the asset allocation among each Fund's classes and
components. The Manager's personnel manage certain of the components. The
Portfolio Managers of each component are listed below.
Component Portfolio Manager/Business Experience (Last 5 Years)
- -------------------------------------------------------------------
International
(Babson-Stewart) James W. Burns: Managing Director, Babson-Stewart
(1993-present) and Director, Stewart-Ivory & Co. Ltd.
(since 1990) John G.L. Wright: Managing Director,
Babson-Stewart (1987-present); Director, Stewart
Ivory & Co. Ltd. (since 1971)
Value/Growth
(the Manager) Peter M. Antos, C.F.A.: Principal Portfolio
Manager, Vice President of the Funds and
Senior Vice President of the Manager;
portfolio manager of other Oppenheimer funds;
previously Vice President and Senior Portfolio
Manager, Equities-G.R. Phelps & Co. ("G.R.
Phelps"), a subsidiary of Connecticut Mutual
Life Insurance Company ("CML") (1989-1996)
Michael C. Strathearn, C.F.A.: Vice President of the
Funds and the Manager since March, 1996; portfolio
manager of other Oppenheimer funds; previously a
Portfolio Manager, Equities, CML (1988-1996)
Kenneth B. White, C.F.A.: Vice President of the Funds
and the Manager since March, 1996; portfolio manager of
other Oppenheimer funds; previously a Portfolio Manager,
Equities CML (1987-1992)
Growth/Income
(the Manager) Michael C. Strathearn, C.F.A.: (see
biographical data above)
Peter M. Antos, C.F.A.: (see biographical data
above)
Stephen F. Libera, C.F.A.: Vice President of
the Funds and the Manager since March, 1996;
portfolio manager of other Oppenheimer funds;
previously a Vice President and Senior
Portfolio Manager, Fixed Income--G.R. Phelps
(1985-1996)
Kenneth B. White, C.F.A.: (see biographical
data above)
Small Cap Stocks
(Pilgrim Baxter) Gary L. Pilgrim: Director, Member of Executive
Committee, President and Chief Investment
Officer, Pilgrim Baxter (1985-Present)
Michael D. Jones: Portfolio Manager/Analyst,
Pilgrim Baxter (since 1995); Vice
President/Portfolio Manager, Bank of New York
(1990-1995)
Government Securities
/Corporate Bonds
(the Manager) Stephen F. Libera, C.F.A.: (see biographical
data above)
High Yield Bonds
(BEA Associates) Richard J. Lindquist: Executive Director and
High Yield Portfolio Manager, BEA Associates
(since 1995); CS First Boston (1989-1995)
Short-Term Bonds
(the Manager) Stephen F. Libera, C.F.A.: (see biographical
data above)
o Fees and Expenses. Under separate Investment Advisory Agreements, each
Fund pays the Manager a monthly fee. For the LifeSpan Growth and Balanced Funds,
the fee is at the following annual rates: 0.85% of the average daily net assets
up to $250 million and 0.75% of average daily net assets over $250 million. For
the LifeSpan Income Fund, the annual rates are: 0.75% of average daily net
assets up to $250 million and 0.65% of average daily net assets over $250
million. The management fees for fiscal year ended October 31, 1997 for each
LifeSpan Growth Fund, LifeSpan Balanced Fund and LifeSpan Income Fund were
o.85%, 0.85% and 0.75%, respectively, of the average annual net assets for each
class of shares that were offered.
Under its Investment Subadvisory Agreements with Babson-Stewart for the
LifeSpan Growth and LifeSpan Balanced Funds, the Manager pays Babson-Stewart a
monthly fee, at the following annual rates, which decline as the average daily
net assets of that portion of the respective Fund's component allocated to
Babson-Stewart grow: 0.75% of the first $10 million of average daily net assets
allocated to Babson-Stewart, 0.625% of the next $15 million, 0.50% of the next
$25 million and 0.375% of such assets in excess of $50 million. The net assets
of all Funds allocated to Babson-Stewart are not aggregated in applying these
breakpoints.
Under its Investment Subadvisory Agreements with BEA for each LifeSpan
Fund, the Manager pays BEA a quarterly fee at the following annual rates, which
decline as the combined average daily net assets of each Fund allocated to BEA
grow: 0.45% of the first $25 million of combined average daily net assets
allocated to BEA, 0.40% of the next $25 million, 0.35% of the next $50 million
and 0.25% of the assets in excess of $100 million.
Under its Investment Subadvisory Agreements with Pilgrim Baxter, the
Manager pays Pilgrim Baxter a monthly fee equal to 0.60% of the combined average
daily net assets of the Funds allocated to Pilgrim Baxter. For purposes of
calculating the fees payable to BEA and Pilgrim Baxter, the net asset values of
those portions of the assets of each Fund subadvised by BEA and Pilgrim Baxter
are aggregated with those portions of the net assets of Panorama Series Fund,
Inc. managed by BEA and Pilgrim Baxter, respectively.
Each Fund pays expenses related to its daily operations, such as custodian
fees, certain Directors' fees, transfer agency fees, legal and auditing costs.
Those expenses are paid out of a Fund's assets and are not paid directly by
shareholders. However, those expenses reduce the net asset value of shares, and
therefore are indirectly borne by shareholders through their investment. More
information about the Investment Advisory Agreements and the other expenses paid
by the Funds is contained in the Statement of Additional Information.
There is also information about the Funds' brokerage policies and practices
in "Brokerage Policies of the Funds" in the Statement of Additional Information.
That section discusses how brokers and dealers are selected for the Funds'
portfolio transactions. When deciding which brokers to use, the Manager is
permitted by the Investment Advisory Agreements to consider whether brokers have
sold shares of the Funds or any other funds for which the Manager serves as
investment adviser.
o The Distributor. Each Fund's shares are sold through dealers, brokers,
banks and other financial institutions that have a sales agreement with
OppenheimerFunds Distributor, Inc., a subsidiary of the Manager that acts as
each Fund's Distributor. The Distributor also distributes the shares of the
other Oppenheimer funds and is sub-distributor for funds managed by a subsidiary
of the Manager.
o The Transfer Agent. Each Fund's transfer agent is OppenheimerFunds
Services, a division of the Manager, which acts as the shareholder servicing
agent for each Fund on an "at-cost" basis. It also acts as the shareholder
servicing agent for the other Oppenheimer funds. Shareholders should direct
inquiries about their accounts, to the Transfer Agent at the address and
toll-free number shown below in this Prospectus or on the back cover.
Performance of the Funds
Explanation of Performance Terminology. Each Fund uses the term "total return"
to illustrate its performance. The performance of each class of shares is shown
separately, because the performance of each class of shares will usually be
different as a result of the different kinds of expenses each class bears. These
returns measure the performance of a hypothetical account in a Fund over various
periods, and do not show the performance of each shareholder's account (which
will vary if dividends are received in cash, or shares are sold or purchased). A
Fund's performance data may help you see how well your investment has done over
time and to compare it to market indices.
It is important to understand that a Fund's total returns represent past
performance and should not be considered to be predictions of future returns or
performance. More detailed information about how total returns are calculated is
contained in the Statement of Additional Information, which also contains
information about other ways to measure and compare a Fund's performance. A
Fund's investment performance will vary over time, depending on market
conditions, the composition of the portfolio, expenses and which class of shares
you purchase.
o Total Returns. There are different types of "total returns" used to
measure a Fund's performance. Total return is the change in value of a
hypothetical investment in a Fund over a given period, assuming that all
dividends and capital gains distributions are reinvested in additional shares.
The cumulative total return measures the change in value over the entire period
(for example, ten years). An average annual total return shows the average rate
of return for each year in a period that would produce the cumulative total
return over the entire period. However, average annual total returns do not show
a Fund's actual year-by-year performance.
When total returns are quoted for Class A shares, normally the current
maximum initial sales charge has been deducted. When total returns are shown for
Class B and Class C shares, normally the contingent deferred sales charge that
applies to the period for which total return is shown has been deducted.
However, total returns may also be quoted at "net asset value," without
considering the effect of the sales charge, and those returns would be less if
sales charges were deducted.
How have the Funds Performed? Below is a discussion by the Manager of the
performance of each Fund during its fiscal year ended October 31, 1997, followed
by a graphical comparison of the Fund's performance to appropriate broad-based
market index or indices.
o Management's Discussion of Performance.
o Oppenheimer LifeSpan Growth Fund. During the fiscal year ended October
31, 1997, the Fund's positive performance was primarily affected by the economic
growth in the stock markets. In particular, the Fund realized gains on its stock
holding in the financial and technology sectors. The Fund's investments in
foreign securities also performed well, due in large part to a reduction of the
Fund's exposure to the difficulties in Southeast Asia. The Fund's investments in
high-yield securities also performed well, especially in strong growth sectors
such as telecommunications. The Fund's government/corporate bond investments
benefited from the controlled, non-inflationary growth in the U.S.
o Oppenheimer LifeSpan Balanced Fund. During fiscal year ended October 31,
1997, the stock market performed strongly. The Fund benefited from the stock
market due primarily to the Manager's allocation of approximately 65% of the
Fund's assets in equity securities. In particular, the Fund's investments in
financial and technology stocks contributed significantly to the Fund's positive
performance, followed by small cap and international stocks. The Fund's returns
were also helped by a bond market rally later in the year.
o Oppenheimer LifeSpan Income Fund. During fiscal year ended October 31,
1997, the Fund performed well despite volatility in the short-term bond market.
The Fund's positive performance was helped in large part by the non-inflationary
growth environment in the U.S. The Fund's Growth/Income component performed the
strongest, benefiting from overall strong stock market returns.
Each Fund's portfolio holdings, allocations and strategies are subject to
change.
o Comparing the Funds' Performance to the Market. The graphs below show the
performance of a hypothetical $10,000 investment in Class A, Class B and Class C
shares of each of the Funds held until October 31, 1997. In the case of Class A
shares, performance is measured from the inception of each Fund. In the case of
Class B shares, performance is measured from the inception of that class of each
Fund on October 2, 1995. In the case of Class C shares, performance is measured
from the inception of that class of each Fund on May 1, 1996.
LifeSpan Balanced Fund's performance is compared to the performance of the
S&P 500 Index, a broad-based index of equity securities widely regarded as a
general measurement of the performance of the U.S. equity securities market and
Lehman Brothers Government/Corporate Bond Index, an index which includes the
government and corporate bond indices, including U.S. government treasury and
agency securities, corporate and Yankee bonds. LifeSpan Income Fund's
performance is compared to the performance of the Lehman Brothers Intermediate
Government/Corporate Bond Index, which includes such bonds with 1- 10 year
maturity. LifeSpan Growth Fund's performance is compared to the performance of
the Wilshire 5000 Index, an index which measures the performance of all U.S.
headquartered equity securities with readily available price data.
Index performance reflects the reinvestment of dividends but does not
consider the effect of capital gains or transaction costs, and none of the data
below shows the effect of taxes. Also, each Fund's performance reflects the
effect of the Fund business and operating expenses. While index comparisons may
be useful to provide a benchmark for a Fund's performance, it must be noted that
each Fund's investments are not limited to the securities in any one index.
Moreover, the indices performance data does not reflect any assessment of the
risk of the investments included in the indices.
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer LifeSpan Growth Fund and Wilshire 5000 Index
[Graph](1)
Average Annual Total Return of Class A Shares of the Fund at 10/31/97(2)
1 Year Life of Class
- -------- -------------
6.46% 15.20%
Total returns and the ending account values in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance in the graph for the Wilshire 5000 Index began 4/30/95 for Class
A shares.
(1) The Fund changed its fiscal year end from December to October. (2) The
commencement of operations of the Fund (Class A shares) was 05/1/95. The average
annual total returns and the ending account value in the graph reflect
reinvestment of all dividends and capital gains distributions and are shown net
of the applicable 5.75% maximum initial sales charge.
Past performance is not predictive of future performance.
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer LifeSpan Growth Fund and Wilshire 5000 Index
[Graph](1)
Average Annual Total Return of Class B Shares of the Fund at 10/31/97(3)
1 Year Life of Class
- -------- -------------
7.07% 13.40%
Total returns and the ending account values in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance in the graph for the Wilshire 5000 Index began 9/30/95 for Class
B shares.
(1) The Fund changed its fiscal year end from December to October. (3) Class B
shares of the Fund were first publicly offered on 10/2/95. The average annual
total returns are shown net of the applicable 5% and 3% contingent deferred
sales charges, respectively, for the 1-year period and the Life of Class. The
ending account value in the graph is net of the applicable 3% contingent
deferred sales charge. Different contingent deferred sales charges applied to
redemptions of Class B shares prior to 3/18/96.
Past performance is not predictive of future performance.
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer LifeSpan Growth Fund and Wilshire 5000 Index
[Graph]
Average Annual Total Return of Class C Shares of the Fund at 10/31/97(4)
1 Year Life of Class
- -------- -------------
11.05% 10.06%
Total returns and the ending account values in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance in the graph for the Wilshire 5000 Index began 4/30/96 for Class
C shares.
(4) Class C shares of the Fund were first publicly offered on 5/1/96. The
average annual total return for the 1-year period is shown net of the applicable
1% contingent deferred sales charge.
Past performance is not predictive of future performance.
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer LifeSpan Balanced Fund, Lehman Brothers
Government/Corporate Bond Index and the S&P 500 Index
[Graph](1)
Average Annual Total Return of Class A Shares of the Fund at 10/31/97(2)
1 Year Life of Class
- -------- -------------
6.18% 12.68%
Total returns and the ending account values in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance in the graph for the Lehman Brothers Government/Corporate Bond
Index and the S&P 500 Index began 4/30/95 for Class A shares.
(1) The Fund changed its fiscal year end from December to October. (2) The
commencment of operations of the Fund (Class A shares) was 05/1/95. The average
annual total returns and the ending account value in the graph reflect
reinvestment of all dividends and capital gains distributions and are shown net
of the applicable 5.75% maximum initial sales charge.
Past performance is not predictive of future performance.
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer LifeSpan Balanced Fund, Lehman Brothers
Government/Corporate Bond Index and the S&P 500 Index
[Graph](1)
Average Annual Total Return of Class B Shares of the Fund at 10/31/97(3)
1 Year Life of Class
- -------- -------------
6.70% 11.09%
Total returns and the ending account values in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance in the graphs for the Lehman Brothers Government/Corporate Bond
Index and the S&P 500 Index began 9/30/95 for Class B shares.
(1) The Fund changed its fiscal year end from December to October. (3) Class B
shares of the Fund were first publicly offered on 10/2/95. The average annual
total returns are shown net of the applicable 5% and 3% contingent deferred
sales charges, respectively, for the 1-year period and the Life of Class. The
ending account value in the graph is net of the applicable 3% contingent
deferred sales charge. Different contingent deferred sales charges applied to
redemptions of Class B shares prior to 3/18/96.
Past performance is not predictive of future performance.
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer LifeSpan Balanced Fund, Lehman Brothers
Government/Corporate Bond Index and the S&P 500 Index
[Graph]
Average Annual Total Return of Class C Shares of the Fund at 10/31/97(4)
1 Year Life of Class
- -------- -------------
10.73% 9.96%
Total returns and the ending account values in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance in the graph for the Lehman Brothers Government/Corporate Bond
Index and the S&P 500 Index began 4/30/96 for Class C shares.
(4) Class C shares of the Fund were first publicly offered on 5/1/96. The
average annual total return for the 1-year period is shown net of the applicable
1% contingent deferred sales charge. Past performance is not predictive of
future performance.
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer LifeSpan Income Fund and the Lehman Brothers
Intermediate Government/Corporate Bond Index
[Graph](1)
Average Annual Total Return of Class A Shares of the Fund at 10/31/97(2)
1 Year Life of Class
- ------ -------------
4.90% 8.22%
Total returns and the ending account values in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance in the graph for the Lehman Brothers Intermediate
Government/Corporate Bond Index began
4/30/95 for Class A shares.
(1) The Fund changed its fiscal year end from December to October. (2) The
commencement of operations date of the Fund (Class A shares) was 05/1/95. The
average annual total returns and the ending account value in the graph reflect
reinvestment of all dividends and capital gains distributions and are shown net
of the applicable 5.75% maximum initial sales charge.
Past performance is not predictive of future performance.
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer LifeSpan Income Fund and the Lehman Brothers
Intermediate Government/Corporate Bond Index
[Graph](1)
Average Annual Total Return of Class B Shares of the Fund at 10/31/97(3)
1 Year Life of Class
- ------ -------------
5.51% 7.62%
Total returns and the ending account values in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance in the graph for the Lehman Brothers Intermediate
Government/Corporate Bond Index began
9/30/95 for Class B shares.
(1) The Fund changed its fiscal year end from December to October. (3) Class B
shares of the Fund were first publicly offered on 10/2/95. The average annual
total returns are shown net of the applicable 5% and 3% contingent deferred
sales charges, respectively, for the 1-year period and the Life of Class. The
ending account value in the graph is net of the applicable 3% contingent
deferred sales charge. Different contingent deferred sales charges applied to
redemptions of Class B shares prior to 3/18/96.
Past performance is not predictive of future performance.
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer LifeSpan Income Fund and the Lehman Brothers
Intermediate Government/Corporate Bond Index
[Graph]
Average Annual Total Return of Class C Shares of the Fund at 10/31/97(4)
1 Year Life of Class
- ------ --------------
10.03% 10.04%
Total returns and the ending account values in the graph show change in share
value and include reinvestment of all dividends and capital gains distributions.
The performance in the graph for the Lehman Brothers Intermediate
Government/Corporate Bond Index began
4/30/96 for Class C shares.
(4) Class C shares of the Fund were first publicly offered on 5/1/96. The
average annual total return for the 1-year period is shown net of the applicable
1% contingent deferred sales charge.
Past performance is not predictive of future performance.
A B O U T Y O U R A C C O U N T
How to Buy Shares
Classes of Shares. Each Fund offers investors three different classes of shares.
The different classes of shares represent investments in the same portfolio of
securities but are subject to different expenses and will likely have different
share prices.
o Class A Shares. If you buy Class A shares, you may pay an initial sales
charge on investments up to $1 million (up to $500,000 for purchases by
"Retirement Plans," as defined in "Class A Contingent Deferred Sales Charge" on
page __). If you purchase Class A shares as part of an investment of at least $1
million ($500,000 for Retirement Plans) in shares of one or more Oppenheimer
funds, you will not pay an initial sales charge, but if you sell any of those
shares within 12 months of buying them (18 months if shares were purchased prior
to May 1, 1997), you may pay a contingent deferred sales charge. The amount of
that sales charge will vary depending on the amount you invested. Sales charge
rates are described in "Buying Class A Shares" below.
o Class B Shares. If you buy Class B shares, you pay no sales charge at
the time of purchase, but if you sell your shares within six years of buying
them, you will normally pay a contingent deferred sales charge that varies
depending on how long you owned your shares, as described in "Buying Class B
Shares" below.
o Class C Shares. If you buy Class C shares, you pay no sales charge at
the time of purchase, but if you sell your shares within 12 months of buying
them, you will normally pay a contingent deferred sales charge of 1%, as
discussed in "Buying Class C Shares" below.
Which Class of Shares Should You Choose? Once you decide that a Fund is an
appropriate investment for you, the decision as to which class of shares is
better suited to your needs depends on a number of factors which you should
discuss with your financial advisor. A Fund's operating costs that apply to a
class of shares and the effect of the different types of sales charges on your
investment will vary your investment results over time. The most important
factors are how much you plan to invest and how long you plan to hold your
investment. If your goals and objectives change over time and you plan to
purchase additional shares, you should re-evaluate those factors to see if you
should consider another class of shares.
In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in a Fund. We used the sales charge
rates that apply to each class, and considered the effect of the asset-based
sales charge on Class B and Class C expenses (which, like all expenses, will
affect your investment return). For the sake of comparison, we have assumed that
there is a 10% rate of appreciation in your investment each year. Of course, the
actual performance of your investment cannot be predicted and will vary, based
on a Fund's actual investment returns, and the operating expenses borne by the
class of shares you invest in.
The factors discussed below are not intended to be investment advice or
recommendations, because each investor's financial considerations are different.
The discussion below of the factors to consider in purchasing a particular class
of shares assumes that you will purchase only one class of shares and not a
combination of shares of different classes.
o How Long Do You Expect to Hold Your Investment? While future financial
needs cannot be predicted with certainty, knowing how long you expect to hold
your investment will assist you in selecting the appropriate class of shares.
Because of the effect of class-based expenses your choice will also depend on
how much you invest. For example, the reduced sales charges available for larger
purchases of Class A shares may, over time, offset the effect of paying an
initial sales charge on your investment (which reduces the amount of your
investment dollars used to buy shares for your account), compared to the effect
over time or higher class-based expenses on the shares of Class B or Class C for
which no initial sales charge is paid.
o Investing for the Short Term. If you have a short term investment
horizon (that is, you plan to hold your shares for not more than six years), you
should probably consider purchasing Class A or Class C shares rather than Class
B shares, because of the effect of the Class B contingent deferred sales charge
if you redeem in less than seven years, as well as the effect of the Class B
asset-based sales charge on the investment return for that class in the
short-term. Class C shares might be the appropriate choice (especially for
investments of less than $100,000), because there is no initial sales charge on
Class C shares, and the contingent deferred sales charge does not apply to
amounts you sell after holding them one year.
However, if you plan to invest more than $100,000 for the shorter term,
then the more you invest and the more your investment horizon increases toward
six years Class C shares might not be as advantageous as Class A shares. That is
because the annual asset-based sales charge on Class C shares will have a
greater economic impact on your account over the longer term than the reduced
front-end sales charge available for larger purchases of Class A shares. For
example, Class A might be more advantageous than Class C (as well as Class B)
for investments of more than $100,000 expected to be held for 5 or 6 years (or
more). For investments over $250,000 expected to be held 4 to 6 years (or more),
Class A shares may become more advantageous than Class C (and B). If investing
$500,000 or more, Class A may be more advantageous as your investment horizon
approaches 3 years or more.
For investors who invest $1 million or more, in most cases Class A shares
will be the most advantageous choice, no matter how long you intend to hold your
shares. For that reason, the Distributor normally will not accept purchase
orders of $500,000 or more of Class B shares or $1 million or more of Class C
shares from a single investor.
o Investing for the Longer Term. If you are investing for the longer term,
for example, for retirement, and do not expect to need access to your money for
seven years or more, Class B shares may be an appropriate consideration, if you
plan to invest less than $100,000. If you plan to invest more than $100,000 over
the long term, Class A shares will likely be more advantageous than Class B
shares or Class C shares, as discussed above, because of the effect of the
expected lower expenses for Class A shares and the reduced initial sales charge
available for larger investments in Class A shares under a Fund's Right of
Accumulation. Unlike Class B shares, Class C shares do not convert to Class A
shares and remain subject to the asset-based sales charge.
Of course all of these examples are based on approximations of the effect
of current sales charges and expenses on a hypothetical investment over time,
using the assumed annual performance return stated above, and you should analyze
your options carefully.
o Are There Differences in Account Features that Matter to You? Because
some features may not be available to Class B or C shareholders, or other
features (such as Automatic Withdrawal Plans) may not be advisable (because of
the effect of the contingent deferred sales charge in non-retirement accounts)
for Class B or Class C shareholders, you should carefully review how you plan to
use your investment account before deciding which class of shares to buy. For
example, share certificates are not available for Class B or Class C shares and
if you are considering using your shares as collateral for a loan, this may be a
factor to consider. Additionally, dividends payable to Class B and Class C
shareholders will be reduced by the additional expenses borne by those classes
that are not borne by Class A, such as the Class B and Class C asset-based sales
charges described below and in the Statement of Additional Information.
o How Does It Affect Payments to My Broker? A salesperson, such as a
broker, or any other person who is entitled to receive compensation for selling
Fund shares, may receive different compensation for selling one class than for
selling another class. It is important that investors understand that the
purpose of the Class B and Class C contingent deferred sales charges and
asset-based sales charges are the same as the purpose of the front-end sales
charge on sales of Class A shares: to reimburse the Distributor for commissions
it pays to dealers and financial institutions for selling shares. The
Distributor may pay additional periodic compensation from its own resources to
securities dealers or financial institutions based upon the value of shares of a
Fund owned by the dealer or financial institution for its own account or for its
customers.
How Much Must You Invest? You can open a Fund account with a minimum initial
investment of $1,000 and make additional investments at any time with as little
as $25. There are reduced minimum investments under special investment plans:
o With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7) custodial
plans and military allotment plans, you can make initial and subsequent
investments for as little as $25; and subsequent purchases of at least $25 can
be made by telephone through AccountLink.
o Under pension and profit-sharing plans, 401(k) plans, Individual
Retirement Accounts (IRAs) and through wrap fee accounts sponsored by certain
broker-dealers, you can make an initial investment of as little as $250 (if your
IRA is established under an Asset Builder Plan, the $25 minimum applies), and
subsequent investments may be as little as $25.
o There is no minimum investment requirement if you are buying shares by
reinvesting dividends from a Fund or other Oppenheimer funds (a list of them
appears in the Statement of Additional Information, or you can ask your dealer
or call the Transfer Agent), or by reinvesting distributions from unit
investment trusts that have made arrangements with the Distributor.
o How Are Shares Purchased? You can buy shares several ways-through any
dealer, broker or financial institution that has a sales agreement with the
Distributor, or directly through the Distributor, or automatically from your
bank account through an Asset Builder Plan under the OppenheimerFunds
AccountLink service. The Distributor may appoint certain servicing agents as the
Distributor's agent to accept purchase (and redemption) orders. When you buy
shares, be sure to specify Class A, Class B or Class C shares. If you do not
choose, your investment will be made in Class A shares.
o Buying Shares Through Your Dealer. Your dealer will place your order with
the Distributor on your behalf.
o Buying Shares Through the Distributor. Complete an OppenheimerFunds New
Account Application and return it with a check payable to "OppenheimerFunds
Distributor, Inc." Mail it to P.O. Box 5270, Denver, Colorado 80217. If you
don't list a dealer on the application, the Distributor will act as your agent
in buying the shares. However, we recommend that you discuss your investment
first with a financial advisor, to be sure it is appropriate for you.
o Payments by Federal Fund Wires. Shares may be purchased by Federal Funds
Wire. The minimum investment is $2,500. You must first call the Distributor's
Wire Department at 1-800-525-7041 to notify the Distributor of the wire and
receive further instructions.
o Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or other
financial institution that is an Automated Clearing House (ACH) member to
transmit funds electronically to purchase shares, to have the Transfer Agent
send redemption proceeds, or to transmit dividends and distributions.
Shares are purchased for your account on AccountLink on the regular
business day the Distributor is instructed by you to initiate the ACH transfer
to buy shares. You can provide those instructions automatically, under an Asset
Builder Plan, described below, or by telephone instructions using
OppenheimerFunds PhoneLink, also described below. You should request AccountLink
privileges on the application or dealer settlement instructions used to
establish your account. Please refer to "AccountLink" below for more details.
o Asset Builder Plans. You may purchase shares of a Fund (and up to four
other Oppenheimer funds) automatically each month from your account at a bank or
other financial institution under an Asset Builder Plan with AccountLink.
Details are on the Application and in the Statement of Additional Information.
o At What Prices Are Shares Sold? Shares are sold at the public offering
price based on the net asset value (and any initial sales charge that applies)
that is next determined after the Distributor receives the purchase order in
Denver, Colorado or the order is received and transmitted to the Distributor by
an entity authorized by a Fund to accept purchases or redemption orders. Each
Fund has authorized the Distributor, certain broker-dealers and agents or
intermediaries designated by the Distributor. In most cases, to enable you to
receive that day's offering price, the Distributor or its authorized entity must
receive your order by the time of day The New York Stock Exchange closes, which
is normally 4:00 P.M., New York time, but may be earlier on some days (all
references to time in this Prospectus mean "New York time"). The net asset value
of each class of shares is determined as of that time on each day The New York
Stock Exchange is open (which is a "regular business day").
If you buy shares through a dealer, the dealer must receive your order by
the close of The New York Stock Exchange on a regular business day and normally
your order must be transmitted to the Distributor so that it is received before
the Distributor's close of business that day, which is normally 5:00 P.M. The
Distributor, in its sole discretion, may reject any purchase order for Fund
shares. Special Sales Charge Arrangements for Certain Persons. Appendix B to
this Prospectus sets forth conditions for the waiver of, or exemption from,
sales charges or the special sales charge rates that apply to purchases of Fund
shares (including purchases by exchange) by a person who was a shareholder of
one of the Former Quest for Value Funds and Former Connecticut Mutual Funds (as
defined in that Appendix).
Buying Class A Shares. Class A shares are sold at their offering price, which is
normally net asset value plus an initial sales charge. However, in some cases,
described below, purchases are not subject to an initial sales charge, and the
offering price may be net asset value. In some cases, reduced sales charges may
be available, as described below. Out of the amount you invest, a Fund receives
the net asset value to invest for your account. The sales charge varies
depending on the amount of your purchase. A portion of the sales charge may be
retained by the Distributor and allocated to your dealer as commission.
Different sales charge rates and commissions applied to sales of Class A shares
prior to March 18, 1996. The current sales charge rates and commissions paid to
dealers and brokers are as follows:
Front-End Sales Front-End Sales
Charge as Charge as Commission as
Percentage of Percentage of Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
- ------------------------------------------------------------------------
Less than $25,000 5.75% 6.10% 4.75%
- ------------------------------------------------------------------------
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
- -------------------------------------------------------------------------
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
- ------------------------------------------------------------------------
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
- ------------------------------------------------------------------------
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
- ------------------------------------------------------------------------
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter" under
Federal securities laws.
o Class A Contingent Deferred Sales Charge. There is no initial sales
charge on purchases of Class A shares of any one or more of the Oppenheimer
funds in the following cases:
o Purchases aggregating $1 million or more;
o Purchases by a retirement plan qualified under sections 401(a) or 401(k)
of the Internal Revenue Code, by a non-qualified deferred compensation plan,
employee benefit plan, group retirement plan (see "How to Buy Shares Retirement
Plans" in the Statement of Additional Information for further details), an
employee's 403(b)(7) custodial plan account, SEP IRA, SARSEP, or SIMPLE plan
(all of these plans are collectively referred to as "Retirement Plans"); that:
(1) buys shares costing $500,000 or more or (2) has, at the time of purchase,
100 or more eligible participants, or (3) certifies that it projects to have
annual plan purchases of $200,000 or more;
o Purchases by an OppenheimerFunds Rollover IRA if the purchases are made
(1) through a broker, dealer, bank or registered investment adviser that has
made special arrangements with the Distributor for these purchases, or (2) by a
direct rollover of a distribution from a qualified retirement plan if the
administrator of that plan has made special arrangements with the Distributor
for those purchases; or
o Purchases by a retirement plan qualified under Section 401(a) or 401(k)
if the retirement plan has total plan assets of $500,000 or more.
The Distributor pays dealers of record commissions on those purchases in an
amount equal to (i) 1.0% for non-Retirement Plan accounts, and (ii) for
Retirement Plan accounts, 1.0% of the first $2.5 million, plus 0.50% of the next
$2.5 million, plus 0.25% of purchases over $5 million calculated on a calendar
year basis. That commission will be paid only on those purchases that were not
previously subject to a front-end sales charge and dealer commission. No sales
commissions will be paid to the dealer, broker or financial institution on sales
of Class A shares purchased with the redemption proceeds of shares of a mutual
fund offered as an investment option in a Retirement Plan in which Oppenheimer
funds are also offered as investment options under a special arrangement with
the Distributor if the purchase occurs more than 30 days after the addition of
the Oppenheimer funds as an investment option to the Retirement Plan.
If you redeem any of those shares purchased prior to May 1, 1997 within 18
months of the end of the calendar month of their purchase, a contingent deferred
sales charge (called the "Class A contingent deferred sales charge") may be
deducted from the redemption proceeds. A Class A contingent deferred sales
charge may be deducted from the redemptions proceeds of any of those shares
purchased on or after May 1, 1997 that are redeemed within 12 months of the end
of the calendar month of their purchase. That sales charge will be equal to 1.0%
of the lesser of (1) the aggregate net asset value of the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original offering price (which is the original net
asset value) of the redeemed shares. However, the Class A contingent deferred
sales charge will not exceed the aggregate commissions the Distributor paid to
your dealer on all Class A shares of all Oppenheimer funds you purchased subject
to the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is payable, a
Fund will first redeem shares that are not subject to the sales charge,
including shares purchased by reinvestment of dividends and capital gains, and
then will redeem other shares in the order that you purchased them. The Class A
contingent deferred sales charge is waived in certain cases described in
"Waivers of Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges of
shares under a Fund's Exchange Privilege (described below). However, if the
shares acquired by exchange are redeemed within 12 calendar months (18 months
for shares purchases prior to May 1, 1997) of the end of the calendar month of
the purchase of the exchanged shares, the sales charge will apply.
o Special Arrangements with Dealers. The Distributor may advance up to 13
months' commissions to dealers that have established special arrangements with
the Distributor for Asset Builder Plans for their clients.
Reduced Sales Charges for Class A Share Purchases. You may be eligible to buy
Class A shares at reduced sales charge rates in one or more of the following
ways:
o Right of Accumulation. To qualify for the lower sales charge rates that
apply to larger purchases of Class A shares, you and your spouse can add
together Class A and Class B shares you purchase for your individual accounts,
or jointly, or for trust or custodial accounts on behalf of your children who
are minors. A fiduciary can count all shares purchased for a trust, estate or
other fiduciary account (including one or more employee benefit plans of the
same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class A and Class
B shares of a Fund and other Oppenheimer funds to reduce the sales charge rate
for current purchases of Class A shares. You can also include Class A and Class
B shares of Oppenheimer funds you previously purchased subject to an initial or
contingent deferred sales charge to reduce the sales charge rate for current
purchases of Class A shares, provided that you still hold your investment in one
of the Oppenheimer funds. The Distributor will add the value , at current
offering price, of the shares you previously purchased and currently own to the
value of current purchases to determine the sales charge rate that applies. The
Oppenheimer funds are listed in "Reduced Sales Charges" in the Statement of
Additional Information, or a list can be obtained from the Distributor. The
reduced sales charge will apply only to current purchases and must be requested
when you buy your shares.
o Letter of Intent. Under a Letter of Intent, if you purchase Class A
shares or Class A and Class B shares of a Fund and other Oppenheimer funds
during a 13-month period, you can reduce the sales charge rate that applies to
your purchases of Class A shares. The total amount of your intended purchases of
both Class A and Class B shares will determine the reduced sales charge rate for
the Class A shares purchased during that period. More information is contained
in the Application and in "Reduced Sales Charges" in the Statement of Additional
Information.
o Waivers of Class A Sales Charges. The Class A sales charges are not
imposed in the circumstances described below. There is an explanation of this
policy in "Reduced Sales Charges" in the Statement of Additional Information.
Waivers of Initial and Contingent Deferred Sales Charges for Certain
Purchasers. Class A shares purchased by the following investors are not subject
to any Class A sales charges:
o the Manager or its affiliates;
o present or former officers, directors, trustees and employees (and their
"immediate families" as defined in "Reduced Sales Charges" in the Statement of
Additional Information) of a Fund, the Manager and its affiliates, and
retirement plans established by them for their employees;
o registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the Distributor for
that purpose;
o dealers or brokers that have a sales agreement with the Distributor, if
they purchase shares for their own accounts or for retirement plans for their
employees;
o employees and registered representatives (and their spouses) of dealers
or brokers described above or financial institutions that have entered into
sales arrangements with such dealers or brokers (and are identified to the
Distributor) or with the Distributor; the purchaser must certify to the
Distributor at the time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor children);
o dealers, brokers, banks or registered investment advisers that have
entered into an agreement with the Distributor providing specifically for the
use of shares of a Fund in particular investment products or employee benefit
plans made available to their clients (those clients may be charged a
transaction fee by their dealer, broker or advisor for the purchase or sale of
Fund shares);
o (1) investment advisors and financial planners who have entered into an
agreement for this purpose with the Distributor and who charge an advisory,
consulting or other fee for their services and buy shares for their own accounts
or the accounts of their clients, (2) Retirement Plans and deferred compensation
plans and trusts used to fund those Plans (including, for example, plans
qualified or created under sections 401(a), 403(b) or 457 of the Internal
Revenue Code), and "rabbi trusts" that buy shares for their own accounts, in
each case if those purchases are made through a broker or agent or other
financial intermediary that has made special arrangements with the Distributor
for those purchases, and (3) clients of such investment advisors or financial
planners (who have entered into an agreement for this purpose with the
Distributor) who buy shares for their own accounts may also purchase shares
without sales charge but only if their accounts are linked to a master account
of their investment advisor or financial planner on the books and records of the
broker, agent or financial intermediary with which the Distributor has made
special arrangements (each of these investors may be charged a fee by the
broker, agent or financial intermediary for purchasing shares).
o directors, trustees, officers or full-time employees of OpCap Advisors
or its affiliates, their relatives or any trust, pension, profit sharing or
other benefit plan which beneficially owns shares for those persons;
o accounts for which Oppenheimer Capital is the investment adviser (the
Distributor must be advised of this arrangement) and persons who are directors
or trustees of the company or trust which is the beneficial owner of such
accounts;
o any unit investment trust that has entered into an appropriate agreement
with the Distributor; or
o qualified retirement plans that had agreed with the former Quest for
Value Advisors to purchase shares of any of the Former Quest for Value Funds at
net asset value, with such shares to be held through DCXchange, a sub-transfer
agency mutual fund clearinghouse, provided that such arrangements are
consummated and share purchases commenced by December 31, 1996.
Waivers of Initial and Contingent Deferred Sales Charges in Certain
Transactions. Class A shares issued or purchased in the following transactions
are not subject to Class A sales charges:
o shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which a Fund is a party;
o shares purchased by the reinvestment of loan repayments by a participant
in a retirement plan for which the Manager or one of its affiliates acts as
sponsor;
o shares purchased by the reinvestment of dividends or other distributions
reinvested from a Fund or other Oppenheimer funds (other than Oppenheimer Cash
Reserves) or unit investment trusts for which reinvestment arrangements have
been made with the Distributor;
o shares purchased and paid for with the proceeds of shares redeemed in
the prior 30 days from a mutual fund (other than a fund managed by the Manager
or any of its subsidiaries) on which an initial sales charge or contingent
deferred sales charge was paid (this waiver also applies to shares purchased by
exchange of shares of Oppenheimer Money Market Fund, Inc. that were purchased
and paid for in this manner); this waiver must be requested when the purchase
order is placed for your Fund shares, and the Distributor may require evidence
of your qualification for this waiver; or
o shares purchased with the proceeds of maturing principal of units of any
Qualified Unit Investment Liquid Trust Series.
Waivers of the Class A Contingent Deferred Sales Charge for Certain
Redemptions. The Class A contingent deferred sales charge is also waived if
shares that would otherwise be subject to the contingent deferred sales charge
are redeemed in the following cases:
o to make Automatic Withdrawal Plan payments that are limited annually to
no more than 12% of the original account value;
o involuntary redemptions of shares by operation of law or involuntary
redemption of small accounts (see "Shareholder Account Rules and Policies,"
below);
o if, at the time a purchase of shares (prior to May 1, 1997) the dealer
agreed in writing to accept the dealer's portion of the sales commission in
installments of 1/18th of the commission per month (and no further commission
will be payable if the shares are redeemed within 18 months of purchase);
o if at the time of purchase of shares (if purchased during the period May
1, 1997 through December 31, 1997) the dealer agrees in writing to accept the
dealer's portion of the sales commission in installments of 1/12th of the
commission per month (and no further commission will be payable if the shares
are redeemed within 12 months of purchase);
o for distributions from Retirement Plans, deferred compensation plans or
other employee benefit plans for any of the following purposes (1) following the
death or disability (as defined in the Internal Revenue Code) of the participant
or beneficiary (the death or disability must occur after the participant's
account was established); (2) to return excess contributions; (3) to return
contributions made due to a mistake or fact; (4) hardship withdrawals, as
defined in the plan; (5) under a Qualified Domestic Relations Order, as defined
in the Internal Revenue Code; (6) to meet the minimum distribution requirements
of the Internal Revenue Code; (7) to establish "substantially equal periodic
payments" as described in Section 72(t) of the Internal Revenue Code; (8) for
retirement distributions or loans to participants or beneficiaries; (9)
separation from services; (10) participant-directed redemptions to purchase
shares of a mutual fund (other than a fund managed by the Manager or its
subsidiary) offered as an investment option in a Retirement Plan in which
Oppenheimer funds are also offered as investment options under a special
arrangement with the Distributor; or (11) plan termination or "in-service
distributions", if the redemption proceeds are rolled over directly to an
OppenheimerFunds IRA;
o for distributions from Retirement Plans having 500 or more eligible
participants, except distributions due to termination of all of the Oppenheimer
funds as an investment option under the Plan; and
o for distribution from 401(k) plans sponsored by broker-dealers that have
entered into a special agreement with the Distributor allowing this waiver.
Service Plan for Class A Shares. Each Fund has adopted a Service Plan for Class
A shares to reimburse the Distributor for a portion of its costs incurred in
connection with the personal service and maintenance of accounts that hold Class
A shares. Reimbursement is made quarterly at an annual rate that may not exceed
0.25% of the average annual net assets of Class A shares of each Fund. The
Distributor uses all of those fees to compensate dealers, brokers, banks and
other financial institutions quarterly for providing personal service and
maintenance of accounts of their customers that hold Class A shares and to
reimburse itself (if a Fund's Board of Directors authorizes such reimbursements,
which no Fund Board has done as yet) for its other expenditures under the Plan.
Services to be provided include, among others, answering customer inquiries
about a Fund, assisting in establishing and maintaining accounts in a Fund,
making a Fund's investment plans available and providing other services at the
request of a Fund or the Distributor. Payments are made by the Distributor
quarterly at an annual rate not to exceed 0.25% of the average annual net assets
of Class A shares held in accounts of the service providers or its customers.
The payments under the Plan increase the annual expenses of Class A shares. For
more details, please refer to "Distribution and Service Plans" in the Statement
of Additional Information.
Buying Class B Shares. Class B shares are sold at net asset value per share
without an initial sales charge. However, if Class B shares are redeemed within
six years of their purchase, a contingent deferred sales charge will be deducted
from the redemption proceeds. That sales charge will not apply to shares
purchased by the reinvestment of dividends or capital gains distributions. The
contingent deferred sales charge will be based on the lesser of the net asset
value of the redeemed shares at the time of redemption or the original offering
price (which is the original net asset value). The contingent deferred sales
charge is not imposed on the amount of your account value represented by the
increase in net asset value over the initial purchase price. The Class B
contingent deferred sales charge is paid to the Distributor to compensate it for
providing distribution-related services to a Fund in connection with the sale of
Class B shares.
To determine whether the contingent deferred sales charge applies to a
redemption, a Fund redeems shares in the following order: (1) shares acquired by
reinvestment of dividends and capital gains distributions, (2) shares held for
over six years, and (3) shares held the longest during the six-year period. The
contingent deferred sales charge is not imposed in the circumstances described
in "Waivers of Class B and Class C Sales Charges" below.
The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule:
Years Since Beginning of Contingent Deferred Sales Charge
Month in Which Purchase On Redemptions in that Year
Order Was Accepted (As % of Amount Subject to Charge)
- -------------------------------------------------------------------
0-1 5.0%
- -------------------------------------------------------------------
1-2 4.0%
- -------------------------------------------------------------------
2-3 3.0%
- -------------------------------------------------------------------
3-4 3.0%
- -------------------------------------------------------------------
4-5 2.0%
- -------------------------------------------------------------------
5-6 1.0%
- -------------------------------------------------------------------
6 and following None
In the table, a "year" is a 12-month period. All purchases are considered
to have been made on the first regular business day of the month in which the
purchase was made. Different contingent deferred sales charges applied to
redemptions of Class B shares prior to March 18, 1996.
o Automatic Conversion of Class B Shares. 72 months after you purchase
Class B shares, those shares will automatically convert to Class A shares. This
conversion feature relieves Class B shareholders of the asset-based sales charge
that applies to Class B shares under the Class B Distribution and Service Plan,
described below. The conversion is based on the relative net asset value of the
two classes, and no sales load or other charge is imposed. When Class B shares
convert, any other Class B shares that were acquired by the reinvestment of
dividends and distributions on the converted shares will also convert to Class A
shares. The conversion feature is subject to the continued availability of a tax
ruling described in "Alternative Sales Arrangements-Class A, Class B and Class C
Shares" in the Statement of Additional Information.
Buying Class C Shares. Class C shares are sold at net asset value per share
without an initial sales charge. However, if Class C shares are redeemed within
12 months of their purchase, a contingent deferred sales charge of 1.0% will be
deducted from the redemption proceeds. That sales charge will not apply to
shares purchased by the reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge will be based on the lesser
of the net asset value of the redeemed shares at the time of redemption or the
original offering price (which is the original net asset value). The contingent
deferred sales charge is not imposed on the amount of your account value
represented by the increase in net asset value over the initial purchase price.
The Class C contingent deferred sales charge is paid to compensate the
Distributor for its expenses of providing distribution-related services to a
Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge applies to a
redemption, a Fund redeems shares in the following order: (1) shares acquired by
reinvestment of dividends and capital gains distributions, (2) shares held for
over 12 months, and (3) shares held the longest during the 12-month period.
Distribution and Service Plans for Class B and Class C Shares. Each Fund has
adopted Distribution and Service Plans for Class B and Class C shares to
compensate the Distributor for its costs in distributing Class B and C shares
and servicing accounts. Under the Plans, a Fund pays the Distributor an annual
"asset-based sales charge" of 0.75% per year on Class B shares and on Class C
shares. The Distributor also receives a service fee of 0.25% per year.
Under each Plan, both fees are computed on the average of the net asset
value of shares in the respective class, determined as of the close of each
regular business day during the period. The asset-based sales charge and service
fees increase Class B and Class C expenses by up to 1.00% of the net assets of
the respective class per year.
The Distributor uses the service fees to compensate dealers for providing
personal services for accounts that hold Class B or C shares. Those services are
similar to those provided under the Class A Service Plan, described above. The
Distributor pays the 0.25% service fees to dealers in advance for the first year
after Class B or Class C shares have been sold by the dealer and retains the
service fee paid by a Fund in that year. After the shares have been held for a
year, the Distributor pays the service fees to dealers on a quarterly basis.
The asset-based sales charge allows investors to buy Class B or C shares
without a front-end sales charge while allowing the Distributor to compensate
dealers that sell those shares. The Fund pays the asset based sales charges to
the Distributor for its services rendered in distributing Class B and Class C
shares. Those payments are at a fixed rate that is not related to the
Distributor's expenses. The services rendered by the Distributor include paying
and financing the payment of sales commissions, service fees and other costs of
distributing and selling Class B and C shares.
The Distributor currently pays sales commissions of 3.75% on the purchase
price of Class B shares to dealers from its own resources at the time of sale.
Including the advance of the service fee, the total amount paid by the
Distributor to the dealer at the time of sales of Class B shares is therefore
4.00% of the purchase price. The Distributor retains the Class B asset-based
sales charge. The Distributor may pay the Class B service fee and the
asset-based sales charge to the dealer quarterly in lieu of paying the sales
commission and service fee advance at the time of purchase.
The Distributor currently pays sales commissions of 0.75% of the purchase
price of Class C shares to dealers from its own resources at the time of sale.
Including the advance of the service fee, the total amount paid by the
Distributor to the dealer at the time of sale of Class C shares is therefore
1.00% of the purchase price. The Distributor retains the asset-based sales
charge during the first year Class C shares are outstanding to recoup the sales
commissions it has paid, the advances of service fee payments it has made, and
its financing costs and other expenses. The Distributor may pay the Class C
service fee and asset-based sales charge to the dealer quarterly in lieu of
paying the sales commission and service fee advance at the time of purchase. The
Distributor plans to pay the asset-based sales charge as an ongoing commission
to the dealer on Class C shares that have been outstanding for a year or more.
The Distributor's actual expenses in selling Class B and C shares may be
more than the payments it receives from contingent deferred sales charges
collected on redeemed shares and from a Fund under the Distribution and Service
Plans for Class B and C shares. If a Fund terminates either of its Plans, the
Board of Directors may allow the Fund to continue payments of the asset-based
sales charge to the Distributor for distributing shares before the Plan was
terminated.
At October 31, 1997 the end of the Class B and Class C Plans year, the
Distributor had the following unreimbursed expenses in connection with the sales
of Class B and Class C shares:
Class B % of Class B Class C % of Class C
Expenses Net Assets Expenses Net Assets
- -------------------------------------------------------------------
LifeSpan
Growth Fund $131,807 2.44% $12,680 1.05%
- -------------------------------------------------------------------
LifeSpan
Income Fund $ 8,787 1.08% -0- -0-
- -------------------------------------------------------------------
LifeSpan
Balanced Fund $135,290 2.84% $14,197 2.08%
Waivers of Class B and Class C Sales Charges. The Class B and Class C contingent
deferred sales charges will not be applied to shares purchased in certain types
of transactions nor will it apply to Class B and Class C shares redeemed in
certain circumstances as described below. The reasons for this policy are in
"Reduced Sales Charges" in the Statement of Additional Information. In order to
receive a waiver of Class B or Class C contingent deferred sales charge, you
must notify the Transfer Agent which conditions applies.
Waivers for Redemptions in Certain Cases. The Class B and Class C
contingent deferred sales charges will be waived for redemptions of shares in
the following cases:
o distributions to participants or beneficiaries from Retirement Plans, if
the distributions are made (a) under an Automatic Withdrawal Plan after the
participant reaches age 59-1/2, as long as the payments are no more than 10% of
the account value annually (measured from the date the Transfer Agent receives
the request), or (b) following the death or disability (as defined in the
Internal Revenue Code) of the participant or beneficiary (the death or
disability must have occurred after the account was established);
o redemptions from accounts other than Retirement Plans following the
death or disability of the last surviving shareholder, including a trustee of a
"grantor" trust or revocable living trust for which the trustee is also the sole
beneficiary (the death or disability must have occurred after the account was
established, and for disability you must provide evidence of a determination of
disability by the Social Security Administration);
o returns of excess contributions to Retirement Plans;
o distributions from Retirement Plans to make "substantially equal
periodic payments" as permitted in Section 72(t) of the Internal Revenue Code
that do not exceed 10% of the account value annually, measured from the date the
Transfer Agent receives the request;
o shares redeemed involuntarily, as described in "Shareholder Account Rules
and Policies" below;
o distributions from OppenheimerFunds prototype 401(k) plans and from
certain Massachusetts Mutual Life Insurance Company prototype 401(k) plans (1)
for hardship withdrawals; (2) under a Qualified Domestic Relations Order, as
defined in the Internal Revenue Code; (3) to meet minimum distribution
requirements as defined in the Internal Revenue Code; (4) to make "substantially
equal periodic payments" as described in Section 72(t) of the Internal Revenue
Code; (5) for separation from service; or (6) for loans to participants or
beneficiaries; or
o distributions from 401(k) plans sponsored by broker-dealers that have
entered into a special agreement with the Distributor allowing this waiver.
Waivers for Shares Sold or Issued in Certain Transactions. The contingent
deferred sales charge is also waived on Class B and Class C shares sold or
issued in the following cases:
o shares sold to the Manager or its affiliates;
o shares sold to registered management investment companies or separate
accounts of insurance companies having an agreement with the Manager or the
Distributor for that purpose; and
o shares issued in plans of reorganization to which a Fund is a party.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account to your
account at your bank or other financial institution to enable you to send money
electronically between those accounts to perform a number of types of account
transactions. These include purchases of shares by telephone (either through a
service representative or by PhoneLink, described below), automatic investments
under Asset Builder Plans, and sending dividends and distributions or Automatic
Withdrawal Plan payments directly to your bank account. Please call the Transfer
Agent for more information.
AccountLink privileges should be requested on your dealer's settlement
instructions if you buy your shares through your dealer. After your account is
established, you can request AccountLink privileges by sending
signature-guaranteed instructions to the Transfer Agent. AccountLink privileges
will apply to each shareholder listed in the registration on your account as
well as to your dealer representative of record unless and until the Transfer
Agent receives written instructions terminating or changing those privileges.
After you establish AccountLink for your account, any change of bank account
information must be made by signature-guaranteed instructions to the Transfer
Agent signed by all shareholders who own the account.
o Using AccountLink to Buy Shares. Purchases may be made by telephone only
after your account has been established. To purchase shares in amounts up to
$250,000 through a telephone representative, call the Distributor at
1-800-852-8457. The purchase payment will be debited from your bank account.
o PhoneLink. PhoneLink is the OppenheimerFunds automated telephone system
that enables shareholders to perform a number of account transactions
automatically using a touch-tone phone. PhoneLink may be used on
already-established Fund accounts after you obtain a Personal Identification
Number (PIN), by calling the special PhoneLink number: 1-800-533-3310.
o Purchasing Shares. You may purchase shares in amounts up to $100,000 by
phone, by calling 1-800-533-3310. You must have established AccountLink
privileges to link your bank account with a Fund account, to pay for these
purchases.
o Exchanging Shares. With the OppenheimerFunds Exchange Privilege,
described below, you can exchange shares automatically by phone from your Fund
account to another Oppenheimer funds account you have already established by
calling the special PhoneLink number. Please refer to "How to Exchange Shares"
below for details.
o Selling Shares. You can redeem shares by telephone automatically by
calling the PhoneLink number and a Fund will send the proceeds directly to your
AccountLink bank account. Please refer to "How to Sell Shares" below for
details.
Shareholder Transactions by Fax. Requests for certain account transactions may
be sent to the Transfer Agent by fax (telecopier). Please call 1-800-525-7048
for information about which transactions are included. Transaction requests
submitted by fax are subject to the same rules and restrictions as written and
telephone requests described in this Prospectus.
OppenheimerFunds Internet Web Site. Information about a Fund, including your
account balance, daily share prices, market and Fund portfolio information, may
be obtained by visiting the OppenheimerFunds Internet Web Site, at the following
Internet address: http://www.oppenheimerfunds.com. In 1998, the Transfer Agent
anticipates offering certain account transactions through the Internet Web Site.
To find out more information about those transactions and procedures, please
visit the Web Site.
Automatic Withdrawal and Exchange Plans. Each Fund has several plans that enable
you to sell shares automatically or exchange them to another Oppenheimer funds
account on a regular basis:
o Automatic Withdrawal Plans. If your Fund account is worth $5,000 or
more, you can establish an Automatic Withdrawal Plan to receive payments of at
least $50 on a monthly, quarterly, semi-annual or annual basis. The checks may
be sent to you or sent automatically to your bank account on AccountLink. You
may even set up certain types of withdrawals of up to $1,500 per month by
telephone. You should consult the Statement of Additional Information for more
details.
o Automatic Exchange Plans. You can authorize the Transfer Agent to
exchange an amount you establish in advance automatically for shares of up to
five other Oppenheimer funds on a monthly, quarterly, semi-annual or annual
basis under an Automatic Exchange Plan. The minimum purchase for each other
Oppenheimer funds account is $25. These exchanges are subject to the terms of
the Exchange Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class A or Class B
shares of a Fund, you have up to 6 months to reinvest all or part of the
redemption proceeds in Class A shares of the Fund or other Oppenheimer funds
without paying a sales charge. This privilege applies to Class A shares that you
purchased subject to an initial sales charge and to Class A or Class B shares on
which you paid a contingent deferred sales charge when you redeemed them. This
privilege does not apply to Class C shares. You must be sure to ask the
Distributor for this privilege when you send your payment. Please consult the
Statement of Additional Information for more details.
Retirement Plans. Fund shares are available as an investment for your retirement
plans. If you participate in a plan sponsored by your employer, the plan trustee
or administrator must make the purchase of shares for your retirement plan
account. The Distributor offers a number of different retirement plans that can
be used by individuals and employers:
o Individual Retirement Accounts including rollover IRAs, for individuals
and their spouses and SIMPLE IRAs offered by employers
o 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
o SEP-IRAs (Simplified Employee Pension Plans) for small business owners
or people with income from self-employment, including SARSEP-IRAs
o Pension and Profit-Sharing Plans for self-employed persons and other
employers
o 401(k) Prototype Retirement Plans for businesses
Please call the Distributor for the OppenheimerFunds plan documents, which
contain important information and applications.
How To Sell Shares
You can arrange to take money out of your account by selling (redeeming) some or
all of your shares on any regular business day. Your shares will be sold at the
next net asset value calculated after your order is received and accepted by the
Transfer Agent. Each Fund offers you a number of ways to sell your shares in
writing or by telephone. You can also set up Automatic Withdrawal Plans to
redeem shares on a regular basis, as described above. If you have questions
about any of these procedures, and especially if you are redeeming shares in a
special situation, such as due to the death of the owner, or from a retirement
plan, please call the Transfer Agent first, at 1-800-525-7048, for assistance.
o Retirement Accounts. To sell shares in an OppenheimerFunds retirement
account in your name, call the Transfer Agent for a distribution request form.
There are special income tax withholding requirements for distributions from
retirement plans and you must submit a withholding form with your request to
avoid delay. If your retirement plan account is held for you by your employer or
plan trustee, you must arrange for the distribution request to be signed and
sent by the plan administrator or trustee. There are additional details in the
Statement of Additional Information.
o Certain Requests Require a Signature Guarantee. To protect you and the
Funds from fraud, certain redemption requests must be in writing and must
include a signature guarantee in the following situations (there may be other
situations also requiring a signature guarantee):
o You wish to redeem more than $50,000 worth of shares and receive a check
o The redemption check is not payable to all shareholders listed on the
account statement
o The redemption check is not sent to the address of record on your account
statement
o Shares are being transferred to a Fund account with a different owner or
name
o Shares are redeemed by someone other than the owners (such as an
Executor)
o Where Can I Have My Signature Guaranteed? The Transfer Agent will accept
a guarantee of your signature by a number of financial institutions, including:
a U.S. bank, trust company, credit union or savings association, or by a foreign
bank that has a U.S. correspondent bank, or by a U.S. registered dealer or
broker in securities, municipal securities or government securities, or by a
U.S. national securities exchange, a registered securities association or a
clearing agency. If you are signing as a fiduciary or on behalf of a
corporation, partnership or other business, you must also include your title in
the signature.
Selling Shares by Mail. Write a "letter of instructions" that includes:
o Your name
o Your Fund's name
o Your Fund account number (from your account statement)
o The dollar amount or number of shares to be redeemed
o Any special payment instructions
o Any share certificates for the shares you are selling
o The signatures of all registered owners exactly as the account is
registered, and
o Any special requirements or documents requested by the Transfer Agent to
assure proper authorization of the person asking to sell shares.
Use the following address for requests by mail:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
Send courier or Express Mail requests to:
OppenheimerFunds Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of record may
also sell your shares by telephone. To receive the redemption price on a regular
business day, your call must be received by the Transfer Agent by the close of
The New York Stock Exchange that day, which is normally 4:00 P.M., but may be
earlier on some days. You may not redeem shares held in an OppenheimerFunds
retirement plan or under a share certificate by telephone.
o To redeem shares through a service representative, call 1-800-852-8457
o To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address on the
account statement, or, if you have linked your Fund account to your bank account
on AccountLink, you may have the proceeds wired to that bank account.
o Telephone Redemptions Paid by Check. Up to $50,000 may be redeemed by
telephone, in any seven-day period. The check must be payable to all owners of
record of the shares and must be sent to the address on the account statement.
This service is not available within 30 days of changing the address on an
account.
o Telephone Redemptions Through AccountLink or Wire. There are no dollar
limits on telephone redemption proceeds sent to a bank account designated when
you establish AccountLink. Normally the ACH transfer to your bank is initiated
on the business day after the redemption. You do not receive dividends on the
proceeds of the shares you redeemed while they are waiting to be transferred.
Shareholders may also have the Transfer Agent send redemption proceeds of
$2,500 or more by Federal Funds wire to a designated commercial bank account if
the bank is a member of the Federal Reserve wire system. There is a $10 fee for
each Federal Funds wire. To place a wire redemption request, call the Transfer
Agent at 1-800-852-8457. The wire will normally be transmitted on the next bank
business day after the shares are redeemed. There is a possibility that the wire
may be delayed up to seven days to enable a Fund to sell securities to pay the
redemption proceeds. No dividends are accrued or paid on the proceeds of shares
that have been redeemed and are awaiting transmittal by wire. To establish wire
redemption privileges on an account that is already established, please contact
the Transfer Agent for instructions.
Selling Shares Through Your Dealer. The Distributor has made arrangements to
repurchase Fund shares from dealers and brokers on behalf of their customers. To
find out more information about that service, please contact your dealer or
broker. Brokers or dealers may charge for that service. Please refer to "Special
Arrangements for Repurchase of Shares from Dealers and Brokers" in the Statement
of Additional Information for more details.
How To Exchange Shares
Shares of a Fund may be exchanged for shares of certain Oppenheimer funds at net
asset value per share at the time of exchange, without sales charge. To exchange
shares, you must meet several conditions:
o Shares of the fund selected for exchange must be available for sale in
your state of residence.
o The prospectuses of your Fund and the fund whose shares you want to buy
must offer the exchange privilege.
o You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them; after the account is open 7 days, you
can exchange shares every regular business day.
o You must meet the minimum purchase requirements for the fund you purchase
by exchange.
o Before exchanging into a fund, you should obtain and read its prospectus.
Shares of a particular class may be exchanged only for shares of the same
class in the other Oppenheimer funds. For example, you can exchange Class A
shares of a Fund only for Class A shares of another fund. At present,
Oppenheimer Money Market Fund, Inc. offers only one class of shares, which are
considered to be Class A shares for this purpose. In some cases, sales charges
may be imposed on exchange transactions. Please refer to "How to Exchange
Shares" in the Statement of Additional Information for more details.
Exchanges may be requested in writing or by telephone:
o Written Exchange Requests. Submit an OppenheimerFunds Exchange Request
form, signed by all owners of the account. Send it to the Transfer Agent at the
addresses listed in "How to Sell Shares."
o Telephone Exchange Requests. Telephone exchange requests may be made
either by calling a service representative at 1-800-852-8457 or by using
PhoneLink for automated exchanges, by calling 1-800-533-3310. Telephone
exchanges may be made only between accounts that are registered with the same
names and address. Shares held under certificates may not be exchanged by
telephone.
You can find a list of Oppenheimer funds currently available for exchanges
in the Statement of Additional Information or obtain one by calling a service
representative at 1-800-525-7048. That list can change from time to time.
There are certain exchange policies you should be aware of:
o Shares are normally redeemed from one fund and purchased from the other
fund in the exchange transaction on the same regular business day on which the
Transfer Agent receives an exchange request that is in proper form by the close
of The New York Stock Exchange that day, which is normally 4:00 P.M. but may be
earlier on some days. However, either fund may delay the purchase of shares of
the fund you are exchanging into up to seven days if it determines it would be
disadvantaged by a same-day transfer of the proceeds to buy shares. For example,
the receipt of multiple exchange requests from a dealer in a "market-timing"
strategy might require the sale of portfolio securities at a time or price
disadvantageous to a Fund.
o Because excessive trading can hurt fund performance and harm
shareholders, a Fund reserves the right to refuse any exchange request that will
disadvantage it, or to refuse multiple exchange requests submitted by a
shareholder or dealer.
o A Fund may amend, suspend or terminate the exchange privilege at any
time. Although a Fund will attempt to provide you notice whenever it is
reasonably able to do so, it may impose these changes at any time.
o For tax purposes, exchanges of shares involve a redemption of the shares
of the Fund you own and a purchase of the shares of the other fund, which may
result in a taxable gain or a loss. For more information about taxes affecting
exchanges, please refer to "How to Exchange Shares" in the Statement of
Additional Information.
o If the Transfer Agent cannot exchange all the shares you request because
of a restriction cited above, only the shares eligible for exchange will be
exchanged.
Shareholder Account Rules and Policies
o Net asset value per share is determined for each class of shares as of
the close of The New York Stock Exchange which is normally 4:00 P.M., but may be
earlier on some days, on each day the Exchange is open by dividing the value of
a Fund's net assets attributable to a class by the number of shares of that
class that are outstanding. The Board of Directors of the Funds has established
procedures to value each Fund's securities to determine net asset value. In
general, securities values are based on market value. There are special
procedures for valuing illiquid and restricted securities and obligations for
which market values cannot be readily obtained. These procedures are described
more completely in the Statement of Additional Information.
o The offering of shares may be suspended during any period in which the
determination of net asset value is suspended, and the offering may be suspended
by the Board of Directors at any time the Board believes it is in a Fund's best
interest to do so.
o Telephone transaction privileges for purchases, redemptions or exchanges
may be modified, suspended or terminated by a Fund at any time. If an account
has more than one owner, a Fund and the Transfer Agent may rely on the
instructions of any one owner. Telephone privileges apply to each owner of the
account and the dealer representative of record for the account unless and until
the Transfer Agent receives cancellation instructions from an owner of the
account.
o The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not use
reasonable procedures the Transfer Agent or a Fund may be liable for losses due
to unauthorized transactions, but otherwise neither the Transfer Agent nor a
Fund will be liable for losses or expenses arising out of telephone instructions
reasonably believed to be genuine. If you are unable to reach the Transfer Agent
during periods of unusual market activity, you may not be able to complete a
telephone transaction and should consider placing your order by mail.
o Redemption or transfer requests will not be honored until the Transfer
Agent receives all required documents in proper form. From time to time, the
Transfer Agent in its discretion may waive certain of the requirements for
redemptions stated in this Prospectus.
o Dealers that can perform account transactions for their clients by
participating in NETWORKING through the National Securities Clearing Corporation
are responsible for obtaining their clients' permission to perform those
transactions and are responsible to their clients who are shareholders of a Fund
if the dealer performs any transaction erroneously or improperly.
o The redemption price for shares will vary from day to day because the
value of the securities in a Fund's portfolio fluctuates, and the redemption
price, which is the net asset value per share, will normally be different for
Class A, Class B and Class C shares. Therefore, the redemption value of your
shares may be more or less than their original cost.
o Payment for redeemed shares is made ordinarily in cash and forwarded by
check or through AccountLink (as elected by the shareholder under the redemption
procedures described above) within 7 days after the Transfer Agent receives
redemption instructions in proper form, except under unusual circumstances
determined by the Securities and Exchange Commission delaying or suspending such
payments. For accounts registered in the name of a broker-dealer, payment will
be forwarded within 3 business days. The Transfer Agent may delay forwarding a
check or processing a payment via AccountLink for recently purchased shares, but
only until the purchase payment has cleared. That delay may be as much as 10
days from the date the shares were purchased. That delay may be avoided if you
purchase shares by federal funds wire, certified check or arrange with your bank
to provide telephone or written assurance to the Transfer Agent that your
purchase payment has cleared.
o Involuntary redemptions of small accounts may be made by a Fund if the
account has fewer than 100 shares, and in some cases involuntary redemptions may
be made to repay the Distributor for losses from the cancellation of share
purchase orders.
o Under unusual circumstances, shares of a Fund may be redeemed "in kind,"
which means that the redemption proceeds will be paid with securities from a
Fund's portfolio. Please refer to "How to Sell Shares" in the Statement of
Additional Information for more details.
o "Backup Withholding" of Federal income tax may be applied at the rate of
31% from taxable dividends, distributions and redemption proceeds (including
exchanges) if you fail to furnish a Fund a correct and properly certified Social
Security or Employer Identification Number and any other certification required
by the Internal Revenue Service when you sign your application, or if you
underreport your income to the Internal Revenue Service.
o A Fund does not charge a redemption fee, but if your dealer or broker
handles your redemption, they may charge a fee. That fee can be avoided by
redeeming your Fund shares directly through the Transfer Agent. Under the
circumstances described in "How To Buy Shares," you may be subject to a
contingent deferred sales charge when redeeming certain Class A, Class B and
Class C shares.
o To avoid sending duplicate copies of materials to households, each Fund
will mail only one copy of its annual and semi-annual report to shareholders
having the same last name and address on the Fund's records. However, each
shareholder may call the Transfer Agent at 1-800-525-7048 to ask that copies of
those materials be sent personally to that shareholder. Dividends, Capital Gains
and Taxes
Dividends. Each Fund declares dividends separately for Class A, Class B and
Class C shares from net investment income. LifeSpan Growth Fund intends to pay
dividends, if any, annually, normally on the last business day in December.
LifeSpan Balanced Fund intends to pay dividends, if any, quarterly, normally on
the last business day of March, June, September and December. LifeSpan Income
Fund will declare dividends from net investment income on each regular business
day and pay those dividends to shareholders monthly. Distributions may be made
monthly by LifeSpan Income Fund, annually by the LifeSpan Growth Fund and
quarterly by LifeSpan Balanced Fund from any net short-term capital gains the
Fund realizes in selling securities. The Board of Directors can change those
dates. Dividends paid on Class A shares generally are expected to be higher than
for Class B and Class C shares because expenses allocable to Class B and Class C
shares will generally be higher than for Class A shares. There is no fixed
dividend rate and there can be no assurance that a Fund will pay any dividends.
Capital Gains. Each Fund may make distributions annually in December out of any
net short-term or long-term capital gains. Each Fund may make supplemental
distributions of long-term capital gains following the end of its fiscal year.
Long-term capital gains will be separately identified in the tax information
your Fund sends you after the end of the year. There can be no assurance that
your Fund will pay any capital gains distributions in a particular year.
Distribution Options. When you open your account, specify on your application
how you want to receive your distributions. For OppenheimerFunds retirement
accounts, all distributions are reinvested. For other accounts, you have four
options:
o Reinvest All Distributions In Your Fund. You can elect to reinvest all
dividends and long-term capital gains distributions in additional shares of your
Fund.
o Reinvest Capital Gains Only. You can elect to reinvest long-term capital
gains in your Fund while receiving dividends by check or sent to your bank
account on AccountLink.
o Receive All Distributions in Cash. You can elect to receive a check for
all dividends and long-term capital gains distributions or have them sent to
your bank on AccountLink.
o Reinvest Your Distributions in Another Oppenheimer Fund Account. You can
reinvest all distributions in the same class of shares of another Oppenheimer
fund account you have established.
Taxes. If your account is not a tax-deferred retirement account, you should be
aware of the following tax implications of investing in a Fund. A Fund's
distributions from long-term capital gains are taxable to shareholders as
long-term capital gains, no matter how long you held your shares. Dividends paid
by a Fund from short-term capital gains and net investment income are taxable as
ordinary income. These dividends and distributions are subject to Federal income
tax and may be subject to state or local taxes. Your distributions are taxable
as described above, whether you reinvest them in additional shares or take them
in cash. Corporate
shareholders may be entitled to the corporate dividends received deduction for
some portion of a Fund's distributions treated as ordinary income, subject to
applicable limitations under the Internal Revenue Code. Every year your Fund
will send you and the IRS a statement showing the amount of the dividends and
other distributions you received for the previous year. So that each Fund will
not have to pay taxes on the amount it distributes to shareholders as dividends
and capital gains, each Fund intends to manage its investments so that it will
qualify as a "regulated investment company" under the Internal Revenue Code,
although it reserves the right not to qualify in a particular year.
o "Buying a Dividend." If you buy shares on or just before the ex-dividend
date, or just before your Fund declares a capital gains distribution, you will
pay the full price for the shares and then receive a portion of the price back
as a taxable dividend or capital gain.
o Taxes on Transactions. Share redemptions and repurchases, including
redemptions for exchanges, may produce a taxable gain or a loss, which generally
will be a capital gain or loss for shareholders who hold their Fund shares as
capital assets. Such a gain or loss is the difference between your tax basis,
which is usually the price you paid for the shares, and the proceeds you
received when you sold them. Special tax rules may apply to certain redemptions
preceded or followed by investments in the same Fund or another Oppenheimer
fund.
o Returns of Capital. In certain cases distributions made by your Fund may
be considered a return of capital to shareholders. If that occurs, it will be
identified in notices to shareholders. A return of capital will reduce your tax
basis in your Fund shares but will not be taxable except to the extent it
exceeds such tax basis.
o Foreign Taxes. Each Fund may be subject to foreign withholding taxes or
other foreign taxes on income (possibly including capital gains) on certain of
its foreign investments, if any. These taxes may be reduced or eliminated
pursuant to an income tax treaty in some cases. The Funds do not expect to
qualify to pass such foreign taxes and any related tax deductions or credits
through to their shareholders.
This information is only a summary of certain federal tax information
about your investment. Tax-exempt or tax-deferred investors, foreign investors,
and investors subject to special tax rules (such as certain banks and securities
dealers) may have different tax consequences not described above. More tax
information is contained in the Statement of Additional Information, and in
addition you should consult with your tax adviser about the effect of an
investment in a Fund on your particular tax situation.
-4-
<PAGE>
Appendix A
Description of Ratings-Categories of Rating Services
Description of Moody's Investors Service, Inc. Bond Ratings
Aaa: Bonds rated "Aaa" are judged to be the best quality and to carry the
smallest degree of investment risk. Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, the changes that can be expected are
most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds rated "Aa" are judged to be of high quality by all standards.
Together with the "Aaa" group, they comprise what are generally known as
"high-grade" bonds. They are rated lower than the best bonds because margins of
protection may not be as large as with "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than those of
"Aaa" securities.
A: Bonds rated "A" possess many favorable investment attributes and are to
be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa: Bonds rated "Baa" are considered medium grade obligations, that is,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and have
speculative characteristics as well.
Ba: Bonds rated "Ba" are judged to have speculative elements; their future
cannot be considered well-assured. Often the protection of interest and
principal payments may be very moderate and not well safeguarded during both
good and bad times over the future. Uncertainty of position characterizes bonds
in this class.
B: Bonds rated "B" generally lack characteristics of desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Caa: Bonds rated "Caa" are of poor standing and may be in default or there
may be present elements of danger with respect to principal or interest.
Ca: Bonds rated "Ca" represent obligations which are speculative in a high
degree and are often in default or have other marked shortcomings.
C: Bonds rated "C" can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Description of Standard & Poor's Bond Ratings
AAA: "AAA" is the highest rating assigned to a debt obligation and
indicates an extremely strong capacity to pay principal and interest.
AA: Bonds rated "AA" also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from "AAA" issues only in small degree.
A: Bonds rated "A" have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to adverse effects of change in
circumstances and economic conditions.
BBB: Bonds rated "BBB" are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the "A" category.
BB, B, CCC, CC: Bonds rated "BB," "B," "CCC" and "CC" are regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with the terms of the obligation.
"BB" indicates the lowest degree of speculation and "CC" the highest degree.
While such bonds will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions.
C, D: Bonds on which no interest is being paid are rated "C." Bonds rated
"D" are in default and payment of interest and/or repayment of principal is in
arrears.
A-1
<PAGE>
APPENDIX B
Special Sales Charge Arrangements
I. Special Sales Charge Arrangements for Shareholders of a Fund
Who Were Shareholders of the Former Quest for Value Funds
The initial and contingent sales charge rates and waivers for Class A, Class B
and Class C shares of a Fund described elsewhere in this Prospectus are modified
as described below for those shareholders of (i) Oppenheimer Quest Value Fund,
Inc., Oppenheimer Quest Growth & Income Value Fund, Oppenheimer Quest
Opportunity Value Fund, Oppenheimer Quest Small Cap Value Fund and Oppenheimer
Quest Global Value Fund, Inc. on November 24, 1995, when OppenheimerFunds, Inc.
became the investment adviser to those funds, and (ii) Quest for Value U.S.
Government Income Fund, Quest for Value Investment Quality Income Fund, Quest
for Value Global Income Fund, Quest for Value New York Tax-Exempt Fund, Quest
for Value National Tax-Exempt Fund and Quest for Value California Tax-Exempt
Fund when those funds merged into various Oppenheimer funds on November 24,
1995. The funds listed above are referred to in this Prospectus as the "Former
Quest for Value Funds." The waivers of initial and contingent deferred sales
charges described in this Appendix apply to shares of a Fund (i) acquired by
such shareholder pursuant to an exchange of shares of one of the Oppenheimer
funds that was one of the Former Quest for Value Funds, or (ii) purchased by
such shareholder by exchange of shares of other Oppenheimer funds that were
acquired pursuant to the merger of any of the former Quest for Value Funds into
an Oppenheimer fund on November 24, 1995.
Class A Sales Charges
o Reduced Class A Initial Sales Charge Rates for Certain Former Quest
Shareholders.
o Purchases by Groups, Associations and Certain Qualified Retirement
Plans. The following table sets forth the initial sales charge rates for Class A
shares purchased by a "Qualified Retirement Plan" through a single broker,
dealer or financial institution, or by members of "Associations" formed for any
purpose other than the purchase of securities if that Qualified Retirement Plan
or that Association purchased shares of any of the Former Quest for Value Funds
or received a proposal to purchase such shares from OCC Distributors prior to
November 24, 1995. For this purpose only, a "Qualified Retirement Plan" includes
any 401(k) plan, 403(b) plan, and SEP/IRA or IRA plan for employees of a single
employer.
Front-End Front-End
Sales Charge as Sales Charge as Commission
Number of Eligible a Percentage of a Percentage of as Percentage
Employees or Members Offering Price Amount Invested of Offering Price
- -------------------------------------------------------------------------------
9 or fewer 2.50% 2.56% 2.00%
- -------------------------------------------------------------------------------
At least 10 but
not more than 49 2.00% 2.04% 1.60%
For purchases by Qualified Retirement plans and Associations having 50 or
more eligible employees or members, there is no initial sales charge on
purchases of Class A shares, but those shares are subject to the Class A
contingent deferred sales charge described on pages __ to __ of this Prospectus.
Purchases made under this arrangement qualify for the lower of the sales
charge rate in the table based on the number of eligible employees in a
Qualified Retirement Plan or members of an Association or the sales charge rate
that applies under the Rights of Accumulation described above in the Prospectus.
In addition, purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they qualified to
purchase shares of any of the Former Quest For Value Funds by virtue of
projected contributions or investments of $1 million or more each year.
Individuals who qualify under this arrangement for reduced sales charge rates as
members of Associations, or as eligible employees in Qualified Retirement Plans
also may purchase shares for their individual or custodial accounts at these
reduced sales charge rates, upon request to the Fund's Distributor.
o Waiver of Class A Sales Charges for Certain Shareholders. Class A shares
of a Fund purchased by the following investors are not subject to any Class A
initial or contingent deferred sales charges:
o Shareholders of a Fund who were shareholders of the AMA Family of Funds
on February 28, 1991 and who acquired shares of any of the Former Quest for
Value Funds by merger of a portfolio of the AMA Family of Funds.
o Shareholders of a Fund who acquired shares of any Former Quest for Value
Fund by merger of any of the portfolios of the Unified Funds.
o Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions. The Class A contingent deferred sales charge will not apply to
redemptions of Class A shares of a Fund purchased by the following investors who
were shareholders of any Former Quest for Value Fund:
o Investors who purchased Class A shares from a dealer that is not or was
not permitted to receive a sales load or redemption fee imposed on a shareholder
with whom that dealer has a fiduciary relationship under the Employee Retirement
Income Security Act of 1974 and regulations adopted under that law.
o Participants in Qualified Retirement Plans that purchased shares of any
of the Former Quest For Value Funds pursuant to a special "strategic alliance"
with the distributor of those funds. A Funds' Distributor will pay a commission
to the dealer for purchases of Fund shares as described above in "Class A
Contingent Deferred Sales Charge."
Class A, Class B and Class C Contingent Deferred Sales Charge
Waivers
o Waivers for Redemptions of Shares Purchased Prior to March 6, 1995. In
the following cases, the contingent deferred sales charge will be waived for
redemptions of Class A, B or C shares of a Fund acquired by exchange from an
Oppenheimer fund that was a Former Quest for Value Fund or into which such fund
merged, if those shares were purchased prior to March 6, 1995: in connection
with (i) distributions to participants or beneficiaries of plans qualified under
Section 401(a) of the Internal Revenue Code or from custodial accounts under
Section 403(b)(7) of the Code, Individual Retirement Accounts, deferred
compensation plans under Section 457 of the Code, and other employee benefit
plans, and returns of excess contributions made to each type of plan, (ii)
withdrawals under an automatic withdrawal plan holding only either Class B or C
shares if the annual withdrawal does not exceed 10% of the initial value of the
account, and (iii) liquidation of a shareholder's account if the aggregate net
asset value of shares held in the account is less than the required minimum
value of such accounts.
o Waivers for Redemptions of Shares Purchased On or After March 6, 1995
but Prior to November 24, 1995. In the following cases, the contingent deferred
sales charge will be waived for redemptions of Class A, B or C shares of a Fund
acquired by exchange from an Oppenheimer fund that was a Former Quest For Value
Fund or into which such fund merged, if those shares were purchased on or after
March 6, 1995, but prior to November 24, 1995: (1) distributions to participants
or beneficiaries from Individual Retirement Accounts under Section 408(a) of the
Internal Revenue Code or retirement plans under Section 401(a), 401(k), 403(b)
and 457 of the Code, if those distributions are made either (a) to an individual
participant as a result of separation from service or (b) following the death or
disability (as defined in the Code) of the participant or beneficiary; (2)
returns of excess contributions to such retirement plans; (3) redemptions other
than from retirement plans following the death or disability of the
shareholder(s) (as evidenced by a determination of total disability by the U.S.
Social Security Administration); (4) withdrawals under an automatic withdrawal
plan (but only for Class B or C shares) where the annual withdrawals do not
exceed 10% of the initial value of the account; and (5) liquidation of a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the required minimum account value. A shareholder's account
will be credited with the amount of any contingent deferred sales charge paid on
the redemption of any Class A, B or C shares of a Fund described in this section
if within 90 days after that redemption, the proceeds are invested in the same
Class of shares in a Fund or another Oppenheimer fund.
II. Special Sales Charge Arrangements for Shareholders of a Fund
Who Were Shareholders of the Former Connecticut Mutual Funds
Certain of the sales charge rates and waivers for Class A and Class B shares of
a Fund described elsewhere in this Prospectus are modified as described below
for those shareholders of Connecticut Mutual Liquid Account, Connecticut Mutual
Government Securities Account, Connecticut Mutual Income Account, Connecticut
Mutual Growth Account, Connecticut Mutual Total Return Account, CMIA LifeSpan
Diversified Income Account, CMIA LifeSpan Capital Appreciation Account and CMIA
LifeSpan Balanced Account (the "Former Connecticut Mutual Funds") on March 1,
1996, when OppenheimerFunds, Inc. became the investment adviser to the Former
Connecticut Mutual Funds.
Prior Class A CDSC and Class A Sales Charge Waivers
o Class A Contingent Deferred Sales Charge. Certain shareholders of a Fund
and the other Former Connecticut Mutual Funds are entitled to continue to make
additional purchases of Class A shares at net asset value without a Class A
initial sales charge, but subject to the Class A contingent deferred sales
charge that was in effect prior to March 18, 1996 (the "prior Class A CDSC").
Under the prior Class A CDSC, if any of those shares are redeemed within one
year of purchase, they will be assessed a 1% contingent deferred sales charge on
an amount equal to the current market value or the original purchase price of
the shares sold, whichever is smaller (in such redemptions, any shares not
subject to the prior Class A CDSC will be redeemed first).
Those shareholders who are eligible for the prior Class A CDSC are: (1)
persons whose purchases of Class A shares of a Fund and other Former Connecticut
Mutual Funds were $500,000 prior to March 18, 1996, as a result of direct
purchases or purchases pursuant to a Funds' policies on Combined Purchases or
Rights of Accumulation, who still hold those shares in a Fund or other Former
Connecticut Mutual Funds, and (2) persons whose intended purchases under a
Statement of Intention entered into prior to March 18, 1996, with a Funds'
former general distributor to purchase shares valued at $500,000 or more over a
13-month period entitled those persons to purchase shares at net asset value
without being subject to the Class A initial sales charge.
Any of the Class A shares of a Fund and the other Former Connecticut
Mutual Funds that were purchased at net asset value prior to March 18, 1996,
remain subject to the prior Class A CDSC, or if any additional shares are
purchased by those shareholders at net asset value pursuant to this arrangement
they will be subject to the prior Class A CDSC.
o Class A Sales Charge Waivers. Additional Class A shares of a Fund may be
purchased without a sales charge, by a person who was in one (or more) of the
categories below and acquired Class A shares prior to March 18, 1996, and still
holds Class A shares:
(1) any purchaser, provided the total initial amount invested in a Fund or any
one or more of the Former Connecticut Mutual Funds totaled $500,000 or more,
including investments made pursuant to the Combined Purchases, Statement of
Intention and Rights of Accumulation features available at the time of the
initial purchase and such investment is still held in one or more of the Former
Connecticut Mutual Funds or a Fund into which such Fund merged; (2) any
participant in a qualified plan, provided that the total initial amount invested
by the plan in a Fund or any one or more of the Former Connecticut Mutual Funds
totaled $500,000 or more; (3) Directors of a Fund or any one or more of the
Former Connecticut Mutual Funds and members of their immediate families; (4)
employee benefit plans sponsored by Connecticut Mutual Financial Services,
L.L.C. ("CMFS"), a Funds' prior distributor, and its affiliated companies; (5)
one or more members of a group of at least 1,000 persons (and persons who are
retirees from such group) engaged in a common business, profession, civic or
charitable endeavor or other activity, and the spouses and minor dependent
children of such persons, pursuant to a marketing program between CMFS and such
group; and (6) an institution acting as a fiduciary on behalf of an individual
or individuals, if such institution was directly compensated by the
individual(s) for recommending the purchase of the shares of a Fund or any one
or more of the Former Connecticut Mutual Funds, provided the institution had an
agreement with CMFS. Purchases of Class A shares made pursuant to (1) and (2)
above may be subject to the Class A CDSC of the Former Connecticut Mutual Funds
described above.
Additionally, Class A shares of a Fund may be purchased without a sales
charge by any holder of a variable annuity contract issued in New York State by
Connecticut Mutual Life Insurance Company through the Panorama Separate Account
which is beyond the applicable surrender charge period and which was used to
fund a qualified plan, if that holder exchanges the variable annuity contract
proceeds to buy Class A shares of a Fund.
Class A and Class B Contingent Deferred Sales Charge Waivers
In addition to the waivers set forth in "How To Buy Shares," above, the
contingent deferred sales charge will be waived for redemptions of Class A and
Class B shares of a Fund and exchanges of Class A or Class B shares of a Fund
into Class A or Class B shares of a Former Connecticut Mutual Fund provided that
the Class A or Class B shares of a Fund to be redeemed or exchanged were (i)
acquired prior to March 18, 1996 or (ii) were acquired by exchange from an
Oppenheimer Fund that was a Former Connecticut Mutual Fund and the shares of
such Former Connecticut Mutual Fund were purchased prior to March 18, 1996:
(1)by the estate of a deceased shareholder; (2) upon the disability of a
shareholder, as defined in Section 72(m)(7) of the Internal Revenue Code; (3)
for retirement distributions (or loans) to participants or beneficiaries from
retirement plans qualified under Sections 401(a) or 403(b)(7)of the Code, or
from IRAs, deferred compensation plans created under Section 457 of the Code, or
other employee benefit plans; (4) as tax-free returns of excess contributions to
such retirement or employee benefit plans; (5) in whole or in part, in
connection with shares sold to any state, county, or city, or any
instrumentality, department, authority, or agency thereof, that is prohibited by
applicable investment laws from paying a sales charge or commission in
connection with the purchase of shares of any registered investment management
company; (6) in connection with the redemption of shares of a Fund due to a
combination with another investment company by virtue of a merger, acquisition
or similar reorganization transaction; (7) in connection with a Fund's right to
involuntarily redeem or liquidate a Fund; (8) in connection with automatic
redemptions of Class A shares and Class B shares in certain retirement plan
accounts pursuant to an Automatic Withdrawal Plan but limited to no more than
12% of the original value annually; and (9) as involuntary redemptions of shares
by operation of law, or under procedures set forth in the Companys Articles of
Incorporation, or as adopted by the Board of Directors of the Funds.
B-1
<PAGE>
Oppenheimer LifeSpan Growth Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Income Fund
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Advisor
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
OppenheimerFunds Internet Web Site
http://www.oppenheimerfunds.com
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, NY 10036
No dealer, broker, salesperson or any other person has been authorized to give
any information or to make any representations other than those contained in
this Prospectus or the Statement of Additional Information, and if given or
made, such information and representations must not be relied upon as having
been authorized by the Funds, OppenheimerFunds, Inc., OppenheimerFunds
Distributor, Inc. or any affiliate thereof. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any of the securities
offered hereby in any state to any person to whom it is unlawful to make such an
offer in such state. PR0000.305.0298 Printed on recycled paper
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER LIFESPAN INCOME FUND
Graphic material included in Prospectus of Oppenheimer LifeSpan Income
Fund: "Comparison of Total Return of Oppenheimer LifeSpan Income Fund with the
Lehman Brothers Intermediate Government/Corporate Index - Change in Value of
$10,000 Hypothetical Investments in Class A, Class B and Class C Shares of
Oppenheimer LifeSpan Income Fund and the Lehman Brothers Intermediate
Government/Corporate Index."
Linear graphs will be included in the Prospectus of Oppenheimer LifeSpan
Income Fund (the "Fund") depicting the initial account value and subsequent
account value of a hypothetical $10,000 investment in the Fund. In the case of
the Fund's Class A shares, that graph will cover the period from inception
(5/1/95) through 10/31/97, in the case of the Fund's Class B, that graph will
cover the period from inception (10/2/95) through 10/31/97, and in the case of
Class C shares, that graph will cover the period from the inception of the class
(5/1/96) through 10/31/97. The graph will compare such values with hypothetical
$10,000 investments over the same time periods in the Lehman Brothers
Intermediate Government/Corporate Bond Index. Set forth below are the relevant
data points that will appear on the linear graph. Additional information with
respect to the foregoing, including a description of the Lehman Brothers
Intermediate Government/Corporate Bond Index, is set forth in the Prospectus
under "Performance of the Fund - Comparing the Fund's Performance to the
Market."
Lehman Brothers
Oppenheimer Intermediate
Fiscal LifeSpan Income Government/Corporate
Period Ended Fund Class A Bond Index
- ------------- --------------- -------------------
5/1/95(1) $ 9,425 $10,000
12/31/95 $10,482 $10,914
10/31/96 $10,949 $11,280
10/31/97 $12,185 $12,125
Lehman Brothers
Oppenheimer Intermediate
Fiscal LifeSpan Income Government/Corporate
Period Ended Fund Class B Bond Index
- ------------- --------------- -------------------
10/02/95(2) $10,000 $10,000
12/31/95 $10,430 $10,352
10/31/96 $10,814 $10,699
10/31/97 $11,651 $11,501
- ----------------
(1) Class A Shares of the Fund were first publicly offered on 5/1/95. (2) Class
B shares of the Fund were first publicly offered on 10/02/95.
Lehman Brothers
Oppenheimer Intermediate
Fiscal LifeSpan Income Government/Corporate
Period Ended Fund Class C Bond Index
- ------------- --------------- -------------------
05/01/96(3) $10,000 $10,000
10/31/96 $10,396 $10,459
10/31/97 $11,543 $11,243
- ----------------
(3) Class C shares of the Fund were first publicly offered on 05/01/96.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER LIFESPAN BALANCED FUND
Graphic material included in Prospectus of Oppenheimer LifeSpan Balanced Fund:
"Comparison of Total Return of Oppenheimer LifeSpan Balanced Fund with the S&P
500 Index and the Lehman Brothers Corporate/Government Index - Change in Value
of $10,000 Hypothetical Investments in Class A, Class B and Class C Shares of
Oppenheimer LifeSpan Balanced Fund and the S&P 500 Index and the Lehman Brothers
Corporate/Government Index."
Linear graphs will be included in the Prospectus of Oppenheimer LifeSpan
Balanced Fund (the "Fund") depicting the initial account value and subsequent
account value of a hypothetical $10,000 investment in the Fund. In the case of
the Fund's Class A shares, that graph will cover the period from inception
(5/1/95) through 10/31/97, in the case of the Fund's Class B, that graph will
cover the period from inception (10/2/95) through 10/31/97, and in the case of
Class C shares, that graph will cover the period from the inception of the class
(5/1/96) through 10/31/97. The graph will compare such values with hypothetical
$10,000 investments over the same time periods in the S&P 500 Index and the
Lehman Brothers Corporate/Government Index. Set forth below are the relevant
data points that will appear on the linear graph. Additional information with
respect to the foregoing, including a description of the S&P 500 Index and the
Lehman Brothers Corporate/ Goverment Index, is set forth in the Prospectus under
"Performance of the Fund - Comparing the Fund's Performance to the Market."
Oppenheimer S&P Lehman Brothers
Fiscal LifeSpan Balanced 500 Corporate/Government
Period Ended Fund Class A Index Index
- ------------- ------------------ ------ --------------------
5/1/95(1) $ 9,425 $10,000 $10,000
12/31/95 $10,870 $12,176 $11,202
10/31/96 $11,962 $14,200 $11,446
10/31/97 $13,476 $18,758 $12,455
Oppenheimer S&P Lehman Brothers
Fiscal LifeSpan Balanced 500 Corporate/Government
Period Ended Fund Class B Index Bond Index
- ------------ ----------------- ------ --------------------
10/02/95(2) $10,000 $10,000 $10,000
12/31/95 $10,450 $10,602 $10,466
10/31/96 $11,413 $12,364 $10,694
10/31/97 $12,447 $16,332 $11,637
- ----------------
(1) Class A Shares of the Fund were first publicly offered on 5/01/95. (2) Class
B shares of the Fund were first publicly offered on 10/02/95.
<PAGE>
Oppenheimer S&P Lehman Brothers
Fiscal LifeSpan Balanced 500 Corporate/Government
Period Ended Fund Class C Index Bond Index
- ------------- ----------------- ------ ------------------
05/01/96(3) $10,000 $10,000 $10,000
10/31/96 $10,321 $10,908 $10,535
10/31/97 $11,532 $14,409 $11,464
- ----------
(3) Class C shares of the Fund were first publicly offered on 5/01/96.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER LIFESPAN GROWTH FUND
Graphic material included in Prospectus of Oppenheimer LifeSpan Growth
Fund: "Comparison of Total Return of Oppenheimer LifeSpan Growth Fund with the
Wilshire 5000 Index - Change in Value of $10,000 Hypothetical Investments in
Class A, Class B and Class C Shares of Oppenheimer LifeSpan Growth Fund and the
Wilshire 5000 Index."
Linear graphs will be included in the Prospectus of Oppenheimer LifeSpan
Growth Fund (the "Fund") depicting the initial account value and subsequent
account value of a hypothetical $10,000 investment in the Fund. In the case of
the Fund's Class A shares, that graph will cover the period from inception
(5/1/95) through 10/31/97, in the case of the Fund's Class B, that graph will
cover the period from inception (10/2/95) through 10/31/97, and in the case of
Class C shares, that graph will cover the period from the inception of the class
(5/1/96) through 10/31/97. The graph will compare such values with hypothetical
$10,000 investments over the same time periods in the Wilshire 5000 Index. Set
forth below are the relevant data points that will appear on the linear graph.
Additional information with respect to the foregoing, including a description of
the Wilshire 5000 Index, is set forth in the Prospectus under "Performance of
the Fund -Comparing the Fund's Performance to the Market."
Oppenheimer
Fiscal LifeSpan Growth Wilshire 5000
Period Ended Fund Class A Index
- ------------- --------------- -------------------
5/01/95(1) $ 9,425 $10,000
12/31/95 $11,123 $12,028
10/31/96 $12,611 $13,605
10/31/97 $14,246 $17,604
Oppenheimer
Fiscal LifeSpan Growth Wilshire 5000
Period Ended Fund Class B Index
- ------------- ---------------- -------------------
10/02/95(2) $10,000 $10,000
12/31/95 $10,534 $10,432
10/31/96 $11,859 $15,267
10/31/97 $12,990
Oppenheimer
Fiscal LifeSpan Growth Wilshire 5000
Period Ended Fund Class C Index
- ------------- --------------- -------------------
5/01/96(3) $10,000 $10,000
10/31/96 $10,304 $10,517
10/31/97 $11,546 $13,608
- ----------------
(1) Class A shares of the Fund were first publicly offered on 5/01/95. (2) Class
B shares of the Fund were first publicly offered on 10/02/95. (3) Class C shares
of the Fund were first publicly offered on 5/01/96.
<PAGE>
Oppenheimer LifeSpan Growth Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Income Fund
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Statement of Additional Information dated February 19, 1998
This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Funds and supplements
information in the Funds' Prospectus dated February 19, 1998. It should be read
together with the Prospectus which may be obtained by writing to the Funds'
Transfer Agent, OppenheimerFunds Services, at P.O. Box 5270, Denver, Colorado
80217 or by calling the Transfer Agent at the toll-free number shown above.
CONTENTS
Page
About the Funds
Investment Objectives and Policies............................................
Investment Policies and Strategies.........................................
Other Investment Restrictions..............................................
How the Funds are Managed.....................................................
Organization and History...................................................
Directors and Officers of the Funds........................................
The Manager and Its Affiliates.............................................
Brokerage Policies of the Funds...............................................
Performance of the Funds......................................................
Distribution and Service Plans................................................
About Your Account
How to Buy Shares.............................................................
How to Sell Shares............................................................
How to Exchange Shares........................................................
Dividends, Capital Gains and Taxes............................................
Additional Information About the Funds........................................
Financial Information About the Funds
Independent Auditors' Report..................................................
Financial Statements..........................................................
Appendix: Corporate Industry Classification................................A-1
<PAGE>
ABOUT THE FUNDS
Investment Objectives And Policies
Investment Policies and Strategies. The investment objectives and policies of
each Fund are described in its Prospectus. Set forth below is supplemental
information about those policies and the types of securities in which the Funds
may invest, as well as the strategies the Funds may use to try to achieve their
objective. Certain capitalized terms used in this Statement of Additional
Information have the same meaning as those terms have in the Prospectuses.
o Foreign Securities. Consistent with the limitations on foreign investing
set forth in the Prospectus, each Fund may invest in foreign securities. Each
Fund may also invest in debt and equity securities of corporate and governmental
issuers of countries with emerging economies or securities markets. Investing in
foreign securities offers potential benefits not available from investing solely
in securities of domestic issuers, such as the opportunity to invest in foreign
issuers that appear to offer growth potential, or in foreign countries with
economic policies or business cycles different from those of the U.S., or to
reduce fluctuations in portfolio value by taking advantage of foreign stock or
bond markets that do not move in a manner parallel to U.S. markets. If a Fund's
portfolio securities are held abroad, the countries in which such securities may
be held and the sub-custodians holding them must be approved by the Fund's Board
of Directors under applicable rules of the Securities and Exchange Commission
("SEC"). In buying foreign securities, a Fund may convert U.S. dollars into
foreign currency, but only to effect securities transactions on foreign
securities exchanges and not to hold such currency as an investment.
Foreign securities include equity and debt securities of companies
organized under the laws of countries other than the United States and debt
securities of foreign governments, that are traded on foreign securities
exchanges or in the foreign over-the-counter markets. Securities of foreign
issuers that are represented by American depository receipts, or that are listed
on a U.S. securities exchange, or are traded in the U.S. over-the-counter market
are not considered "foreign securities" for purposes of a Fund's investment
allocations, because they are not subject to many of the special considerations
and risks (discussed below) that apply to foreign securities traded and held
abroad.
Investing in foreign securities, and in particular in securities in
emerging countries, involves special additional risks and considerations not
typically associated with investing in securities of issuers traded in the U.S.
These include: reduction of income by foreign taxes; fluctuation in value of
foreign portfolio investments due to changes in currency rates and control
regulations (e.g., currency blockage); transaction charges for currency
exchange; lack of public information about foreign issuers; lack of uniform
accounting, auditing and financial reporting standards comparable to those
applicable to domestic issuers; less volume on foreign exchanges than on U.S.
exchanges; greater volatility and less liquidity in foreign markets than in the
U.S.; less regulation of foreign issuers, stock exchanges and brokers than in
the U.S.; greater difficulties in commencing lawsuits against foreign issuers;
higher brokerage commission rates than in the U.S.; increased risks of delays in
settlement of portfolio transactions or loss of certificates for portfolio
securities; possibilities in some countries, and in particular emerging
countries, of expropriation or nationalization of assets, confiscatory taxation,
political, financial or social instability or adverse diplomatic developments;
and unfavorable differences between the U.S. economy and foreign economies. In
the past, U.S. Government policies have discouraged certain investments abroad
by U.S. investors, through taxation or other restrictions, and it is possible
that such restrictions could be re-imposed.
A Fund's investment income or, in some cases, capital gains from foreign
issuers may be subject to foreign withholding or other foreign taxes, thereby
reducing a Fund's net investment income and/or net realized capital gains. See
"Dividends, Capital Gains and Taxes."
o Debt Securities. All debt securities are subject to two types of risks:
credit risk and interest rate risk (these are in addition to other investment
risks that may affect a particular security).
o Credit Risk. Credit risk relates to the ability of the issuer to meet
interest or principal payments or both as they become due. Generally, higher
yielding bonds are subject to credit risk to a greater extent than higher
quality bonds.
o Interest Rate Risk. Interest rate risk refers to the fluctuations in
value of fixed-income securities resulting solely from the inverse relationship
between the market value of outstanding fixed-income securities and changes in
interest rates. An increase in interest rates will generally reduce the market
value of fixed-income investments, and a decline in interest rates will tend to
increase their value. In addition, debt securities with longer maturities, which
tend to produce higher yields, are subject to potentially greater capital
appreciation and depreciation than obligations with shorter maturities.
Fluctuations in the market value of fixed-income securities subsequent to their
acquisition will not affect the interest payable on those securities, and thus
the cash income from such securities, but will be reflected in the valuations of
those securities used to compute a Fund's net asset values.
o High Yield Securities. Each Fund may invest in high-yield/high risk
securities (commonly called junk bonds). OppenheimerFunds, Inc. (the "Manager")
does not rely on credit ratings assigned by rating agencies in assessing
investment opportunities in debt securities. Ratings by credit agencies assess
safety of principal and interest payments and do not reflect market risks. In
addition, ratings by credit agencies may not be changed by the agencies in a
timely manner to reflect subsequent economic events. By carefully selecting
individual issues and diversifying portfolio holdings by industry sector and
issuer, the Manager believes that the risk of the Fund holding defaulted lower
grade securities can be reduced. Emphasis on credit risk management involves the
Manager's own internal analysis to determine the debt service capability,
financial flexibility and liquidity of an issuer, as well as the fundamental
trends and outlook for the issuer and its industry. The Manager's rating helps
it determine the attractiveness of specific issues relative to the valuation by
the market place of similarly rated credits.
Risks of high yield securities include: (i) limited liquidity and secondary
market support, (ii) substantial market price volatility resulting from changes
in prevailing interest rates, (iii) subordination to the prior claims of banks
and other senior lenders, (iv) the operation of mandatory sinking fund or
call/redemption provisions during periods of declining interest rates which may
cause the Fund to invest premature redemption proceeds in lower yielding
portfolio securities, (v) the possibility that earnings of the issuer may be
insufficient to meet its debt service, and (vi) the issuer's low
creditworthiness and potential for insolvency during periods of rising interest
rates and economic downturn. As a result of the limited liquidity of high yield
securities, their prices have at times experienced significant and rapid decline
when a substantial number of holders decided to sell. A decline is also likely
in the high yield bond market during an economic downturn. An economic downturn
or an increase in interest rates could severely disrupt the market for high
yield bonds and adversely affect the value of outstanding bonds and the ability
of the issuers to repay principal and interest. In addition, there have been
several Congressional attempts to limit the use of tax and other advantages of
high yield bonds which, if enacted, could adversely affect the value of these
securities and the net asset value of a Fund. For example, federally-insured
savings and loan associations have been required to divest their investments in
high yield bonds.
o U.S. Government Securities. U.S. Government Securities are debt
obligations issued or guaranteed by the U.S. Government or one of its agencies
or instrumentalities, and include "zero coupon" Treasury securities.
o U.S. Treasury Obligations. These include Treasury Bills (which have
maturities of one year or less when issued), Treasury Notes (which have
maturities of one to ten years when issued) and Treasury Bonds (which have
maturities generally greater than ten years when issued). U.S. Treasury
obligations are backed by the full faith and credit of the United States.
o U.S. Government and Agency. U.S. Government Securities are debt
obligations issued by or guaranteed by the United States government or any of
its agencies or instrumentalities. Some of these obligations, including U.S.
Treasury notes and bonds, and mortgage-backed securities (referred to as "Ginnie
Maes") guaranteed by the Government National Mortgage Association, are supported
by the full faith and credit of the United States, which means that the
government pledges to use its taxing power to repay the debt. Other U.S.
Government Securities issued or guaranteed by Federal agencies or
government-sponsored enterprises are not supported by the full faith and credit
of the United States. They may include obligations supported by the ability of
the issuer to borrow from the U.S. Treasury. However, the Treasury is not under
a legal obligation to make a loan. Examples of these are obligations of Federal
Home Loan Mortgage Corporation (those securities are often called "Freddie
Macs"). Other obligations are supported by the credit of the instrumentality,
such as Federal National Mortgage Association bonds (these securities are often
called "Fannie Maes").
o GNMA Certificates. Certificates of Government National Mortgage
Association ("GNMA") are mortgaged-backed securities of GNMA that evidence an
undivided interest in a pool or pools of mortgages ("GNMA Certificates"). The
GNMA Certificates that a Fund may purchase may be of the "modified pass-through"
type, which entitle the holder to receive timely payment of all interest and
principal payments due on the mortgage pool, net of fees paid to the "issuer"
and GNMA, regardless of whether the mortgagor actually makes the payments.
The National Housing Act authorizes GNMA to guarantee the timely payment of
principal and interest on securities backed by a pool of mortgages insured by
the Federal Housing Administration ("FHA") or guaranteed by the Veterans
Administration ("VA"). The GNMA guarantee is backed by the full faith and credit
of the U.S. Government. GNMA is also empowered to borrow without limitation from
the U.S. Treasury if necessary to make any payments required under its
guarantee.
The average life of a GNMA Certificate is likely to be substantially
shorter than the original maturity of the mortgages underlying the securities.
Prepayments of principal by mortgagors and mortgage foreclosures will usually
result in the return of the principal investment long before the maturity of the
mortgages in the pool. Foreclosures impose no risk to principal investment
because of the GNMA guarantee, except to the extent that a Fund has purchased
the certificates at a premium in the secondary market.
o FNMA Securities. The Federal National Mortgage Association ("FNMA") was
established to create a secondary market in mortgages insured by the FHA. FNMA
issues guaranteed mortgage pass-through certificates ("FNMA Certificates"). FNMA
Certificates resemble GNMA Certificates in that each FNMA Certificate represents
a pro rata share of all interest and principal payments made and owed on the
underlying pool. FNMA guarantees timely payment of interest and principal on
FNMA Certificates. The FNMA guarantee is not backed by the full faith and credit
of the U.S. Government.
o FHLMC Securities. The Federal Home Loan Mortgage Corporation ("FHLMC")
was created to promote development of a nationwide secondary market for
conventional residential mortgages. FHLMC issues two types of mortgage
pass-through certificates ("FHLMC Certificates"): mortgage participation
certificates ("PCS") and guaranteed mortgage certificates ("GMCs"). PCS resemble
GNMA Certificates in that each PC represents a pro rata share of all interest
and principal payments made and owed on the underlying pool. FHLMC guarantees
timely monthly payment of interest on PCS and the ultimate payment of principal.
The FHLMC guarantee is not backed by the full faith and credit of the U.S.
Government.
GMCs also represent a pro rata interest in a pool of mortgages. However,
these instruments pay interest semi-annually and return principal once a year in
guaranteed minimum payments. The expected average life of these securities is
approximately ten years. The FHLMC guarantee is not backed by the full faith and
credit of the U.S. Government.
o Zero Coupon Securities and Deferred Interest Bonds. The Funds may invest
in zero coupon securities and deferred interest bonds issued by the U.S.
Treasury or by private issuers such as domestic or foreign corporations. Zero
coupon U.S. Treasury securities include: (1) U.S. Treasury bills without
interest coupons, (2) U.S. Treasury notes and bonds that have been stripped of
their unmatured interest coupons and (3) receipts or certificates representing
interests in such stripped debt obligations or coupons. Zero coupon securities
and deferred interest bonds usually trade at a deep discount from their face or
par value and will be subject to greater fluctuations in market value in
response to changing interest rates than debt obligations of comparable
maturities that make current payments of interest. An additional risk of
private-issuer zero coupon securities and deferred interest bonds is the credit
risk that the issuer will be unable to make payment at maturity of the
obligation.
While zero coupon bonds do not require the periodic payment of interest,
deferred interest bonds generally provide for a period of delay before the
regular payment of interest begins. Although this period of delay is different
for each deferred interest bond, a typical period is approximately one-third of
the bond's term to maturity. Such investments benefit the issuer by mitigating
its initial need for cash to meet debt service, but some also provide a higher
rate of return to attract investors who are willing to defer receipt of such
cash. With zero coupon securities, however, the lack of periodic interest
payments means that the interest rate is "locked in" and the investor avoids the
risk of having to reinvest periodic interest payments in securities having lower
rates.
Because a Fund accrues taxable income from zero coupon and deferred
interest securities without receiving cash, a Fund may be required to sell
portfolio securities in order to pay dividends or redemption proceeds for its
shares, which require the payment of cash. This will depend on several factors:
the proportion of shareholders who elect to receive dividends in cash rather
than reinvesting dividends in additional shares of a Fund, and the amount of
cash income a Fund receives from other investments and the sale of shares. In
either case, cash distributed or held by a Fund that is not reinvested by
investors in additional Fund shares will hinder a Fund from seeking current
income.
o Mortgage-Backed Securities. These securities represent participation
interests in pools of residential mortgage loans which are guaranteed by
agencies or instrumentalities of the U.S. Government. Such securities differ
from conventional debt securities which generally provide for periodic payment
of interest in fixed or determinable amounts (usually semi-annually) with
principal payments at maturity or specified call dates. Some mortgage-backed
securities in which the Funds may invest may be backed by the full faith and
credit of the U.S. Treasury (e.g., direct pass-through certificates of
Government National Mortgage Association); some are supported by the right of
the issuer to borrower from the U.S. Government (e.g., obligations of Federal
Home Loan Mortgage Corporation); and some are backed by only the credit of the
issuer itself. Those guarantees do not extend to the value of or yield of the
mortgage-backed securities themselves or to the net asset value of a Fund's
shares.
Mortgage-backed securities may also be issued by trusts or other entities
formed or sponsored by private originators of and institutional investors in
mortgage loans and other foreign or domestic non-governmental entities (or
represent custodial arrangements administered by such institutions). These
private originators and institutions include domestic and foreign savings and
loan associations, mortgage bankers, commercial banks, insurance companies,
investment banks and special purpose subsidiaries of the foregoing. Privately
issued mortgage-backed securities are generally backed by pools of conventional
(i.e., non-government guaranteed or insured) mortgage loans. Since such
mortgage-backed securities are not guaranteed by an entity having the credit
standing of Ginnie Mae, Fannie Mae or Freddie Mac, in order to receive a high
quality rating, they normally are structured with one or more types of "credit
enhancement." Such credit enhancements fall generally into two categories; (1)
liquidity protection and (2) protection against losses resulting after default
by a borrower and liquidation of the collateral. Liquidity protection refers to
the providing of cash advances to holders of mortgage-backed securities when a
borrower on an underlying mortgage fails to make its monthly payment on time.
Protection against losses resulting after default and liquidation is designed to
cover losses resulting when, for example, the proceeds of a foreclosure sale are
insufficient to cover the outstanding amount on the mortgage. Such protection
may be provided through guarantees, insurance policies or letters of credit,
though various means of structuring the transaction or through a combination of
such approaches.
The yield on mortgage-backed securities is based on the average expected
life of the underlying pool of mortgage loans. The actual life of any particular
pool will be shortened by any unscheduled or early payments of principal and
interest. Principal prepayments generally result from the sale of the underlying
property or the refinancing or foreclosure of underlying mortgages. The
occurrence of prepayments is affected by a wide range of economic, demographic
and social factors and, accordingly, it is not possible to predict accurately
the average life of a particular pool. Yield on such pools is usually computed
by using the historical record of prepayments for that pool, or, in the case of
newly issued mortgages, the prepayment history of similar pools. The actual
prepayment experience of a pool of mortgage loans may cause the yield realized
by a Fund to differ from the yield calculated on the basis of the expected
average life of the pool.
Prepayments tend to increase during periods of falling interest rates,
while during periods of rising interest rates prepayments will most likely
decline. When prevailing interest rates rise, the value of a pass-through
security may decrease as do the values of other debt securities, but, when
prevailing interest rates decline, the value of a pass-through security is not
likely to rise to the extent that the value of other debt securities rise,
because of the prepayment feature of pass-through securities. A Fund's
reinvestment of scheduled principal payments and unscheduled prepayments it
receives may occur at times when available investments offer higher or lower
rates than the original investment, thus affecting the yield of such Fund.
Monthly interest payments received by a Fund have a compounding effect which may
increase the yield to the Fund more than debt obligations that pay interest
semi-annually. Because of those factors, mortgage-backed securities may be less
effective than Treasury bonds of similar maturity at maintaining yields during
periods of declining interest rates. A Fund may purchase mortgage-backed
securities at par, at a premium or at a discount. Accelerated prepayments
adversely affect yields for pass-through securities purchased at a premium
(i.e., at a price in excess of their principal amount) and may involve
additional risk of loss of principal because the premium may not have been fully
amortized at the time the obligation is repaid. The opposite is true for
pass-through securities purchased at a discount.
Mortgage-backed securities may be less effective than debt obligations of
similar maturity at maintaining yields during periods of declining interest
rates. As new types of mortgage-related securities are developed and offered to
investors, the Manager will, subject to the direction of the Board of Directors
and consistent with a Fund's investment objective and policies, consider making
investments in such new types of mortgage-related securities.
o "Stripped" Mortgage-Backed Securities. The Funds may invest in "stripped"
mortgage-backed securities, in which the principal and interest portions of the
security are separated and sold. Stripped mortgage-backed securities usually
have at least two classes each of which receives different proportions of
interest and principal distributions on the underlying pool of mortgage assets.
One common variety of stripped mortgage-backed security has one class that
receives some of the interest and most of the principal, while the other class
receives most of the interest and remainder of the principal. In some cases, one
class will receive all of the interest (the "interest-only" or "IO" class),
while the other class will receive all of the principal (the "principal-only" or
"PO" class). Interest only securities are extremely sensitive to interest rate
changes, and prepayments of principal on the underlying mortgage assets. An
increase in principal payments or prepayments will reduce the income available
to the IO security. In accordance with a requirement imposed by the staff of the
SEC, the Manager or the relevant Subadviser will consider privately- issued
fixed rate IOs and POs to be illiquid securities for purposes of a Fund's
limitation on investments in illiquid securities. Unless the Manager or the
relevant Subadviser, acting pursuant to guidelines and standards established by
the Board of Directors, determines that a particular government-issued fixed
rate IO or PO is liquid, management will also consider these IOs and POs to be
illiquid. In other types of CMOs, the underlying principal payments may apply to
various classes in a particular order, and therefore the value of certain
classes or "tranches" of such securities may be more volatile than the value of
the pool as a whole, and losses may be more severe than on other classes.
o Custodial Receipts. Each of the Funds may acquire U.S. Government
Securities and their unmatured interest coupons that have been separated
(stripped) by their holder, typically a custodian bank or investment brokerage
firm. Having separated the interest coupons from the underlying principal of the
U.S. Government Securities, the holder will resell the stripped securities in
custodial receipt programs with a number of different names, including Treasury
Income Growth Receipts (TIGRs) and Certificate of Accrual on Treasury Securities
(CATS). The stripped coupons are sold separately from the underlying principal,
which is usually sold at a deep discount because the buyer receives only the
right to receive a future fixed payment on the security and does not receive any
rights to periodic interest (cash) payments. The underlying U.S. Treasury bonds
and notes themselves are generally held in book-entry form at a Federal Reserve
Bank. Counsel to the underwriters of these certificates or other evidences of
ownership of U.S. Treasury securities have stated that, in their opinion,
purchasers of the stripped securities most likely will be deemed the beneficial
holders of the underlying U.S. Government Securities for federal tax and
securities purposes. In the case of CATS and TIGRs, the IRS has reached this
conclusion for the purpose of applying the tax diversification requirements
applicable to regulated investment companies such as the Funds. CATS and TIGRs
are not considered U.S. Government Securities by the Staff of the SEC, however.
Further, the IRS' conclusion is contained only in a general counsel memorandum,
which is an internal document of no precedential value or binding effect, and a
private letter ruling, which also may not be relied upon by the Funds. The
Company is not aware of any binding legislative, judicial or administrative
authority on this issue.
o Collateralized Mortgage-Backed Obligations ("CMOs"). Each Fund may invest
in collateralized mortgage obligations ("CMOs"). CMOs are fully-collateralized
bonds that are the general obligations of the issuer thereof, either the U.S.
Government, a U.S. Government instrumentality, or a private issuer, which may be
a domestic or foreign corporation. Such bonds generally are secured by an
assignment to a trustee (under the indenture pursuant to which the bonds are
issued) of collateral consisting of a pool of mortgages. Payments with respect
to the underlying mortgages generally are made to the trustee under the
indenture. Payments of principal and interest on the underlying mortgages are
not passed through to the holders of the CMOs as such (i.e., the character of
payments of principal and interest is not passed through, and therefore payments
to holders of CMOs attributable to interest paid and principal repaid on the
underlying mortgages do not necessarily constitute income and return of capital,
respectively, to such holders), but such payments are dedicated to payment of
interest on and repayment of principal of the CMOs. CMOs often are issued in two
or more classes with different characteristics such as varying maturities and
stated rates of interest. Because interest and principal payments on the
underlying mortgages are not passed through to holders of CMOs, CMOs of varying
maturities may be secured by the same pool of mortgages, the payments on which
are used to pay interest on each class and to retire successive maturities in
sequence. Unlike other mortgage-backed securities (discussed above), CMOs are
designed to be retired as the underlying mortgages are repaid. In the event of
prepayment on such mortgages, the class of CMO first to mature generally will be
paid down. Therefore, although in most cases the issuer of CMOs will not supply
additional collateral in the event of such prepayment, there will be sufficient
collateral to secure CMOs that remain outstanding.
o Asset-Backed Securities. The Funds may purchase asset-back securities.
The value of an asset-backed security is affected by changes in the market's
perception of the asset backing the security, the creditworthiness of the
servicing agent for the loan pool, the originator of the loans, or the financial
institution providing any credit enhancement, and is also affected if any credit
enhancement has been exhausted. The risks of investing in asset-backed
securities are ultimately dependent upon payment of consumer loans by the
individual borrowers. As a purchaser of an asset- backed security, a Fund would
generally have no recourse to the entity that originated the loans in the event
of default by a borrower. The underlying loans are subject to prepayments, which
shorten the weighted average life of asset-backed securities and may lower their
return, in the same manner as described above for the prepayments of a pool of
mortgage loans underlying mortgage-backed securities.
o Commercial Paper. Each Fund may purchase commercial paper for temporary
defensive purposes as described in its Prospectus. In addition, a Fund may
invest in variable amount master demand notes and floating rate notes as
follows:
o Variable Amount Master Demand Notes. Master demand notes are corporate
obligations which permit the investment of fluctuating amounts by a Fund at
varying rates of interest pursuant to direct arrangements between a Fund, as
lender, and the borrower. They permit daily changes in the amounts borrowed. A
Fund has the right to increase the amount under the note at any time up to the
full amount provided by the note agreement, or to decrease the amount, and the
borrower may prepay up to the full amount of the note without penalty. These
notes may or may not be backed by bank letters of credit. Because these notes
are direct lending arrangements between the lender and borrower, it is not
generally contemplated that they will be traded. There is no secondary market
for these notes, although they are redeemable (and thus immediately repayable by
the borrower) at principal amount, plus accrued interest, at any time.
Accordingly, a Fund's right to redeem such notes is dependent upon the ability
of the borrower to pay principal and interest on demand. A Fund has no
limitations on the type of issuer from whom these notes will be purchased;
however, in connection with such purchases and on an ongoing basis, the Manager
will consider the earning power, cash flow and other liquidity ratios of the
issuer, and its ability to pay principal and interest on demand, including a
situation in which all holders of such notes made demand simultaneously.
Investments in master demand notes are subject to the limitation on investments
by a Fund in illiquid securities, described in the Fund's Prospectus. The
Manager and relevant Subadviser will consider the earning power, cash flow and
other liquidity ratios of issuers of demand notes and continually will monitor
their financial ability to meet payment on demand.
o Floating Rate/Variable Rate Notes. Some of the notes a Fund may purchase
may have variable or floating interest rates. Variable rates are adjustable at
stated periodic intervals; floating rates are automatically adjusted according
to a specified market rate for such investments, such as the percentage of the
prime rate of a bank, or the 91-day U.S. Treasury Bill rate. Such obligations
may be secured by bank letters of credit or other support arrangements. Any bank
providing such a bank letter, line of credit, guarantee or loan commitment will
meet a Fund's investment quality standards relating to investments in bank
obligations. A Fund will invest in variable and floating rate instruments only
when the Manager or relevant Subadviser deems the investment to meet the
investment guidelines applicable to a Fund. The Manager or relevant Subadviser
will also continuously monitor the creditworthiness of issuers of such
instruments to determine whether a Fund should continue to hold the investments.
The absence of an active secondary market for certain variable and
floating rate notes could make it difficult to dispose of the instruments, and a
Fund could suffer a loss if the issuer defaults or during periods in which the
Fund is not entitled to exercise its demand rights.
Variable and floating rate instruments held by a Fund will be subject to
the Fund's limitation on investments in illiquid securities when a reliable
trading market for the instruments does not exist and the Fund may not demand
payment of the principal amount of such instruments within seven days.
o Bank Obligations and Instruments Secured Thereby. The bank obligations
each Fund may invest in include time deposits, certificates of deposit, and
bankers' acceptances if they are: (i) obligations of a domestic bank with total
assets of at least $1 billion or (ii) obligations of a foreign bank with total
assets of at least U.S. $1 billion. A Fund may also invest in instruments
secured by such obligations (e.g., debt which is guaranteed by the bank). For
purposes of this section, the term "bank" includes commercial banks, savings
banks, and savings and loan associations which may or may not be members of the
Federal Deposit Insurance Corporation.
Time deposits are non-negotiable deposits in a bank for a specified period
of time at a stated interest rate, whether or not subject to withdrawal
penalties. However, time deposits that are subject to withdrawal penalties,
other than those maturing in seven days or less, are subject to the limitation
on investments by a Fund in illiquid investments, set forth in the Fund's
Prospectus under "Illiquid and Restricted Securities."
Banker's acceptances are marketable short-term credit instruments used to
finance the import, export, transfer or storage of goods. They are deemed
"accepted" when a bank guarantees their payment at maturity.
o Equity Securities. Additional information about some of the types of
equity securities each Fund may invest in is provided below.
o Convertible Securities. Each Fund may invest in convertible securities.
While convertible securities are a form of debt security in many cases, their
conversion feature (allowing conversion into equity securities) causes them to
be regarded more as "equity equivalents." As a result, any rating assigned to
the security has less impact on the Manager's or relevant Subadviser's
investment decision with respect to convertible securities than in the case of
non-convertible debt securities. To determine whether convertible securities
should be regarded as "equity equivalents," the Manager or relevant Subadviser
examines the following factors: (1) whether, at the option of the investor, the
convertible security can be exchanged for a fixed number of shares of common
stock of the issuer, (2) whether the issuer of the convertible securities has
restated its earnings per share of common stock on a fully diluted basis
(considering the effect of converting the convertible securities), and (3) the
extent to which the convertible security may be a defensive "equity substitute,"
providing the ability to participate in any appreciation in the price of the
issuer's common stock.
o Warrants and Rights. Each Fund may purchase warrants. Warrants are
options to purchase equity securities at set prices valid for a specified period
of time. The prices of warrants do not necessarily move in a manner parallel to
the prices of the underlying securities. The price a Fund pays for a warrant
will be lost unless the warrant is exercised prior to its expiration. Rights are
similar to warrants, but normally have a short duration and are distributed
directly by the issuer to its shareholders. Rights and warrants have no voting
rights, receive no dividends and have no rights with respect to the assets of
the issuer.
o Preferred Stock. Each of the Funds, subject to its investment objective,
may purchase preferred stock. Preferred stocks are equity securities, but
possess certain attributes of debt securities and are generally considered fixed
income securities. Holders of preferred stocks normally have the right to
receive dividends at a fixed rate when and as declared by the issuer's board of
directors, but do not participate in other amounts available for distribution by
the issuing corporation. Dividends on the preferred stock may be cumulative, and
all cumulative dividends usually must be paid prior to dividend payments to
common stockholders. Because of this preference, preferred stocks generally
entail less risk than common stocks. Upon liquidation, preferred stocks are
entitled to a specified liquidation preference, which is generally the same as
the par or stated value, and are senior in right of payment to common stocks.
However, preferred stocks are equity securities in that they do not represent a
liability of the issuer and therefore do not offer as great a degree of
protection of capital or assurance of continued income as investments in
corporate debt securities. In addition, preferred stocks are subordinated in
right of payment to all debt obligations and creditors of the issuer, and
convertible preferred stocks may be subordinated to other preferred stock of the
same issuer.
o Hedging. Consistent with the limitations set forth in its Prospectus and
below, each Fund may employ one or more of the types of hedging instruments
described below. Additional information about the hedging instruments a Fund may
use is provided below. In the future, a Fund may employ hedging instruments and
strategies that are not presently contemplated but which may be developed, to
the extent such investment methods are consistent with the Fund's investment
objective, legally permissible and adequately disclosed.
o Covered Call Options on Securities, Securities Indices and Foreign
Currencies. Each Fund may purchase and write covered call options. Such options
may relate to particular U.S. or non-U.S. securities, to various U.S. or
non-U.S. stock indices or to U.S. or non-U.S. currencies. The Funds may purchase
and write, as the case may be, call options which are issued by the Options
Clearing Corporation (OCC) or which are traded on U.S. and non-U.S. exchanges.
LifeSpan Growth Fund and LifeSpan Balanced Fund (with respect to the
international Component) may purchase options on currency in the
over-the-counter (OTC) markets.
o Writing Covered Calls. When a Fund writes a call on a security, it
receives a premium and agrees to sell the callable investment to a purchaser of
a corresponding call on the same security during the call period (usually not
more than 9 months) at a fixed exercise price (which may differ from the market
price of the underlying security), regardless of market price changes during the
call period. A Fund retains the risk of loss should the price of the underlying
security decline during the call period, which may be offset to some extent by
the premium.
To terminate its obligation on a call it has written, a Fund may purchase
a corresponding call in a "closing purchase transaction." A profit or loss will
be realized, depending upon whether the net of the amount of the option
transaction costs and the premium received on the call written was more or less
than the price of the call subsequently purchased. A profit may also be realized
if the call expires unexercised, because a Fund retains the underlying
investment and the premium received. Any such profits are considered short-term
capital gains for Federal income tax purposes, and when distributed by the Fund
are taxable as ordinary income. If a Fund could not effect a closing purchase
transaction due to lack of a market, it would have to hold the callable
investments until the call lapsed or was exercised.
No Fund shall write a covered call option if as a result thereof the
assets underlying calls outstanding (including the proposed call option) would
exceed 20% of the value of the assets of the Fund.
o Purchasing Covered Calls. When a Fund purchases a call (other than in a
closing purchase transaction), it pays a premium and, except as to calls on
indices or futures, has the right to buy the underlying investment from a seller
of a corresponding call on the same investment during the call period at a fixed
exercise price. When a Fund purchases a call on a securities index or future, it
pays a premium, but settlement is in cash rather than by delivery of the
underlying investment to the Fund. In purchasing a call, a Fund benefits only if
the call is sold at a profit or if, during the call period, the market price of
the underlying investment is above the sum of the exercise price, transaction
costs and the premium paid, and the call is exercised. If the call is not
exercised or sold (whether or not at a profit), it will become worthless at its
expiration date and the Fund will lose its premium payment and the right to
purchase the underlying investment.
Calls on broadly-based indices or futures are similar to calls on
securities or futures contracts except that all settlements are in cash and gain
or loss depends on changes in the index in question (and thus on price movements
in the stock market generally) rather than on price movements in individual
securities or futures contracts. When a Fund buys a call on an index or future,
it pays a premium. During the call period, upon exercise of a call by a Fund, a
seller of a corresponding call on the same investment will pay the Fund an
amount of cash to settle the call if the closing level of the index or future
upon which the call is based is greater than the exercise price of the call.
That cash payment is equal to the difference between the closing price of the
index and the exercise price of the call times a specified multiple (the
"multiplier"), which determines the total dollar value for each point of
difference. That cash payment is determined by the multiplier, in the same
manner as described above as to calls.
An option position may be closed out only on a market which provides
secondary trading for options of the same series and there is no assurance that
a liquid secondary market will exist for any particular option. A Fund's option
activities may affect its turnover rate and brokerage commissions. A Fund may
pay a brokerage commission each time it buys a call, sells a call, or buys or
sells an underlying investment in connection with the exercise of a call. Such
commissions may be higher than those which would apply to direct purchases or
sales of such underlying investments. Premiums paid for options are small in
relation to the market value of the related investments, and consequently, call
options offer large amounts of leverage. The leverage offered by trading in
options could result in a Fund's net asset value being more sensitive to changes
in the value of the underlying investments.
o Futures Contracts and Related Options. To hedge against changes in
interest rates, securities prices or currency exchange rates or for certain
non-hedging purposes, each Fund may, subject to its investment objectives and
policies, purchase and sell various kinds of futures contracts, and purchase and
write call and put options on any of such futures contracts. A Fund may also
enter into closing purchase and sale transactions with respect to any of such
contracts and options. The futures contracts may be based on various securities
(such as U.S. Government securities), securities indices, currencies and other
financial instruments and indices. In addition, each Fund that may invest in
securities that are denominated in a foreign currency may purchase and sell
futures on currencies and sell options on such futures. A Fund will engage in
futures and related options transactions only for bona fide hedging or other
non-hedging purposes as defined in regulations promulgated by the CFTC. All
futures contracts entered into by the Funds are traded on U.S. exchanges or
boards of trade that are licensed and regulated by the CFTC or on foreign
exchanges approved by the CFTC.
A Fund may buy and sell futures contracts on interest rates ("Interest
Rate Futures"). No price is paid or received upon the purchase or sale of an
Interest Rate Future. An Interest Rate Future obligates the seller to deliver
and the purchaser to take a specific type of debt security at a specific future
date for a fixed price. That obligation may be satisfied by actual delivery of
the debt security or by entering into an offsetting contract.
The Fund may buy and sell futures contracts related to financial indices (a
"Financial Future"). A financial index assigns relative values to the securities
included in the index and fluctuates with the changes in the market value of
those securities. Financial indices cannot be purchased or sold directly. The
contracts obligate the seller to deliver, and the purchaser to take, cash to
settle the futures transaction or to enter into an offsetting contract. No
physical delivery of the securities underlying the index is made on settling the
futures obligation. No monetary amount is paid or received by a Fund on the
purchase or sale of a Financial Future.
Upon entering into a futures transaction, a Fund will be required to
deposit an initial margin payment in cash or U.S. Treasury bills with the
futures commission merchant (the "futures broker"). The initial margin will be
deposited with a Fund's Custodian in an account registered in the futures
broker's name; however the futures broker can gain access to that account only
under specified conditions. As the Future is marked to market to reflect changes
in its market value, subsequent margin payments, called variation margin, will
be made to or by the futures broker on a daily basis. Prior to expiration of the
Future, if a Fund elects to close out its position by taking an opposite
position, a final determination of variation margin is made, additional cash is
required to be paid by or released to the Fund, and any loss or gain is realized
for tax purposes. Although Financial Futures and Interest Rate Futures by their
terms call for settlement by delivery cash or securities, respectively, in most
cases the obligation is fulfilled by entering into an offsetting position. All
futures transactions are effected through a clearinghouse associated with the
exchange on which the contracts are traded.
o Options on Futures Contracts. The acquisition of put and call options on
futures contracts will give the Funds the right (but not the obligation) for a
specified price to sell or to purchase, respectively, the underlying futures
contract at any time during the option period. As the purchaser of an option on
a futures contract, a Fund obtains the benefit of the futures position if prices
move in a favorable direction but limits its risk of loss in the event of an
unfavorable price movement to the loss of the premium and transaction costs.
The writing of a call option on a futures contract generates a premium
which may partially offset a decline in the value of a Fund's assets. By writing
a call option, a Fund becomes obligated, in exchange for the premium, to sell a
futures contract (if the option is exercised), which may have a value higher
than the exercise price. Conversely, the writing of a put option on a futures
contract generates a premium which may partially offset an increase in the price
of securities that a Fund intends to purchase. However, a Fund becomes obligated
to purchase a futures contract (if the option is exercised) which may have a
value lower than the exercise price. Thus, the loss incurred by a Fund in
writing options on futures is potentially unlimited and may exceed the amount of
the premium received. The Funds will incur transaction costs in connection with
the writing of options on futures.
The holder or writer of an option on a futures contract may terminate its
position by selling or purchasing an offsetting option on the same series. There
is no guarantee that such closing transactions can be effected. The Funds'
ability to establish and close out positions on such options will be subject to
the development and maintenance of a liquid market.
The Funds may use options on futures contracts solely for bona fide
hedging or other non- hedging purposes as described below.
o Forward Contracts. Each Fund may enter into foreign currency exchange
contracts ("Forward Contracts") for hedging and non-hedging purposes. A forward
currency exchange contract generally has no deposit requirement, and no
commissions are generally charged at any stage for trades. A Forward Contract
involves bilateral obligations of one party to purchase, and another party to
sell, a specific currency at a future date (which may be any fixed number of
days from the date of the contract agreed upon by the parties), at a price set
at the time the contract is entered into. A Fund generally will not enter into a
forward currency exchange contract with a term of greater than one year. These
contracts are traded in the interbank market conducted directly between currency
traders (usually large commercial banks) and their customers.
A Fund may use Forward Contracts to protect against uncertainty in the
level of future exchange rates. The use of Forward Contracts does not eliminate
fluctuations in the prices of the underlying securities a Fund owns or intends
to acquire, but it does fix a rate of exchange in advance. In addition, although
Forward Contracts limit the risk of loss due to a decline in the value of the
hedged currencies, at the same time they limit any potential gain that might
result should the value of the currencies increase.
A Fund may enter into Forward Contracts with respect to specific
transactions. For example, when a Fund enters into a contract for the purchase
or sale of a security denominated in a foreign currency, or when it anticipates
receipt of dividend payments in a foreign currency, a Fund may desire to
"lock-in" the U.S. dollar price of the security or the U.S. dollar equivalent of
such payment by entering into a Forward Contract, for a fixed amount of U.S.
dollars per unit of foreign currency, for the purchase or sale of the amount of
foreign currency involved in the underlying transaction ("transaction hedge"). A
Fund will thereby be able to protect itself against a possible loss resulting
from an adverse change in the relationship between the currency exchange rates
during the period between the date on which the security is purchased or sold,
or on which the payment is declared, and the date on which such payments are
made or received.
A Fund may also use Forward Contracts to lock in the U.S. dollar value of
portfolio positions ("position hedge"). In a position hedge, for example, when a
Fund believes that foreign currency may suffer a substantial decline against the
U.S. dollar, it may enter into a forward sale contract to sell an amount of that
foreign currency approximating the value of some or all of a Fund's portfolio
securities denominated in such foreign currency, or when it believes that the
U.S. dollar may suffer a substantial decline against a foreign currency, it may
enter into a forward purchase contract to buy that foreign currency for a fixed
dollar amount. In this situation a Fund may, in the alternative, enter into a
Forward Contract to sell a different foreign currency for a fixed U.S. dollar
amount where the Fund believes that the U.S. dollar value of the currency to be
sold pursuant to the Forward Contract will fall whenever there is a decline in
the U.S. dollar value of the currency in which portfolio securities of the Fund
is denominated ("cross hedge").
A Fund will not enter into such Forward Contracts or maintain a net
exposure to such contracts where the consummation of the contracts would
obligate a fund to deliver an amount of foreign currency in excess of the value
of the Fund's portfolio securities or other assets denominated in that currency
or another currency that is also the subject of the hedge. A Fund, however, in
order to avoid excess transactions and transaction costs, may maintain a net
exposure to Forward Contracts in excess of the value of the Fund's portfolio
securities or other assets denominated in these currencies provided the excess
amount is "covered" by liquid, high-grade debt securities, denominated in any
currency, at least equal at all times to the amount of such excess. As an
alternative, a Fund may purchase a call option permitting the Fund to purchase
the amount of foreign currency being hedged by a forward sale contract at a
price no higher than the forward contract price or a Fund may purchase a put
option permitting the Fund to sell the amount of foreign currency subject to a
forward purchase contract at a price as high or higher than the forward contract
price. Unanticipated changes in currency prices may result in poorer overall
performance for a Fund than if it had not entered into such contracts.
The precise matching of the Forward Contract amounts and the value of the
securities involved will not generally be possible because the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of these securities between the date the Forward Contract
is entered into and the date it is sold. Accordingly, it may be necessary for a
Fund to purchase additional foreign currency on the spot (i.e., cash) market
(and bear the expense of such purchase), if the market value of the security is
less than the amount of foreign currency a Fund is obligated to deliver and if a
decision is made to sell the security and make delivery of the foreign currency.
Conversely, it may be necessary to sell on the spot market some of the foreign
currency received upon the sale of the portfolio security if its market value
exceeds the amount of foreign currency a Fund is obligated to deliver. The
projection of short-term currency market movements is extremely difficult, and
the successful execution of a short-term hedging strategy is highly uncertain.
Forward Contracts involve the risk that anticipated currency movements will not
be accurately predicted, causing a Fund to sustain losses on these contracts and
transactions costs.
At or before the maturity of a Forward Contract requiring a Fund to sell a
currency, a Fund, may either sell a portfolio security and use the sale proceeds
to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which a Fund will obtain, on the same maturity date, the same amount
of the currency that it is obligated to deliver. Similarly, a Fund may close out
a Forward Contract requiring it to purchase a specified currency by entering
into a second contract entitling it to sell the same amount of the same currency
on the maturity date of the first contract. The Fund would realize a gain or
loss as a result of entering into such an offsetting Forward Contract under
either circumstance to the extent the exchange rate or rates between the
currencies involved moved between the execution dates of the first contract and
offsetting contract.
The cost to a Fund of engaging in Forward Contracts varies with factors
such as the currencies involved, the length of the contract period and the
market conditions then prevailing. Because Forward Contracts are usually entered
into on a principal basis, no fees or commissions are involved. Because such
contracts are not traded on an exchange, a Fund must evaluate the credit and
performance risk of each particular counterparty under a Forward Contract.
Although a Fund values its assets daily in terms of U.S. dollars, it does
not intend to convert its holdings of foreign currencies into U.S. dollars on a
daily basis. A Fund may convert foreign currency from time to time, and
investors should be aware of the costs of currency conversion. Foreign exchange
dealers do not charge a fee for conversion, but they do seek to realize a profit
based on the difference between the prices at which they buy and sell various
currencies. Thus, a dealer may offer to sell a foreign currency to a Fund at one
rate, while offering a lesser rate of exchange should a Fund desire to resell
that currency to the dealer.
o Interest Rate Swap Transactions. All Funds may enter into swap
transactions. Swap agreements entail both interest rate risk and credit risk.
There is a risk that, based on movements of interest rates in the future, the
payments made by a Fund under a swap agreement will have been greater than those
received by them. Credit risk arises from the possibility that the counterparty
will default. If the counterparty to an interest rate swap defaults, a Fund's
loss will consist of the net amount of contractual interest payments that the
Fund has not yet received. The Manager or relevant Subadviser will monitor the
creditworthiness of counterparties to the Fund's interest rate swap transactions
on an ongoing basis.
A Fund will enter into swap transactions with appropriate counterparties
pursuant to master netting agreements. A master netting agreement provides that
all swaps done between a Fund and that counterparty under that master agreement
shall be regarded as parts of an integral agreement. If on any date amounts are
payable in the same currency in respect of one or more swap transactions, the
net amount payable on that date in that currency shall be paid. In addition, the
master netting agreement may provide that if one party defaults generally or on
one swap, the counterparty may terminate the swaps with that party. Under such
agreements, if there is a default resulting in a loss to one party, the measure
of that party's damages is calculated by reference to the average cost of a
replacement swap with respect to each swap (i.e., the mark-to-market value at
the time of the termination of each swap). The gains and losses on all swaps are
then netted, and the result is the counterparty's gain or loss on termination.
The termination of all swaps and the netting of gains and losses on termination
is generally referred to as "aggregation." The swap market has grown
substantially in recent years with a large number of banks and investment
banking firms acting both as principals and as agents utilizing standardized
swap documentation. As a result, the swap market has become relatively liquid in
comparison with the markets for other similar instruments which are traded in
the interbank market. However, the staff of the SEC takes the position that
swaps, caps and floors are illiquid investments that are subject to a limitation
on such investments.
o Additional Information About Hedging Instruments and Their Use. A
Fund's Custodian, or a securities depository acting for the Custodian, will act
as a Fund's escrow agent, through the facilities of the Options Clearing
Corporation ("OCC"), as to the investments on which a Fund has written options
traded on exchanges or as to other acceptable escrow securities, so that no
margin will be required for such transactions. OCC will release the securities
covering a call on the expiration of the option or upon a Fund entering into a
closing purchase transaction. An option position may be closed out only on a
market which provides secondary trading for options of the same series, and
there is no assurance that a liquid secondary market will exist for any
particular option.
When LifeSpan Growth Fund or LifeSpan Balanced Fund writes an
over-the-counter ("OTC") option, it will enter into an arrangement with a
primary U.S. Government securities dealer, which would establish a formula price
at which the Fund would have the absolute right to repurchase that OTC option.
That formula price would generally be based on a multiple of the premium
received for the option, plus the amount by which the option is exercisable
below the market price of the underlying security (that is, the extent to which
the option "is in-the-money"). When LifeSpan Growth Fund or LifeSpan Balanced
Fund writes an OTC option, it will treat as illiquid (for purposes of the limit
on its assets that may be invested in illiquid securities, stated in its
Prospectus) the mark- to-market value of any OTC option held by them. The SEC is
evaluating whether OTC options should be considered liquid securities, and the
procedure described above could be affected by the outcome of that evaluation.
o Regulatory Aspects of Hedging Instruments. The Funds are required to
operate within certain guidelines and restrictions with respect to their use of
futures and options thereon as established by the Commodities Futures Trading
Commission ("CFTC"). In particular, the Funds are excluded from registration as
a "commodity pool operator" if they comply with the requirements of Rule 4.5
adopted by the CFTC. The Rule does not limit the percentage of the Funds' assets
that may be used for Futures margin and related options premiums for a bona fide
hedging position. However, under the Rule a Fund must limit its aggregate
initial futures margin and related option premiums to no more than 5% of the
Funds' net assets for hedging strategies that are not considered bona fide
hedging strategies under the Rule. Under the Rule, a Fund must also use short
futures and options futures positions solely for bona fide hedging purposes
within the meaning and intent of the applicable provisions of the Commodity
Exchange Act.
Transactions in options by the Funds are subject to limitations
established by each of the exchanges governing the maximum number of options
which may be written or held by a single investor or group of investors acting
in concert, regardless of whether the options were written or purchased on the
same or different exchanges or are held in one or more accounts or through one
or more different exchanges through one or more or brokers. Thus, the number of
options which the Funds may write or hold may be affected by options written or
held by other entities, including other investment companies having the same or
an affiliated investment adviser. Position limits also apply to Futures. An
exchange may order the liquidation of positions found to be in violation of
those limits and may impose certain other sanctions. Due to requirements under
the Investment Company Act of 1940 (the "Investment Company Act"), when the
Funds purchase a Future, the Funds will maintain, in a segregated account or
accounts with their Custodian, cash or readily-marketable, short-term (maturing
in one year or less) debt instruments in an amount equal to the market value of
the securities underlying such Future, less the margin deposit applicable to it.
o Tax Aspects of Covered Calls and Hedging Instruments. Each Fund intends
to qualify as a "regulated investment company" under the Internal Revenue Code
(although each reserves the right not to qualify). That qualification enables a
Fund to "pass through" its income and realized capital gains to shareholders
without the Fund having to pay tax on them. This avoids a "double tax" on that
income and capital gains, since shareholders will be taxed on the dividends and
capital gains they receive from the Fund (unless the Fund's shares are held in a
retirement account or shareholder is otherwise exempt from tax).
Certain foreign currency exchange contracts (Forward Contracts) in which a
Fund may invest are treated as "Section 1256 contracts." Gains or losses
relating to Section 1256 contracts generally are characterized under the
Internal Revenue Code as 60% long-term and 40% short-term capital gains or
losses. However, foreign currency gains or losses arising from certain Section
1256 contracts (including Forward Contracts) generally are treated as ordinary
income or loss. In addition, Section 1256 contracts held by the Fund at the end
of each taxable year are "marked-to- market" with the result that unrealized
gains or losses are treated as though they were realized. These contracts also
may be marked-to-market for purposes of the excise tax applicable to investment
company distributions and for other purposes under rules prescribed pursuant to
the Internal Revenue Code. An election can be made by the Fund to exempt these
transactions from this mark-to-market treatment.
Certain Forward Contracts entered into by the Fund may result in
"straddles" for Federal income tax purposes. The straddle rules may affect the
timing and character of gains (or losses) recognized by the Fund on straddle
positions. Generally, a loss sustained on the disposition of a position making
up a straddle is allowed only to the extent such loss exceeds any unrecognized
gain in the offsetting positions making up the straddle. Disallowed loss is
generally allowed at the point where there is no unrecognized gain in the
offsetting positions making up the straddle, or the offsetting position is
disposed of.
Under the Internal Revenue Code, generally gains or losses attributable to
fluctuations in exchange rates that occur between the time the Fund accrues
interest or other receivables or accrues expenses or other liabilities
denominated in a foreign currency and the time the Fund actually collects such
receivables or pays such liabilities generally are treated as ordinary income or
ordinary loss. Similarly, on disposition of debt securities denominated in a
foreign currency and on disposition of foreign currency forward contracts, gains
or losses attributable to fluctuations in the value of a foreign currency
between the date of acquisition of the security or contract and the date of
disposition also are treated as ordinary gain or loss. Currency gains and losses
are offset against market gains and losses before determining a net "Section
988" gain or loss under the Internal Revenue Code, which may increase or
decrease the amount of the Fund's investment company income available for
distribution to its shareholders.
o Risks Of Hedging With Options and Futures. In addition to the risks with
respect to hedging discussed in each Fund's Prospectus and above, there is a
risk in using short hedging by selling Futures to attempt to protect against a
decline in value of a Fund's portfolio securities (due to an increase in
interest rates) that the prices of such Futures will correlate imperfectly with
the behavior of the cash (i.e., market value) prices of a Fund's securities. The
ordinary spreads between prices in the cash and futures markets are subject to
distortions due to differences in the natures of those markets. First, all
participants in the futures markets are subject to margin deposit and
maintenance requirements. Rather than meeting additional margin deposit
requirements, investors may close out futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, the liquidity of the futures markets depends on
participants entering into offsetting transactions rather than making or taking
delivery. To the extent participants decide to make or take delivery, liquidity
in the futures markets could be reduced, thus producing distortion. Third, from
the point of view of speculators, the deposit requirements in the futures
markets are less onerous than margin requirements in the securities markets.
Therefore, increased participation by speculators in the futures markets may
cause temporary price distortions.
o Portfolio Turnover. Each Fund's particular portfolio securities may be
changed without regard to the holding period of these securities (subject to
certain tax restrictions), when the Manager or respective Subadviser deems that
this action will help achieve the Fund's objective given a change in an issuer's
operations or changes in general market conditions. Short-term trading means the
purchase and subsequent sale of a security after it has been held for a
relatively brief period of time. The Funds do not generally intend to invest for
the purpose of seeking short-term profits. Variations in portfolio turnover rate
from year to year reflect the investment discipline applied to the particular
Fund and do not generally reflect trading for short-term profits.
Other Investment Restrictions
Fundamental Investment Restrictions. Each Fund has adopted the following
fundamental investment restrictions. Each Fund's most significant investment
restrictions are also set forth in its Prospectus. Fundamental policies cannot
be changed without the vote of a "majority" of a Fund's outstanding voting
securities. Under the Investment Company Act, such a "majority" vote is defined
as the vote of the holders of the lesser of (i) 67% or more of the shares
present or represented by proxy at a shareholder meeting, if the holders of more
than 50% of the outstanding shares are present, or (ii) more than 50% of the
outstanding shares.
Each of the LifeSpan Funds may not:
(1)Issue senior securities, except as permitted by paragraphs 2, 3, 6 and
7 below. For purposes of this restriction, the issuance of shares of common
stock in multiple classes or series, the purchase or sale of options, futures
contracts and options on futures contracts, forward commitments and repurchase
agreements entered into in accordance with the Fund's investment policies, are
not deemed to be senior securities.
(2)Purchase any securities on margin (except that the Company may obtain
such short-term credits as may be necessary for the clearance of purchases and
sales of portfolio securities) or make short sales of securities or maintain a
short position. The deposit or payment by the Fund of initial or maintenance
margin in connection with futures contracts or related options transactions is
not considered the purchase of a security on margin.
(3)Borrow money, except for emergency or extraordinary purposes including
(i) from banks for temporary or short-term purposes or for the clearance of
transactions in amounts not to exceed 33 1/3% of the value of the Fund's total
assets (including the amount borrowed) taken at market value, (ii) in connection
with the redemption of Fund shares or to finance failed settlements of portfolio
trades without immediately liquidating portfolio securities or other assets; and
(iii) in order to fulfill commitments or plans to purchase additional securities
pending the anticipated sale of other portfolio securities or assets, but only
if after each such borrowing there is asset coverage of at least 300% as defined
in the Investment Company Act. For purposes of this investment restriction,
reverse repurchase agreements, mortgage dollar rolls, short sales, futures
contracts, options on futures contracts, securities or indices and forward
commitment transactions shall not constitute borrowing.
(4)Act as an underwriter, except to the extent that in connection with the
disposition of portfolio securities, the Fund may be deemed to be an underwriter
for purposes of the 1933 Act.
(5)Purchase or sell real estate except that the Fund may (i) acquire or
lease office space for its own use, (ii) invest in securities of issuers that
invest in real estate or interests therein, (iii) invest in securities that are
secured by real estate or interests therein, (iv) purchase and sell
mortgage-related securities and (v) hold and sell real estate acquired by the
Fund as a result of the ownership of securities.
(6)Invest in commodities, except the Fund may purchase and sell options on
securities, securities indices and currency, futures contracts on securities,
securities indices and currency and options on such futures, forward foreign
currency exchange contracts, forward commitments, securities index put or call
warrants and repurchase agreements entered into in accordance with the Fund's
investment policies.
(7)Make loans, except that the Fund (1) may lend portfolio securities in
accordance with the Fund's investment policies up to 33 1/3% of the Fund's total
assets taken at market value, (2) enter into repurchase agreements, and (3)
purchase all or a portion of an issue of publicly distributed bonds, debentures
or other similar obligations.
(8)Purchase the securities of issuers conducting their principal activity
in the same industry if, immediately after such purchase, the value of its
investments in such industry would exceed 25% of its total assets taken at
market value at the time of such investment. This limitation does not apply to
investments in obligations of the U.S. Government or any of its agencies,
instrumentalities or authorities.
(9)With respect to 75% of total assets, purchase securities of an issuer
(other than the U.S. Government, its agencies, instrumentalities or
authorities), if:
(a)such purchase would cause more than 5% of the Fund's total assets taken
at market value to be invested in the securities of such issuer; or
(b)such purchase would at the time result in more than 10% of the
outstanding voting securities of such issuer being held by the Fund.
For purposes of the fundamental investment restrictions, the term "borrow"
does not include mortgage dollar rolls, reverse repurchase agreements or lending
portfolio securities and the terms "illiquid securities" and "portfolio
securities which do not have readily available market quotations" shall include
restricted securities. However, as non-fundamental policies, the Company will
treat reverse repurchase agreements as borrowings, master demand notes as
illiquid securities and mortgage dollar rolls as sales transactions and not as a
financing.
For purposes of the restriction on investing more than 25% of the Funds'
assets in the securities of issuers in any single industry, the category
Financial Services as used in the Financial Statements may include several
different industries such as mortgage-backed securities, brokerage firms and
other financial institutions. Each of the Income Fund and Liquid Fund of the
Company may not, as a non-fundamental investment restriction, invest more than
5% of its total assets in securities of any issuer which, together with its
predecessors, has been in operation for less than three years.
For purposes of a Funds' policy not to concentrate their assets, described
in the above restrictions, the Funds have adopted the industry classifications
set forth in the Appendix to this Statement of Additional Information. This is
not a fundamental policy.
The percentage restrictions described above and in each Fund's Prospectus
are applicable only at the time of investment and require no action by a Fund as
a result of subsequent changes in value of the investments or the size of a
Fund.
Non-fundamental Investment Restrictions. The following restrictions are
designated as non- fundamental and may be changed by the Board of Directors
without the approval of shareholders.
Each of the LifeSpan Funds may not:
(1)Pledge, mortgage or hypothecate its assets, except to secure permitted
borrowings and then only if such pledging, mortgaging or hypothecating does not
exceed 33 1/3% of the Fund's total assets taken at market value. Collateral
arrangements with respect to margin, option and other risk management and
when-issued and forward commitment transactions are not deemed to be pledges or
other encumbrances for purposes of this restriction.
(2)Participate on a joint or joint-and-several basis in any securities
trading account. The "bunching" of orders for the sale or purchase of marketable
portfolio securities with other accounts under the management of the Manager or
the Subadvisers to save commissions or to average prices among them is not
deemed to result in a joint securities trading account.
(3)Purchase or retain securities of an issuer if one or more of the
Directors or officers of the Company or directors or officers of the Manager or
any Subadviser or any investment management subsidiary of the Manager or any
Subadviser individually owns beneficially more than 0.5% and together own
beneficially more than 5% of the securities of such issuer.
(4)Purchase a security if, as a result, (i) more than 10% of the Fund's
assets would be invested in securities of other investment companies, (ii) such
purchase would result in more than 3% of the total outstanding voting securities
of any one such investment company being held by the Fund or (iii) more than 5%
of the Fund's assets would be invested in any one such investment company. The
Fund will not purchase the securities of any open-end investment company except
when such purchase is part of a plan of merger, consolidation, reorganization or
purchase of substantially all of the assets of any other investment company, or
purchase the securities of any closed-end investment company except in the open
market where no commission or profit to a sponsor or dealer results from the
purchase, other than customary brokerage fees. The Fund has no current intention
of investing in other investment companies.
(5)Invest more than 15% of total assets in restricted securities,
including securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933.
(6)Invest more than 5% of total assets in securities of any issuer which,
together with its predecessors, has been in operation for less than three years.
(7)Invest in securities which are illiquid if, as a result, more than 15%
of its net assets would consist of such securities, including repurchase
agreements maturing in more than seven days, securities that are not readily
marketable, certain restricted securities, purchased OTC options, certain assets
used to cover written OTC options, and privately issued stripped mortgage-backed
securities.
(8)Purchase securities while outstanding borrowings exceed 5% of the
Fund's total assets.
(9)Invest in real estate limited partnership interests.
(10) Purchase warrants of any issuer, if, as a result of such purchase,
more than 2% of the value of the Fund's total assets would be invested in
warrants which are not listed on an exchange or more than 5% of the value of the
total assets of the Fund would be invested in warrants generally, whether or not
so listed. For these purposes, warrants are to be valued at the lesser of cost
or market, but warrants acquired by the Fund in units with or attached to debt
securities shall be deemed to be without value.
(11) Purchase interests in oil, gas, or other mineral exploration programs
or mineral leases; however, this policy will not prohibit the acquisition of
securities of companies engaged in the production or transmission of oil, gas,
or other minerals.
(12) Write covered call or put options with respect to more than 25% of
the value of its total assets, invest more than 25% of its total assets in
protective put options or invest more than 5% of its total assets in puts,
calls, spreads or straddles, or any combination thereof, other than protective
put options. The aggregate value of premiums paid on all options, other than
protective put options, held by the Fund at any time will not exceed 20% of the
Fund's total assets.
(13) Invest for the purpose of exercising control over or management of
any company.
In order to permit the sale of shares of the Funds in certain states, the
Board of Directors may, in its sole discretion, adopt restrictions on investment
policy more restrictive than those described above. Should the Board of
Directors determine that any such more restrictive policy is no longer in the
best interest of a Fund and its shareholders, the Fund may cease offering shares
in the state involved and the Board of Directors may revoke such restrictive
policy. Moreover, if the states involved shall no longer require any such
restrictive policy, the Board of Directors may, in its sole discretion, revoke
such policy. How the Funds are Managed
Organization and History. Oppenheimer Series Fund, Inc. (the "Company") was
incorporated in Maryland on December 9, 1981. Prior to March 18, 1996, the
Company was named Connecticut Mutual Investment Accounts, Inc. On March 18, 1996
the Funds listed below changed their names as follows:
Fund Name Prior to
Fund March 18, 1996
LifeSpan Balanced Fund CMIA LifeSpan Balanced Account
LifeSpan Growth Fund CMIA LifeSpan Capital Appreciation Account
LifeSpan Income Fund CMIA LifeSpan Income Account
As a Maryland corporation, the Company (and each of its series, including
the Funds) are not required to hold, and do not plan to hold, regular annual
meetings of shareholders. The Funds will hold meetings when required to do so by
the Investment Company Act or other applicable law, or when a shareholder
meeting is called by the Directors or upon proper request of the shareholders.
The Directors will call a meeting of shareholders to vote on the removal of a
Director upon the written request of the record holders of 10% of its
outstanding shares. In addition, if the Directors receive a request from at
least 10 shareholders (who have been shareholders for at least six months)
holding shares of the Company valued at $25,000 or more or holding at least 1%
of the Company's outstanding shares, whichever is less, stating that they wish
to communicate with other shareholders to request a meeting to remove a
Director, the Directors will then either make each Fund's shareholder list
available to the applicants or mail their communication to all other
shareholders at the applicants' expense, or the Directors may take such other
action as set forth under Section 16(c) of the Investment Company Act.
Directors and Officers of the Company. The Funds' Directors and officers and
their principal occupations and business affiliations during the past five years
are listed below. The address for each Director and officer is Two World Trade
Center, New York, New York 10048-0203, unless another address is listed below.
All of the Directors are also trustees or directors of Oppenheimer California
Municipal Fund, Oppenheimer Capital Appreciation Fund, Oppenheimer Developing
Markets Fund, Oppenheimer Discovery Fund, Oppenheimer Enterprise Fund,
Oppenheimer Global Fund, Oppenheimer Global Growth & Income Fund, Oppenheimer
Gold & Special Minerals Fund, Oppenheimer Growth Fund, Oppenheimer International
Growth Fund, Oppenheimer International Small Company Fund, Oppenheimer Money
Market Fund, Inc., Oppenheimer Multi-Sector Income Trust, Oppenheimer
Multi-State Municipal Trust, Oppenheimer Multiple Strategies Fund, Oppenheimer
Municipal Bond Fund, Oppenheimer New York Municipal Fund, the other series in
the Oppenheimer Series Fund, Inc., Oppenheimer U.S. Government Trust, and
Oppenheimer World Bond Fund (collectively, the "New York-based Oppenheimer
funds"), except that Ms. Macaskill is not a director of Oppenheimer Money Market
Fund, Inc. Ms. Macaskill and Messrs. Spiro, Donohue, Bishop, Bowen, Farrar and
Zack hold the same respective offices with the New York- based Oppenheimer funds
as with the Funds. As of February 9, 1998, the Directors and officers of each
Fund as a group owned less than 1% of the outstanding Class A, Class B, or Class
C shares of each Fund. That statement does not include ownership of shares held
of record by an employee benefit plan for employees of the Manager (one of the
Directors of the Funds listed below, Ms. Macaskill, and one of the officers, Mr.
Donohue, are trustees of that plan) other than the shares beneficially owned
under that plan by the officers of the funds listed above.
Leon Levy, Chairman of the Board of Directors; Age: 72
31 West 52nd Street, New York, NY 10019
General Partner of Odyssey Partners, L.P. (investment partnership) (since 1982)
and Chairman of Avatar Holdings, Inc. (real estate development).
Robert G. Galli, Director; Age: 64
19750 Beach Road, Jupiter Island, FL 33464
Formerly he held the following positions: Vice Chairman of OppenheimerFunds,
Inc. (the "Manager") (October 1995-December 1997); Vice President and Counsel of
Oppenheimer Acquisition Corp. ("OAC"), the Manager's parent holding company;
Executive Vice President, General Counsel and a director of the Manager and
OppenheimerFunds Distributor, Inc. (the "Distributor"), Vice President and a
director of HarbourView Asset Management Corporation ("HarbourView") and
Centennial Asset Management Corporation ("Centennial"), investment adviser
subsidiaries of the Manager, a director of Shareholder Financial Services, Inc.
("SFSI") and Shareholder Services, Inc. ("SSI"), transfer agent subsidiaries of
the Manager and an officer of other Oppenheimer funds.
Benjamin Lipstein, Director; Age: 74
591 Breezy Hill Road, Hillsdale, NY 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University; a director of Sussex Publishers, Inc
(Publishers of Psychology Today and Mother Earth News) and of Spy Magazine, L.P.
Bridget A. Macaskill, President and Director*; Age: 49
President (since June 1991), Chief Executive Officer (since September 1995) and
a Director (since December 1994) of the Manager; President and director (since
June 1991) of HarbourView; Chairman and a director of SSI (since August 1994),
and SFSI (September 1995); President (since September 1995) and a director
(since October 1990) of OAC; President (since September 1995) and a director
(since November 1989) of Oppenheimer Partnership Holdings, Inc., a holding
company subsidiary of the Manager; a director of Oppenheimer Real Asset
Management, Inc. (since July 1996); President and a director (since October
1997) of OppenheimerFunds International Ltd., an offshore fund manager
subsidiary of the Manager ("OFIL") and Oppenheimer Millennium Funds plc (since
October 1997); President and a director of other Oppenheimer funds; a director
of the NASDAQ Stock Market, Inc. and of Hillsdown Holdings plc (a U.K. food
company); formerly an Executive Vice President of the Manager.
Elizabeth B. Moynihan, Director; Age: 68
801 Pennsylvania Avenue, N.W., Washington, D.C. 20004
Author and architectural historian; a trustee of the Freer Gallery of Art
(Smithsonian Institution), the Institute of Fine Arts (New York University),
National Building Museum; a member of the Trustees Council, Preservation League
of New York State, and of the Indo-U.S. Sub-Commission on Education and Culture.
Kenneth A. Randall, Director; Age: 70
6 Whittaker's Mill, Williamsburg, VA 23185
A director of Dominion Resources, Inc. (electric utility holding company),
Dominion Energy, Inc. (electric power and oil & gas producer), Texan
Cogeneration Company (cogeneration company), Prime Retail, Inc. (real estate
investment trust); formerly President and Chief Executive Officer of The
Conference Board, Inc. (international economic and business research) and a
director of Lumbermens Mutual Casualty Company, American Motorists Insurance
Company and American Manufacturers Mutual Insurance Company.
Edward V. Regan, Director; Age: 67
40 Park Avenue, New York, NY 10016
Chairman of Municipal Assistance Corporation for the City of New York; Senior
Fellow of Jerome Levy Economics Institute, Bard College; a member of the U.S.
Competitiveness Policy Council; a director of River Bank America (real estate
manager); Trustee, Financial Accounting Foundation (FASB and GASB); formerly New
York State Comptroller and trustee, New York State and Local Retirement Fund.
Russell S. Reynolds, Jr., Director; Age: 66
8 Sound Shore Drive, Greenwich, CT 06830
Founder Chairman of Russell Reynolds Associates, Inc. (executive recruiting);
Chairman of Directorship Inc. (corporate and governance consulting); a director
of Professional Staff Limited (U.K.); a trustee of Mystic Seaport Museum,
International House and Greenwich Historical Society.
Donald W. Spiro, Vice Chairman and Director*; Age: 72
Chairman Emeritus (since August 1991) and a director (since January 1969) of the
Manager; formerly Chairman of the Manager and the Distributor.
Pauline Trigere, Director; Age: 85
498 Seventh Avenue, New York, NY 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and sale of
women's fashions).
Clayton K. Yeutter, Director; Age: 67
1325 Merrie Ridge Road, McLean, VA 22101
Of Counsel, Hogan & Hartson (a law firm); a director of B.A.T. Industries, Ltd.
(tobacco and financial services), Caterpillar, Inc. (machinery), ConAgra, Inc.
(food and agricultural products), Farmers Insurance Company (insurance), FMC
Corp. (chemicals and machinery) and Texas Instruments, Inc. (electronics);
formerly (in descending chronological order) IMC Global Inc. (chemicals and
animal feed), Counsellor to the President (Bush) for Domestic Policy, Chairman
of the Republican National Committee, Secretary of the U.S. Department of
Agriculture, and U.S. Trade Representative.
Peter M. Antos, Vice President and Portfolio Manager; Age: 52
One Financial Plaza, 755 Main Street, Hartford, CT 06103-2603
Chartered Financial Analyst; Principal Portfolio Manager, Vice President of the
Fund and Senior Vice President of the Manager and HarbourView (since March
1996); portfolio manager of other Oppenheimer funds; previously Vice President
and Senior Portfolio Manager, Equities - Connecticut Mutual Life Insurance
Company and its subsidiary - G. R. Phelps & Co. ("G. R. Phelps") (1989- 1996).
Michael C. Strathearn, Vice President and Portfolio Manager; Age: 45 One
Financial Plaza, 755 Main Street, Hartford, CT 06103-2603 Chartered Financial
Analyst; Vice President of the Funds, the Manager and HarbourView (since March
1996); portfolio manager of other Oppenheimer funds; previously a Portfolio
Manager, Equities-Connecticut Mutual Life Insurance
Company (1988-1996).
Kenneth B. White, Vice President and Portfolio Manager; Age: 46 One Financial
Plaza, 755 Main Street, Hartford, CT 06103-2603 Chartered Financial Analyst;
Vice President of the Funds, the Manager and HarbourView (since March 1996);
portfolio manager of other Oppenheimer funds; previously a Portfolio Manager,
Equities-Connecticut Mutual Life Insurance Company (1992-1996); Senior
Investment Officer, Equities-Connecticut Mutual Life Insurance Company
(1987-1992).
Stephen F. Libera, Vice President and Portfolio Manager; Age: 47 One Financial
Plaza, 755 Main Street, Hartford, CT 06103-2603 Chartered Financial Analyst;
Vice President of the Funds, the Manager and HarbourView (since March 1996);
portfolio manager of other Oppenheimer funds; previously a Vice President and
Senior Portfolio Manager, Fixed Income-Connecticut Mutual Life Insurance Company
and its subsidiary -G.R. Phelps (1985-1996).
George C. Bowen, Treasurer; Age: 61
6803 South Tucson Way, Englewood, CO 80112
Senior Vice President (since September 1987) and Treasurer (since March 1985) of
the Manager; Vice President (since June 1983) and Treasurer (since March 1985)
of the Distributor; Vice President (since October 1989) and Treasurer (since
April 1986) of HarbourView; Senior Vice President (since February 1992),
Treasurer (since July 1991)and a director (since December 1991) of Centennial;
President, Treasurer and a director of Centennial Capital Corporation (since
June 1989); Vice President and Treasurer (since August 1978) and Secretary
(since April 1981) of SSI; Vice President, Treasurer and Secretary of SFSI
(since November 1989); Treasurer of OAC (since June 1990); Treasurer of
Oppenheimer Partnership Holdings, Inc. (since November 1989); Vice President and
Treasurer of Oppenheimer Real Asset Management, Inc. (since July 1996); Chief
Executive Officer, Treasurer and a director of MultiSource Services, Inc., a
broker-dealer (since December 1995); an officer of other Oppenheimer funds.
Andrew J. Donohue, Secretary; Age: 47
Executive Vice President (since January 1993), General Counsel (since October
1991) and a Director (since September 1995) of the Manager; Executive Vice
President (since September 1993), and a director (since January 1992) of the
Distributor; Executive Vice President, General Counsel and a director of
HarbourView, SSI, SFSI and Oppenheimer Partnership Holdings, Inc. since
(September 1995) and MultiSource Services, Inc. (a broker-dealer) (since
December 1995); President and a director of Centennial (since September 1995);
President and a director of Oppenheimer Real Asset Management, Inc. (since July
1996); General Counsel (since May 1996) and Secretary (since April 1997) of OAC;
Vice President of OFIL and Oppenheimer Millennium Funds plc (since October
1997); an officer of other Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer; Age: 39
6803 South Tucson Way, Englewood, CO 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); an
officer of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for
the Manager.
Scott T. Farrar, Assistant Treasurer; Age: 32
6803 South Tucson Way, Englewood, CO 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); Assistant
Treasurer of Oppenheimer Millennium Funds plc (since October 1997); an officer
of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for
the Manager.
Robert G. Zack, Assistant Secretary; Age: 49
Senior Vice President (since May 1985) and Associate General Counsel (since May
1981) of the Manager, Assistant Secretary of SSI (since May 1985), and SFSI
(since November 1989); Assistant Secretary of Oppenheimer Millennium Funds plc
(since October 1997); an officer of other Oppenheimer funds.
- -------------------------------------------
*A Director who is an "interested person" of the Company as defined in the
Investment Company Act.
o Remuneration of Directors. The officers of the Funds are affiliated with
the Manager. They and the Directors of the Funds who are affiliated with the
Manager (Ms. Macaskill and Mr. Spiro) receive no salary or fee from the Funds.
The remaining Directors of the Funds received the compensation shown below from
the Funds, during its fiscal year ended October 31, 1997. The compensation from
all of the New York-based Oppenheimer funds includes the Funds and is
compensation received as director, trustee or member of a committee of the Board
during the calendar year 1997.
Compensation Received from each Fund
LifeSpan LifeSpan LifeSpan
Growth Balanced Income
Fund Fund Fund
Leon Levy $6673 $6123 $7369
Chairman and Director
Benjamin Lipstein $5768 $5292 $6370
Study Committee
Chairman, Audit Committee
Member and Director(2)
Elizabeth B. Moynihan $4063 $3728 $4487
Study Committee Member
and Director
Kenneth A. Randall $3726 $3419 $4115
Audit Committee Chairman
and Director
Edward V. Regan $3684 $3380 $4068
Proxy Committee Chairman,
Audit Committee Member
and Director
Russell S. Reynolds, Jr. $1379 $1265 $1523
Proxy Committee Member
and Director
Pauline Trigere $2463 $2260 $2720
Director
Clayton K. Yeutter $2758 $2530 $3045
Proxy Committee
Member and Director
Retirement Benefits Accrued as Part of Fund Expenses
LifeSpan LifeSpan LifeSpan
Growth Balanced Income
Fund Fund Fund
Leon Levy $795 $38 $202
Chairman and Director
Benjamin Lipstein $688 $33 $175
Study Committee
Chairman, Audit Committee
Member and Director(2)
Elizabeth B. Moynihan $484 $23 $123
Study Committee Member
and Director
Kenneth A. Randall $444 $21 $113
Audit Committee Chairman
and Director
Edward V. Regan $439 $21 $112
Proxy Committee Chairman,
Audit Committee Member
and Director
Russell S. Reynolds, Jr. $164 $ 8 $42
Proxy Committee Member
and Director
Pauline Trigere $294 $14 $75
Director
Clayton K. Yeutter $329 $16 $84
Proxy Committee
Member and Director
Total Compensation from all New York-based Oppenheimer Funds (1)
Leon Levy $158,500
Chairman and Director
Benjamin Lipstein $137,000
Study Committee
Chairman, Audit Committee
Member and Director(2)
Elizabeth B. Moynihan $96,500
Study Committee Member
and Director
Kenneth A. Randall $88,500
Audit Committee Chairman
and Director
Edward V. Regan $87,500
Proxy Committee Chairman,
Audit Committee Member
and Director
Russell S. Reynolds, Jr. $32,750
Proxy Committee Member
and Director
Pauline Trigere $58,500
Director
Clayton K. Yeutter $65,500
Proxy Committee
Member and Director
- -----------------
(1) For the 1997 calendar year.
(2) Committee position held during a portion of the period shown.
Each of the Funds has adopted a retirement plan that provides for payment
to a retired Director of up to 80% of the average compensation paid during the
Director's five years of service in which the highest compensation was received.
A Director must serve in that capacity for any of the New York-based Oppenheimer
funds for at least 15 years to be eligible for the maximum payment. Because each
Director's retirement benefits will depend on the amount of the Director's
future compensation and length of service, the amount of those benefits cannot
be determined at this time, nor can the Fund estimate the number of years of
credited service that will be used to determine those benefits.
o Deferred Compensation Plan. The Board of Directors has adopted a Deferred
Compensation Plan for disinterested directors that enables directors to elect to
defer receipt of all or a portion of the annual fees they are entitled to
receive from each of the Funds. Under the plan, the compensation deferred by a
Director is periodically adjusted as though an equivalent amount had been
invested in shares of one or more Oppenheimer funds selected by the Director.
The amount paid to the Director under the plan will be determined based upon the
performance of the selected funds. Deferral of Director's fees under the plan
will not materially affect each Fund's assets, liabilities or net income per
share. The plan will not obligate each Fund to retain the services of any
Director or to pay any particular level of compensation to any Director.
Pursuant to an Order issued by the Securities and Exchange Commission, a Fund
may, without shareholder approval and notwithstanding its fundamental policy
restricting investment in other open-end investment companies, as described on
page 22 of the Statement of Additional Information, invest in the funds selected
by the Director under the plan for the limited purpose of determining the value
of the Director's deferred fee account.
o Major Shareholders. As of February 9, 1998, no person owned of record or
was known by the Fund to own beneficially 5% or more of the Fund's outstanding
Class A, Class B or Class C shares except as follows:
o LifeSpan Income Fund: (i) Mass Mutual Life Insurance Company, 1295 State
Street, Springfield, Massachusetts 01111, which owned 2,401,213.639 Class A
shares (or 88.69% of the then outstanding Class A shares); (ii) RPSS TR Rollover
IRA for the benefit of Kathy R. Simkins, 314 West 1700 South, Orem, Utah 84058,
which owned 11, 730.256 Class B shares (or 15.25% of the then outstanding Class
B shares); (iii) RPSS TR Rollover IRA for the benefit of Frances L. Barnes,
Harriman Hill Road, Raymond, New Hampshire 03077 which owned 5,577.754 Class B
shares (or 7.25% of the then outstanding Class B shares); (iv) David E. & Gail
Tilton Joint Revocable Trust, 34 Wawayanda Road, Warwick, New York 10990 which
owned 5,281.934 Class B shares (or 6.86% of the then outstanding Class B
shares); (v) Filla Irrevocable Trust for the benefit of Elizabeth Lynn Filla,
405 Bethany Court, Valley Park, Missouri 63088, which owned 1000.918 Class C
shares (or 17.41% of the then outstanding Class C shares); (vi) Norman I.
Bobczynski, 189 Leeward Avenue, Pismo Beach, California 93449, who owned 898.065
Class C shares (or 15.62% of the then outstanding Class C shares); (vii) Gary R.
Close and Sammie A. Closer, JTWRS, 1295 Hetrick Avenue, Arroyo Grande,
California 93420, who owned 781.637 Class C shares (or 13.60% of the then
outstanding Class C shares); (viii) Laura M. Simmons, 718 North Greece Road,
Rochester, New York 14626 who owned 722.026 Class C shares (or 12.56% of the
then outstanding Class C shares); (ix) RPSS TR Paula Rosenstein SEP IRA for the
benefit of Paula Rosenstein, 4756 Biona Drive, San Diego, California 92116,
which owned 624.149 Class C shares (or 10.86% of the then outstanding Class C
shares); (x) Phillip and Ruth Shapiro, 102 Claybrook Drive, Silver Spring,
Maryland 20902 who owned 495.797 Class C shares (or 8.62% of the then
outstanding Class C shares); and (xi) RPSS TR Rollover IRA for the benefit of
Robin R. Prafke, PO Box 88, New Auburn, Minnesota 55366, which owned 442.726
Class C shares (or 7.70% of the then outstanding Class C shares).
o LifeSpan Balanced Fund: (i) Mass Mutual Life Insurance Company, 1295
State Street, Springfield, Massachusetts 01111, which owned 3,994,015.346 Class
A shares (or 6.89% of the then outstanding Class A shares); (ii) William R.
Trimmer M.D. Ltd. Profit Sharing Plan , 890 Mill Street, Reno, Nevada 89502
which owned 42,532.925 Class B shares (or 10.06% of the then outstanding Class B
shares); (iii) Margaret B. Woodworth Trust, 2404 Loring Street, San Diego,
California 92109, which owned 24,512.862 Class B shares (or 5.80% of the then
outstanding Class B shares); (iv) RPSS TR Rollover IRA for the benefit of
Clayton C. Clammer, 5928 Los Alamos Street, Buena Park, California 90620, which
owned 11, 203.186 Class C shares (or 15.38% of the then outstanding Class C
shares); (v) RPSS TR Rollover IRA for the benefit of Joanne Dickinson, 1071 Wade
Lane, Oakmont, Pennsylvania 15139, which owned 8,253.868 Class C shares (or
11.33% of the then outstanding Class C shares); and (vi) Merrill Lynch Pierce
Fenner & Smith Inc. for the benefit of its customers, 4800 Deer Lake Drive,
East, 32246, which owned 4,259.082 of Class C shares (or 5.84% of the then
outstanding Class C shares).
o LifeSpan Growth Fund: (I) Mass Mutual Life Insurance Company, 1295 State
Street, Springfield, Massachusetts 01111, which owned 2,986,502.938 Class A
shares (or 70.85% of the then outstanding Class A shares); (ii) Frank R. Casey
Trust, 1866 West Tweed Road, Inverness, Illinois 60067, which owned 35,013.975
Class B shares (or 7.64% of the then outstanding Class B shares); (iii) Merrill
Lynch Pierce Fenner & Smith Inc. for the benefit of its customers, 4800 Deer
Lake Drive, East, 32246, which owned 22,025.936 of Class C shares (or 18.54% of
the then outstanding Class C shares); and (iv) Donaldson Lufkin Jenrette
Securities Corporation, PO Box 2052, Jersey City, New Jersey 07303, which owned
8,246.579 Class C shares (or 6.94% of the then outstanding Class C shares). .
The Manager and its Affiliates. The Manager is wholly-owned by Oppenheimer
Acquisition Corporation ("OAC"), a holding company controlled by Massachusetts
Mutual Life Insurance Company. OAC is also owned in part by certain of the
Manager's directors and officers, some of whom also serve as officers of the
Funds, and two of whom (Ms. Macaskill and Mr. Spiro) serve as Directors of the
Funds.
The Manager and the Funds have a Code of Ethics. It is designed to detect
and prevent improper personal trading by certain employees, including portfolio
managers, that would compete with or take advantage of a Fund's portfolio
transactions. Compliance with the Code of Ethics is carefully monitored and
strictly enforced by the Manager.
o Portfolio Management. The Portfolio Manager of the Fund is Peter M.
Antos, who is principally responsible for the day-to-day management of the
Fund's portfolio. Mr. Antos' background is described in the Prospectus under
"Portfolio Management." Other member of the Manager's Fixed Income Portfolio
Department, particularly Michael C. Strathearn, Kenneth B. White and Stephen F.
Libera, provide the Portfolio Manager with counsel and support in managing the
Fund's portfolio.
o The Investment Advisory Agreements. Each Fund has entered into an
Investment Advisory Agreement with the Manager. The Investment Advisory
Agreement between the Manager and each Fund requires the Manager, at its
expense, to provide each Fund with adequate office space, facilities and
equipment, and to provide and supervise the activities of all administrative and
clerical personnel required to provide effective corporate administration for
each Fund, including the compilation and maintenance of records with respect to
its operations, the preparation and filing of specified reports, and composition
of proxy materials and registration statements for the continuous public sale of
shares of each Fund.
Expenses not expressly assumed by the Manager under an Investment Advisory
Agreement or by the Distributor under a Distribution Agreement (defined below)
are paid by the relevant Fund. The Investment Advisory Agreement lists examples
of expenses to be paid by a Fund, the major categories of which relate to
interest, taxes, brokerage commissions, fees to certain Directors, legal, and
audit expenses, custodian and transfer agent expenses, share issuance costs,
certain printing and registration costs and non-recurring expenses, including
litigation.
o LifeSpan Growth Fund. For the fiscal period from May 1, 1995 through
December 31, 1995 the management fee paid to G.R. Phelps & Co., the Fund's
investment advisor, by LifeSpan Growth Fund was $166,212. For the fiscal period
ended October 31, 1996 the Fund paid $290,999, in management fees, some of which
was paid to G. R. Phelps & Co. prior to March 18, 1996. For the fiscal year
ended October 31, 1997 the Fund paid $457,316 to the Manager.
o LifeSpan Balanced Fund. For the fiscal period from May 1, 1995 through
December 31, 1995 the management fee paid to G.R. Phelps & Co., the Fund's
investment advisor, by LifeSpan Balanced Fund was $214,011. For the fiscal
period ended October 31, 1996, the Fund paid $344,756 in management fees, some
of which was paid to G. R. Phelps & Co. prior to March 18, 1996. For the fiscal
year ended October 31, 1997, the Fund paid $527,770 to the Manager.
o LifeSpan Income Fund. For the fiscal period from May 1, 1995 through
December 31, 1995 the management fee paid to G.R. Phelps & Co., the Fund's
investment advisor, by LifeSpan Income Fund was $111,599. For the fiscal period
ended October 31, 1996 the Fund paid $161,101 in management fees, some of which
was paid to G. R. Phelps & Co. prior to March 18, 1996. For the fiscal year
ended October 31, 1997, the Fund paid $212,649 to the Manager.
The Investment Advisory Agreement contains no expense limitation. However,
because of state regulations limited fund expenses that previously applied, the
Manager had voluntarily undertaken that the Fund's total expenses in any fiscal
year (including the investment advisory fee but exclusive of taxes, interest,
brokerage commissions, distribution plan payments and any extraordinary
non-recurring expenses, including litigation) would not exceed the most
stringent state regulatory limitation applicable to the Fund. Due to changes in
federal securities laws, such state regulations no longer apply and the
Manager's undertaking is therefore inapplicable and has been withdrawn. During
the Fund's last fiscal year, the Fund's expenses did not exceed the most
stringent state regulatory limit and the voluntary undertaking was not invoked.
The Investment Advisory Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence in the performance of its duties, or
reckless disregard of its obligations and duties under the Investment Advisory
Agreement, the Manager is not liable for any loss resulting from any good faith
errors or omissions in connection with any matters to which the Agreement
relates. Each Investment Advisory Agreement permits the Manager to act as
investment adviser for any other person, firm or corporation and to use the name
"Oppenheimer" in connection with its other investment activities. If the Manager
shall no longer act as investment adviser to the Funds, the right of the Funds
to use the name "Oppenheimer" as part of their corporate names may be withdrawn.
o The Investment Subadvisory Agreements. Babson-Stewart, One Memorial
Drive, Cambridge, Massachusetts 02142, is a Massachusetts general partnership
and a registered investment adviser and was originally established in 1987. The
general partners of Babson-Stewart are David L. Babson & Co., which is an
indirect subsidiary of Massachusetts Life Insurance Company, and Stewart Ivory &
Co. (International), Ltd. As of December 31, 1997, Babson-Stewart had
approximately $4.5 million in assets under management.
BEA Associates, Citicorp Center, 153 E. 53rd Street, 57th Floor, New York,
NY 10022, is a partnership between Credit Suisse Capital Corporation and BEA
Associate's employee shareholders. BEA Associates has been providing domestic
and global fixed income and equity investment management services for
institutional clients and mutual funds since 1984 and, together with its global
affiliate, had approximately $128 billion in assets under management as of
December 31, 1997.
Pilgrim, 825 Duportail Road, Wayne, Pennsylvania 19087, was established
in 1982 to provide specialized equity management for institutional investors.
Pilgrim is a Delaware corporation and a wholly owned subsidiary of United Asset
Management Corporation. As of December 31, 1997, Pilgrim had over $16 billion in
assets under management.
With respect to the International Component for LifeSpan Growth Fund and
LifeSpan Balanced Fund, the Manager has entered into Investment Subadvisory
Agreements with Babson- Stewart. With respect to the Small Cap Component of each
LifeSpan Fund, the Manager has entered into Investment Subadvisory Agreements
with Pilgrim. With respect to the High Yield/High Risk Bond Component for each
LifeSpan Fund, the Manager has entered into Investment Subadvisory Agreements
with BEA Associates. Under the respective Investment Subadvisory Agreement, the
corresponding Subadviser, subject to the review of the Board of Directors and
the overall supervision of the Manager, is responsible for managing the
investment operations of the corresponding LifeSpan Fund Component and the
composition of the Component's portfolio and furnishing the LifeSpan Fund with
advice and recommendations with respect to investments and the purchase and sale
of securities for the respective Component.
The Investment Subadvisory Agreements with Babson-Stewart provide that in
the absence of willful misfeasance, bad faith, gross negligence or reckless
disregard with respect to its obligations and duties under the agreements,
Babson-Stewart will not be subject to liability for any loss sustained by reason
of its good faith errors of omissions in connection with any matters to which
the agreements relate.
The Investment Subadvisory Agreements with Pilgrim provide that in the
absence of willful misfeasance, bad faith, negligence, or reckless disregard of
the performance of its duties under the agreements, Pilgrim is not subject to
liability for any error of judgment or mistake of law or for any other action or
omission in the course of, or connected with, rendering services or for any
losses that may be sustained in the purchase, holding or sale of any security,
or otherwise.
The Investment Subadvisory Agreement with BEA Associates provides that in
the absence of willful misfeasance, bad faith, negligence, or reckless disregard
of the performance of its duties under the agreement, BEA Associates is not
subject to liability for losses as a result of its activities in connection with
the adoption of any investment policy or the purchase, sale or retention of
securities on behalf of the LifeSpan Funds subadvised by BEA Associates if such
activities were made with due care and in good faith.
o The Distributor. Under its General Distributor's Agreements with each
Fund, the Distributor acts as each Fund's principal underwriter in the
continuous public offering of the Fund's shares, but is not obligated to sell a
specific number of shares. Expenses normally attributable to sales (other than
those paid under the Distribution and Service Plans, but including advertising
and the cost of printing and mailing prospectuses other than those furnished to
existing shareholders), are borne by the Distributor.
o LifeSpan Growth Fund. During LifeSpan Growth Fund's fiscal period from
May 1, 1995 through December 31, 1995, the fiscal period ended October 31, 1996
and the fiscal year ended October 31, 1997, the aggregate sales charges on sales
of the Fund's Class A shares were $151,750, $103,757 and $137,511, respectively,
of which the Distributor and an affiliate broker-dealer retained $0, $69,069 and
$111,486 in those respective years. During the Fund's fiscal period ended
October 31, 1997, $2,500 in contingent deferred sales charges were collected on
the Fund's Class B shares. During the fiscal year ended October 31, 1997, sales
charges advanced to broker/dealers by the Distributor on sales of the Fund's
Class B shares totaled$102,107 of which $64,131 was paid to an affiliated
broker/dealer. During the Fund's fiscal year ended October 31, 1997 there were
no contingent deferred sales charges collected on the Fund's Class C shares.
During the fiscal year ended October 31, 1997, sales charges advanced to
broker/dealers by the Distributor on sales of the Fund's Class C shares totaled
$9,869, all of which the Distributor retained.
o LifeSpan Balanced Fund. During LifeSpan Balanced Fund's fiscal period
from May 1, 1995 through December 31, 1995, fiscal period ended October 31, 1996
and the fiscal year ended October 31, 1997, the aggregate sales charges on sales
of the Fund's Class A shares were $123,711, $84,043 and $100,461, respectively,
of which the Distributor and an affiliate broker-dealer retained $0, $67,555 and
$67,205 in those respective years. During the Fund's fiscal year ended October
31, 1997 there were no contingent deferred sales charges collected on the Fund's
Class B shares. During the fiscal year ended October 31, 1997, sales charges
advanced to broker/dealers by the Distributor on sales of the Fund's Class B
shares totaled $114,889 of which $67,463 was paid to an affiliated
broker/dealer. During the Fund's fiscal year ended October 31, 1997 there were
no contingent deferred sales charges collected on the Fund's Class C shares.
During the fiscal year ended October 31, 1997, sales charges advanced to
broker/dealers by the Distributor on sales of the Fund's Class C shares totaled
$5,414, all of which the Distributor retained.
o LifeSpan Income Fund. During LifeSpan Income Fund's fiscal period from
May 1, 1995 through December 31, 1995, fiscal period ended October 31, 1996 and
fiscal year ended October 31, 1997, the aggregate sales charges on sales of the
Fund's Class A shares were $75,262, $29,128 and $19,537, respectively, of which
the Distributor and an affiliate broker-dealer retained $0, $21,324 and $13,796
in those respective years. During the Fund's fiscal year ended October 31, 1997,
$5,923 contingent deferred sales charges were collected on the Fund's Class B
shares. During the fiscal year ended October 31, 1997, sales charges advanced to
broker/dealers by the Distributor on sales of the Fund's Class B shares totaled
$14,373 of which $11,515 was paid to an affiliated broker/dealer. During the
Fund's fiscal year ended October 31, 1997 there were no contingent deferred
sales charges collected on the Fund's Class C shares. During the fiscal year
ended October 31, 1997, there were no sales charges advanced to broker/dealers
by the Distributor on sales of the Fund's Class C shares.
o The Transfer Agent. OppenheimerFunds Services, each Fund's transfer
agent, is responsible for maintaining each Fund's shareholder registry and
shareholder accounting records, and for shareholder servicing and administrative
functions.
Brokerage Policies of the Funds
Brokerage Provisions of the Investment Advisory Agreements. One of the duties of
the Manager under each Investment Advisory Agreement is to arrange the portfolio
transactions for each Fund. Each Investment Advisory Agreement contains
provisions relating to the employment of broker-dealers ("brokers") to effect a
Fund's portfolio transactions. In doing so, the Manager is authorized by the
Investment Advisory Agreement to employ such broker-dealers, including
"affiliated" brokers, as that term is defined in the Investment Company Act, as
may, in its best judgment based on all relevant factors, implement the policy of
a Fund to obtain, at reasonable expense, the "best execution" (prompt and
reliable execution at the most favorable price obtainable) of such transactions.
The Manager need not seek competitive commission bidding, but is expected to
minimize the commissions paid to the extent consistent with the interest and
policies of a Fund as established by its Board of Directors.
Under each Investment Advisory Agreement, the Manager is authorized to
select brokers that provide brokerage and/or research services for a Fund and/or
the other accounts over which the Manager or its affiliates have investment
discretion. The commissions paid to such brokers may be higher than another
qualified broker would have charged, if a good faith determination is made by
the Manager and the commission is fair and reasonable in relation to the
services provided. Subject to the foregoing considerations, the Manager may also
consider sales of shares of a Fund and other investment companies managed by the
Manager or its affiliates as a factor in the selection of brokers for a Fund's
portfolio transactions.
Description of Brokerage Practices Followed by the Manager. Most purchases made
by the Funds are principal transactions at net prices, and the Funds incur
little or no brokerage costs. Subject to the provisions of the Investment
Advisory Agreement, the procedures and rules described above, allocations of
brokerage are generally made by the Manager's portfolio traders based upon
recommendations from the Manager's portfolio managers. In certain instances,
portfolio managers may directly place trades and allocate brokerage, also
subject to the provisions of the Investment Advisory Agreements and the
procedures and rules described above. In either case, brokerage is allocated
under the supervision of the Manager's executive officers. Transactions in
securities other than those for which an exchange is the primary market are
generally done with principals or market makers. Brokerage commissions are paid
primarily for effecting transactions in listed securities or for certain fixed
income agency transactions in the secondary market and otherwise only if it
appears likely that a better price or execution can be obtained.
When the Funds engage in an option transaction, ordinarily the same broker
will be used for the purchase or sale of the option and any transaction in the
securities to which the option relates. When possible, concurrent orders to
purchase or sell the same security by more than one of the accounts managed by
the Manager and its affiliates are combined. The transactions effected pursuant
to such combined orders are averaged as to price and allocated in accordance
with the purchase or sale orders actually placed for each account.
The research services provided by a particular broker may be useful only
to one or more of the advisory accounts of the Manager and its affiliates, and
investment research received for the commissions of those other accounts may be
useful both to the Funds and one or more of such other accounts. Such research,
which may be supplied by a third party at the instance of a broker, includes
information and analyses on particular companies and industries as well as
market or economic trends and portfolio strategy, receipt of market quotations
for portfolio evaluations, information systems, computer hardware and similar
products and services. If a research service also assists the Manager in a
non-research capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to the Manager in
the investment decision-making process may be paid in commission dollars. The
Board of Directors has permitted the Manager to use concessions on fixed price
offerings to obtain research, in the same manner as is permitted for agency
transactions. The Board has also permitted the Manager to use stated commissions
on secondary fixed-income trades to obtain research where the broker has
represented to the Manager that (i) the trade is not from the broker's own
inventory, (ii) the trade was executed by the broker on an agency basis at the
stated commission, and (iii) the trade is not a riskless principal transaction.
The research services provided by brokers broadens the scope and
supplements the research activities of the Manager, by making available
additional views for consideration and comparisons, and enabling the Manager to
obtain market information for the valuation of securities held in a Fund's
portfolio or being considered for purchase. The Board of Directors, including
the "independent" Directors of the Funds (those Directors of the Funds who are
not "interested persons" as defined in the Investment Company Act, and who have
no direct or indirect financial interest in the operation of the Investment
Advisory Agreement or the Distribution Plans described below) annually reviews
information furnished by the Manager as to the commissions paid to brokers
furnishing such services so that the Board may ascertain whether the amount of
such commissions was reasonably related to the value or benefit of such
services.
During the fiscal year ended October 31,1997, the Funds paid the following
brokerage commissions:
o LifeSpan Growth Fund. The Fund paid total commissions of $86,105 of
which, during the same period, $47,945 was paid to brokers as commission in
return for research services. The total aggregate dollar amount of those
transactions was $25,802,538.
o LifeSpan Balanced Fund. The Fund paid total commissions of $76,371 of
which, during the same period, $43,638 was paid to brokers as commission in
return for research services. The total aggregate dollar amount of those
transactions was $23,646,780.
o LifeSpan Income Fund. The Fund paid total commissions of $6,349 of which,
during the same period, $6,340 was paid to brokers as commission in return for
research services. The total aggregate dollar amount of those transactions was
$3,430,340.
Performance of the Funds
Yield and Total Return Information. From time to time, as set forth in a Fund's
Prospectus, the "standardized yield," "dividend yield," "average annual total
return," "total return," or "total return at net asset value", as the case may
be, of an investment in a class of a Fund may be advertised. An explanation of
how yields and total returns are calculated for each class and the components of
those calculations is set forth below. A Fund's maximum sales charge rate on
Class A shares was lower prior to March 18, 1996, and actual investment
performance would be affected by that change.
A Fund's advertisement of its performance must, under applicable rules of
the SEC, include the average annual total returns for each class of shares of a
Fund for the 1, 5 and 10-year periods (or the life of the class, if less) as of
the most recently ended calendar quarter prior to the publication of the
advertisement. This enables an investor to compare a Fund's performance to the
performance of other funds for the same periods. However, a number of factors
should be considered before using such information as a basis for comparison
with other investments. An investment in a Fund is not insured; its yields and
total returns and share prices are not guaranteed and normally will fluctuate on
a daily basis. When redeemed, an investor's shares may be worth more or less
than their original cost. Yields and total returns for any given past period are
not a prediction or representation by the Fund of future yields or rates of
return on its shares. The yields and total returns of Class A, Class B and Class
C shares of a Fund, as the case may be, are affected by portfolio quality, the
type of investments the Fund holds and its operating expenses allocated to a
particular class.
o Yields
o Standardized Yield. The "standardized yield" (referred to as "yield") is
shown for a class of shares for a stated 30-day period. It is not based on
actual distributions paid by a Fund to shareholders in the 30-day period, but is
a hypothetical yield based upon the net investment income from a Fund's
portfolio investments for that period. It may therefore differ from the
"dividend yield" for the same class of shares described below. It is calculated
using the following formula set forth in rules adopted by the Securities and
Exchange Commission designed to assure uniformity in the way that all funds
calculate their yields:
a-b 6
Standardized Yield = 2 ((------ + 1) - 1)
cd
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period. b = expenses
accrued for the period (net of any expense reimbursements). c = the average
daily number of shares of that class outstanding during
the 30-day period that were entitled to receive dividends.
d = the maximum offering price per share of the class on the last day of
the period, using the current maximum sales charge rate adjusted for
undistributed net investment income.
The standardized yield for a 30-day period may differ from the yield for
other periods. The SEC formula assumes that the standardized yield for a 30-day
period occurs at a constant rate for a six-month period and is annualized at the
end of the six-month period. Additionally, because each class of shares is
subject to different expenses, it is likely that the standardized yields of a
Fund's classes of shares will differ for any 30-day period.
o Dividend Yield. A Fund may quote a "dividend yield" for each class of
its shares. Dividend yield is based on the dividends paid on shares of a class
during the actual dividend period. To calculate dividend yield, the dividends of
a class declared during a stated period are added together and the sum is
multiplied by 12 (to annualize the yield) and divided by the maximum offering
price on the last day of the dividend period. The formula is shown below:
Dividend Yield = Dividends paid x 12
---------------------------------------------
Maximum Offering Price (payment date)
The maximum offering price for Class A shares includes the current maximum
initial sales charge. The maximum offering price for Class B and Class C shares
is the net asset value per share, without considering the effect of contingent
deferred sales charges. The Class A dividend yield may also be quoted without
deducting the maximum initial sales charge.
o Total Return Information
o Average Annual Total Returns. The "average annual total return" of each
class is an average annual compounded rate of return for each year in a
specified number of years. It is the rate of return based on the change in value
of a hypothetical initial investment of $1,000 ("P" in the formula below) held
for a number of years ("n") to achieve an Ending Redeemable Value ("ERV") of
that investment according to the following formula:
( ERV ) 1/n
(-----) -1 = Average Annual Total Return ( P )
o Cumulative Total Returns. The cumulative "total return" calculation
measures the change in value of a hypothetical investment of $1,000 over an
entire period of years. Its calculation uses some of the same factors as average
annual total return, but it does not average the rate of return on an annual
basis. Cumulative total return is determined as follows:
ERV - P
------- = Total Return
P
In calculating total returns for Class A shares, the current maximum sales
charge of 5.75% (as a percentage of the offering price) is deducted from the
initial investment ("P") (unless the return is shown at net asset value, as
discussed below). For Class B shares, the payment of the current contingent
deferred sales charge (5.0% for the first year, 4.0% for the second year, 3.0%
for the third and fourth years, 2.0% in the fifth year, 1.0% for the sixth year
and none thereafter) is applied to the investment result for the time period
shown (unless the total return is shown at net asset value, as described below).
For Class C shares, the 1.0% contingent deferred sales charge is applied to the
investment result for the one-year period (or less). Total returns also assume
that all dividends and capital gains distributions during the period are
reinvested to buy additional shares at net asset value per share, and that the
investment is redeemed at the end of the period.
o LifeSpan Growth Fund. The average annual total returns on an investment
in Class A shares of the Fund for the one year period ended October 31, 1997 and
for the period from May 1, 1995 (commencement of operations) to October 31, 1997
were 6.46% and 15.20%, respectively. The cumulative total return on Class A
shares for the period from inception through October 31, 1997 was 42.45%.
The average annual total returns on Class B shares for the one- year
period ended October 31, 1997 and for the period October 2, 1995 (inception of
the class) through October 31, 1997 were 7.07% and 13.40%, respectively. The
cumulative total return on Class B shares for the period from inception through
October 31, 1997 was 29.91%.
The average annual total returns on Class C shares for the one- year
period ended October 31, 1997 and for the period May 1, 1996 (inception of the
class) through October 31, 1997 were 11.05% and 10.06%, respectively. The
cumulative total return on Class C shares for the period from inception to
October 31, 1997 was 15.46%.
o LifeSpan Balanced Fund. The average annual total returns on an
investment in Class A shares of the Fund for the one- year period ended October
31, 1997 and for the period from May 1, 1995 (commencement of operations) to
October 31, 1997 were 6.18% and 12.68%, respectively. The cumulative total
return on Class A shares for the period from inception through October 31, 1997
was 34.76%.
The average annual total return on Class B shares for the one- year period
ended October 31, 1997 and for the period October 2, 1995 (inception of the
class) through October 31, 1997 were 6.70% and 11.09%, respectively. The
cumulative total return on Class B shares for the period from inception through
October 31, 1997 was 24.47%.
The average annual total return on Class C shares for the one- year period
ended October 31, 1997 and for the period October 2, 1995 (inception of the
class) through October 31, 1997 were 10.73% and 9.96%, respectively. The
cumulative total return on Class C shares for the period from inception to
October 31, 1997 was 15.31%.
o LifeSpan Income Fund. The average annual total returns on an investment
in Class A shares of the Fund for the one- year period ended October 31, 1997
and for the period from May 1, 1995 (commencement of operations) to October 31,
1997 were 4.90% and 8.22%, respectively. The cumulative total return on Class A
shares for the period from inception through October 31, 1997 was 21.85%.
The average annual total return on Class B shares for the one-year period
ended October 31, 1997 and for the period October 2, 1995 (inception of the
class) through October 31, 1997 were 5.51% and 7.62%, respectively. The
cumulative total return on Class B shares for the period from inception through
October 31, 1997 was 16.51%.
The average annual total return on Class C shares for the one-year period
ended October 31, 1997 and for the period May 1, 1996 (inception of the class)
through October 31, 1997 were 10.04% and 10.04%, respectively. The cumulative
total return on Class C shares for the period from inception to October 31, 1997
was 15.43%.
o Total Returns at Net Asset Value. From time to time a Fund may also
quote an "average annual total return at net asset value" or a cumulative "total
return at net asset value" for Class A, Class B or Class C shares, as the case
may be. Each is based on the difference in net asset value per share at the
beginning and the end of the period for a hypothetical investment in that class
of shares (without considering front-end or contingent deferred sales charges)
and takes into consideration the reinvestment of dividends and capital gains
distributions.
o LifeSpan Growth Fund. The average annual total returns at net asset
value on an investment in Class A shares of the Fund for the one year period
ended October 31, 1997 and for the period from May 1, 1995 (commencement of
operations) to October 31, 1997 were 12.96% and 17.97%, respectively. The
cumulative total return at net asset value on Class A shares for the period from
inception through October 31, 1997 was 51.14%.
The average annual total returns at net asset value on Class B shares for
the one- year period ended October 31, 1997 and for the period October 2, 1995
(inception of the class) through October 31, 1997 were 12.07% and 14.65%,
respectively. The cumulative total return at net asset value on Class B shares
for the period from inception through October 31, 1997 was 32.91%.
The average annual total returns at net asset value on Class C shares for
the one- year period ended October 31, 1997 and for the period May 1, 1996
(inception of the class) through October 31, 1997 were 12.05% and 10.06%,
respectively. The cumulative total return at net asset value on Class C shares
for the period from inception to October 31, 1997 was 15.46%.
o LifeSpan Balanced Fund. The average annual total returns at net asset
value on an investment in Class A shares of the Fund for the one- year period
ended October 31, 1997 and for the period from May 1, 1995 (commencement of
operations) to October 31, 1997 were 12.66% and 15.38%, respectively. The
cumulative total return at net asset value on Class A shares for the period from
inception through October 31, 1997 was 42.99%.
The average annual total return at net asset value on Class B shares for
the one- year period ended October 31, 1997 and for the period October 2, 1995
(inception of the class) through October 31, 1997 were 11.70% and 12.37%,
respectively. The cumulative total return at net asset value on Class B shares
for the period from inception through October 31, 1997 was 27.47%.
The average annual total return at net asset value on Class C shares for
the one- year period ended October 31, 1997 and for the period October 2, 1995
(inception of the class) through October 31, 1997 were 11.73% and 9.96%,
respectively. The cumulative total return at net asset value on Class C shares
for the period from inception to October 31, 1997 was 15.31%.
o LifeSpan Income Fund. The average annual total returns at net asset
value on an investment in Class A shares of the Fund for the one- year period
ended October 31, 1997 and for the period from May 1, 1995 (commencement of
operations) to October 31, 1997 were 11.30% and 10.82%, respectively. The
cumulative total return at net asset value on Class A shares for the period from
inception through October 31, 1997 was 29.28%.
The average annual total return at net asset value on Class B shares for
the one-year period ended October 31, 1997 and for the period October 2, 1995
(inception of the class) through October 31, 1997 were 10.51% and 8.94%,
respectively. The cumulative total return at net asset value on Class B shares
for the period from inception through October 31, 1997 was 19.51%.
The average annual total return at net asset value on Class C shares for
the one-year period ended October 31, 1997 and for the period May 1, 1996
(inception of the class) through October 31, 1997 was 11.04% and 10.04%,
respectively. The cumulative total return at net asset value on Class C shares
for the period from inception to October 31, 1997 was 15.43%.
Other Performance Comparisons. From time to time a Fund may publish the ranking
of its Class A, Class B, or Class C shares by Lipper Analytical Services, Inc.
("Lipper"), a widely-recognized independent mutual fund monitoring service.
Lipper monitors the performance of regulated investment companies, including the
Funds, and ranks their performance for various periods based on categories
relating to investment objectives. The Lipper performance rankings are based on
total returns that include the reinvestment of capital gains distributions and
income dividends but do not take sales charges or taxes into consideration.
From time to time a Fund may publish the star ranking of the performance of
its Class A, Class B or Class C shares by Morningstar, Inc., an independent
mutual fund monitoring service. Morningstar ranks mutual funds in broad
investment categories: domestic stock funds, international stock funds, taxable
bond funds, municipal bond funds, based on risk-adjusted total investment
returns. The Funds are ranked among the domestic stock funds. Investment return
measures a fund's or class's one, three, five and ten-year average annual total
returns (depending on the inception of the fund or class) in excess of 90-day
U.S. Treasury bill returns after considering the fund's sales charges and
expenses. Risk measures a fund's or class's performance below 90-day U.S.
Treasury bill returns. Risk and investment return are combined to produce star
rankings reflecting performance relative to the average fund in a fund's
category. Five stars is the "highest" ranking (top 10%), four stars is "above
average" (next 22.5%), three stars is "average" (next 35%), two stars is "below
average" (next 22.5%) and one star is "lowest" (bottom 10%). The current star
ranking is the fund's or class's 3-year ranking or its combined 3-and 5-year
ranking (weighted 60%/40%, respectively, or its combined 3-,5- and 10-year
ranking (weighted 40%, 30% and 30%, respectively), depending on the inception of
the fund or class. Rankings are subject to change monthly.
A Fund may also compare its performance to that of other funds in its
Morningstar Category. In addition to its star rankings, Morningstar also
categorizes and compares a fund's 3-year performance based on Morningstar's
classification of the fund's investments and investment style, rather than how a
fund defines its investment objective. Morningstar's four broad categories
(domestic equity, international equity, municipal bond and taxable bond) are
each further subdivided into categories based on types of investments and
investment styles. Those comparisons by Morningstar are based on the same risk
and return measurements as its star rankings but do not consider the effect of
sales charges.
The total return on an investment in each Fund's Class A, Class B and
Class C shares may be compared with the performance for the same period of the
following indices: LifeSpan Growth Fund compared to Wilshire 5000 Index;
LifeSpan Balanced Fund compared to both S&P 500 Index and Lehman
Brothers/Government/Corporate Bond Index; and LifeSpan Income Fund compared to
Lehman Brothers Intermediate Government/Corporate Bond Index. Each of these
indices is described in the Prospectus.
Other indices may provide useful comparisons. The performance of a Fund's
Class A, Class B or Class C shares may also be compared in publications to (i)
the performance of various market indices or other investments for which
reliable performance data is available, and (ii) to averages, performance
rankings or other benchmarks prepared by recognized mutual fund statistical
services.
From time to time a Fund may also include in its advertisements and sales
literature performance information about the Fund or rankings of the Fund's
performance cited in newspapers or periodicals, such as The New York Times.
These articles may include quotations of performance from other sources, such as
Lipper or Morningstar.
From time to time, a Fund's Manager may publish rankings or ratings of the
Manager (or the Transfer Agent), by independent third-parties, on the investor
services provided by them to shareholders of the Oppenheimer funds, other than
the performance rankings of the Oppenheimer funds themselves. These ratings or
rankings of shareholder/investor services by third parties may compare the
Oppenheimer funds services to those of other mutual fund families selected by
the rating or ranking services, and may be based upon the opinions of the rating
or ranking service itself, using its own research or judgment, or based upon
surveys of investors, brokers, shareholders or others.
When comparing yield, total return and investment risk of an investment in
Class A, Class B or Class C of a Fund with other investments, investors should
understand that certain other investments have different risk characteristics
than an investment in shares of a Fund. For example, certificates of deposit may
have fixed rates of return and may be insured as to principal and interest by
the FDIC, while a Fund's returns will fluctuate and its share values and returns
are not guaranteed. U.S. Treasury securities are guaranteed as to principal and
interest by the full faith and credit of the U.S. government.
Distribution and Service Plans
Each Fund has adopted a Service Plan for Class A Shares and a Distribution and
Service Plan for each Class B shares and Class C shares of the Fund under Rule
12b-1 of the Investment Company Act. Pursuant to such Plans, each Fund will
reimburse the Distributor for all or a portion of its costs incurred in
connection with the distribution and/or servicing of the shares of that class,
as described in the Prospectuses. Each Plan has been approved by a vote of (i)
the Board of Directors of the effected Funds, including a majority of the
Independent Directors, cast in person at a meeting called for the purpose of
voting on that Plan, and (ii) the holders of a "majority" (as defined in the
Investment Company Act) of the shares of each class. For the Distribution and
Service Plans for the Class C shares, the votes were cast by the Manager as the
then-sole initial holder of Class C shares of the effected Funds.
In addition, under the Plans, the Manager and the Distributor, in their
sole discretion, from time to time may use their own resources (which, in the
case of the Manager, may include profits from the advisory fee it receives from
a Fund) to make payments to brokers, dealers or other financial institutions
(each is referred to as a "Recipient" under the Plans) for distribution and
administrative services they perform at no cost to a Fund. The Distributor and
the Manager may, in their sole discretion, increase or decrease the amount of
payments they make to Recipients from their own resources.
Unless terminated as described below, each Plan continues in effect from
year to year but only as long as such continuance is specifically approved at
least annually by the effected Fund's Board of Directors including its
Independent Directors by a vote cast in person at a meeting called for the
purpose of voting on such continuance. Each Plan may be terminated at any time
by the vote of a majority of the Independent Directors or by the vote of the
holders of a "majority" (as defined in the Investment Company Act) of the
outstanding shares of that class. No Plan may be amended to increase materially
the amount of payments to be made unless such amendment is approved by
shareholders of the class affected by the amendment. In addition, because Class
B shares of each Fund automatically convert into Class A shares after six years,
a Fund is required by a Securities and Exchange Commission rule to obtain the
approval of Class B as well as Class A shareholders for a proposed amendment to
a Class A Plan that would materially increase payments under the Class A Plan.
Such approval must be by a "majority" of the Class A and Class B shares (as
defined in the Investment Company Act), voting separately by class. All material
amendments must be approved by the Board and the Independent Directors.
While the Plans are in effect, the Treasurer of the Funds shall provide
separate written reports to the Board of Directors at least quarterly for its
review, detailing the amount of all payments made pursuant to each Plan, the
purpose for which the payments were made and the identity of each Recipient that
received any such payment and the purpose of the payments. The report for the
Class B Plan shall also include the Distributor's distribution costs for that
quarter, and such costs for previous fiscal periods that are carried forward, as
explained in the Prospectuses and below. Those reports, including the
allocations on which they are based, will be subject to the review and approval
of the Independent Directors in the exercise of their fiduciary duty. Each Plan
further provides that while it is in effect, the selection and nomination of
those Directors who are not "interested persons" of the Funds are committed to
the discretion of the Independent Directors. This does not prevent the
involvement of others in such selection and nomination if the final decision on
any such selection or nomination is approved by a majority of the Independent
Directors.
Under the Plans, no payment will be made to any Recipient in any quarter
if the aggregate net asset value of all shares of a Fund held by the Recipient
for itself and its customers did not exceed a minimum amount, if any, that may
be determined from time to time by a majority of the Fund's Independent
Directors. Initially, the Board of Directors has set the fee at the maximum rate
and set no minimum amount. Payments under each Class A Plan for fiscal year
ended October 31,1997 were as follows:
o LifeSpan Growth Fund - Class A Plan - payments totaled $123,431 of which
$117,788 was paid to and affiliate of the Distributor.
o LifeSpan Balanced Fund - Class A Plan - payments totaled $145,068 of
which $141,239 was paid to an affiliate of the Distributor.
o LifeSpan Income Fund - Class A Plan - payments totaled $69,406 of which
$68,271 was paid to an affiliate of the Distributor.
Any unreimbursed expenses incurred by the Distributor with respect to Class A
shares for any fiscal quarter by the Distributor may not be recovered under the
Class A Plan in subsequent fiscal quarters. Payments received by the Distributor
under the Plan for Class A shares will not be used to pay any interest expense,
carrying charges, or other financial costs, or allocation of overhead by the
Distributor.
The Class B and Class C Plans allow the service fee payments to be paid by
the Distributor to Recipients in advance for the first year Class B and Class C
shares are outstanding, and thereafter on a quarterly basis, as described in the
Prospectuses. The advance payment is based on the net asset value of the Class B
and Class C shares sold. An exchange of shares does not entitle the Recipient to
an advance payment of the service fee. In the event Class B or Class C shares
are redeemed during the first year such shares are outstanding, the Recipient
will be obligated to repay a pro rata portion of the advance of the service fee
payment to the Distributor. Payments under each Class B Plan and Class C Plan
for fiscal year ended October 31, 1997 were as follows:
o LifeSpan Growth Fund - Class B Plan - payments totaled $39,156, of which
$34,240 was retained by the Distributor.
o LifeSpan Balanced Fund - Class B Plan -payments totaled $34,948, of which
$25,286 was retained by the Distributor.
o LifeSpan Income Fund - Class B Plan - payments totaled $6,756, of which
$5,749 was retained by the Distributor.
o LifeSpan Growth Fund- Class C Plan - payments totaled $7,192, of which
$6,064 was retained by the Distributor.
o LifeSpan Balanced Fund - Class C Plan -payments totaled $8,787, of which
$5,576 was retained by the Distributor.
o LifeSpan Income Fund - Class C Plan - payments totaled $199, none of
which was retained by the Distributor.
Although the Class B and the Class C Plans permit the Distributor to
retain both the asset-based sales charges and the service fee, or to pay
Recipients the service fee on a quarterly basis, without payment in advance, the
Distributor presently intends to pay the service fee to Recipients in the manner
described above. A minimum holding period may be established from time to time
under the Class B Plan and the Class C Plan by the Board. Initially, the Board
has set no minimum holding period. All payments under the Class B Plan and the
Class C Plan are subject to the limitations imposed by the Conduct Rules of the
National Association of Securities Dealers, Inc. The Distributor anticipates
that it will take a number of years for it to recoup (from a Fund's payments to
the Distributor under the Class B or Class C Plan and from contingent deferred
sales charges collected on redeemed Class B or Class C shares) the sales
commissions paid to authorized brokers or dealers.
Asset-based sales charge payments are designed to permit an investor to
purchase shares of a Fund without the assessment of a front-end sales load and
at the same time permit the Distributor to compensate brokers and dealers in
connection with the sale of Class B and Class C shares of a Fund. The Class B
and Class C Plans provide for the Distributor to be compensated at a flat rate
whether the Distributor's distribution expenses are more than the amounts paid
by a Fund during that period. Such payments are made in recognition that the
Distributor (i) pays sales commissions to authorized brokers and dealers at the
time of sale, (ii) may finance such commissions and/or the advance of the
service fee payment to Recipients under those Plans or provide such financing
from its own resources, or from an affiliate, (iii) employs personnel to support
distribution of shares, and (iv) costs of sales literature, advertising and
prospectuses (other than those furnished to current shareholders) and state
"blue sky" registration fees and certain other distribution expenses.
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A, Class B and Class C Shares. Each
LifeSpan Fund offers three classes of shares, Class A, Class B and Class C
shares. The availability of multiple classes of shares permits an investor to
choose the method of purchasing shares that is more beneficial to the investor
depending on the amount of the purchase, the length of time the investor expects
to hold shares and other relevant circumstances. Investors should understand
that the purpose and function of the deferred sales charge and asset-based sales
charge with respect to Class B and Class C shares are the same as those of the
initial sales charge with respect to Class A shares. Any salesperson or other
person entitled to receive compensation for selling Fund shares may receive
different compensation with respect to one class of shares than the other. The
Distributor will not accept any order for $500,000 or $1 million or more of
Class B or Class C shares, respectively, on behalf of a single investor (not
including dealer "street name" or omnibus accounts) because generally it will be
more advantageous for that investor to purchase Class A shares of a Fund
instead.
A Fund's classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different shareholder
privileges and features. The net income attributable to Class B and Class C
shares and the dividends payable on Class B and Class C shares will be reduced
by incremental expenses borne solely by that class, including the asset-based
sales charge to which Class B and Class C shares are subject.
The conversion of Class B shares to Class A shares after six years is
subject to the continuing availability of a private letter ruling from the
Internal Revenue Service, or an opinion of counsel or tax adviser, to the effect
that the conversion of Class B shares does not constitute a taxable event for
the holder under Federal income tax law. If such a revenue ruling or opinion is
no longer available, the automatic conversion feature may be suspended, in which
event no further conversions of Class B shares would occur while such suspension
remained in effect. Although Class B shares could then be exchanged for Class A
shares on the basis of relative net asset value of the two classes, without the
imposition of a sales charge or fee, such exchange could constitute a taxable
event for the holder, and absent such exchange, Class B shares might continue to
be subject to the asset-based sales charge for longer than six years.
The methodology for calculating the net asset value, dividends and
distributions of a Fund's Class A, Class B and Class C shares recognizes two
types of expenses. General expenses that do not pertain specifically to any
class are allocated pro rata to the shares of each class, based on the
percentage of the net assets of such class to a Fund's total net assets, and
then equally to each outstanding share within a given class. Such general
expenses include (i) management fees, (ii) legal, bookkeeping and audit fees,
(iii) printing and mailing costs of shareholder reports, Prospectuses,
Statements of Additional Information and other materials for current
shareholders, (iv) fees to unaffiliated Trustees, (v) custodian expenses, (vi)
share issuance costs, (vii) organization and start-up costs, (viii) interest,
taxes and brokerage commissions, and (ix) non-recurring expenses, such as
litigation costs. Other expenses that are directly attributable to a class are
allocated equally to each outstanding share within that class. Such expenses
include (i) Distribution and/or Service Plan fees, (ii) incremental transfer and
shareholder servicing agent fees and expenses, (iii) registration fees and (iv)
shareholder meeting expenses, to the extent that such expenses pertain to a
specific class rather than to a Fund as a whole.
Determination of Net Asset Values Per Share. The net asset values per share of
Class A, Class B and, in some cases, Class C shares of a Fund are determined as
of the close of business of The New York Stock Exchange (the "Exchange") on each
day the Exchange is open by dividing the value of a Fund's net assets
attributable to that class by the number of shares of that class outstanding.
The Exchange normally closes at 4:00 P.M., New York time, but may close earlier
on some days (for example, in case of weather emergencies or on days falling
before a holiday). The Exchange's most recent annual holiday schedule (which is
subject to change) states that it will close New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. It may close on other days. Trading may
occur at times when the Exchange is closed (including weekends and holidays or
after 4:00 P.M., on a regular business day). Because the net asset values of a
Fund will not be calculated at such times, if securities held in a Fund's
portfolio are traded at such time, the net asset values per share of Class A,
Class B or Class C shares of a Fund may be significantly affected on such days
when shareholders do not have the ability to purchase or redeem shares.
The Fund's Board of Directors has established procedures for the valuation
of the Fund's securities, generally as follows:
(i) equity securities traded on a U.S. securities exchange or on the
Automated Quotation System ("NASDAQ") of the Nasdaq Stock Market, Inc. for which
last sale information is regularly reported are valued at the last reported sale
price on the principal exchange for such security or NASDAQ that day (the
"Valuation Date") or, in the absence of sales that day, at the last reported
sale price preceding the Valuation Date if it is within the spread of the
closing "bid" and "asked" prices on the Valuation Date or, if not, the closing
"bid" price on the Valuation Date;
(ii) equity securities traded on a foreign securities exchange are valued
generally at the last sales price available to the pricing service approved by
the Fund's Board of Directors or to the Manager as reported by the principal
exchange on which the security is traded at its last trading session on or
immediately preceding the Valuation Date, or, if unavailable, at the mean
between "bid" and "asked" prices obtained from the principal exchange or two
active market makers in the security on the basis of reasonable inquiry;
(iii) a non-money market fund will value (x) debt instruments that had a
maturity of more than 397 days when issued, (y) debt instruments that had a
maturity of 397 days or less when issued and have a remaining maturity in excess
of 60 days, and (z) non-money market type debt instruments that had a maturity
of 397 days or less when issued and have a remaining maturity of sixty days or
less, at the mean between "bid" and "asked" prices determined by a pricing
service approved by the Fund's Board of Directors or, if unavailable, obtained
by the Manager from two active market makers in the security on the basis of
reasonable inquiry;
(iv) money market-type debt securities held by a non-money market fund
that had a maturity of less than 397 days when issued and have a remaining
maturity of 60 days or less, and debt instruments held by a money market fund
that have a remaining maturity of 397 days or less, shall be valued at cost,
adjusted for amortization of premiums and accretion of discount; and
(v) securities (including restricted securities) not having
readily-available market quotations are valued at fair value determined under
the Board's procedures.
If the Manager is unable to locate two market makers willing to give
quotes (see (ii) and (iii) above), the security may be priced at the mean
between the "bid" and "asked" prices provided by a single active market maker
(which in certain cases may be the "bid" price if no "asked" price is available)
provided that the Manager is satisfied that the firm rendering the quotes is
reliable and that the quotes reflect the current market value.
In the case of U.S. Government Securities and mortgage-backed securities,
where last sale information is not generally available, such pricing procedures
may include "matrix" comparisons to the prices for comparable instruments on the
basis of quality, yield, maturity, and other special factors involved. The
Manager may use pricing services approved by the Board of Directors to price
U.S. Government Securities or mortgage-backed securities for which last sale
information is not generally available. The Manager will monitor the accuracy of
such pricing services which may include comparing prices used for portfolio
evaluation to actual sales prices of selected securities.
Trading in securities on European and Asian exchanges and over-the-counter
markets is normally completed before the close of the New York Stock Exchange.
Events affecting the values of foreign securities traded in securities markets
that occur between the time their prices are determined and the close of the New
York Stock Exchange will not be reflected in the Fund's calculation of net asset
value unless the Board of Directors or the Manager, under procedures established
by the Board of Directors, determines that the particular event is likely to
effect a material change in the value of such security. Foreign currency,
including forward contracts, will be valued at the closing price in the London
foreign exchange market that day as provided by a reliable bank, dealer or
pricing service. The values of securities denominated in foreign currency will
be converted to U.S. dollars at the closing price in the London foreign exchange
market that day as provided by a reliable bank, dealer or pricing service.
Puts, calls and Futures are valued at the last sales price on the
principal exchange on which they are traded, or on NASDAQ, as applicable, as
determined by a pricing service approved by the Board of Directors or by the
Manager. If there were no sales that day, value shall be the last sale price on
the preceding trading day if it is within the spread of the closing "bid" and
"ask" prices on the principal exchange or on NASDAQ on the valuation date, or,
if not, value shall be the closing bid price on the principal exchange or on
NASDAQ, on the valuation date. If the put, call or future is not traded on an
exchange or on NASDAQ, it shall be valued at the mean between "bid" and "ask"
prices obtained by the Manager from two active market makes (which in certain
cases may be "bid" price if "ask" price is not available).
When the Fund writes an option, an amount equal to the premium received is
included in the Fund's Statement of Assets and Liabilities as an asset, and an
equivalent credit is included in the liability section. The credit is adjusted
("marked-to market") to reflect the current market value of the call or put. In
determining the Fund's gain on investments, if a call or put written by the Fund
is exercised, the proceeds are increased by the premium received. If a call or
put written by the Fund expires, the Fund has a gain in the amount of the
premium; if the Fund enters into a closing purchase transaction, it will have a
gain or loss depending on whether the premium received was more or less than the
cost of the closing transaction. If the Fund exercises a put it holds, the
amount the Fund receives on its sale of the underlying investment is reduced by
the amount of premium paid by the Fund.
AccountLink. When shares are purchased through AccountLink, each purchase must
be at least $25.00. Shares will be purchased on the regular business day the
Distributor is instructed to initiate the Automated Clearing House ("ACH")
transfer to buy the shares. Dividends will begin to accrue on shares purchased
by the proceeds of ACH transfers on the business day a Fund receives Federal
Funds for such purchase through the ACH system before the close of The New York
Stock Exchange. The Exchange normally closes at 4:00 P.M., but may close earlier
on certain days. If the Federal Funds are received on a business day after the
close of the Exchange, the shares will be purchased and dividends will begin to
accrue on the next regular business day. The proceeds of ACH transfers are
normally received by a Fund three days after the transfers are initiated. The
Distributor and the Funds are not responsible for any delays in purchasing
shares resulting from delays in ACH transmissions.
Reduced Sales Charges. A reduced sales charge rate may be obtained for Class A
shares under Right of Accumulation and Letters of Intent because of the
economies of sales efforts and reduction in expenses realized by the
Distributor, dealers and brokers making such sales. No sales charge is imposed
in certain other circumstances described in each Fund's Prospectus because the
Distributor or broker-dealer incurs little or no selling expenses. The term
"immediate family" refers to one's spouse, children, grandchildren,
grandparents, parents, parents-in-law, brothers and sisters, aunts, uncles,
nieces and nephews, sons- and daughters-in-law, a sibling's spouse and a
spouse's siblings. Relation by virtue of a remarriage (step-children,
step-parents, etc.) are included.
o The Oppenheimer Funds. The Oppenheimer funds are those mutual funds for
which the Distributor acts as the distributor or the sub-Distributor and include
the following:
Limited Term New York Municipal Fund Oppenheimer Bond Fund for Growth
Oppenheimer California Municipal Fund Oppenheimer Champion Income Fund
Oppenheimer Developing Markets Fund Oppenheimer Disciplined Allocation Fund
Oppenheimer Disciplined Value Fund Oppenheimer Discovery Fund Oppenheimer
Enterprise Fund Oppenheimer Equity Income Fund Oppenheimer Florida Municipal
Fund Oppenheimer Global Fund Oppenheimer Global Growth & Income Fund Oppenheimer
Gold & Special Minerals Fund Oppenheimer High Income Fund Oppenheimer Insured
Municipal Fund Oppenheimer Intermediate Municipal Fund Oppenheimer International
Bond Fund Oppenheimer International Growth Fund Oppenheimer International Small
Company Fund Oppenheimer LifeSpan Balanced Fund Oppenheimer LifeSpan Growth Fund
Oppenheimer LifeSpan Income Fund Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street California Municipal Fund
Oppenheimer Main Street Income & Growth Fund
Oppenheimer MidCap Fund
Oppenheimer Municipal Bond Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer New York Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Real Asset Fund
Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer U.S. Government Trust
Panorama Series Fund Inc.
Rochester Fund Municipals
the following "Money Market Funds":
Centennial America Fund, L.P. Centennial California Tax Exempt Trust Centennial
Government Trust Centennial Money Market Trust Centennial New York Tax Exempt
Trust Centennial Tax Exempt Trust Oppenheimer Cash Reserves Oppenheimer Money
Market Fund, Inc.
There is an initial sales charge on the purchase of Class A shares of each
of the Oppenheimer funds except Money Market Funds (under certain circumstances
described herein, redemption proceeds of Money Market Fund shares may be subject
to a CDSC).
o Letters of Intent. A Letter of Intent (referred to as a "Letter") is an
investor's statement in writing to the Distributor of the intention to purchase
Class A shares of a Fund (and Class A and Class B shares of other Oppenheimer
funds) during a 13-month period (the "Letter of Intent period"), which may, at
the investor's request, include purchases made up to 90 days prior to the date
of the Letter. The Letter states the investor's intention to make the aggregate
amount of purchases of shares which, when added to the investor's holdings of
shares of those funds, will equal or exceed the amount specified in the Letter.
Purchases made by reinvestment of dividends or distributions of capital gains
and purchases made at net asset value without sales charge do not count toward
satisfying the amount of the Letter. A Letter enables an investor to count the
Class A and Class B shares purchased under the Letter to obtain the reduced
sales charge rate on purchases of Class A shares of a Fund (and other
Oppenheimer funds) that applies under the Right of Accumulation to current
purchases of Class A shares. Each purchase of Class A shares under the Letter
will be made at the public offering price (including the sales charge) that
applies to a single lump-sum purchase of shares in the amount intended to be
purchased under the Letter.
In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of Intent
period, when added to the value (at offering price) of the investor's holdings
of shares on the last day of that period, do not equal or exceed the intended
purchase amount, the investor agrees to pay the additional amount of sales
charge applicable to such purchases, as set forth in "Terms of Escrow," below
(as those terms may be amended from time to time). The investor agrees that
shares equal in value to 5% of the intended purchase amount will be held in
escrow by the Transfer Agent subject to the Terms of Escrow. Also, the investor
agrees to be bound by the terms of his or her Fund's Prospectus, this Statement
of Additional Information and the Application used for such Letter of Intent,
and if such terms are amended, as they may be from time to time by a Fund, that
those amendments will apply automatically to existing Letters of Intent.
For purchases of shares of a Fund and other Oppenheimer funds by
OppenheimerFunds prototype 401(k) plans under a Letter of Intent, the Transfer
Agent will not hold shares in escrow. If the intended purchase amount under the
Letter entered into by an OppenheimerFunds prototype 401(k) plan is not
purchased by the plan by the end of the Letter of Intent period, there will be
no adjustment of commissions paid to the broker-dealer or financial institution
of record for accounts held in the name of that plan.
If the total eligible purchases made during the Letter of Intent period do
not equal or exceed the intended purchase amount, the commissions previously
paid to the dealer of record for the account and the amount of sales charge
retained by the Distributor will be adjusted to the rates applicable to actual
total purchases. If total eligible purchases during the Letter of Intent period
exceed the intended amount and exceed the amount needed to qualify for the next
sales charge rate reduction set forth in the applicable prospectus, the sales
charges paid will be adjusted to the lower rate, but only if and when the dealer
returns to the Distributor the excess of the amount of commissions allowed or
paid to the dealer over the amount of commissions that apply to the actual
amount of purchases. The excess commissions returned to the Distributor will be
used to purchase additional shares for the investor's account at the net asset
value per share in effect on the date of such purchase, promptly after the
Distributor's receipt thereof.
In determining the total amount of purchases made under a Letter, shares
redeemed by the investor prior to the termination of the Letter of Intent period
will be deducted. It is the responsibility of the dealer of record and/or the
investor to advise the Distributor about the Letter in placing any purchase
orders for the investor during the Letter of Intent period. All of such
purchases must be made through the Distributor.
o Terms of Escrow That Apply to Letters of Intent.
(1)Out of the initial purchase (or subsequent purchases if necessary) made
pursuant to a Letter, shares of a Fund equal in value to 5% of the intended
purchase amount specified in the Letter shall be held in escrow by the Transfer
Agent. For example, if the intended purchase amount is $50,000, the escrow shall
be shares valued in the amount of $2,500 (computed at the public offering price
adjusted for a $50,000 purchase). Any dividends and capital gains distributions
on the escrowed shares will be credited to the investor's account.
(2)If the total minimum investment specified under the Letter is completed
within the thirteen-month Letter of Intent period, the escrowed shares will be
promptly released to the investor.
(3)If, at the end of the thirteen-month Letter of Intent period the total
purchases pursuant to the Letter are less than the intended amount specified in
the Letter, the investor must remit to the Distributor an amount equal to the
difference between the dollar amount of sales charges actually paid and the
amount of sales charges which would have been paid if the total amount purchased
had been made at a single time. Such sales charge adjustment will apply to any
shares redeemed prior to the completion of the Letter. If such difference in
sales charges is not paid within twenty days after a request from the
Distributor or the dealer, the Distributor will, within sixty days of the
expiration of the Letter, redeem the number of escrowed shares necessary to
realize such difference in sales charges. Full and fractional shares remaining
after such redemption will be released from escrow. If a request is received to
redeem escrowed shares prior to the payment of such additional sales charge, the
sales charge will be withheld from the redemption proceeds.
(4)By signing the Letter, the investor irrevocably constitutes and
appoints the Transfer Agent as attorney-in-fact to surrender for redemption any
or all escrowed shares.
(5)The shares eligible for purchase under the Letter (or the holding of
which may be counted toward completion of a Letter) include (a) Class A shares
sold with a front-end sales charge or subject to a Class A contingent deferred
sales charge, (b) Class B shares of other Oppenheimer funds acquired subject to
a contingent deferred sales charge, and (c) Class A shares or Class B shares
acquired in exchange for either (i) Class A shares of one of the other
Oppenheimer funds that were acquired subject to a Class A initial or contingent
deferred sales charge or (ii) Class B shares of one of the other Oppenheimer
funds that were acquired subject to a contingent deferred sales charge.
(6)Shares held in escrow hereunder will automatically be exchanged for
shares of another fund to which an exchange is requested, as described in the
section of the Prospectuses entitled "How to Exchange Shares," and the escrow
will be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a bank account, a
check (minimum $25) for the initial purchase must accompany the application.
Shares purchased by Asset Builder Plan payments from bank accounts are subject
to the redemption restrictions for recent purchases described in "How To Sell
Shares," in the Prospectuses. Asset Builder Plans also enable shareholders of
Oppenheimer Cash Reserves to use those accounts for monthly automatic purchases
of shares of up to four other Oppenheimer funds. If you make payments from your
bank account to purchase shares of a Fund, your bank account will be
automatically debited normally four to five business days prior to the
investment dates selected in the Account Application. Neither the Distributor,
the Transfer Agent nor a Fund shall be responsible for any delays in purchasing
resulting from delays in ACH transmission.
There is a front-end sales charge on the purchase of Class A shares of
certain OppenheimerFunds, or a contingent deferred sales charge may apply to
shares purchased by Asset Builder payments. An application should be obtained
from the Transfer Agent, completed and returned, and a prospectus of the
selected fund(s) should be obtained from the Distributor or your financial
advisor before initiating Asset Builder payments. The amount of the Asset
Builder investment may be changed or the automatic investments may be terminated
at any time by writing to the Transfer Agent. A reasonable period (approximately
15 days) is required after the Transfer Agent's receipt of such instructions to
implement them. Each Fund reserves the right to amend, suspend, or discontinue
offering such plans at any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders for a Fund's
shares (for example, when a purchase check is returned to a Fund unpaid) causes
a loss to be incurred when the net asset value of the Fund's shares on the
cancellation date is less than on the purchase date. That loss is equal to the
amount of the decline in the net asset value per share multiplied by the number
of shares in the purchase order. The investor is responsible for that loss. If
the investor fails to compensate a Fund for the loss, the Distributor will do
so. A Fund may reimburse the Distributor for that amount by redeeming shares
from any account registered in that investor's name, or the Fund or the
Distributor may seek other redress.
Retirement Plans. In describing certain types of employee benefit plans that may
purchase Class A shares without being subject to the Class A contingent deferred
sales charge, the term "employee benefit plan" means any plan or arrangement,
whether or not "qualified" under the Internal Revenue Code, including, medical
savings accounts, payroll deduction plans or similar plans in which Class A
shares are purchased by a fiduciary or other person for the account of
participants who are employees of a single employer or of affiliated employers,
if the Fund account is registered in the name of the fiduciary or other person
for the benefit of participants in the plan.
The term "group retirement plan" means any qualified or non-qualified
retirement plan (including 457 plans, SEPs, SARSEPs, 403(b) plans other than
public school 403(b) plans, and SIMPLE plans) for employees of a corporation or
a sole proprietorship, members and employees of a partnership or association or
other organized group of persons (the members of which may include other
groups), if the group or association has made special arrangements with the
Distributor and all members of the group or association participating in or
eligible to participate in the plan(s) purchase Class A shares of a Fund through
a single investment dealer, broker, or other financial institution designated by
the group. "Group retirement plan" also includes qualified retirement plans and
non-qualified deferred compensation plans and IRAs that purchase Class A shares
of a Fund through a single investment dealer, broker, or other financial
institution, provided that broker-dealer has made special arrangements with the
Distributor for the purpose of qualifying those plans to purchase Class A shares
of a Fund at net asset value but subject to a contingent deferred sales charge.
In addition to the discussion in the Prospectus relating to the ability of
Retirement Plans to purchase Class A shares at net asset value in certain
circumstances, there is no initial sales charge on purchases of Class A shares
of any one or more of the Oppenheimer funds by Retirement Plans ("Plan") in the
following cases:
(i) the recordkeeping for the Plan is performed on a daily valuation basis
by Merrill Lynch Pierce Fenner & Smith, Inc. ("Merrill Lynch") and, on the date
the Plan Sponsor signs the Merrill Lynch Recordkeeping Service Agreement, the
Plan has $3 million or more in assets invested in mutual funds not advised or
managed by Merrill Lynch Asset Management, L.P. ("MLAM") that are made available
pursuant to a Service Agreement between Merrill Lynch and the mutual fund's
principal underwriter or distributor and in funds advised or managed by MLAM
(collectively, the "Applicable Investments"); or
(ii) the recordkeeping for the Plan is performed on a daily valuation
basis by an independent record keeper whose services are provided through a
contract or alliance arrangement with Merrill Lynch, and on the date the Plan
Sponsor signs the Merrill Lynch Record Keeping Service Agreement, the Plan has
$3 million or more in assets, excluding money market funds, invested in
Applicable Investments; or
(iii) the Plan has 500 or more eligible employees, as determined by the
Merrill Lynch plan conversion manager, on the date the Plan Sponsor signs the
Merrill Lynch Record Keeping Service Agreement.
For Plans whose records are maintained on a daily basis by Merrill Lynch
or an independent record keeper under a contract or alliance arrangement with
Merrill Lynch, if on the date the Plan Sponsor signs the Merrill Lynch Record
Keeping Service Agreement the Plan has less than $3 million in assets, excluding
money market funds, invested in Applicable Investments, then the Plan may only
purchase Class B shares of any one or more of the Oppenheimer funds. Otherwise,
the Plan will be permitted to purchase Class A shares of any one or more of the
Oppenheimer funds. Any such Plans that currently invest in Class B shares of the
Fund will be transferred to Class A shares of the Fund once the Plan has reached
$5 million invested in Applicable Investments.
Any redemptions from Plans whose records are maintained on a daily basis
by Merrill Lynch or an independent record keeper under a contract with Merrill
Lynch that are currently invested in Class B shares of the Fund shall not be
subject to the Class B CDSC.
How to Sell Shares
Information on how to sell shares of the Funds is stated in the Prospectuses.
The information below supplements the terms and conditions for redemptions set
forth in the Prospectus.
o Involuntary Redemptions. A Fund's Board of Directors has the right to
cause the involuntary redemption of the shares held in any account if the number
of shares is less than 100. Should the Board elect to exercise this right, it
may also fix, in accordance with the Investment Company Act, the requirements
for any notice to be given to the shareholders in question (not less than 30
days), or the Board may set requirements for granting permission to the
shareholder to increase the investment, and set other terms and conditions so
that the shares would not be involuntarily redeemed.
o Selling Shares by Wire. The wire of redemption proceeds may be delayed
if a Fund's Custodian bank is not open for business on a day when the Fund would
normally authorize the wire to be made, which is usually the Fund's next regular
business day following the redemption. In those circumstances, the wire will not
be transmitted until the next bank business day on which the Fund is open for
business. No dividends will be paid on the proceeds of redeemed shares awaiting
transfer by wire.
o Payments "In Kind." Each Fund's Prospectus states that payment for
shares tendered for redemption is ordinarily made in cash. However, if the Board
of Directors of a Fund determines that it would be detrimental to the best
interests of the remaining shareholders of a Fund to make payment of a
redemption order wholly or partly in cash, the Fund may pay the redemption
proceeds in whole or in part by a distribution "in kind" of securities from the
portfolio of the Fund, in lieu of cash, in conformity with applicable rules of
the SEC. Each Fund has elected to be governed by Rule 18f-1 under the Investment
Company Act, pursuant to which the Fund is obligated to redeem shares solely in
cash up to the lesser of $250,000 or 1% of the net assets of the Fund during any
90-day period for any one shareholder. If shares are redeemed in kind, the
redeeming shareholder might incur brokerage or other costs in selling the
securities for cash. The method of valuing securities used to make redemptions
in kind will be the same as the method a Fund uses to value its portfolio
securities described above under "Determination of Net Asset Values Per Share"
and such valuation will be made as of the time the redemption price is
determined.
Reinvestment Privilege. Within six months of a redemption, a shareholder may
reinvest all or part of the redemption proceeds of (i) Class A shares, or (ii)
Class A shares and/or Class B shares that were subject to the contingent
deferred sales charge when redeemed. This privilege does not apply to Class C
shares. The reinvestment may be made without sales charge only in Class A shares
of a Fund or any of the other Oppenheimer funds into which shares of a Fund are
exchangeable as described in "How to Exchange Shares" below, at the net asset
value next computed after receipt by the Transfer Agent of the reinvestment
order. The shareholder must ask the Distributor for such privilege at the time
of reinvestment. Any capital gain that was realized when the shares were
redeemed is taxable, and reinvestment will not alter any capital gains tax
payable on that gain. If there has been a capital loss on the redemption, some
or all of the loss may not be tax deductible, depending on the timing and amount
of the reinvestment. Under the Internal Revenue Code, if the redemption proceeds
of Fund shares on which a sales charge was paid are reinvested in shares of a
Fund or another of the Oppenheimer funds within 90 days of payment of the sales
charge, the shareholder's basis in the shares of the Fund that were redeemed may
not include the amount of the sales charge paid. That would reduce the loss or
increase the gain recognized from the redemption. However, in that case, the
sales charge would be added to the basis of the shares acquired by the
reinvestment of the redemption proceeds. A Fund may amend, suspend or cease
offering this reinvestment privilege at any time as to shares redeemed after the
date of such amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a contingent
deferred sales charge of either class at the time of transfer to the name of
another person or entity (whether the transfer occurs by absolute assignment,
gift or bequest, not involving, directly or indirectly, a public sale). The
transferred shares will remain subject to the contingent deferred sales charge,
calculated as if the transferee shareholder had acquired the transferred shares
in the same manner and at the same time as the transferring shareholder. If less
than all shares held in an account are transferred, and some but not all shares
in the account would be subject to a contingent deferred sales charge if
redeemed at the time of transfer, the priorities described in a Fund's
Prospectus under "How to Buy Shares" for the imposition of the Class B and Class
C contingent deferred sales charge will be followed in determining the order in
which shares are transferred.
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds- sponsored IRAs, 403(b)(7) custodial plans, 401(k) plans or
pension or profit-sharing plans should be addressed to "Trustee,
OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its address listed
in "How To Sell Shares" in the relevant Fund's Prospectus or on the back cover
of this Statement of Additional Information. The request must: (i) state the
reason for the distribution; (ii) state the owner's awareness of tax penalties
if the distribution is premature; and (iii) conform to the requirements of the
plan and a Fund's other redemption requirements. Participants (other than
self-employed persons maintaining a plan account in their own name) in
OppenheimerFunds-sponsored prototype pension or profit-sharing or 401(k) plans
may not directly redeem or exchange shares held for their account under those
plans. The employer or plan administrator must sign the request. Distributions
from pension and profit sharing plans are subject to special requirements under
the Internal Revenue Code and certain documents (available from the Transfer
Agent) must be completed before the distribution may be made. Distributions from
retirement plans are subject to withholding requirements under the Internal
Revenue Code, and IRS Form W-4P (available from the Transfer Agent) must be
submitted to the Transfer Agent with the distribution request, or the
distribution may be delayed. Unless the shareholder has provided the Transfer
Agent with a certified tax identification number, the Internal Revenue Code
requires that tax be withheld from any distribution even if the shareholder
elects not to have tax withheld. The Funds, the Manager, the Distributor, the
Trustee and the Transfer Agent assume no responsibility to determine whether a
distribution satisfies the conditions of applicable tax laws and will not be
responsible for any tax penalties assessed in connection with a distribution.
Special Arrangements for Repurchase of Shares from Dealers and Brokers. The
Distributor is the Funds' agent to repurchase their shares from authorized
dealers or brokers on behalf of their customers. The shareholders should contact
the broker or dealer to arrange this type of redemption. The repurchase price
per share will be the net asset value next computed after the Distributor
receives the order placed by the dealer or broker, except that if the
Distributor receives a repurchase order from a dealer or broker after the close
of The New York Stock Exchange on a regular business day, it will be processed
at that day's net asset value if the order was received by the dealer or broker
from its customer prior to the time the Exchange closes (normally, that is 4:00
P.M., but may be earlier on some days) and the order was transmitted to and
received by the Distributor prior to its close of business that day (normally
5:00 P.M.). Ordinarily, for accounts redeemed by a broker-dealer under this
procedure, payment will be made within three business days after the shares have
been redeemed upon the Distributor's receipt of the required redemption
documents in proper form, with the signature(s) of the registered owners
guaranteed on the redemption document as described in the Prospectuses.
o Automatic Withdrawal and Exchange Plans. Investors owning shares of a
Fund valued at $5,000 or more can authorize the Transfer Agent to redeem shares
(minimum $50) automatically on a monthly, quarterly, semi-annual or annual basis
under an Automatic Withdrawal Plan. Shares will be redeemed three business days
prior to the date requested by the shareholder for receipt of the payment.
Automatic withdrawals of up to $1,500 per month may be requested by telephone if
payments are to be made by check payable to all shareholders of record and sent
to the address of record for the account (and if the address has not been
changed within the prior 30 days). Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on this basis.
Payments are normally made by check, but shareholders having AccountLink
privileges (see "How To Buy Shares") may arrange to have Automatic Withdrawal
Plan payments transferred to the bank account designated on the OppenheimerFunds
New Account Application or signature-guaranteed instructions. Shares are
normally redeemed pursuant to an Automatic Withdrawal Plan three business days
before the date you select in the Account Application. If a contingent deferred
sales charge applies to the redemption, the amount of this check or payment will
be reduced accordingly. A Fund cannot guarantee receipt of the payment on the
date requested and reserves the right to amend, suspend or discontinue offering
such plans at any time without prior notice. Because of the sales charge
assessed on Class A share purchases, shareholders should not make regular
additional Class A share purchases while participating in an Automatic
Withdrawal Plan. Class B and Class C shareholders should not establish
withdrawal plans, because of the imposition of the Class B and Class C
contingent deferred sales charges on such withdrawals (except where the Class B
and Class C contingent deferred sales charge is waived as described in the
Prospectuses under "Class B Contingent Deferred Sales Charge" or in "Class C
Contingent Deferred Sales Charge").
By requesting an Automatic Withdrawal or Exchange Plan, the shareholder
agrees to the terms and conditions applicable to such plans, as stated below as
well as the Prospectuses. These provisions may be amended from time to time by a
Fund and/or the Distributor. When adopted, such amendments will automatically
apply to existing Plans.
o Automatic Exchange Plans. Shareholders can authorize the Transfer Agent
(on the OppenheimerFunds Application or signature-guaranteed instructions) to
exchange a pre-determined amount of shares of a Fund for shares (of the same
class) of other Oppenheimer funds automatically on a monthly, quarterly,
semi-annual or annual basis under an Automatic Exchange Plan. The minimum amount
that may be exchanged to each other fund account is $25. Exchanges made under
these plans are subject to the restrictions that apply to exchanges as set forth
in "How to Exchange Shares" in the Prospectus and below in this Statement of
Additional Information.
o Automatic Withdrawal Plans. Fund shares will be redeemed as necessary to
meet withdrawal payments. Shares acquired without a sales charge will be
redeemed first and thereafter shares acquired with reinvested dividends and
capital gains distributions will be redeemed next, followed by shares acquired
with a sales charge, to the extent necessary to make withdrawal payments.
Depending upon the amount withdrawn, the investor's principal may be depleted.
Payments made under withdrawal plans should not be considered as a yield or
income on your investment.
The Transfer Agent will administer the investor's Automatic Withdrawal
Plan (the "Plan") as agent for the investor (the "Planholder") who executed the
Plan authorization and application submitted to the Transfer Agent. The Transfer
Agent and the effected Fund shall incur no liability to the Planholder for any
action taken or omitted by the Transfer Agent and the Fund in good faith to
administer the Plan. Certificates will not be issued for shares of a Fund
purchased for and held under the Plan, but the Transfer Agent will credit all
such shares to the account of the Planholder on the records of such Fund. Any
share certificates held by a Planholder may be surrendered unendorsed to the
Transfer Agent with the Plan application so that the shares represented by the
certificate may be held under the Plan.
For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of a Fund, which will be done at net
asset value without a sales charge. Dividends on shares held in the account may
be paid in cash or reinvested.
Redemptions of shares needed to make withdrawal payments will be made at
the net asset value per share determined on the redemption date. Checks or
AccountLink payments of the proceeds of Plan withdrawals will normally be
transmitted three business days prior to the date selected for receipt of the
payment (receipt of payment on the date selected cannot be guaranteed),
according to the choice specified in writing by the Planholder.
The amount and the interval of disbursement payments and the address to
which checks are to be mailed or AccountLink payments are to be sent may be
changed at any time by the Planholder by writing to the Transfer Agent. The
Planholder should allow at least two weeks' time in mailing such notification
for the requested change to be put in effect. The Planholder may, at any time,
instruct the Transfer Agent by written notice (in proper form in accordance with
the requirements of the then-current Prospectus of a Fund) to redeem all, or any
part of, the shares held under the Plan. In that case, the Transfer Agent will
redeem the number of shares requested at the net asset value per share in effect
in accordance with such Fund's usual redemption procedures and will mail a check
for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by writing to the
Transfer Agent. A Plan may also be terminated at any time by the Transfer Agent
upon receiving directions to that effect from a Fund. The Transfer Agent will
also terminate a Plan upon receipt of evidence satisfactory to it of the death
or legal incapacity of the Planholder. Upon termination of a Plan by the
Transfer Agent or a Fund, shares that have not been redeemed from the account
will be held in uncertificated form in the name of the Planholder, and the
account will continue as a dividend- reinvestment, uncertificated account unless
and until proper instructions are received from the Planholder or his or her
executor or guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt, the Planholder
may request issuance of a portion of the shares in certificated form. Upon
written request from the Planholder, the Transfer Agent will determine the
number of shares for which a certificate may be issued without causing the
withdrawal checks to stop because of exhaustion of uncertificated shares needed
to continue payments. However, should such uncertificated shares become
exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for a Fund, the
Planholder will be deemed to have appointed any successor transfer agent to act
as agent in administering the Plan.
How to Exchange Shares
As stated in the Prospectuses, shares of a particular class of Oppenheimer funds
having more than one class of shares may be exchanged only for shares of the
same class of other Oppenheimer funds. Shares of the Oppenheimer funds that have
a single class without a class designation are deemed "Class A" shares for this
purpose. All of the Oppenheimer funds offer Class A, B and C shares except
Oppenheimer Money Market Fund, Inc., Centennial Money Market Trust, Centennial
Tax Exempt Trust, Centennial Government Trust, Centennial New York Tax Exempt
Trust, Centennial California Tax Exempt Trust and Centennial America Fund, L.P.,
which only offer Class A shares and Oppenheimer Main Street California Tax
Exempt Fund, which only offers Class A and Class B shares (Class B and Class C
shares of Oppenheimer Cash Reserves are generally available only by exchange
from the same class of shares of other Oppenheimer funds or through
OppenheimerFunds sponsored 401(k) plans). A current list showing which funds
offer which classes can be obtained by calling the Distributor at
1-800-525-7048.
For accounts established on or before March 8, 1996 holding Class M shares
of Oppenheimer Bond Fund for Growth, Class M shares can be exchanged only for
Class A shares of other Oppenheimer funds, including Rochester Fund Municipals
and Limited Term New York Municipal Fund. Exchanges to Class M shares of
Oppenheimer Bond Fund for Growth are permitted from Class A shares of
Oppenheimer Money Market Fund, Inc. or Oppenheimer Cash Reserves that were
acquired by exchange from Class M shares. Otherwise no exchanges of any class of
any Oppenheimer fund into Class M shares are permitted.
Class A shares of Oppenheimer funds may be exchanged at net asset value for
shares of any Money Market Fund. Shares of any Money Market Fund purchased
without a sales charge may be exchanged for shares of Oppenheimer funds offered
with a sales charge upon payment of the sales charge (or, if applicable, may be
used to purchase shares of Oppenheimer funds subject to a contingent deferred
sales charge). However, shares of Oppenheimer Money Market Fund, Inc. purchased
with the redemption proceeds of shares of other mutual funds (other than funds
managed by the Manager or its subsidiaries) redeemed within the 30 days prior to
that purchase may subsequently be exchanged for shares of other Oppenheimer
funds without being subject to an initial or contingent deferred sales charge,
whichever is applicable. To qualify for that privilege, the investor or the
investor's dealer must notify the Distributor of eligibility for this privilege
at the time the shares of Oppenheimer Money Market Fund, Inc. are purchased,
and, if requested, must supply proof of entitlement to this privilege.
No contingent deferred sales charge is imposed on exchanges of shares of
either class purchased subject to a contingent deferred sales charge. However,
when Class A shares acquired by exchange of Class A shares of other Oppenheimer
funds purchased subject to a Class A contingent deferred sales charge are
redeemed within 12 months (18 months for shares purchased prior to May 1, 1997)
of the end of the calendar month of the initial purchase of the exchanged Class
a shares, the Class A contingent deferred sales charge is imposed on the
redeemed shares (see "Class A contingent Deferred Sales Charge" in the
Prospectus). The Class B contingent deferred sales charge is imposed on Class B
shares acquired by exchange if they are redeemed within 6 years of the initial
purchase of the exchanged Class B shares. The Class C contingent deferred sales
charge is imposed on Class C shares acquired by exchange if they are redeemed
within 12 months of the initial purchase of the exchanged Class C shares. Shares
of a Fund acquired by reinvestment of dividends or distributions from any other
of the Oppenheimer funds (except Oppenheimer Cash Reserves) or from any unit
investment trust for which reinvestment arrangements have been made with the
Distributor may be exchanged at net asset value for shares of any of the
Oppenheimer funds. No contingent deferred sales charge is imposed on exchanges
of shares of either class purchased subject to a contingent deferred sales
charge.
When Class B or Class C shares are redeemed to effect an exchange, the
priorities described in "How To Buy Shares" in the Prospectuses for the
imposition of the Class B and Class C contingent deferred sales charge will be
followed in determining the order in which the shares are exchanged.
Shareholders should take into account the effect of any exchange on the
applicability and rate of any contingent deferred sales charge that might be
imposed in the subsequent redemption of remaining shares. Shareholders owning
shares of more than one class must specify whether they intend to exchange Class
A, Class B or Class C shares.
A Fund reserves the right to reject telephone or written exchange requests
submitted in bulk by anyone on behalf of more than one account. A Fund may
accept requests for exchanges of up to 50 accounts per day from representatives
of authorized dealers that qualify for this privilege. In connection with any
exchange request, the number of shares exchanged may be less than the number
requested if the exchange or the number requested would include shares subject
to a restriction cited in the relevant Fund's Prospectus or this Statement of
Additional Information or would include shares covered by a share certificate
that is not tendered with the request. In those cases, only the shares available
for exchange without restriction will be exchanged.
When exchanging shares by telephone, the shareholder must either have an
existing account in, or obtain acknowledge receipt of a prospectus of, the fund
to which the exchange is to be made. For full or partial exchanges of an account
made by telephone, any special account features such as Asset Builder Plans,
Automatic Withdrawal Plans and retirement plan contributions will be switched to
the new account unless the Transfer Agent is instructed otherwise. If all
telephone lines are busy (which might occur, for example, during periods of
substantial market fluctuations), shareholders might not be able to request
exchanges by telephone and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the "Redemption
Date"). Normally, shares of the fund to be acquired are purchased on the
Redemption Date, but such purchases may be delayed by either fund up to five
business days if it determines that it would be disadvantaged by an immediate
transfer of the redemption proceeds. A Fund reserves the right, in its
discretion, to refuse any exchange request that may disadvantage it (for
example, if the receipt of multiple exchange requests from a dealer might
require the disposition of portfolio securities at a time or at a price that
might be disadvantageous to a Fund).
The different Oppenheimer funds available for exchange have different
investment objectives, policies and risks, and a shareholder should assure that
the funds selected are appropriate for his or her investment and should be aware
of the tax consequences of an exchange. For federal income tax purposes, an
exchange transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. "Reinvestment Privilege," above, discusses some
of the tax consequences of reinvestment of redemption proceeds in such cases.
The Funds, the Distributor, and the Transfer Agent are unable to provide
investment, tax or legal advice to a shareholder in connection with an exchange
request or any other investment transaction.
Dividends, Capital Gains and Taxes
Dividends and Distributions. Dividends will be payable on shares held of record
at the time of the previous determination of net asset value, or as otherwise
described in "How to Buy Shares." Daily dividends on newly purchased shares will
not be declared or paid until such time as Federal Funds (funds credited to a
member bank's account at the Federal Reserve Bank) are available from the
purchase payment for such shares. Normally, purchase checks received from
investors are converted to Federal Funds on the next business day. Dividends
will be declared on shares repurchased by a dealer or broker for three business
days following the trade date (i.e., to and including the day prior to
settlement of the repurchase). If all shares in an account are redeemed, all
dividends accrued on shares of the same class in the account will be paid
together with the redemption proceeds.
Dividends, distributions and the proceeds of the redemption of Fund shares
represented by checks returned to the Transfer Agent by the Postal Service as
undeliverable will be invested in shares of Oppenheimer Money Market Fund, Inc.,
as promptly as possible after the return of such checks to the Transfer Agent,
to enable the investor to earn a return on otherwise idle funds.
The amount of a class's distributions may vary from time to time depending
on market conditions, the composition of a Fund's portfolio, and expenses borne
by the Fund or borne separately by a class, as described in "Alternative Sales
Arrangements -- Class A, Class B and Class C shares" above. Dividends are
calculated in the same manner, at the same time and on the same day for shares
of each class. However, dividends on Class B and Class C shares are expected to
be lower than dividends on Class A shares as a result of the asset-based sales
charges on Class B and Class C shares, and will also differ in amount as a
consequence of any difference in net asset value between the classes.
Tax Status of the Funds' Dividends and Distributions
If prior distributions must be re-characterized at the end of the fiscal year as
a result of the effect of a Fund's investment policies, shareholders may have a
non-taxable return of capital, which will be identified in notices to
shareholders. There is no fixed dividend rate and there can be no assurance as
to the payment of any dividends or the realization of any capital gains.
If a Fund qualifies as a "regulated investment company" under the Internal
Revenue Code, they will not be liable for Federal income taxes on amounts paid
by them as dividends and distributions. Each Fund qualified as a regulated
investment company in its last fiscal year and intends to qualify in future
years, but reserves the right not to qualify. The Internal Revenue Code contains
a number of complex tests to determine whether a Fund will qualify, and a Fund
might not meet those tests in a particular year. If it does not qualify, a Fund
will be treated for tax purposes as an ordinary corporation and will receive no
tax deduction for payments of dividends and distributions made to shareholders.
Under the Internal Revenue Code, by December 31 each year each Fund must
distribute 98% of its taxable investment income earned from January 1 through
December 31 of that year and 98% of its capital gains realized in the period
from November 1 of the prior year through October 31 of the current year, or
else a Fund must pay an excise tax on the amounts not distributed. While it is
presently anticipated that each Fund will meet those requirements, a Fund's
Board and the Manager might determine in a particular year that it would be in
the best interest of shareholders for a Fund not to make such distributions at
the required levels and to pay the excise tax on the undistributed amounts. That
would reduce the amount of income or capital gains available for distribution to
shareholders.
Dividend Reinvestment in Another Fund. Shareholders of a Fund may elect to
reinvest all dividends and/or capital gains distributions in shares of the same
class of any of the other Oppenheimer funds listed in "Reduced Sales Charges"
above, at net asset value without sales charge. To elect this option, the
shareholder must notify the Transfer Agent in writing and either have an
existing account in the fund selected for reinvestment or must obtain a
prospectus for that fund and an application from the Transfer Agent to establish
an account. The investment will be made at net asset value per share in effect
at the close of business on the payable date of the dividend or distribution.
Dividends and/or distributions from certain of the Oppenheimer funds may be
invested in shares of a Fund on the same basis.
Additional Information About The Funds
The Custodian. The Bank of New York is the Custodian of the Funds' assets. The
Custodian's responsibilities include safeguarding and controlling the Funds'
portfolio securities, collecting income on the portfolio securities and handling
the delivery of such securities to and from the Funds. State Street Bank and
Trust Company was the previous Custodian.
Independent Auditors. The independent auditors of the Funds audit the Funds'
financial statements and perform other related audit services. They also act as
auditors for certain other funds advised by the Manager and its affiliates.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of Oppenheimer Series Fund, Inc.:
We have audited the accompanying statements of investments and assets and
liabilities of LifeSpan Income, LifeSpan Balanced and LifeSpan Growth Funds
(collectively Oppenheimer Series Fund, Inc.) as of October 31, 1997, the related
statement of operations for the year then ended, the statements of changes in
net assets for the year then ended and the ten-month period ended October 31,
1996, and the financial highlights for the year ended October 31, 1997 and the
ten-month period ended October 31, 1996. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights for the
period from May 1, 1995 (commencement of operations) to December 31, 1995 were
audited by other auditors whose report dated February 15, 1996 expressed an
unqualified opinion on this information.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997 by correspondence with the custodian and brokers; and where
confirmations were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial positions of
LifeSpan Income, LifeSpan Balanced and LifeSpan Growth Funds as of October 31,
1997, the results of their operations for the year then ended, the changes in
their net assets for the year then ended and the ten-month period ended October
31, 1996, and the financial highlights for the year ended October 31, 1997 and
the ten-month period ended October 31, 1996, in conformity with generally
accepted accounting principles.
/s/KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Denver, Colorado
November 21, 1997
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS OCTOBER 31, 1997
Oppenheimer LifeSpan Income Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSET-BACKED SECURITIES - 2.0%
- -----------------------------------------------------------------------------------------------------------------------------
Dayton Hudson Credit Card Master Trust, Asset Backed Certificates, Series
1997-1, Cl. A, 6.25%, 8/25/05 $ 125,000 $ 124,945
- -----------------------------------------------------------------------------------------------------------------------------
IROQUOIS Trust, Asset-Backed Amortizing Nts., Series
1997-2, Cl. A, 6.752%, 6/25/07 (1) 175,000 175,848
- -----------------------------------------------------------------------------------------------------------------------------
Olympic Automobile Receivables Trust:
Receivables-Backed Nts., Series 1997-A, Cl. A5, 6.80%, 2/15/05 150,000 153,296
Series 1996-A, Cl. A4, 5.85%, 7/15/01 145,000 144,796
---------------
Total Asset-Backed Securities (Cost $593,509) 598,885
- -----------------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS - 10.1%
- -----------------------------------------------------------------------------------------------------------------------------
Countrywide Funding Corp., Mtg. Pass-Through Certificates,
Series 1994-10, Cl. A3, 6%, 5/25/09 250,000 247,813
- -----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg.
Participation Certificates:
5.50%, 5/1/98 8,327 8,250
Series 1711, Cl. EA, 7%, 3/15/24 200,000 204,750
Gtd. Multiclass Mtg. Participation Certificates:
6%, 3/1/09 308,916 306,489
Series 1574, Cl. PD, 5.55%, 3/15/13 75,000 74,812
Series 1843, Cl. VB, 7%, 4/15/03 85,000 87,496
Series 1849, Cl. VA, 6%, 12/15/10 244,705 241,953
Interest-Only Stripped Mtg.-Backed Security:
Series 1583, Cl. IC, 9.283%, 1/15/20 (2) 500,000 80,000
Series 1661, Cl. PK, 5.965%, 11/15/06 (2) 874,957 74,098
- -----------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6%, 12/1/03 233,155 232,017
6.50%, 4/1/26 187,449 184,621
7%, 4/1/00 115,282 116,387
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Trust 1993-181, Cl. C, 5.40%,
10/25/02 226,979 225,844
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Trust 1993-190, Cl. Z, 5.85%,
7/25/08 189,438 188,455
Medium-Term Nts., 6.56%, 11/13/01 125,000 125,313
Trust 1994-13, Cl. B, 6.50%, 2/25/09 200,000 199,812
- -----------------------------------------------------------------------------------------------------------------------------
GE Capital Mortgage Services, Inc., Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Series 1994-7, C1. A18, 6%, 2/25/09 198,885 186,455
- -----------------------------------------------------------------------------------------------------------------------------
PNC Mortgage Securities Corp., Commercial Mtg. Pass-Through
Certificates, Series 1995-2, Cl. A3, 6.50%, 2/25/12 74,000 74,335
- -----------------------------------------------------------------------------------------------------------------------------
Residential Accredit Loans, Inc., Mortgage Asset-Backed Pass-Through
Certificates, Series 1997-QS9, Cl. A2, 6.75%, 9/25/27 175,000 175,260
---------------
Total Mortgage-Backed Obligations (Cost $2,987,639) 3,034,160
</TABLE>
5 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS - 14.2%
- -----------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 7.50%, 11/15/16 $ 1,795,000 $ 2,052,471
- -----------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
6.50%, 8/15/05 650,000 674,172
6.75%, 6/30/99 380,000 386,769
7.50%, 11/15/01 1,100,000 1,168,407
---------------
Total U.S. Government Obligations (Cost $4,121,898) 4,281,819
- -----------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES - 42.3%
- -----------------------------------------------------------------------------------------------------------------------------
BASIC INDUSTRY - 5.0%
- -----------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 2.2%
Burmah Castrol plc, 7% Gtd. Medium-Term Nts., 12/15/97 (3) 145,000 145,197
- -----------------------------------------------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co., 8.50% Debs., 2/15/03 150,000 159,743
- -----------------------------------------------------------------------------------------------------------------------------
Harris Chemical North America, Inc., 10.25% Gtd.
Sr. Sec. Disc. Nts., 7/15/01 50,000 52,250
- -----------------------------------------------------------------------------------------------------------------------------
Laroche Industries, Inc., 9.50% Sr. Sub. Nts., 9/15/07 (3) 50,000 50,250
- -----------------------------------------------------------------------------------------------------------------------------
Morton International, Inc., 9.25% Credit Sensitive Nts., 6/1/20 85,000 108,567
- -----------------------------------------------------------------------------------------------------------------------------
PPG Industries, Inc., 9% Debs., 5/1/21 85,000 104,061
- -----------------------------------------------------------------------------------------------------------------------------
Texas Petrochemical Corp., 11.125% Sr.
Sub. Nts., Series B, 7/1/06 50,000 55,250
---------------
675,318
- -----------------------------------------------------------------------------------------------------------------------------
METALS/MINING - 0.8%
Alcan Aluminum Ltd., 9.625% Debs., 7/15/19 165,000 177,913
- -----------------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 2/1/03 50,000 53,875
---------------
231,788
- -----------------------------------------------------------------------------------------------------------------------------
PAPER - 1.2%
Celulosa Arauco y Constitucion SA, 7.25% Debs., 6/11/98 (1) 145,000 145,362
- -----------------------------------------------------------------------------------------------------------------------------
Gaylord Container Corp., 12.75% Sr. Sub. Disc. Debs., 5/15/05 50,000 54,500
- -----------------------------------------------------------------------------------------------------------------------------
Malette, Inc., 12.25% Sr. Sec. Nts., 7/15/04 (1) 50,000 56,875
- -----------------------------------------------------------------------------------------------------------------------------
Stone Container Corp., 9.875% Sr. Nts., 2/1/01 100,000 102,250
---------------
358,987
- -----------------------------------------------------------------------------------------------------------------------------
STEEL - 0.8%
Gulf States Steel, Inc. (Alabama), 13.50% First Mtg. Nts.,
Series B, 4/15/03 50,000 51,500
- -----------------------------------------------------------------------------------------------------------------------------
NS Group, Inc., 13.50% Gtd. Sr. Sec. Nts., 7/15/03 45,000 51,637
- -----------------------------------------------------------------------------------------------------------------------------
Republic Engineered Steels, Inc., 9.875% First Mtg. Nts., 12/15/01 25,000 24,250
- -----------------------------------------------------------------------------------------------------------------------------
WCI Steel, Inc., 10% Sr. Nts., Series B, 12/1/04 50,000 52,375
- -----------------------------------------------------------------------------------------------------------------------------
Weirton Steel Corp., 10.75% Sr. Nts., 6/1/05 50,000 52,875
---------------
232,637
- -----------------------------------------------------------------------------------------------------------------------------
CONSUMER RELATED - 5.6%
- -----------------------------------------------------------------------------------------------------------------------------
CONSUMER PRODUCTS - 1.3%
Black & Decker Corp., 6.625% Nts., 11/15/00 145,000 146,609
- -----------------------------------------------------------------------------------------------------------------------------
Dyersburg Corp., 9.75% Sr. Sub. Nts., 9/1/07 (3) 50,000 51,250
- -----------------------------------------------------------------------------------------------------------------------------
IHF Holdings, Inc., 0%/15% Sr. Sub. Disc.
Nts., Series B, 11/15/04 (4) 50,000 43,000
- -----------------------------------------------------------------------------------------------------------------------------
Kimberly-Clark Corp., 7.875% Debs., 2/1/23 85,000 91,622
- -----------------------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 9.375% Sr. Nts., 4/1/01 50,000 51,875
---------------
384,356
</TABLE>
6 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FOOD/BEVERAGES/TOBACCO - 0.7%
AmeriServe Food Distribution, Inc., 8.875% Sr. Nts., 10/15/06 (3) $ 50,000 $ 50,125
- -----------------------------------------------------------------------------------------------------------------------------
Dole Food Co., 6.75% Nts., 7/15/00 150,000 151,913
---------------
202,038
- -----------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 1.2%
Columbia/HCA Healthcare Corp., 6.875% Nts., 7/15/01 160,000 160,161
- -----------------------------------------------------------------------------------------------------------------------------
Integrated Health Services, Inc., 9.50% Sr. Sub. Nts., 9/15/07 (3) 50,000 51,875
- -----------------------------------------------------------------------------------------------------------------------------
Mariner Health Group, Inc., 9.50% Sr. Sub. Nts., Series B, 4/1/06 (1) 50,000 52,000
- -----------------------------------------------------------------------------------------------------------------------------
Paracelsus Healthcare Corp., 10% Sr. Sub. Unsec. Nts., 8/15/06 50,000 52,250
- -----------------------------------------------------------------------------------------------------------------------------
Signature Brands, Inc., 13% Sr. Sub. Nts., 8/15/02 (1) 50,000 53,187
---------------
369,473
- -----------------------------------------------------------------------------------------------------------------------------
HOTEL/GAMING - 2.2%
Casino America, Inc., 12.50% Sr. Nts., 8/1/03 50,000 53,500
- -----------------------------------------------------------------------------------------------------------------------------
Casino Magic of Louisiana Corp., 13% First Mtg. Nts., 8/15/03 100,000 95,500
- -----------------------------------------------------------------------------------------------------------------------------
GB Property Funding Corp., 10.875% First Mtg. Nts., 1/15/04 50,000 43,750
- -----------------------------------------------------------------------------------------------------------------------------
Hilton Hotels Corp., 7.375% Nts., 6/1/02 75,000 76,991
- -----------------------------------------------------------------------------------------------------------------------------
HMH Properties, Inc., 8.875% Sr. Nts., 7/15/07 (3) 50,000 51,250
- -----------------------------------------------------------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 (3) 50,000 51,250
- -----------------------------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority, 13.50% Sr. Sec. Nts., Series B, 11/15/02 25,000 32,125
- -----------------------------------------------------------------------------------------------------------------------------
Players International, Inc., 10.875% Sr. Nts., 4/15/05 50,000 53,625
- -----------------------------------------------------------------------------------------------------------------------------
Prime Hospitality Corp., 9.25% First Mtg. Bonds, 1/15/06 50,000 52,250
- -----------------------------------------------------------------------------------------------------------------------------
Rio Hotel & Casino, Inc., 10.625% Sr. Sub. Nts., 7/15/05 100,000 108,500
- -----------------------------------------------------------------------------------------------------------------------------
Santa Fe Hotel, Inc., 11% Gtd. First Mtg. Nts., 12/15/00 45,000 38,475
---------------
657,216
- -----------------------------------------------------------------------------------------------------------------------------
LEISURE - 0.2%
Bally Total Fitness Holdings, 9.875% Sr. Sub. Nts., 10/15/07 (3) 50,000 49,250
- -----------------------------------------------------------------------------------------------------------------------------
ENERGY - 3.1%
- -----------------------------------------------------------------------------------------------------------------------------
Coastal Corp.:
8.125% Sr. Nts., 9/15/02 85,000 91,098
8.75% Sr. Nts., 5/15/99 55,000 57,104
- -----------------------------------------------------------------------------------------------------------------------------
Falcon Drilling Co., Inc., 9.75% Sr. Nts., Series B, 1/15/01 70,000 73,150
- -----------------------------------------------------------------------------------------------------------------------------
Forcenergy, Inc., 8.50% Sr. Sub. Nts., 2/15/07 50,000 50,000
- -----------------------------------------------------------------------------------------------------------------------------
Gulf Canada Resources Ltd.:
8.25% Sr. Nts., 3/15/17 75,000 81,331
9% Debs., 8/15/99 75,000 78,561
- -----------------------------------------------------------------------------------------------------------------------------
HS Resources, Inc., 9.25% Sr. Sub. Nts., 11/15/06 50,000 51,500
- -----------------------------------------------------------------------------------------------------------------------------
Louisiana Land & Exploration Co., 7.65% Debs., 12/1/23 100,000 106,892
- -----------------------------------------------------------------------------------------------------------------------------
Mesa Operating Co., 0%/11.625% Gtd. Sr. Sub. Disc. Nts., 7/1/06 (4) 75,000 60,375
- -----------------------------------------------------------------------------------------------------------------------------
Petroleum Geo-Services ASA, 7.50% Nts., 3/31/07 75,000 78,915
- -----------------------------------------------------------------------------------------------------------------------------
Standard Oil/British Petroleum Co. plc, 9% Debs., 6/1/19 85,000 88,692
- -----------------------------------------------------------------------------------------------------------------------------
Transamerican Energy Corp., 11.50% Sr. Nts., 6/15/02 (3) 25,000 25,750
- -----------------------------------------------------------------------------------------------------------------------------
Williams Holdings of Delaware, Inc., 6.25% Sr. Unsec. Debs., 2/1/06 100,000 97,781
---------------
941,149
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES - 10.7%
- -----------------------------------------------------------------------------------------------------------------------------
BANKS & THRIFTS - 2.7%
Barnett Banks, Inc., 8.50% Sub. Exchangeable Nts., 3/1/99 60,000 61,898
- -----------------------------------------------------------------------------------------------------------------------------
Chase Manhattan Corp. (New), 6.625% Sr. Nts., 1/15/98 55,000 55,093
</TABLE>
7 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BANKS & THRIFTS (CONTINUED)
Citicorp, 5.625% Sr. Nts., 2/15/01 $ 90,000 $ 88,955
- -----------------------------------------------------------------------------------------------------------------------------
First Fidelity Bancorporation, 8.50% Sub. Capital Nts., 4/1/98 55,000 55,521
- -----------------------------------------------------------------------------------------------------------------------------
First Union Corp., 6.75% Sr. Nts., 1/15/98 55,000 55,106
- -----------------------------------------------------------------------------------------------------------------------------
Fleet Mtg./Norstar Group, Inc., 9.90% Sub. Nts., 6/15/01 145,000 161,749
- -----------------------------------------------------------------------------------------------------------------------------
Integra Financial Corp., 6.50% Sub. Nts., 4/15/00 145,000 146,437
- -----------------------------------------------------------------------------------------------------------------------------
Mellon Financial Bank Corp., 6.50% Gtd. Sr. Nts., 12/1/97 185,000 185,098
---------------
809,857
- -----------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 6.2%
American General Finance Corp., 8.50% Sr. Nts., 8/15/98 60,000 61,213
- -----------------------------------------------------------------------------------------------------------------------------
American General Institutional Capital, 8.125% Bonds, Series B,
3/15/46 (3) 75,000 80,645
- -----------------------------------------------------------------------------------------------------------------------------
Beneficial Corp., 9.125% Debs., 2/15/98 145,000 146,302
- -----------------------------------------------------------------------------------------------------------------------------
Capital One Financial Corp., 6.83% Sr. Nts., 5/17/99 75,000 75,736
- -----------------------------------------------------------------------------------------------------------------------------
Capital One Funding Corp., 7.25% Nts., 12/1/03 50,000 50,351
- -----------------------------------------------------------------------------------------------------------------------------
Chelsea GCA Realty Partner, Inc., 7.75% Gtd. Unsec. Unsub.
Nts., 1/26/01 60,000 61,616
- -----------------------------------------------------------------------------------------------------------------------------
Commercial Credit Co., 5.55% Unsec. Nts., 2/15/01 145,000 142,362
- -----------------------------------------------------------------------------------------------------------------------------
Countrywide Home Loans, Inc.:
6.05% Gtd. Medium-Term Nts., Series D, 3/1/01 90,000 89,490
6.085% Gtd. Medium-Term Nts., Series B, 7/14/99 60,000 60,013
- -----------------------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 6.25% Unsub. Nts., 2/26/98 145,000 145,616
- -----------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp.:
5.625% Nts., 2/15/01 175,000 172,302
5.65% Medium-Term Nts., 12/15/97 300,000 299,963
- -----------------------------------------------------------------------------------------------------------------------------
Golden West Financial Corp., 8.625% Sub. Nts., 8/30/98 55,000 56,212
- -----------------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 6.50% Nts., 4/1/01 150,000 151,778
- -----------------------------------------------------------------------------------------------------------------------------
MCII Holdings (USA), Inc., 0%/15% Sec. Nts., 11/15/02 (4) 50,000 41,688
- -----------------------------------------------------------------------------------------------------------------------------
Olympic Financial Ltd., Units (each unit consists of $1,000
principal amount of 11.50% sr. nts., 3/15/07 and one (5) 50,000 51,500
warrant to purchase 6.84 shares of common stock)
- -----------------------------------------------------------------------------------------------------------------------------
Salomon, Inc., 8.69% Sr. Medium-Term Nts., Series D, 3/1/99 160,000 165,421
---------------
1,852,208
- -----------------------------------------------------------------------------------------------------------------------------
INSURANCE - 1.8%
- -----------------------------------------------------------------------------------------------------------------------------
Cigna Corp., 7.90% Nts., 12/14/98 150,000 152,879
- -----------------------------------------------------------------------------------------------------------------------------
Conseco Financing Trust III, 8.796% Bonds, 4/1/27 100,000 109,067
- -----------------------------------------------------------------------------------------------------------------------------
SunAmerica, Inc., 9% Sr. Nts., 1/15/99 120,000 123,728
- -----------------------------------------------------------------------------------------------------------------------------
Travelers Property Casualty Corp., 6.75% Nts., 4/15/01 145,000 147,469
---------------
533,143
- -----------------------------------------------------------------------------------------------------------------------------
HOUSING RELATED - 0.4%
- -----------------------------------------------------------------------------------------------------------------------------
BUILDING MATERIALS - 0.2%
American Standard, Inc., 10.875% Sr. Nts., 5/15/99 (1) 70,000 74,375
- -----------------------------------------------------------------------------------------------------------------------------
HOMEBUILDERS/REAL ESTATE - 0.2%
First Industrial LP, 7.15% Bonds, 5/15/27 75,000 77,179
- -----------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 1.1%
- -----------------------------------------------------------------------------------------------------------------------------
AEROSPACE - 0.1%
GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98 25,000 25,500
</TABLE>
8 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL GOODS - 1.0%
- -----------------------------------------------------------------------------------------------------------------------------
Day International Group, Inc., 11.125% Sr. Sub. Nts., Series B, 6/1/05 (1) $ 50,000 $ 53,750
- -----------------------------------------------------------------------------------------------------------------------------
Interlake Corp., 12.125% Sr. Sub. Debs., 3/1/02 50,000 52,125
- -----------------------------------------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., 6/1/05 50,000 54,875
- -----------------------------------------------------------------------------------------------------------------------------
Jordan Industries, Inc., 10.375% Sr. Nts., 8/1/07 50,000 50,500
- -----------------------------------------------------------------------------------------------------------------------------
Mark IV Industries, Inc., 8.75% Sub. Nts., 4/1/03 (1) 40,000 41,900
- -----------------------------------------------------------------------------------------------------------------------------
Specialty Equipment Co., 11.375% Sr. Sub. Nts., 12/1/03 50,000 54,375
---------------
307,525
- -----------------------------------------------------------------------------------------------------------------------------
MEDIA - 4.2%
- -----------------------------------------------------------------------------------------------------------------------------
BROADCASTING - 0.4%
Allbritton Communications Co., 9.75% Sr. Sub. Debs.,
Series B, 11/30/07 50,000 50,250
- -----------------------------------------------------------------------------------------------------------------------------
Fox Kids Worldwide, Inc., 0%/10.25% Sr. Disc. Nts., 11/1/07 (3)(4) 50,000 28,875
- -----------------------------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., 10% Sr. Sub. Nts., 9/30/05 50,000 52,625
---------------
131,750
- -----------------------------------------------------------------------------------------------------------------------------
CABLE TELEVISION - 2.3%
Adelphia Communications Corp., 10.50% Sr. Nts., 7/15/04 (3) 50,000 52,250
- -----------------------------------------------------------------------------------------------------------------------------
Australis Media Ltd., 1.75%/15.75% Gtd. Sr. Sec. Disc. Nts., 5/15/03 (6) 75,664 55,235
- -----------------------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp., 9.875% Sr. Sub. Debs., 2/15/13 50,000 53,375
- -----------------------------------------------------------------------------------------------------------------------------
Comcast Corp., 9.375% Sr. Sub. Debs., 5/15/05 50,000 53,500
- -----------------------------------------------------------------------------------------------------------------------------
EchoStar Communications Corp., 0%/12.875% Sr. Disc. Nts., 6/1/04 (4) 50,000 44,500
- -----------------------------------------------------------------------------------------------------------------------------
Falcon Holdings Group LP, 11% Sr. Sub. Nts., 9/15/03 (7) 65,347 66,890
- -----------------------------------------------------------------------------------------------------------------------------
James Cable Partners LP, 10.75% Sr. Nts., 8/15/04 (3) 50,000 52,375
- -----------------------------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., 8.875% Sr. Nts., 7/15/07 50,000 49,625
- -----------------------------------------------------------------------------------------------------------------------------
TCI Satellite Entertainment, Inc., 10.875% Sr. Sub. Nts., 2/15/07 (3) 50,000 51,750
- -----------------------------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 125,000 138,356
- -----------------------------------------------------------------------------------------------------------------------------
United International Holdings, Inc., Zero Coupon Sr.
Sec. Disc. Nts., Series B, 14%, 11/15/99 (8) 100,000 82,500
---------------
700,356
- -----------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED MEDIA - 0.7%
Fox/Liberty Networks LLC, 8.875% Sr. Nts., 8/15/07 (3) 25,000 25,000
- -----------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co., 8.625% Sr. Sub. Nts., 9/15/07 (3) 50,000 50,500
- -----------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc., 7.45% Nts., 2/1/98 145,000 145,486
---------------
220,986
- -----------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT/FILM - 0.8%
American Skiing Corp., 12% Sr. Sub. Nts., Series B, 7/15/06 (1) 75,000 83,625
- -----------------------------------------------------------------------------------------------------------------------------
Blockbuster Entertainment Corp., 6.625% Sr. Nts., 2/15/98 145,000 145,194
---------------
228,819
- -----------------------------------------------------------------------------------------------------------------------------
OTHER - 1.1%
- -----------------------------------------------------------------------------------------------------------------------------
SERVICES - 1.1%
Employee Solutions, Inc., 10% Sr. Nts., 10/15/04 (1) 50,000 49,250
- -----------------------------------------------------------------------------------------------------------------------------
Maxim Group, Inc. (The), 9.25% Sr. Nts., 10/15/07 (3) 50,000 48,750
- -----------------------------------------------------------------------------------------------------------------------------
Shop Vac Corp., 10.625% Sr. Nts., 9/1/03 75,000 81,563
- -----------------------------------------------------------------------------------------------------------------------------
Sun Co., Inc., 7.95% Debs., 12/15/01 75,000 79,359
- -----------------------------------------------------------------------------------------------------------------------------
USI American Holdings, Inc., 7.25% Gtd. Sr. Nts., 12/1/06 80,000 78,526
---------------
337,448
</TABLE>
9 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
RETAIL - 2.7%
- -----------------------------------------------------------------------------------------------------------------------------
DEPARTMENT STORES - 1.8%
Costco Cos., Inc., 7.125% Sr. Nts., 6/15/05 $ 120,000 $ 122,129
- -----------------------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc., 10% Sr. Nts., 2/15/01 60,000 66,326
- -----------------------------------------------------------------------------------------------------------------------------
Parisian, Inc., 9.875% Sr. Sub. Nts., 7/15/03 (1) 50,000 52,500
- -----------------------------------------------------------------------------------------------------------------------------
Sears Roebuck & Co., 8.39% Medium-Term Nts., 3/23/99 290,000 299,285
---------------
540,240
- -----------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAILING - 0.1%
K Mart Corp., 7.75% Debs., 10/1/12 50,000 47,250
- -----------------------------------------------------------------------------------------------------------------------------
SUPERMARKETS - 0.8%
Dairy Mart Convenience Stores, Inc., 10.25% Sr. Sub. Nts., 3/15/04 50,000 49,250
- -----------------------------------------------------------------------------------------------------------------------------
Great Atlantic & Pacific Tea Co., 9.125% Debs., 1/15/98 145,000 145,840
- -----------------------------------------------------------------------------------------------------------------------------
Jitney-Jungle Stores of America, Inc., 12% Gtd. Sr. Nts., 3/1/06 50,000 56,250
---------------
251,340
- -----------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 4.1%
- -----------------------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY - 2.5%
DecisionOne Corp., 9.75% Sr. Sub. Nts., 8/1/07 50,000 51,750
- -----------------------------------------------------------------------------------------------------------------------------
Digital Equipment Corp., 7% Nts., 11/15/97 215,000 215,068
- -----------------------------------------------------------------------------------------------------------------------------
DII Group, Inc., 8.50% Sr. Sub. Nts., 9/15/07 (3) 50,000 49,563
- -----------------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc., 12% Cv. Sr. Sub. Nts., 2/15/01 (1) 25,000 20,875
- -----------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc., 0%/14%
Sr. Disc. Nts., Series B, 6/1/06 (4) 50,000 33,500
- -----------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 0%/9.75% Sr. Disc. Nts., 8/15/04 (4) 100,000 84,750
- -----------------------------------------------------------------------------------------------------------------------------
Plantronics, Inc., 10% Sr. Nts., 1/15/01 (1) 75,000 78,000
- -----------------------------------------------------------------------------------------------------------------------------
Price Communications Cellular Holdings, Inc.,
0%/13.50% Sr. Disc. Nts., 8/1/07 (1)(4) 75,000 42,750
- -----------------------------------------------------------------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum Finance Corp., 11% Sr. Nts.,
8/15/06 50,000 55,375
- -----------------------------------------------------------------------------------------------------------------------------
Unisys Corp., 12% Sr. Nts., Series B, 4/15/03 50,000 56,250
- -----------------------------------------------------------------------------------------------------------------------------
Western Wireless Corp., 10.50% Sr. Sub. Nts., 2/1/07 50,000 53,875
---------------
741,756
- -----------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS/TECHNOLOGY - 1.6%
American Communications Services, Inc., 0%/13% Sr. Disc. Nts.,
11/1/05 (4) 75,000 52,875
- -----------------------------------------------------------------------------------------------------------------------------
Brooks Fiber Properties, Inc., 0%/11.875% Sr. Disc. Nts., 11/1/06 (4) 75,000 59,156
- -----------------------------------------------------------------------------------------------------------------------------
Centennial Cellular Corp., 10.125% Sr. Nts., 5/15/05 25,000 26,625
- -----------------------------------------------------------------------------------------------------------------------------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc. Debs., 11/15/07 (4) 75,000 58,125
- -----------------------------------------------------------------------------------------------------------------------------
Diamond Cable Communications plc, 0%/10.75% Sr. Disc. Nts., 2/15/07 (4) 50,000 32,250
- -----------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 0%/11.25% Sr. Disc. Nts., 7/15/07 (4) 50,000 33,250
- -----------------------------------------------------------------------------------------------------------------------------
International CableTel, Inc., 0%/11.50%
Sr. Deferred Coupon Nts., Series B, 2/1/06 (4) 100,000 73,500
- -----------------------------------------------------------------------------------------------------------------------------
IXC Communications, Inc., 12.50% Sr. Nts., Series B, 10/1/05 50,000 57,000
- -----------------------------------------------------------------------------------------------------------------------------
McLeodUSA, Inc., 0%/10.50% Sr. Disc. Nts., 3/1/07 (4) 50,000 34,750
- -----------------------------------------------------------------------------------------------------------------------------
Teleport Communications Group, Inc.:
0%/11.125% Sr. Disc. Nts., 7/1/07 (4) 25,000 19,719
9.875% Sr. Nts., 7/1/06 25,000 27,438
---------------
474,688
</TABLE>
10 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 1.9%
- -----------------------------------------------------------------------------------------------------------------------------
RAILROADS - 1.1%
CSX Corp., 7.05% Debs., 5/1/02 $ 85,000 $ 86,993
- -----------------------------------------------------------------------------------------------------------------------------
Norfolk Southern Corp., 7.35% Nts., 5/15/07 75,000 78,755
- -----------------------------------------------------------------------------------------------------------------------------
Union Pacific Corp., 7% Nts., 6/15/00 150,000 152,803
---------------
318,551
- -----------------------------------------------------------------------------------------------------------------------------
SHIPPING - 0.8%
Federal Express Corp., 6.25% Nts., 4/15/98 240,000 240,297
- -----------------------------------------------------------------------------------------------------------------------------
UTILITIES - 2.4%
- -----------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 0.9%
Consumers Energy Co., 8.75% First Mtg. Nts., 2/15/98 145,000 145,947
- -----------------------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 7.25% First Mtg. Nts., Series A, 2/1/99 (1) 75,000 75,750
- -----------------------------------------------------------------------------------------------------------------------------
Panda Global Energy Co., 12.50% Sr. Nts., 4/15/04 (1) 50,000 48,250
---------------
269,947
- -----------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES - 1.1%
Northern Illinois Gas Co., 6.45% First Mtg. Bonds, 8/1/01 220,000 222,749
- -----------------------------------------------------------------------------------------------------------------------------
Tennessee Gas Pipeline Co., 7.50% Bonds, 4/1/17 100,000 105,230
---------------
327,979
- -----------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES - 0.4%
GTE Corp., 8.85% Debs., 3/1/98 60,000 60,528
- -----------------------------------------------------------------------------------------------------------------------------
Peoples Telephone Co., Inc., 12.25% Sr. Nts., 7/15/02 50,000 52,125
---------------
112,653
---------------
Total Corporate Bonds and Notes (Cost $12,488,086) 12,726,059
SHARES
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
COMMON STOCKS - 23.6%
- -----------------------------------------------------------------------------------------------------------------------------
BASIC INDUSTRY - 2.9%
- -----------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 1.3%
Dexter Corp. 4,300 168,775
- -----------------------------------------------------------------------------------------------------------------------------
Ethyl Corp. 13,300 114,712
- -----------------------------------------------------------------------------------------------------------------------------
IMC Global, Inc. 3,149 106,082
---------------
389,569
- -----------------------------------------------------------------------------------------------------------------------------
PAPER - 0.4%
Unisource Worldwide, Inc. 6,900 112,556
- -----------------------------------------------------------------------------------------------------------------------------
STEEL - 1.2%
Carpenter Technology Corp. 3,200 154,800
- -----------------------------------------------------------------------------------------------------------------------------
Oregon Steel Mills, Inc. 4,500 94,781
- -----------------------------------------------------------------------------------------------------------------------------
UNR Industries, Inc. 23,000 117,875
---------------
367,456
- -----------------------------------------------------------------------------------------------------------------------------
CONSUMER RELATED - 0.8%
- -----------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 0.5%
Glaxo Wellcome plc, Sponsored ADR 3,800 162,687
- -----------------------------------------------------------------------------------------------------------------------------
RESTAURANTS - 0.3%
Piccadilly Cafeterias, Inc. 6,900 102,637
</TABLE>
11 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
MARKET VALUE
SHARES SEE NOTE 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
ENERGY - 3.4%
- -----------------------------------------------------------------------------------------------------------------------------
Amoco Corp. 1,400 $ 128,362
- -----------------------------------------------------------------------------------------------------------------------------
Atlantic Richfield Co. 2,400 197,550
- -----------------------------------------------------------------------------------------------------------------------------
Chevron Corp. 2,300 190,756
- -----------------------------------------------------------------------------------------------------------------------------
Exxon Corp. 3,000 184,312
- -----------------------------------------------------------------------------------------------------------------------------
Mobil Corp. 2,400 174,750
- -----------------------------------------------------------------------------------------------------------------------------
Occidental Petroleum Corp. 4,700 131,012
---------------
1,006,742
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES - 4.8%
- -----------------------------------------------------------------------------------------------------------------------------
BANKS & THRIFTS - 2.1%
BankAmerica Corp. 1,000 71,500
- -----------------------------------------------------------------------------------------------------------------------------
BankBoston Corp. 2,000 162,125
- -----------------------------------------------------------------------------------------------------------------------------
First Union Corp. 2,700 132,469
- -----------------------------------------------------------------------------------------------------------------------------
NationsBank Corp. 1,900 113,762
- -----------------------------------------------------------------------------------------------------------------------------
Wells Fargo & Co. 500 145,687
---------------
625,543
- -----------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL -2.3%
- -----------------------------------------------------------------------------------------------------------------------------
Camden Property Trust 4,800 144,000
- -----------------------------------------------------------------------------------------------------------------------------
Capstone Capital Corp. 5,900 139,387
- -----------------------------------------------------------------------------------------------------------------------------
Crescent Real Estate Equities, Inc. 4,200 151,200
- -----------------------------------------------------------------------------------------------------------------------------
Health & Retirement Properties Trust 6,800 127,500
- -----------------------------------------------------------------------------------------------------------------------------
Meditrust Corp., Paired Stock 3,100 132,525
---------------
694,612
- -----------------------------------------------------------------------------------------------------------------------------
INSURANCE - 0.4%
HSB Group, Inc. 2,500 130,469
- -----------------------------------------------------------------------------------------------------------------------------
Housing Related - 0.9%
- -----------------------------------------------------------------------------------------------------------------------------
Homebuilders/Real Estate - 0.9%
Cornerstone Properties, Inc. 8,300 153,031
- -----------------------------------------------------------------------------------------------------------------------------
Tower Realty Trust, Inc. (9) 5,000 126,250
---------------
279,281
- -----------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 2.2%
- -----------------------------------------------------------------------------------------------------------------------------
AEROSPACE - 1.5%
General Dynamics Corp. 2,300 186,731
- -----------------------------------------------------------------------------------------------------------------------------
Lockheed Martin Corp. 1,200 114,075
- -----------------------------------------------------------------------------------------------------------------------------
TRW, Inc. 2,400 137,400
---------------
438,206
- -----------------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS - 0.7%
PACCAR, Inc. 5,000 225,312
- -----------------------------------------------------------------------------------------------------------------------------
RETAIL - 1.2%
- -----------------------------------------------------------------------------------------------------------------------------
DEPARTMENT STORES - 0.4%
Penney (J.C.) Co., Inc. 2,100 123,244
- -----------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAILING - 0.8%
Brown Group, Inc. 6,500 98,313
- -----------------------------------------------------------------------------------------------------------------------------
New England Business Service, Inc. 5,000 145,625
---------------
243,938
</TABLE>
12 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
MARKET VALUE
SHARES SEE NOTE 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 0.0%
- -----------------------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY - 0.0%
Nextel Communications, Inc., Cl. A (9) 154 $ 4,043
- -----------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 0.7%
- -----------------------------------------------------------------------------------------------------------------------------
RAILROADS - 0.7%
GATX Corp. 3,100 200,144
- -----------------------------------------------------------------------------------------------------------------------------
UTILITIES - 6.7%
- -----------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 2.4%
Duke Energy Corp. 3,704 178,718
- -----------------------------------------------------------------------------------------------------------------------------
FPL Group, Inc. 3,000 155,063
- -----------------------------------------------------------------------------------------------------------------------------
Illinova Corp. 4,000 89,000
- -----------------------------------------------------------------------------------------------------------------------------
Kansas City Power & Light Co. 5,000 146,563
- -----------------------------------------------------------------------------------------------------------------------------
Western Resources, Inc. 3,900 145,275
---------------
714,619
- -----------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES - 2.2%
El Paso Natural Gas Co. 3,800 227,763
- -----------------------------------------------------------------------------------------------------------------------------
MCN Energy Group, Inc. 3,700 128,113
- -----------------------------------------------------------------------------------------------------------------------------
National Fuel Gas Co. 3,700 163,263
- -----------------------------------------------------------------------------------------------------------------------------
Questar Corp. 3,300 127,463
---------------
646,602
- -----------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES - 2.1%
- -----------------------------------------------------------------------------------------------------------------------------
Ameritech Corp. 2,100 136,500
- -----------------------------------------------------------------------------------------------------------------------------
Bell Atlantic Corp. 2,473 197,531
- -----------------------------------------------------------------------------------------------------------------------------
Frontier Corp. 5,700 123,263
- -----------------------------------------------------------------------------------------------------------------------------
U S West Communications Group 4,200 167,213
---------------
624,507
---------------
Total Common Stocks (Cost $5,534,380) 7,092,167
- -----------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS - 0.6%
- -----------------------------------------------------------------------------------------------------------------------------
Case Corp., $4.50 Cum. Cv., Series A, Non-Vtg. (Cost $115,000) 1,200 174,000
UNITS
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES - 0.0%
- -----------------------------------------------------------------------------------------------------------------------------
Australis Media Ltd. Wts., Exp. 5/00 (1) 75 --
- -----------------------------------------------------------------------------------------------------------------------------
Dairy Mart Convenience Stores, Inc. Wts., Exp. 12/01 (1) 333 333
- -----------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc. Wts., Exp. 6/00 (1) 50 3,500
- -----------------------------------------------------------------------------------------------------------------------------
Price Communications Corp. Wts., 8/07 258 3
- -----------------------------------------------------------------------------------------------------------------------------
Signature Brands, Inc. Wts., Exp. 12/49 (1) 50 750
---------------
Total Rights, Warrants and Certificates (Cost $470) 4,586
</TABLE>
13 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENTS - 6.3%
- -----------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Zion First National Bank, 5.68%, dated 10/31/97, to be
repurchased at $1,883,891 on 11/3/97, collateralized by U.S. Treasury Nts.,
7.25%, 8/15/04, with a
value of $1,923,955 (Cost $1,883,000) $ 1,883,000 $ 1,883,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $27,723,982) 99.1% 29,794,676
- -----------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.9 259,607
-------------- ---------------
NET ASSETS 100.0% $ 30,054,283
-------------- ---------------
-------------- ---------------
</TABLE>
1. Identifies issues considered to be illiquid or restricted - See Note 5 of
Notes to Financial Statements. 2. Interest-Only Strips represent the right to
receive the monthly interest payments on an underlying pool of mortgage loans.
These securities typically decline in price as interest rates decline. Most
other fixed income securities increase in price when interest rates decline. The
principal amount of the underlying pool represents the notional amount on which
current interest is calculated. The price of these securities is typically more
sensitive to changes in prepayment rates than traditional mortgage-backed
securities (for example, GNMA pass-throughs). Interest rates disclosed represent
current yields based upon the current cost basis and estimated timing and amount
of future cash flows. 3. Represents securities sold under Rule 144A, which are
exempt from registration under the Securities Act of 1933, as amended. These
securities have been determined to be liquid under guidelines established by the
Board of Directors. These securities amount to $965,905 or 3.21% of the Fund's
net assets as of October 31, 1997. 4. Denotes a step bond: a zero coupon bond
that converts to a fixed or variable interest rate at a designated future date.
5. Units may be comprised of several components, such as debt and equity and/or
warrants to purchase equity at some point in the future. For units which
represent debt securities, face amount disclosed represents total underlying
principal. 6. Represents the current interest rate for an increasing rate
security. 7. Interest or dividend is paid in kind. 8. For zero coupon bonds, the
interest rate shown is the effective yield on the date of purchase. 9.
Non-income producing security. See accompanying Notes to Financial Statements.
14 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS OCTOBER 31, 1997
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 57.7%
- -----------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 2.7%
- -----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 1.0%
Ciba Specialty Chemicals AG (1) 1,200 $ 118,162
- -----------------------------------------------------------------------------------------------------------------------------------
Dexter Corp. 5,000 196,250
- -----------------------------------------------------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co. 2,100 119,437
- -----------------------------------------------------------------------------------------------------------------------------------
Ethyl Corp. 15,900 137,137
- -----------------------------------------------------------------------------------------------------------------------------------
Fuji Photo Film Co. 1,000 36,252
- -----------------------------------------------------------------------------------------------------------------------------------
IMC Global, Inc. 2,834 95,470
---------------
702,708
- -----------------------------------------------------------------------------------------------------------------------------------
METALS - 0.8%
Allegheny Teledyne, Inc. 4,000 105,250
- -----------------------------------------------------------------------------------------------------------------------------------
Carpenter Technology Corp. 3,700 178,987
- -----------------------------------------------------------------------------------------------------------------------------------
Oregon Steel Mills, Inc. 7,400 155,862
- -----------------------------------------------------------------------------------------------------------------------------------
UNR Industries, Inc. 25,000 128,125
---------------
568,224
- -----------------------------------------------------------------------------------------------------------------------------------
PAPER - 0.9%
Fletcher Challenge Forest 80,000 77,345
- -----------------------------------------------------------------------------------------------------------------------------------
Fort James Corp. 4,675 185,539
- -----------------------------------------------------------------------------------------------------------------------------------
International Paper Co. 2,900 130,500
- -----------------------------------------------------------------------------------------------------------------------------------
Kimberly-Clark de Mexico, SA 16,000 69,582
- -----------------------------------------------------------------------------------------------------------------------------------
Unisource Worldwide, Inc. 8,100 132,131
---------------
595,097
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 7.1%
- -----------------------------------------------------------------------------------------------------------------------------------
AUTOS & HOUSING - 1.1%
Bridgestone Corp. 3,000 64,854
- -----------------------------------------------------------------------------------------------------------------------------------
Cornerstone Properties, Inc. 9,900 182,531
- -----------------------------------------------------------------------------------------------------------------------------------
Goodyear Tire & Rubber Co. 2,600 162,825
- -----------------------------------------------------------------------------------------------------------------------------------
Groupe SEB SA 700 79,823
- -----------------------------------------------------------------------------------------------------------------------------------
Lear Corp. (1) 1,400 67,287
- -----------------------------------------------------------------------------------------------------------------------------------
Rinnai Corp. 3,000 48,890
- -----------------------------------------------------------------------------------------------------------------------------------
Tower Realty Trust, Inc. (1) 6,000 151,500
---------------
757,710
- -----------------------------------------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 1.7%
Alaska Air Group, Inc. (1) 2,200 73,425
- -----------------------------------------------------------------------------------------------------------------------------------
America West Holdings Corp., Cl. B (1) 4,100 60,731
- -----------------------------------------------------------------------------------------------------------------------------------
AMR Corp. (1) 1,700 197,944
- -----------------------------------------------------------------------------------------------------------------------------------
CDL Hotels International Ltd. 290,000 83,479
- -----------------------------------------------------------------------------------------------------------------------------------
Granada Group plc 9,000 124,057
- -----------------------------------------------------------------------------------------------------------------------------------
Landry's Seafood Restaurants, Inc. (1) 2,500 70,000
- -----------------------------------------------------------------------------------------------------------------------------------
Piccadilly Cafeterias, Inc. 7,900 117,512
- -----------------------------------------------------------------------------------------------------------------------------------
Regal Cinemas, Inc. (1) 5,800 133,400
- -----------------------------------------------------------------------------------------------------------------------------------
UAL Corp. (1) 900 78,862
- -----------------------------------------------------------------------------------------------------------------------------------
Vistana, Inc. (1) 10,100 231,037
---------------
1,170,447
- -----------------------------------------------------------------------------------------------------------------------------------
MEDIA - 0.9%
Applied Graphics Technologies, Inc. (1) 4,200 224,700
- -----------------------------------------------------------------------------------------------------------------------------------
Benpres Holdings Corp., Sponsored GDR (1) 5,000 23,125
</TABLE>
15 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MEDIA (CONTINUED)
Reed International plc 9,000 $ 88,968
- -----------------------------------------------------------------------------------------------------------------------------------
Reuters Holdings plc 8,000 86,729
- -----------------------------------------------------------------------------------------------------------------------------------
Television Broadcasts Ltd. 26,000 72,320
- -----------------------------------------------------------------------------------------------------------------------------------
Wolters Kluwer NV 900 110,557
---------------
606,399
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL: GENERAL - 1.6%
adidas AG 900 131,249
- -----------------------------------------------------------------------------------------------------------------------------------
Dayton Hudson Corp. 1,500 94,219
- -----------------------------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc. (1) 1,600 70,400
- -----------------------------------------------------------------------------------------------------------------------------------
Marks & Spencer plc 13,000 131,888
- -----------------------------------------------------------------------------------------------------------------------------------
North Face, Inc. (The) (1) 5,100 120,487
- -----------------------------------------------------------------------------------------------------------------------------------
Penney (J.C.) Co., Inc. 5,700 334,519
- -----------------------------------------------------------------------------------------------------------------------------------
Wolverine World Wide, Inc. 7,975 175,450
---------------
1,058,212
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 1.8%
Argos plc 10,000 105,896
- -----------------------------------------------------------------------------------------------------------------------------------
Brown Group, Inc. 8,300 125,537
- -----------------------------------------------------------------------------------------------------------------------------------
Brylane, Inc. (1) 400 17,375
- -----------------------------------------------------------------------------------------------------------------------------------
Dickson Concepts International Ltd. 42,000 90,472
- -----------------------------------------------------------------------------------------------------------------------------------
Eagle Hardware & Garden, Inc. (1) 7,100 120,700
- -----------------------------------------------------------------------------------------------------------------------------------
Guitar Center, Inc. (1) 4,300 93,525
- -----------------------------------------------------------------------------------------------------------------------------------
Hennes & Mauritz AB, B Shares 2,700 110,573
- -----------------------------------------------------------------------------------------------------------------------------------
Koninklijke Ahold NV 3,600 92,192
- -----------------------------------------------------------------------------------------------------------------------------------
New England Business Service, Inc. 5,800 168,925
- -----------------------------------------------------------------------------------------------------------------------------------
Payless ShoeSource, Inc. (1) 1,500 83,625
- -----------------------------------------------------------------------------------------------------------------------------------
Shimamura Co. Ltd. 2,000 54,045
- -----------------------------------------------------------------------------------------------------------------------------------
Stage Stores, Inc. (1) 4,300 156,950
---------------
1,219,815
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 7.9%
- -----------------------------------------------------------------------------------------------------------------------------------
BEVERAGES - 0.4%
Embotelladora Andina SA, Series A, Sponsored ADR 3,200 76,800
- -----------------------------------------------------------------------------------------------------------------------------------
Embotelladora Andina SA, Series B, Sponsored ADR 3,200 65,600
- -----------------------------------------------------------------------------------------------------------------------------------
Quilmes Industrial Quinsa SA, Sponsored ADR 3,750 46,406
- -----------------------------------------------------------------------------------------------------------------------------------
Scottish & Newcastle plc 6,000 67,361
---------------
256,167
- -----------------------------------------------------------------------------------------------------------------------------------
FOOD - 1.7%
American Stores Co. 5,400 138,712
- -----------------------------------------------------------------------------------------------------------------------------------
Carrefour Supermarche SA 190 98,962
- -----------------------------------------------------------------------------------------------------------------------------------
Colruyt SA 250 134,126
- -----------------------------------------------------------------------------------------------------------------------------------
Jeronimo Martins & Filho, SA 1,400 91,218
- -----------------------------------------------------------------------------------------------------------------------------------
JP Foodservice, Inc. (1) 4,000 127,750
- -----------------------------------------------------------------------------------------------------------------------------------
Kroger Co. (1) 5,300 172,912
- -----------------------------------------------------------------------------------------------------------------------------------
Morningstar Group, Inc. (1) 3,500 149,625
- -----------------------------------------------------------------------------------------------------------------------------------
Safeway, Inc. (1) 2,000 116,250
- -----------------------------------------------------------------------------------------------------------------------------------
William Morrison Supermarkets plc 40,000 132,140
---------------
1,161,695
</TABLE>
16 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE/DRUGS - 2.3%
Dura Pharmaceuticals, Inc. (1) 3,500 $ 169,312
- -----------------------------------------------------------------------------------------------------------------------------------
Gedeon Richter (2) 1,000 92,066
- -----------------------------------------------------------------------------------------------------------------------------------
Glaxo Wellcome plc, Sponsored ADR 4,300 184,094
- -----------------------------------------------------------------------------------------------------------------------------------
Incyte Pharmaceuticals, Inc. (1) 1,200 96,600
- -----------------------------------------------------------------------------------------------------------------------------------
Medicis Pharmaceutical Corp., Cl. A (1) 4,250 204,531
- -----------------------------------------------------------------------------------------------------------------------------------
Novartis AG 100 157,048
- -----------------------------------------------------------------------------------------------------------------------------------
Novo-Nordisk AS, B Shares 1,000 108,382
- -----------------------------------------------------------------------------------------------------------------------------------
Roche Holding AG 12 105,744
- -----------------------------------------------------------------------------------------------------------------------------------
Schering AG 1,000 98,190
- -----------------------------------------------------------------------------------------------------------------------------------
SKW Trostberg AG 3,000 103,710
- -----------------------------------------------------------------------------------------------------------------------------------
Takeda Chemical Industries Ltd. 5,000 136,360
- -----------------------------------------------------------------------------------------------------------------------------------
Zeneca Group plc 4,000 126,170
---------------
1,582,207
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 2.7%
Acuson Corp. (1) 5,800 108,750
- -----------------------------------------------------------------------------------------------------------------------------------
Alternative Living Services, Inc. (1) 4,000 98,000
- -----------------------------------------------------------------------------------------------------------------------------------
Concentra Managed Care, Inc. (1) 1,000 32,625
- -----------------------------------------------------------------------------------------------------------------------------------
FPA Medical Management, Inc. (1) 4,800 115,800
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare Financial Partners, Inc. (1) 700 24,150
- -----------------------------------------------------------------------------------------------------------------------------------
Luxottica Group SpA, Sponsored ADR 1,500 95,812
- -----------------------------------------------------------------------------------------------------------------------------------
National Surgery Centers, Inc. (1) 8,800 220,000
- -----------------------------------------------------------------------------------------------------------------------------------
Pediatrix Medical Group, Inc. (1) 4,700 198,575
- -----------------------------------------------------------------------------------------------------------------------------------
Renal Treatment Centers, Inc. (1) 3,400 112,837
- -----------------------------------------------------------------------------------------------------------------------------------
Rural/Metro Corp. (1) 6,200 215,450
- -----------------------------------------------------------------------------------------------------------------------------------
SmithKline Beecham plc 16,894 160,062
- -----------------------------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp. (1) 4,635 141,657
- -----------------------------------------------------------------------------------------------------------------------------------
Total Renal Care Holdings, Inc. (1) 6,166 189,990
- -----------------------------------------------------------------------------------------------------------------------------------
WellPoint Health Networks, Inc. (1) 1,800 82,350
---------------
1,796,058
- -----------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD GOODS - 0.8%
Blyth Industries, Inc. (1) 4,050 100,744
- -----------------------------------------------------------------------------------------------------------------------------------
L'OREAL 350 123,793
- -----------------------------------------------------------------------------------------------------------------------------------
Premark International, Inc. 5,600 151,550
- -----------------------------------------------------------------------------------------------------------------------------------
Reckitt & Colman plc 9,000 138,017
---------------
514,104
- -----------------------------------------------------------------------------------------------------------------------------------
ENERGY - 5.3%
- -----------------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 1.4%
Diamond Offshore Drilling, Inc. 4,600 286,350
- -----------------------------------------------------------------------------------------------------------------------------------
Global Marine, Inc. (1) 4,300 133,838
- -----------------------------------------------------------------------------------------------------------------------------------
Oryx Energy Co. (1) 4,300 118,519
- -----------------------------------------------------------------------------------------------------------------------------------
Pool Energy Services Co. (1) 2,700 91,631
- -----------------------------------------------------------------------------------------------------------------------------------
Tidewater, Inc. 3,000 197,063
- -----------------------------------------------------------------------------------------------------------------------------------
Varco International, Inc. (1) 2,200 134,063
---------------
961,464
- -----------------------------------------------------------------------------------------------------------------------------------
OIL-INTEGRATED - 3.9%
Amoco Corp. 3,100 284,231
- -----------------------------------------------------------------------------------------------------------------------------------
Atlantic Richfield Co. 3,000 246,938
</TABLE>
17 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OIL-INTEGRATED (CONTINUED)
Chevron Corp. 5,900 $ 489,331
- -----------------------------------------------------------------------------------------------------------------------------------
Cliffs Drilling Co. (1) 1,100 79,956
- -----------------------------------------------------------------------------------------------------------------------------------
Exxon Corp. 5,500 337,906
- -----------------------------------------------------------------------------------------------------------------------------------
Mobil Corp. 5,000 364,063
- -----------------------------------------------------------------------------------------------------------------------------------
Occidental Petroleum Corp. 9,800 273,175
- -----------------------------------------------------------------------------------------------------------------------------------
Patterson Energy, Inc. (1) 2,400 134,400
v-----------------------------------------------------------------------------------------------------------------------------------
Quinenco SA, ADR (1) 2,700 39,488
- -----------------------------------------------------------------------------------------------------------------------------------
Shell Transport & Trading Co. plc 14,000 99,189
- -----------------------------------------------------------------------------------------------------------------------------------
Total SA, B Shares 1,641 181,734
- -----------------------------------------------------------------------------------------------------------------------------------
UTI Energy Corp. (1) 2,200 98,175
---------------
2,628,586
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL - 9.2%
- -----------------------------------------------------------------------------------------------------------------------------------
BANKS - 3.8%
Banco Popular Espanol SA 1,600 94,202
- -----------------------------------------------------------------------------------------------------------------------------------
Bank of Tokyo-Mitsubishi Ltd. 6,000 78,324
- -----------------------------------------------------------------------------------------------------------------------------------
BankAmerica Corp. 4,200 300,300
- -----------------------------------------------------------------------------------------------------------------------------------
BankBoston Corp. 4,800 389,100
- -----------------------------------------------------------------------------------------------------------------------------------
Bayerische Vereinsbank AG 1,850 107,379
- -----------------------------------------------------------------------------------------------------------------------------------
Credit Suisse Group 700 98,880
- -----------------------------------------------------------------------------------------------------------------------------------
Credito Italiano (1) 48,000 128,225
- -----------------------------------------------------------------------------------------------------------------------------------
First Union Corp. 7,400 363,063
- -----------------------------------------------------------------------------------------------------------------------------------
Halifax plc (1) 9,000 102,098
- -----------------------------------------------------------------------------------------------------------------------------------
Lloyds TSB Group plc 17,000 212,380
- -----------------------------------------------------------------------------------------------------------------------------------
Mitsubishi Trust & Banking Corp. 8,000 98,445
- -----------------------------------------------------------------------------------------------------------------------------------
NationsBank Corp. 4,400 263,450
- -----------------------------------------------------------------------------------------------------------------------------------
Wells Fargo & Co. 1,200 349,650
---------------
2,585,496
- -----------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 3.6%
Amresco, Inc. (1) 7,300 229,038
- -----------------------------------------------------------------------------------------------------------------------------------
Camden Property Trust 5,400 162,000
- -----------------------------------------------------------------------------------------------------------------------------------
Capstone Capital Corp. 6,700 158,287
- -----------------------------------------------------------------------------------------------------------------------------------
Cattles plc 12,000 75,259
- -----------------------------------------------------------------------------------------------------------------------------------
Crescent Real Estate Equities, Inc. 9,200 331,200
- -----------------------------------------------------------------------------------------------------------------------------------
Haw Par Brothers International Ltd. 41,000 66,464
- -----------------------------------------------------------------------------------------------------------------------------------
Health & Retirement Properties Trust 7,800 146,250
- -----------------------------------------------------------------------------------------------------------------------------------
ING Groep NV 2,552 107,170
- -----------------------------------------------------------------------------------------------------------------------------------
Lend Lease Corp. Ltd. 3,600 73,487
- -----------------------------------------------------------------------------------------------------------------------------------
Meditrust Corp., Paired Stock 3,900 166,725
- -----------------------------------------------------------------------------------------------------------------------------------
Money Store, Inc. (The) 1,700 48,238
- -----------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co. 3,300 161,700
- -----------------------------------------------------------------------------------------------------------------------------------
Nichiei Co. Ltd. 1,300 142,679
- -----------------------------------------------------------------------------------------------------------------------------------
Perlis Plantations Berhad 28,000 50,985
- -----------------------------------------------------------------------------------------------------------------------------------
Salomon, Inc. 1,600 124,300
- -----------------------------------------------------------------------------------------------------------------------------------
Sirrom Capital Corp. 2,400 120,900
- -----------------------------------------------------------------------------------------------------------------------------------
Southcorp Holdings Ltd. 14,000 46,813
- -----------------------------------------------------------------------------------------------------------------------------------
Swire Pacific Ltd., Cl. B 87,000 92,296
</TABLE>
18 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DIVERSIFIED FINANCIAL (CONTINUED)
Travelers Group, Inc. 2,600 $ 182,000
---------------
2,485,791
- -----------------------------------------------------------------------------------------------------------------------------------
INSURANCE - 1.8%
AFLAC, Inc. 1,500 76,313
- -----------------------------------------------------------------------------------------------------------------------------------
Allstate Corp. 1,200 99,525
- -----------------------------------------------------------------------------------------------------------------------------------
Chubb Corp. 2,500 165,625
- -----------------------------------------------------------------------------------------------------------------------------------
Conseco, Inc. 5,300 231,213
- -----------------------------------------------------------------------------------------------------------------------------------
Equitable Cos., Inc. 4,500 185,344
- -----------------------------------------------------------------------------------------------------------------------------------
HSB Group, Inc. 2,700 140,906
- -----------------------------------------------------------------------------------------------------------------------------------
Pre-Paid Legal Services, Inc. (1) 1,500 45,375
- -----------------------------------------------------------------------------------------------------------------------------------
Torchmark Corp. 3,900 155,513
- -----------------------------------------------------------------------------------------------------------------------------------
Travelers Property Casualty Corp., Cl. A 3,600 130,050
---------------
1,229,864
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 8.3%
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.6%
ABB AG 65 84,951
- -----------------------------------------------------------------------------------------------------------------------------------
Johnson Electric Holdings Ltd. 42,000 114,652
- -----------------------------------------------------------------------------------------------------------------------------------
Power Technologies, Inc. (1) 3,400 104,975
- -----------------------------------------------------------------------------------------------------------------------------------
Siebe plc 5,000 96,003
---------------
400,581
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 3.3%
Adecco SA 300 95,604
- -----------------------------------------------------------------------------------------------------------------------------------
American Disposal Services, Inc. (1) 5,000 176,250
- -----------------------------------------------------------------------------------------------------------------------------------
Caribiner International, Inc. (1) 2,800 125,475
- -----------------------------------------------------------------------------------------------------------------------------------
Central Parking Corp. 1,500 81,938
- -----------------------------------------------------------------------------------------------------------------------------------
Computer Horizons Corp. (1) 6,550 198,956
- -----------------------------------------------------------------------------------------------------------------------------------
Computer Task Group, Inc. 7,800 220,350
- -----------------------------------------------------------------------------------------------------------------------------------
Corestaff, Inc. (1) 5,900 146,025
- -----------------------------------------------------------------------------------------------------------------------------------
Eastern Environmental Services, Inc. (1) 6,300 160,650
- -----------------------------------------------------------------------------------------------------------------------------------
Guilbert SA 625 81,437
- -----------------------------------------------------------------------------------------------------------------------------------
Hays plc 13,000 152,598
- -----------------------------------------------------------------------------------------------------------------------------------
Helix Technology Corp. 2,500 112,500
- -----------------------------------------------------------------------------------------------------------------------------------
Kurita Water Industries Ltd. 5,000 88,135
- -----------------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co. (1) 3,800 128,725
- -----------------------------------------------------------------------------------------------------------------------------------
SpeedFam International, Inc. (1) 1,300 48,263
- -----------------------------------------------------------------------------------------------------------------------------------
Tetra Tech, Inc. (1) 5,600 146,300
- -----------------------------------------------------------------------------------------------------------------------------------
Transaction Systems Architects, Inc., Cl. A (1) 4,700 183,888
- -----------------------------------------------------------------------------------------------------------------------------------
Viad Corp. 4,700 85,775
---------------
2,232,869
- -----------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 3.6%
Aeroquip-Vickers, Inc. 2,000 104,125
- -----------------------------------------------------------------------------------------------------------------------------------
AGCO Corp. 4,000 116,000
- -----------------------------------------------------------------------------------------------------------------------------------
Canon Sales Co., Inc. 300 5,463
- -----------------------------------------------------------------------------------------------------------------------------------
Case Corp. 3,700 221,306
- -----------------------------------------------------------------------------------------------------------------------------------
Deere & Co. 4,300 226,288
- -----------------------------------------------------------------------------------------------------------------------------------
Halter Marine Group, Inc. (1) 1,800 94,163
- -----------------------------------------------------------------------------------------------------------------------------------
Ingersoll-Rand Co. 4,200 163,538
</TABLE>
19 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING (CONTINUED)
Mannesmann AG 250 $ 106,034
- -----------------------------------------------------------------------------------------------------------------------------------
NSK Ltd. 7,000 29,101
- -----------------------------------------------------------------------------------------------------------------------------------
PACCAR, Inc. 9,000 405,563
- -----------------------------------------------------------------------------------------------------------------------------------
Parker-Hannifin Corp. 2,600 108,713
- -----------------------------------------------------------------------------------------------------------------------------------
Ricoh Co. Ltd. 11,000 141,764
- -----------------------------------------------------------------------------------------------------------------------------------
SMC Corp. 500 43,236
- -----------------------------------------------------------------------------------------------------------------------------------
Smiths Industries plc 5,000 72,107
- -----------------------------------------------------------------------------------------------------------------------------------
Societe BIC SA 1,400 95,594
- -----------------------------------------------------------------------------------------------------------------------------------
Textron, Inc. 4,200 242,813
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Industries, Inc. 8,550 229,781
---------------
2,405,589
- -----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 0.8%
Brambles Industries Ltd. 4,100 78,578
- -----------------------------------------------------------------------------------------------------------------------------------
Burlington Northern Santa Fe Corp. 1,300 123,500
- -----------------------------------------------------------------------------------------------------------------------------------
GATX Corp. 3,600 232,425
- -----------------------------------------------------------------------------------------------------------------------------------
Gulfmark Offshore, Inc. (1) 500 18,188
- -----------------------------------------------------------------------------------------------------------------------------------
MotivePower Industries, Inc. (1) 2,100 55,913
---------------
508,604
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 11.8%
- -----------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 1.3%
General Dynamics Corp. 3,900 316,631
- -----------------------------------------------------------------------------------------------------------------------------------
Lockheed Martin Corp. 2,600 247,163
- -----------------------------------------------------------------------------------------------------------------------------------
REMEC, Inc. (1) 2,700 68,513
- -----------------------------------------------------------------------------------------------------------------------------------
TRW, Inc. 4,600 263,350
---------------
895,657
- -----------------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE - 2.0%
Apex PC Solutions, Inc. (1) 3,000 77,250
- -----------------------------------------------------------------------------------------------------------------------------------
CFM Technologies, Inc. (1) 1,700 31,025
- -----------------------------------------------------------------------------------------------------------------------------------
CHS Electronics, Inc. (1) 1,050 25,659
- -----------------------------------------------------------------------------------------------------------------------------------
Compaq Computer Corp. (1) 2,800 178,500
- -----------------------------------------------------------------------------------------------------------------------------------
Digital Lightwave, Inc. (1) 1,600 29,200
- -----------------------------------------------------------------------------------------------------------------------------------
Insight Enterprises, Inc. (1) 4,650 181,931
- -----------------------------------------------------------------------------------------------------------------------------------
International Business Machines Corp. 1,700 166,706
- -----------------------------------------------------------------------------------------------------------------------------------
Level One Communications, Inc. (1) 900 40,500
- -----------------------------------------------------------------------------------------------------------------------------------
Lexmark International Group, Inc., Cl. A (1) 800 24,450
- -----------------------------------------------------------------------------------------------------------------------------------
Network Appliance, Inc. (1) 3,200 160,800
- -----------------------------------------------------------------------------------------------------------------------------------
Quantum Corp. (1) 3,900 123,338
- -----------------------------------------------------------------------------------------------------------------------------------
Semtech Corp. (1) 1,500 69,844
- -----------------------------------------------------------------------------------------------------------------------------------
Storage Technology Corp. (New) (1) 4,500 264,094
---------------
1,373,297
- -----------------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 2.8%
BEA Systems, Inc. (1) 7,500 101,250
- -----------------------------------------------------------------------------------------------------------------------------------
Electronic Data Systems Corp. 1,200 46,425
- -----------------------------------------------------------------------------------------------------------------------------------
HNC Software, Inc. (1) 2,600 96,200
- -----------------------------------------------------------------------------------------------------------------------------------
JDA Software Group, Inc. (1) 3,400 106,250
- -----------------------------------------------------------------------------------------------------------------------------------
Pegasystems, Inc. (1) 5,300 96,725
- -----------------------------------------------------------------------------------------------------------------------------------
Remedy Corp. (1) 3,000 141,000
</TABLE>
20 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER SOFTWARE/SERVICES (CONTINUED)
SAP AG, Preference 500 $ 149,464
- -----------------------------------------------------------------------------------------------------------------------------------
Sapient Corp. (1) 2,500 133,125
- -----------------------------------------------------------------------------------------------------------------------------------
Security Dynamics Technologies, Inc. (1) 4,000 135,500
- -----------------------------------------------------------------------------------------------------------------------------------
Summit Design, Inc. (1) 1,400 20,300
- -----------------------------------------------------------------------------------------------------------------------------------
Sykes Enterprises, Inc. (1) 5,800 144,275
- -----------------------------------------------------------------------------------------------------------------------------------
Technology Solutions Co. (1) 6,350 200,025
- -----------------------------------------------------------------------------------------------------------------------------------
Veritas Software Corp. (1) 3,500 145,688
- -----------------------------------------------------------------------------------------------------------------------------------
Viasoft, Inc. (1) 2,700 110,700
- -----------------------------------------------------------------------------------------------------------------------------------
Visio Corp. (1) 3,100 115,281
- -----------------------------------------------------------------------------------------------------------------------------------
Wind River Systems (1) 3,200 122,800
---------------
1,865,008
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS - 3.2%
ATMI, Inc. (1) 3,300 88,688
- -----------------------------------------------------------------------------------------------------------------------------------
Bowthorpe plc 11,000 72,492
- -----------------------------------------------------------------------------------------------------------------------------------
Electro Scientific Industries, Inc. (1) 2,300 111,550
- -----------------------------------------------------------------------------------------------------------------------------------
Electrocomponents plc 15,000 116,335
- -----------------------------------------------------------------------------------------------------------------------------------
Getronics NV 3,000 99,087
- -----------------------------------------------------------------------------------------------------------------------------------
Hirose Electric Co. 2,000 130,540
- -----------------------------------------------------------------------------------------------------------------------------------
Keyence Corp. 660 98,778
- -----------------------------------------------------------------------------------------------------------------------------------
Matsushita Electric Industrial Co. 4,000 67,182
- -----------------------------------------------------------------------------------------------------------------------------------
National Semiconductor Corp. (1) 3,000 108,000
- -----------------------------------------------------------------------------------------------------------------------------------
Omron Corp. 4,000 67,847
- -----------------------------------------------------------------------------------------------------------------------------------
Philips Electronics NV 1,300 101,818
- -----------------------------------------------------------------------------------------------------------------------------------
Philips Electronics NV, NY Shares 1,400 109,725
- -----------------------------------------------------------------------------------------------------------------------------------
Samsung Electronics Ltd., Sponsored GDR (2) 2,400 24,444
- -----------------------------------------------------------------------------------------------------------------------------------
Samsung Electronics Ltd., Sponsored GDR (1)(2) 38 793
- -----------------------------------------------------------------------------------------------------------------------------------
Sawtek, Inc. (1) 2,200 74,800
- -----------------------------------------------------------------------------------------------------------------------------------
SCI Systems, Inc. (1) 2,400 105,600
- -----------------------------------------------------------------------------------------------------------------------------------
Sony Corp. 1,900 157,820
- -----------------------------------------------------------------------------------------------------------------------------------
TDK Corp. 1,000 82,980
- -----------------------------------------------------------------------------------------------------------------------------------
Vitesse Semiconductor Corp. (1) 3,650 158,319
- -----------------------------------------------------------------------------------------------------------------------------------
VTech Holdings Ltd. 50,000 97,678
- -----------------------------------------------------------------------------------------------------------------------------------
Waters Corp. (1) 5,900 259,600
---------------
2,134,076
- -----------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY - 2.5%
Boston Communications Group, Inc. (1) 2,000 29,500
- -----------------------------------------------------------------------------------------------------------------------------------
British Sky Broadcasting Group plc 9,500 67,386
- -----------------------------------------------------------------------------------------------------------------------------------
Comverse Technology, Inc. (1) 4,700 193,875
- -----------------------------------------------------------------------------------------------------------------------------------
DSP Communications, Inc. (1) 8,800 162,800
- -----------------------------------------------------------------------------------------------------------------------------------
Ericsson LM, B Shares 3,520 155,206
- -----------------------------------------------------------------------------------------------------------------------------------
Inter-Tel, Inc. 3,400 84,681
- -----------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., Cl. A (1) 309 8,111
- -----------------------------------------------------------------------------------------------------------------------------------
Nippon Telegraph & Telephone Corp. 14 118,733
- -----------------------------------------------------------------------------------------------------------------------------------
P-COM, Inc. (1) 6,800 136,850
- -----------------------------------------------------------------------------------------------------------------------------------
Pacific Gateway Exchange, Inc. (1) 3,400 130,050
- -----------------------------------------------------------------------------------------------------------------------------------
SK Telecommunications Co. Ltd., ADR 6,600 36,300
- -----------------------------------------------------------------------------------------------------------------------------------
Tekelec (1) 3,400 142,375
</TABLE>
21 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS-TECHNOLOGY (CONTINUED)
Telecom Italia Mobile SpA 30,000 $ 111,469
- -----------------------------------------------------------------------------------------------------------------------------------
Uniphase Corp. (1) 2,100 140,963
- -----------------------------------------------------------------------------------------------------------------------------------
Vodafone Group plc 28,000 153,889
---------------
1,672,188
- -----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 5.4%
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 1.6%
Duke Energy Corp. 4,449 214,664
- -----------------------------------------------------------------------------------------------------------------------------------
FPL Group, Inc. 5,800 299,788
- -----------------------------------------------------------------------------------------------------------------------------------
Illinova Corp. 4,500 100,125
- -----------------------------------------------------------------------------------------------------------------------------------
Kansas City Power & Light Co. 5,700 167,081
- -----------------------------------------------------------------------------------------------------------------------------------
Veba AG 2,000 112,715
- -----------------------------------------------------------------------------------------------------------------------------------
Western Resources, Inc. 4,600 171,350
---------------
1,065,723
- -----------------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES - 1.8%
Columbia Gas System, Inc. 4,900 354,025
- -----------------------------------------------------------------------------------------------------------------------------------
El Paso Natural Gas Co. 4,600 275,713
- -----------------------------------------------------------------------------------------------------------------------------------
MCN Energy Group, Inc. 4,400 152,350
- -----------------------------------------------------------------------------------------------------------------------------------
National Fuel Gas Co. 4,600 202,975
- -----------------------------------------------------------------------------------------------------------------------------------
Questar Corp. 4,200 162,225
- -----------------------------------------------------------------------------------------------------------------------------------
RWE AG, Preference 2,500 92,162
---------------
1,239,450
- -----------------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES - 2.0%
Ameritech Corp. 2,500 162,500
- -----------------------------------------------------------------------------------------------------------------------------------
Bell Atlantic Corp. 4,280 341,865
- -----------------------------------------------------------------------------------------------------------------------------------
Frontier Corp. 9,500 205,438
- -----------------------------------------------------------------------------------------------------------------------------------
Tel-Save Holdings, Inc. (1) 6,400 137,600
- -----------------------------------------------------------------------------------------------------------------------------------
Telefonica de Espana 3,500 95,236
- -----------------------------------------------------------------------------------------------------------------------------------
U S West Communications Group 11,200 445,900
---------------
1,388,539
---------------
Total Common Stocks (Cost $32,198,814) 39,061,625
SHARES
- -----------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS - 0.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Case Corp., $4.50 Cum. Cv., Series A, Non-Vtg. (Cost $114,800) 1,200 174,000
UNITS
- -----------------------------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES - 0.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Australis Media Ltd. Wts., Exp. 5/00 (3) 150 --
- -----------------------------------------------------------------------------------------------------------------------------------
Dairy Mart Convenience Stores, Inc. Wts., Exp. 12/01 (3) 666 667
- -----------------------------------------------------------------------------------------------------------------------------------
Haw Par Brothers International Ltd. Wts., Exp. 7/01 3,000 992
- -----------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc. Wts., Exp. 6/00 (3) 100 7,000
- -----------------------------------------------------------------------------------------------------------------------------------
Mccaw International Ltd. Wts., Exp. 4/07 (3) 100 250
- -----------------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc.:
Conditional Wts., Exp. 12/97 (3) 500 313
Wts., Exp. 12/97 (3) 500 6,500
- -----------------------------------------------------------------------------------------------------------------------------------
Price Communications Corp. Wts., 8/07 516 5
</TABLE>
22 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
UNITS SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
Signature Brands, Inc. Wts., Exp. 12/49 (3) 100 $ 1,500
---------------
Total Rights, Warrants and Certificates (Cost $10,124) 17,227
FACE
AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES - 0.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Dayton Hudson Credit Card Master Trust, Asset Backed Certificates, Series
1997-1, Cl. A, 6.25%, 8/25/05 $ 125,000 124,945
- -----------------------------------------------------------------------------------------------------------------------------------
IROQUOIS Trust, Asset-Backed Amortizing Nts., Series 1997-2, Cl. A,
6.752%, 6/25/07 (3) 175,000 175,848
- -----------------------------------------------------------------------------------------------------------------------------------
Olympic Automobile Receivables Trust:
Receivables-Backed Nts., Series 1997-A, Cl. A5, 6.80%, 2/15/05 150,000 153,296
Series 1996-A, Cl. A4, 5.85%, 7/15/01 110,000 109,845
---------------
Total Asset-Backed Securities (Cost $558,742) 563,934
- -----------------------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS - 3.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Countrywide Funding Corp., Mtg. Pass-Through Certificates,
Series 1994-10, Cl. A3, 6%, 5/25/09 250,000 247,813
- -----------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation
Certificates:
5.50%, 6/1/98 7,400 7,331
Series 1711, Cl. EA, 7%, 3/15/24 200,000 204,750
Gtd. Multiclass Mtg. Participation Certificates:
6%, 3/1/09 178,221 176,820
Series 1574, Cl. PD, 5.55%, 3/15/13 100,000 99,750
Series 1843, Cl. VB, 7%, 4/15/03 65,000 66,909
Series 1849, Cl. VA, 6%, 12/15/10 179,450 177,432
Interest-Only Stripped Mtg.-Backed Security:
Series 1542, Cl. QC, 8.675%, 10/15/20 (4) 400,000 89,203
Series 1583, Cl. IC, 9.283%, 1/15/20 (4) 750,000 120,000
Series 1661, Cl. PK, 5.965%, 11/15/06 (4) 874,957 74,098
- -----------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6%, 12/1/03 165,377 164,571
6.50%, 4/1/26 140,587 138,466
7%, 4/1/00 76,854 77,591
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Trust 1993-181, Cl. C, 5.40%,
10/25/02 177,327 176,441
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Trust 1993-190, Cl. Z, 5.85%,
7/25/08 151,551 150,764
Medium-Term Nts., 6.56%, 11/13/01 100,000 100,250
Trust 1994-13, Cl. B, 6.50%, 2/25/09 150,000 149,859
</TABLE>
23 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MORTGAGE-BACKED OBLIGATIONS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
GE Capital Mortgage Services, Inc., Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Series 1994-7, Cl. A18, 6%, 2/25/09 $ 149,164 $ 139,841
- -----------------------------------------------------------------------------------------------------------------------------------
PNC Mortgage Securities Corp., Commercial Mtg. Pass-Through
Certificates, Series 1995-2, Cl. A3, 6.50%, 2/25/12 125,000 125,566
- -----------------------------------------------------------------------------------------------------------------------------------
Residential Accredit Loans, Inc., Mortgage Asset-Backed Pass-Through
Certificates, Series 1997-QS9, Cl. A2, 6.75%, 9/25/27 175,000 175,260
---------------
Total Mortgage-Backed Obligations (Cost $2,624,050) 2,662,715
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 6.6%
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 7.50%, 11/15/16 1,550,000 1,772,329
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
6.50%, 8/15/05 965,000 1,000,887
6.75%, 6/30/99 720,000 732,825
7.50%, 11/15/01 900,000 955,969
---------------
Total U.S. Government Obligations (Cost $4,308,612) 4,462,010
- -----------------------------------------------------------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES - 24.1%
- -----------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 3.0%
- -----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 1.4%
Burmah Castrol plc, 7% Gtd. Medium-Term Nts., 12/15/97 (2) 110,000 110,150
- -----------------------------------------------------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co., 8.50% Debs., 2/15/03 120,000 127,795
- -----------------------------------------------------------------------------------------------------------------------------------
Harris Chemical North America, Inc., 10.25% Gtd. Sr. Sec. Disc. Nts.,
7/15/01 100,000 104,500
- -----------------------------------------------------------------------------------------------------------------------------------
Laroche Industries, Inc., 9.50% Sr. Sub. Nts., 9/15/07 (2) 125,000 125,625
- -----------------------------------------------------------------------------------------------------------------------------------
Morton International, Inc., 9.25% Credit Sensitive Nts., 6/1/20 65,000 83,022
- -----------------------------------------------------------------------------------------------------------------------------------
NL Industries, Inc., 0%/13% Sr. Sec. Disc. Nts., 10/15/05 (5) 100,000 98,000
- -----------------------------------------------------------------------------------------------------------------------------------
PPG Industries, Inc., 9% Debs., 5/1/21 65,000 79,576
- -----------------------------------------------------------------------------------------------------------------------------------
Sterling Chemical Holdings, Inc., 0%/13.50% Sr. Disc. Nts., 8/15/08 (5) 125,000 91,250
- -----------------------------------------------------------------------------------------------------------------------------------
Texas Petrochemical Corp., 11.125% Sr. Sub. Nts., Series B, 7/1/06 125,000 138,125
---------------
958,043
- -----------------------------------------------------------------------------------------------------------------------------------
METALS - 1.0%
Alcan Aluminum Ltd., 9.625% Debs., 7/15/19 125,000 134,783
- -----------------------------------------------------------------------------------------------------------------------------------
Gulf States Steel, Inc. (Alabama), 13.50% First Mtg. Nts., Series B,
4/15/03 100,000 103,000
- -----------------------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 2/1/03 100,000 107,750
- -----------------------------------------------------------------------------------------------------------------------------------
NS Group, Inc., 13.50% Gtd. Sr. Sec. Nts., 7/15/03 75,000 86,062
- -----------------------------------------------------------------------------------------------------------------------------------
Republic Engineered Steels, Inc., 9.875% First Mtg. Nts., 12/15/01 50,000 48,500
- -----------------------------------------------------------------------------------------------------------------------------------
WCI Steel, Inc., 10% Sr. Nts., Series B, 12/1/04 100,000 104,750
- -----------------------------------------------------------------------------------------------------------------------------------
Weirton Steel Corp., 10.75% Sr. Nts., 6/1/05 100,000 105,750
---------------
690,595
- -----------------------------------------------------------------------------------------------------------------------------------
PAPER - 0.6%
Celulosa Arauco y Constitucion SA, 7.25% Debs., 6/11/98 (3) 110,000 110,275
- -----------------------------------------------------------------------------------------------------------------------------------
Gaylord Container Corp., 12.75% Sr. Sub. Disc. Debs., 5/15/05 100,000 109,000
- -----------------------------------------------------------------------------------------------------------------------------------
Malette, Inc., 12.25% Sr. Sec. Nts., 7/15/04 (3) 100,000 113,750
</TABLE>
24 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PAPER (CONTINUED)
Stone Container Corp., 9.875% Sr. Nts., 2/1/01 $ 50,000 $ 51,125
---------------
384,150
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 6.3%
- -----------------------------------------------------------------------------------------------------------------------------------
AUTOS & HOUSING - 0.6%
Black & Decker Corp., 6.625% Nts., 11/15/00 110,000 111,221
- -----------------------------------------------------------------------------------------------------------------------------------
First Industrial LP, 7.15% Bonds, 5/15/27 60,000 61,743
- -----------------------------------------------------------------------------------------------------------------------------------
IHF Holdings, Inc., 0%/15% Sr. Sub. Disc. Nts., Series B, 11/15/04 (5) 125,000 107,500
- -----------------------------------------------------------------------------------------------------------------------------------
Signature Brands, Inc., 13% Sr. Sub. Nts., 8/15/02 (3) 100,000 106,375
---------------
386,839
- -----------------------------------------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 2.4%
American Skiing Corp., 12% Sr. Sub. Nts., Series B, 7/15/06 (3) 125,000 139,375
- -----------------------------------------------------------------------------------------------------------------------------------
Bally Total Fitness Holdings Corp., 9.875% Sr. Sub. Nts., 10/15/07 (2) 125,000 123,125
- -----------------------------------------------------------------------------------------------------------------------------------
Blockbuster Entertainment Corp., 6.625% Sr. Nts., 2/15/98 110,000 110,147
- -----------------------------------------------------------------------------------------------------------------------------------
Casino America, Inc., 12.50% Sr. Nts., 8/1/03 125,000 133,750
- -----------------------------------------------------------------------------------------------------------------------------------
Casino Magic of Louisiana Corp., 13% First Mtg. Nts., 8/15/03 250,000 238,750
- -----------------------------------------------------------------------------------------------------------------------------------
GB Property Funding Corp., 10.875% First Mtg. Nts., 1/15/04 100,000 87,500
- -----------------------------------------------------------------------------------------------------------------------------------
Hilton Hotels Corp., 7.375% Nts., 6/1/02 50,000 51,327
- -----------------------------------------------------------------------------------------------------------------------------------
HMH Properties, Inc., 8.875% Sr. Nts., 7/15/07 (2) 125,000 128,125
- -----------------------------------------------------------------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 (2) 125,000 128,125
- -----------------------------------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority (Connecticut), 13.50% Sr. Sec. Nts.,
Series B, 11/15/02 50,000 64,250
- -----------------------------------------------------------------------------------------------------------------------------------
Players International, Inc., 10.875% Sr. Nts., 4/15/05 125,000 134,062
- -----------------------------------------------------------------------------------------------------------------------------------
Prime Hospitality Corp., 9.25% First Mtg. Bonds, 1/15/06 125,000 130,625
- -----------------------------------------------------------------------------------------------------------------------------------
Rio Hotel & Casino, Inc., 10.625% Sr. Sub. Nts., 7/15/05 100,000 108,500
- -----------------------------------------------------------------------------------------------------------------------------------
Santa Fe Hotel, Inc., 11% Gtd. First Mtg. Nts., 12/15/00 91,000 77,805
---------------
1,655,466
- -----------------------------------------------------------------------------------------------------------------------------------
MEDIA - 2.5%
Adelphia Communications Corp., 10.50% Sr. Nts., 7/15/04 (2) 125,000 130,625
- -----------------------------------------------------------------------------------------------------------------------------------
Allbritton Communications Co., 9.75% Sr. Sub. Debs., Series B,
11/30/07 100,000 100,500
- -----------------------------------------------------------------------------------------------------------------------------------
Australis Media Ltd., 1.75%/15.75% Gtd. Sr. Sec. Disc. Nts., 5/15/03 (6) 151,328 110,469
- -----------------------------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp., 9.875% Sr. Sub. Debs., 2/15/13 75,000 80,062
- -----------------------------------------------------------------------------------------------------------------------------------
Comcast Corp., 9.375% Sr. Sub. Debs., 5/15/05 100,000 107,000
- -----------------------------------------------------------------------------------------------------------------------------------
EchoStar Satellite Broadcasting Corp., 0%/13.125% Sr. Sec. Disc. Nts., 3/15/04 (5) 100,000 79,500
- -----------------------------------------------------------------------------------------------------------------------------------
Fox Kids Worldwide, Inc., 0%/10.25% Sr. Disc. Nts., 11/1/07 (2)(5) 125,000 72,187
- -----------------------------------------------------------------------------------------------------------------------------------
Fox/Liberty Networks LLC, 8.875% Sr. Nts., 8/15/07 (2) 50,000 50,000
- -----------------------------------------------------------------------------------------------------------------------------------
James Cable Partners LP, 10.75% Sr. Nts., 8/15/04 (2) 125,000 130,937
- -----------------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co., 8.625% Sr. Sub. Nts., 9/15/07 (2) 125,000 126,250
- -----------------------------------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., 8.875% Sr. Nts., 7/15/07 125,000 124,062
- -----------------------------------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., 10% Sr. Sub. Nts., 9/30/05 100,000 105,250
- -----------------------------------------------------------------------------------------------------------------------------------
TCI Satellite Entertainment, Inc., 10.875% Sr. Sub. Nts., 2/15/07 (2) 75,000 77,625
- -----------------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc., 7.45% Nts., 2/1/98 110,000 110,369
- -----------------------------------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 125,000 138,356
</TABLE>
25 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MEDIA (CONTINUED)
United International Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts.:
Series B, 14%, 11/15/99 (7) $ 100,000 $ 82,500
12.376%, 11/15/99 (7) 50,000 41,250
---------------
1,666,942
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL: GENERAL - 0.7%
Costco Cos., Inc., 7.125% Sr. Nts., 6/15/05 90,000 91,597
- -----------------------------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc., 10% Sr. Nts., 2/15/01 40,000 44,217
- -----------------------------------------------------------------------------------------------------------------------------------
Parisian, Inc., 9.875% Sr. Sub. Nts., 7/15/03 (3) 100,000 105,000
- -----------------------------------------------------------------------------------------------------------------------------------
Sears Roebuck & Co., 8.39% Medium-Term Nts., 3/23/99 220,000 227,044
---------------
467,858
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 0.1%
K Mart Corp., 7.75% Debs., 10/1/12 100,000 94,500
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 2.3%
- -----------------------------------------------------------------------------------------------------------------------------------
FOOD - 0.9%
AmeriServe Food Distribution, Inc., 8.875% Sr. Nts., 10/15/06 (2) 125,000 125,313
- -----------------------------------------------------------------------------------------------------------------------------------
Dairy Mart Convenience Stores, Inc., 10.25% Sr. Sub. Nts., 3/15/04 100,000 98,500
- -----------------------------------------------------------------------------------------------------------------------------------
Dole Food Distributing, Inc., 6.75% Nts., 7/15/00 120,000 121,531
- -----------------------------------------------------------------------------------------------------------------------------------
Great Atlantic & Pacific Tea Co., 9.125% Debs., 1/15/98 115,000 115,666
- -----------------------------------------------------------------------------------------------------------------------------------
Jitney-Jungle Stores of America, Inc., 12% Gtd. Sr. Nts., 3/1/06 150,000 168,750
---------------
629,760
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/DRUGS - 0.2%
Integrated Health Services, Inc., 9.50% Sr. Sub. Nts., 9/15/07 (2) 100,000 103,750
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 0.8%
Columbia/HCA Healthcare Corp., 6.875% Nts., 7/15/01 120,000 120,121
- -----------------------------------------------------------------------------------------------------------------------------------
Dade International, Inc., 11.125% Sr. Sub. Nts., 5/1/06 125,000 139,688
- -----------------------------------------------------------------------------------------------------------------------------------
Mariner Health Group, Inc., 9.50% Sr. Sub. Nts., Series B, 4/1/06 (3) 125,000 130,000
- -----------------------------------------------------------------------------------------------------------------------------------
Paracelsus Healthcare Corp., 10% Sr. Sub. Unsec. Nts., 8/15/06 100,000 104,500
- -----------------------------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp., 8% Sr. Nts., 1/15/05 75,000 75,844
---------------
570,153
- -----------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD GOODS - 0.4%
Dyersburg Corp., 9.75% Sr. Sub. Nts., 9/1/07 (2) 100,000 102,500
- -----------------------------------------------------------------------------------------------------------------------------------
Kimberly-Clark Corp., 7.875% Debs., 2/1/23 65,000 70,064
- -----------------------------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 9.375% Sr. Nts., 4/1/01 100,000 103,750
---------------
276,314
- -----------------------------------------------------------------------------------------------------------------------------------
ENERGY - 1.5%
- -----------------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 0.9% Coastal Corp.:
8.125% Sr. Nts., 9/15/02 65,000 69,663
8.75% Sr. Nts., 5/15/99 35,000 36,339
- -----------------------------------------------------------------------------------------------------------------------------------
Falcon Drilling Co., Inc., 9.75% Sr. Nts., Series B, 1/15/01 55,000 57,475
- -----------------------------------------------------------------------------------------------------------------------------------
Forcenergy, Inc., 8.50% Sr. Sub. Nts., 2/15/07 125,000 125,000
- -----------------------------------------------------------------------------------------------------------------------------------
Louisiana Land & Exploration Co., 7.65% Debs., 12/1/23 75,000 80,169
- -----------------------------------------------------------------------------------------------------------------------------------
Mesa Operating Co., 0%/11.625% Gtd. Sr. Sub. Disc. Nts., 7/1/06 (5) 150,000 120,750
- -----------------------------------------------------------------------------------------------------------------------------------
Transamerican Energy Corp., 11.50% Sr. Nts., 6/15/02 (2) 75,000 77,250
- -----------------------------------------------------------------------------------------------------------------------------------
Williams Holdings of Delaware, Inc., 6.25% Sr. Unsec. Debs., 2/1/06 75,000 73,336
---------------
639,982
</TABLE>
26 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OIL-INTEGRATED - 0.6%
Gulf Canada Resources Ltd.:
8.25% Sr. Nts., 3/15/17 $ 75,000 $ 81,332
9% Debs., 8/15/99 75,000 78,561
- -----------------------------------------------------------------------------------------------------------------------------------
HS Resources, Inc., 9.25% Sr. Sub. Nts., 11/15/06 125,000 128,750
- -----------------------------------------------------------------------------------------------------------------------------------
Petroleum Geo-Services ASA, 7.50% Nts., 3/31/07 75,000 78,915
- -----------------------------------------------------------------------------------------------------------------------------------
Standard Oil/British Petroleum Co. plc, 9% Debs., 6/1/19 65,000 67,824
---------------
435,382
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL - 3.7%
- -----------------------------------------------------------------------------------------------------------------------------------
BANKS - 0.8%
Chase Manhattan Corp. (New), 6.625% Sr. Nts., 1/15/98 35,000 35,059
- -----------------------------------------------------------------------------------------------------------------------------------
Citicorp, 5.625% Sr. Nts., 2/15/01 65,000 64,245
- -----------------------------------------------------------------------------------------------------------------------------------
First Fidelity Bancorp, 8.50% Sub. Capital Nts., 4/1/98 35,000 35,331
- -----------------------------------------------------------------------------------------------------------------------------------
First Union Corp., 6.75% Sr. Nts., 1/15/98 35,000 35,067
- -----------------------------------------------------------------------------------------------------------------------------------
Fleet Mtg./Norstar Group, Inc., 9.90% Sub. Nts., 6/15/01 110,000 122,706
- -----------------------------------------------------------------------------------------------------------------------------------
Integra Financial Corp., 6.50% Sub. Nts., 4/15/00 110,000 111,090
- -----------------------------------------------------------------------------------------------------------------------------------
Mellon Financial Bank Corp., 6.50% Gtd. Sr. Nts., 12/1/97 145,000 145,076
---------------
548,574
- -----------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 2.2%
American General Finance Corp., 8.50% Sr. Nts., 8/15/98 45,000 45,910
- -----------------------------------------------------------------------------------------------------------------------------------
American General Institutional Capital, 8.125% Bonds, Series B,
3/15/46 (2) 75,000 80,645
- -----------------------------------------------------------------------------------------------------------------------------------
Beneficial Corp., 9.125% Debs., 2/15/98 110,000 110,987
- -----------------------------------------------------------------------------------------------------------------------------------
Capital One Financial Corp., 6.83% Sr. Nts., 5/17/99 50,000 50,491
- -----------------------------------------------------------------------------------------------------------------------------------
Capital One Funding Corp., 7.25% Nts., 12/1/03 40,000 40,281
- -----------------------------------------------------------------------------------------------------------------------------------
Chelsea GCA Realty Partner, Inc., 7.75% Gtd. Unsec. Unsub.
Nts., 1/26/01 50,000 51,347
- -----------------------------------------------------------------------------------------------------------------------------------
Commercial Credit Co., 5.55% Unsec. Nts., 2/15/01 110,000 107,999
- -----------------------------------------------------------------------------------------------------------------------------------
Countrywide Home Loans, Inc.:
6.05% Gtd. Medium-Term Nts., Series D, 3/1/01 65,000 64,632
6.085% Gtd. Medium-Term Nts., Series B, 7/14/99 45,000 45,009
- -----------------------------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 6.25% Unsub. Nts., 2/26/98 110,000 110,468
- -----------------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp.:
5.625% Nts., 2/15/01 125,000 123,073
5.65% Medium-Term Nts., 12/15/97 200,000 199,975
- -----------------------------------------------------------------------------------------------------------------------------------
Golden West Financial Corp., 8.625% Sub. Nts., 8/30/98 35,000 35,771
- -----------------------------------------------------------------------------------------------------------------------------------
MCII Holdings (USA), Inc., 0%/15% Sec. Nts., 11/15/02 (5) 125,000 104,219
- -----------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 6.50% Nts., 4/1/01 100,000 101,186
- -----------------------------------------------------------------------------------------------------------------------------------
Olympic Financial Ltd., Units (each unit consists of $1,000 principal
amount of 11.50% sr. nts., 3/15/07 and one warrant to purchase 6.84 shares
of common stock) (8) 125,000 128,750
- -----------------------------------------------------------------------------------------------------------------------------------
Salomon, Inc., 8.69% Sr. Medium-Term Nts., Series D, 3/1/99 125,000 129,235
---------------
1,529,978
- -----------------------------------------------------------------------------------------------------------------------------------
INSURANCE - 0.7%
Cigna Corp., 7.90% Nts., 12/14/98 120,000 122,303
- -----------------------------------------------------------------------------------------------------------------------------------
Conseco Financing Trust III, 8.796% Bonds, 4/1/27 100,000 109,067
- -----------------------------------------------------------------------------------------------------------------------------------
SunAmerica, Inc., 9% Sr. Nts., 1/15/99 125,000 128,884
</TABLE>
27 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INSURANCE (CONTINUED)
Travelers Property Casualty Corp., 6.75% Nts., 4/15/01 $ 110,000 $ 111,873
---------------
472,127
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 2.7%
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL MATERIALS - 0.2%
American Standard, Inc., 10.875% Sr. Nts., 5/15/99 (3) 100,000 106,250
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 0.9%
Beverly Enterprises, Inc., 9% Gtd. Sr. Nts., 2/15/06 100,000 103,500
- -----------------------------------------------------------------------------------------------------------------------------------
Employee Solutions, Inc., 10% Sr. Nts., 10/15/04 (3) 125,000 123,125
- -----------------------------------------------------------------------------------------------------------------------------------
Shop Vac Corp., 10.625% Sr. Nts., 9/1/03 125,000 135,938
- -----------------------------------------------------------------------------------------------------------------------------------
Sun Co., Inc., 7.95% Debs., 12/15/01 125,000 132,264
- -----------------------------------------------------------------------------------------------------------------------------------
USI American Holdings, Inc., 7.25% Gtd. Sr. Nts., 12/1/06 80,000 78,526
---------------
573,353
- -----------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 1.0%
Day International Group, Inc., 11.125% Sr. Sub. Nts., Series B, 6/1/05 (3) 100,000 107,500
- -----------------------------------------------------------------------------------------------------------------------------------
Interlake Corp., 12.125% Sr. Sub. Debs., 3/1/02 100,000 104,250
- -----------------------------------------------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., 6/1/05 100,000 109,750
- -----------------------------------------------------------------------------------------------------------------------------------
Jordan Industries, Inc., 10.375% Sr. Nts., 8/1/07 125,000 126,250
- -----------------------------------------------------------------------------------------------------------------------------------
Mark IV Industries, Inc., 8.75% Sub. Nts., 4/1/03 (3) 30,000 31,425
- -----------------------------------------------------------------------------------------------------------------------------------
Specialty Equipment Co., 11.375% Sr. Sub. Nts., 12/1/03 100,000 108,750
- -----------------------------------------------------------------------------------------------------------------------------------
Titan Wheel International, Inc., 8.75% Sr. Sub. Nts., 4/1/07 100,000 104,000
---------------
691,925
- -----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 0.6%
CSX Corp., 7.05% Debs., 5/1/02 70,000 71,641
- -----------------------------------------------------------------------------------------------------------------------------------
Federal Express Corp., 6.25% Nts., 4/15/98 165,000 165,204
- -----------------------------------------------------------------------------------------------------------------------------------
Norfolk Southern Corp., 7.35% Nts., 5/15/07 75,000 78,755
- -----------------------------------------------------------------------------------------------------------------------------------
Union Pacific Corp., 7% Nts., 6/15/00 105,000 106,962
---------------
422,562
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 3.6%
- -----------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 0.2%
GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98 100,000 102,000
- -----------------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE - 0.2%
Digital Equipment Corp., 7% Nts., 11/15/97 159,000 159,051
- -----------------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 0.5%
DecisionOne Corp., 9.75% Sr. Sub. Nts., 8/1/07 75,000 77,625
- -----------------------------------------------------------------------------------------------------------------------------------
DII Group, Inc., 8.50% Sr. Sub. Nts., 9/15/07 (2) 125,000 123,906
- -----------------------------------------------------------------------------------------------------------------------------------
Unisys Corp., 12% Sr. Nts., Series B, 4/15/03 100,000 112,500
---------------
314,031
- -----------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY - 2.7%
American Communications Services, Inc., 0%/13% Sr. Disc.
Nts., 11/1/05 (5) 125,000 88,125
- -----------------------------------------------------------------------------------------------------------------------------------
Brooks Fiber Properties, Inc., 0%/11.875% Sr. Disc. Nts., 11/1/06 (5) 125,000 98,594
- -----------------------------------------------------------------------------------------------------------------------------------
Centennial Cellular Corp., 10.125% Sr. Nts., 5/15/05 75,000 79,875
- -----------------------------------------------------------------------------------------------------------------------------------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc. Debs., 11/15/07 (5) 125,000 96,875
- -----------------------------------------------------------------------------------------------------------------------------------
Diamond Cable Communications plc, 0%/10.75% Sr. Disc. Nts., 2/15/07 (5) 125,000 80,625
- -----------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 0%/11.25% Sr. Disc. Nts., 7/15/07 (5) 125,000 83,125
- -----------------------------------------------------------------------------------------------------------------------------------
International CableTel, Inc., 0%/11.50% Sr. Deferred Coupon Nts., Series
B, 2/1/06 (5) 250,000 183,750
</TABLE>
28 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS-TECHNOLOGY (CONTINUED)
IXC Communications, Inc., 12.50% Sr. Nts., Series B, 10/1/05 $ 125,000 $ 142,500
- -----------------------------------------------------------------------------------------------------------------------------------
McCaw International Ltd., 0%/13% Sr. Disc. Nts., 4/15/07 (5) 100,000 61,500
- -----------------------------------------------------------------------------------------------------------------------------------
McLeodUSA, Inc., 0%/10.50% Sr. Disc. Nts., 3/1/07 (5) 100,000 69,500
- -----------------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc., 0%/14% Sr. Disc. Nts., Series B,
6/1/06 (5) 125,000 83,750
- -----------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 0%/9.75% Sr. Disc. Nts., 8/15/04 (5) 200,000 169,500
- -----------------------------------------------------------------------------------------------------------------------------------
Price Communications Cellular Holdings, Inc., 0%/13.50% Sr. Disc. Nts.,
8/1/07 (3)(5) 150,000 85,500
- -----------------------------------------------------------------------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum Finance Corp., 11% Sr. Nts.,
8/15/06 100,000 110,750
- -----------------------------------------------------------------------------------------------------------------------------------
Teleport Communications Group, Inc.:
0%/11.125% Sr. Disc. Nts., 7/1/07 (5) 50,000 39,438
9.875% Sr. Nts., 7/1/06 50,000 54,875
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. West Capital Funding, Inc., 6.85% Gtd. Nts., 1/15/02 175,000 177,865
- -----------------------------------------------------------------------------------------------------------------------------------
Western Wireless Corp., 10.50% Sr. Sub. Nts., 2/1/07 100,000 107,750
---------------
1,813,897
- -----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 1.0%
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 0.4%
Consumers Energy Co., 8.75% First Mtg. Nts., 2/15/98 110,000 110,719
- -----------------------------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 7.25% First Mtg. Nts., Series A, 2/1/99 (3) 50,000 50,500
- -----------------------------------------------------------------------------------------------------------------------------------
Panda Global Energy Co., 12.50% Sr. Nts., 4/15/04 (3) 125,000 120,625
---------------
281,844
- -----------------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES - 0.5%
AES Corp., 8.50% Sr. Sub. Nts., 11/1/07 (2) 50,000 49,375
- -----------------------------------------------------------------------------------------------------------------------------------
Northern Illinois Gas Co., 6.45% First Mtg. Bonds, 8/1/01 180,000 182,249
- -----------------------------------------------------------------------------------------------------------------------------------
Tennessee Gas Pipeline Co., 7.50% Bonds, 4/1/17 75,000 78,922
---------------
310,546
- -----------------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES - 0.1%
GTE Corp., 8.85% Debs., 3/1/98 45,000 45,396
---------------
Total Non-Convertible Corporate Bonds and Notes (Cost $15,857,137) 16,331,268
- -----------------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE CORPORATE BONDS AND NOTES - 0.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Barnett Banks, Inc., 8.50% Sub. Exchangeable Nts., 3/1/99 40,000 41,265
- -----------------------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc., 12% Cv. Sr. Sub. Nts., 2/15/01 (3) 100,000 83,500
---------------
Total Convertible Corporate Bonds and Notes (Cost $133,413) 124,765
- -----------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 5.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Zion First National Bank, 5.68%, dated 10/31/97, to be
repurchased at $3,396,607 on 11/3/97, collateralized by U.S. Treasury Nts.,
7.25%, 8/15/04, with a
value of $3,468,840 (Cost $3,395,000) 3,395,000 3,395,000
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $59,200,693) 98.6% 66,792,544
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.4 914,212
--------------- ---------------
NET ASSETS 100.0% $ 67,706,756
--------------- ---------------
--------------- ---------------
</TABLE>
29 Oppenheimer LifeSpan Funds
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
- --------------------------------------------------------------------------------
1. Non-income producing security.
2. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Directors. These securities amount to $1,982,816 or 2.93% of the Fund's net
assets as of October 31, 1997. 3. Identifies issues considered to be illiquid or
restricted - See Note 5 of Notes to Financial Statements. 4. Interest-Only
Strips represent the right to receive the monthly interest payments on an
underlying pool of mortgage loans. These securities typically decline in price
as interest rates decline. Most other fixed income securities increase in price
when interest rates decline. The principal amount of the underlying pool
represents the notional amount on which current interest is calculated. The
price of these securities is typically more sensitive to changes in prepayment
rates than traditional mortgage-backed securities (for example, GNMA
pass-throughs). Interest rates disclosed represent current yields based upon the
current cost basis and estimated timing and amount of future cash flows. 5.
Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date. 6. Represents the current interest
rate for an increasing rate security. 7. For zero coupon bonds, the interest
rate shown is the effective yield on the date of purchase. 8. Units may be
comprised of several components, such as debt and equity and/or warrants to
purchase equity at some point in the future. For units which represent debt
securities, face amount disclosed represents total underlying principal. See
accompanying Notes to Financial Statements.
30 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS OCTOBER 31, 1997
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS - 72.8%
- ------------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 3.5%
- ------------------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 1.3%
Ciba Specialty Chemicals AG (1) 1,200 $ 118,162
- ------------------------------------------------------------------------------------------------------------------------------------
Dexter Corp. 5,500 215,875
- ------------------------------------------------------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co. 2,300 130,812
- ------------------------------------------------------------------------------------------------------------------------------------
Ethyl Corp. 18,000 155,250
- ------------------------------------------------------------------------------------------------------------------------------------
Fuji Photo Film Co. 2,000 72,504
- ------------------------------------------------------------------------------------------------------------------------------------
IMC Global, Inc. 3,149 106,082
------------
798,685
- ------------------------------------------------------------------------------------------------------------------------------------
METALS - 1.1%
Allegheny Teledyne, Inc. 4,100 107,881
- ------------------------------------------------------------------------------------------------------------------------------------
Carpenter Technology Corp. 4,100 198,337
- ------------------------------------------------------------------------------------------------------------------------------------
Oregon Steel Mills, Inc. 8,800 185,350
- ------------------------------------------------------------------------------------------------------------------------------------
UNR Industries, Inc. 27,300 139,912
------------
631,480
- ------------------------------------------------------------------------------------------------------------------------------------
PAPER - 1.1%
Fletcher Challenge Forest 85,000 82,180
- ------------------------------------------------------------------------------------------------------------------------------------
Fort James Corp. 5,225 207,367
- ------------------------------------------------------------------------------------------------------------------------------------
International Paper Co. 3,100 139,500
- ------------------------------------------------------------------------------------------------------------------------------------
Kimberly-Clark de Mexico, SA 17,000 73,931
- ------------------------------------------------------------------------------------------------------------------------------------
Unisource Worldwide, Inc. 9,300 151,706
------------
654,684
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 9.0%
- ------------------------------------------------------------------------------------------------------------------------------------
AUTOS & HOUSING - 1.5%
Bridgestone Corp. 4,000 86,472
- ------------------------------------------------------------------------------------------------------------------------------------
Cornerstone Properties, Inc. 11,400 210,187
- ------------------------------------------------------------------------------------------------------------------------------------
Goodyear Tire & Rubber Co. 3,000 187,875
- ------------------------------------------------------------------------------------------------------------------------------------
Groupe SEB SA 900 102,630
- ------------------------------------------------------------------------------------------------------------------------------------
Lear Corp. (1) 1,500 72,094
- ------------------------------------------------------------------------------------------------------------------------------------
Rinnai Corp. 5,000 81,483
- ------------------------------------------------------------------------------------------------------------------------------------
Tower Realty Trust, Inc. (1) 6,800 171,700
------------
912,441
- ------------------------------------------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 2.2%
Alaska Air Group, Inc. (1) 2,300 76,762
- ------------------------------------------------------------------------------------------------------------------------------------
America West Holdings Corp., Cl. B (1) 4,500 66,656
- ------------------------------------------------------------------------------------------------------------------------------------
AMR Corp. (1) 1,900 221,231
- ------------------------------------------------------------------------------------------------------------------------------------
CDL Hotels International Ltd. 330,000 94,993
- ------------------------------------------------------------------------------------------------------------------------------------
Granada Group plc 10,000 137,841
- ------------------------------------------------------------------------------------------------------------------------------------
Landry's Seafood Restaurants, Inc. (1) 2,800 78,400
- ------------------------------------------------------------------------------------------------------------------------------------
Piccadilly Cafeterias, Inc. 8,700 129,412
- ------------------------------------------------------------------------------------------------------------------------------------
Regal Cinemas, Inc. (1) 6,775 155,825
- ------------------------------------------------------------------------------------------------------------------------------------
UAL Corp. (1) 1,000 87,625
- ------------------------------------------------------------------------------------------------------------------------------------
Vistana, Inc. (1) 11,600 265,350
------------
1,314,095
- ------------------------------------------------------------------------------------------------------------------------------------
MEDIA - 1.1%
Applied Graphics Technologies, Inc. (1) 4,800 256,800
</TABLE>
31 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MEDIA (CONTINUED)
Benpres Holdings Corp., Sponsored GDR (1) 5,000 $ 23,125
- ------------------------------------------------------------------------------------------------------------------------------------
Reed International plc 10,000 98,853
- ------------------------------------------------------------------------------------------------------------------------------------
Reuters Holdings plc 9,000 97,571
- ------------------------------------------------------------------------------------------------------------------------------------
Television Broadcasts Ltd. 28,000 77,883
- ------------------------------------------------------------------------------------------------------------------------------------
Wolters Kluwer NV 1,000 122,841
------------
677,073
- ------------------------------------------------------------------------------------------------------------------------------------
RETAIL: GENERAL - 2.0%
adidas AG 1,000 145,833
- ------------------------------------------------------------------------------------------------------------------------------------
Dayton Hudson Corp. 1,600 100,500
- ------------------------------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc. (1) 1,600 70,400
- ------------------------------------------------------------------------------------------------------------------------------------
Marks & Spencer plc 15,000 152,179
- ------------------------------------------------------------------------------------------------------------------------------------
North Face, Inc. (The) (1) 5,900 139,387
- ------------------------------------------------------------------------------------------------------------------------------------
Penney (J.C.) Co., Inc. 6,400 375,600
- ------------------------------------------------------------------------------------------------------------------------------------
Wolverine World Wide, Inc. 9,100 200,200
------------
1,184,099
- ------------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 2.2%
Argos plc 11,400 120,722
- ------------------------------------------------------------------------------------------------------------------------------------
Brown Group, Inc. 9,300 140,662
- ------------------------------------------------------------------------------------------------------------------------------------
Brylane, Inc. (1) 500 21,719
- ------------------------------------------------------------------------------------------------------------------------------------
Dickson Concepts International Ltd. 42,000 90,472
- ------------------------------------------------------------------------------------------------------------------------------------
Eagle Hardware & Garden, Inc. (1) 8,100 137,700
- ------------------------------------------------------------------------------------------------------------------------------------
Guitar Center, Inc. (1) 5,000 108,750
- ------------------------------------------------------------------------------------------------------------------------------------
Hennes & Mauritz AB, B Shares 2,550 104,430
- ------------------------------------------------------------------------------------------------------------------------------------
Koninklijke Ahold NV 3,600 92,192
- ------------------------------------------------------------------------------------------------------------------------------------
New England Business Service, Inc. 6,600 192,225
- ------------------------------------------------------------------------------------------------------------------------------------
Payless ShoeSource, Inc. (1) 1,500 83,625
- ------------------------------------------------------------------------------------------------------------------------------------
Shimamura Co. Ltd. 2,000 54,045
- ------------------------------------------------------------------------------------------------------------------------------------
Stage Stores, Inc. (1) 4,900 178,850
------------
1,325,392
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 9.8%
- ------------------------------------------------------------------------------------------------------------------------------------
BEVERAGES - 0.5%
Embotelladora Andina SA, Series A, Sponsored ADR 3,400 81,600
- ------------------------------------------------------------------------------------------------------------------------------------
Embotelladora Andina SA, Series B, Sponsored ADR 3,400 69,700
- ------------------------------------------------------------------------------------------------------------------------------------
Quilmes Industrial Quinsa SA, Sponsored ADR 4,000 49,500
- ------------------------------------------------------------------------------------------------------------------------------------
Scottish & Newcastle plc 7,000 78,588
------------
279,388
- ------------------------------------------------------------------------------------------------------------------------------------
FOOD - 2.0%
American Stores Co. 5,700 146,419
- ------------------------------------------------------------------------------------------------------------------------------------
Carrefour Supermarche SA 225 117,192
- ------------------------------------------------------------------------------------------------------------------------------------
Colruyt SA 250 134,126
- ------------------------------------------------------------------------------------------------------------------------------------
Jeronimo Martins & Filho, SA 1,600 104,249
- ------------------------------------------------------------------------------------------------------------------------------------
JP Foodservice, Inc. (1) 4,600 146,912
- ------------------------------------------------------------------------------------------------------------------------------------
Kroger Co. (1) 5,200 169,650
- ------------------------------------------------------------------------------------------------------------------------------------
Morningstar Group, Inc. (1) 4,000 171,000
- ------------------------------------------------------------------------------------------------------------------------------------
Safeway, Inc. (1) 2,200 127,875
- ------------------------------------------------------------------------------------------------------------------------------------
William Morrison Supermarkets plc 31,000 102,408
------------
1,219,831
</TABLE>
32 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
HEALTHCARE/DRUGS - 3.0%
Dura Pharmaceuticals, Inc. (1) 4,100 $ 198,337
- ------------------------------------------------------------------------------------------------------------------------------------
Gedeon Richter (2) 1,000 92,066
- ------------------------------------------------------------------------------------------------------------------------------------
Glaxo Wellcome plc, Sponsored ADR 4,800 205,500
- ------------------------------------------------------------------------------------------------------------------------------------
Incyte Pharmaceuticals, Inc. (1) 1,400 112,700
- ------------------------------------------------------------------------------------------------------------------------------------
Medicis Pharmaceutical Corp., Cl. A (1) 5,000 240,625
- ------------------------------------------------------------------------------------------------------------------------------------
Novartis AG 105 164,901
- ------------------------------------------------------------------------------------------------------------------------------------
Novo-Nordisk AS, B Shares 1,200 130,059
- ------------------------------------------------------------------------------------------------------------------------------------
Roche Holding AG 15 132,180
- ------------------------------------------------------------------------------------------------------------------------------------
Schering AG 1,075 105,554
- ------------------------------------------------------------------------------------------------------------------------------------
SKW Trostberg AG 3,750 129,637
- ------------------------------------------------------------------------------------------------------------------------------------
Takeda Chemical Industries Ltd. 5,000 136,360
- ------------------------------------------------------------------------------------------------------------------------------------
Zeneca Group plc 4,250 134,056
------------
1,781,975
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 3.4%
Acuson Corp. (1) 6,700 125,625
- ------------------------------------------------------------------------------------------------------------------------------------
Alternative Living Services, Inc. (1) 4,500 110,250
- ------------------------------------------------------------------------------------------------------------------------------------
Concentra Managed Care, Inc. (1) 1,200 39,150
- ------------------------------------------------------------------------------------------------------------------------------------
FPA Medical Management, Inc. (1) 5,600 135,100
- ------------------------------------------------------------------------------------------------------------------------------------
Healthcare Financial Partners, Inc. (1) 800 27,600
- ------------------------------------------------------------------------------------------------------------------------------------
Luxottica Group SpA, Sponsored ADR 2,000 127,750
- ------------------------------------------------------------------------------------------------------------------------------------
National Surgery Centers, Inc. (1) 10,000 250,000
- ------------------------------------------------------------------------------------------------------------------------------------
Pediatrix Medical Group, Inc. (1) 5,500 232,375
- ------------------------------------------------------------------------------------------------------------------------------------
Renal Treatment Centers, Inc. (1) 3,900 129,431
- ------------------------------------------------------------------------------------------------------------------------------------
Rural/Metro Corp. (1) 7,100 246,725
- ------------------------------------------------------------------------------------------------------------------------------------
SmithKline Beecham plc 17,724 167,926
- ------------------------------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp. (1) 5,210 159,231
- ------------------------------------------------------------------------------------------------------------------------------------
Total Renal Care Holdings, Inc. (1) 7,166 220,802
- ------------------------------------------------------------------------------------------------------------------------------------
WellPoint Health Networks, Inc. (1) 2,000 91,500
------------
2,063,465
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD GOODS - 0.9%
Blyth Industries, Inc. (1) 4,700 116,912
- ------------------------------------------------------------------------------------------------------------------------------------
L'OREAL 375 132,635
- ------------------------------------------------------------------------------------------------------------------------------------
Premark International, Inc. 5,800 156,962
- ------------------------------------------------------------------------------------------------------------------------------------
Reckitt & Colman plc 10,000 153,353
------------
559,862
- ------------------------------------------------------------------------------------------------------------------------------------
ENERGY - 6.5%
- ------------------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 1.7%
Diamond Offshore Drilling, Inc. 4,400 273,900
- ------------------------------------------------------------------------------------------------------------------------------------
Global Marine, Inc. (1) 4,800 149,400
- ------------------------------------------------------------------------------------------------------------------------------------
Oryx Energy Co. (1) 4,400 121,275
- ------------------------------------------------------------------------------------------------------------------------------------
Pool Energy Services Co. (1) 3,100 105,206
- ------------------------------------------------------------------------------------------------------------------------------------
Tidewater, Inc. 3,200 210,200
- ------------------------------------------------------------------------------------------------------------------------------------
Varco International, Inc. (1) 2,600 158,437
------------
1,018,418
- ------------------------------------------------------------------------------------------------------------------------------------
OIL-INTEGRATED - 4.8%
Amoco Corp. 3,600 330,075
- ------------------------------------------------------------------------------------------------------------------------------------
Atlantic Richfield Co. 3,400 279,862
</TABLE>
33 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OIL-INTEGRATED (CONTINUED)
Chevron Corp. 6,300 $ 522,506
- ------------------------------------------------------------------------------------------------------------------------------------
Cliffs Drilling Co. (1) 1,300 94,494
- ------------------------------------------------------------------------------------------------------------------------------------
Exxon Corp. 6,000 368,625
- ------------------------------------------------------------------------------------------------------------------------------------
Mobil Corp. 5,200 378,625
- ------------------------------------------------------------------------------------------------------------------------------------
Occidental Petroleum Corp. 10,800 301,050
- ------------------------------------------------------------------------------------------------------------------------------------
Patterson Energy, Inc. (1) 2,800 156,800
- ------------------------------------------------------------------------------------------------------------------------------------
Quinenco SA, ADR (1) 3,000 43,875
- ------------------------------------------------------------------------------------------------------------------------------------
Shell Transport & Trading Co. plc 16,000 113,359
- ------------------------------------------------------------------------------------------------------------------------------------
Total SA, B Shares 1,641 181,734
- ------------------------------------------------------------------------------------------------------------------------------------
UTI Energy Corp. (1) 2,500 111,562
------------
2,882,567
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL - 11.6%
- ------------------------------------------------------------------------------------------------------------------------------------
BANKS - 4.8%
Banco Popular Espanol SA 1,720 101,267
- ------------------------------------------------------------------------------------------------------------------------------------
Bank of Tokyo-Mitsubishi Ltd. 6,000 78,324
- ------------------------------------------------------------------------------------------------------------------------------------
BankAmerica Corp. 5,400 386,100
- ------------------------------------------------------------------------------------------------------------------------------------
BankBoston Corp. 5,400 437,737
- ------------------------------------------------------------------------------------------------------------------------------------
Bayerische Vereinsbank AG 2,000 116,085
- ------------------------------------------------------------------------------------------------------------------------------------
Credit Suisse Group 750 105,943
- ------------------------------------------------------------------------------------------------------------------------------------
Credito Italiano (1) 48,000 128,225
- ------------------------------------------------------------------------------------------------------------------------------------
First Union Corp. 8,400 412,125
- ------------------------------------------------------------------------------------------------------------------------------------
Halifax plc (1) 10,000 113,442
- ------------------------------------------------------------------------------------------------------------------------------------
Lloyds TSB Group plc 19,000 237,365
- ------------------------------------------------------------------------------------------------------------------------------------
Mitsubishi Trust & Banking Corp. 8,000 98,445
- ------------------------------------------------------------------------------------------------------------------------------------
NationsBank Corp. 4,700 281,412
- ------------------------------------------------------------------------------------------------------------------------------------
Wells Fargo & Co. 1,300 378,787
------------
2,875,257
- ------------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 4.6%
Amresco, Inc. (1) 8,400 263,550
- ------------------------------------------------------------------------------------------------------------------------------------
Camden Property Trust 6,100 183,000
- ------------------------------------------------------------------------------------------------------------------------------------
Capstone Capital Corp. 7,500 177,187
- ------------------------------------------------------------------------------------------------------------------------------------
Cattles plc 13,000 81,531
- ------------------------------------------------------------------------------------------------------------------------------------
Crescent Real Estate Equities, Inc. 10,100 363,600
- ------------------------------------------------------------------------------------------------------------------------------------
Haw Par Brothers International Ltd. 46,000 74,570
- ------------------------------------------------------------------------------------------------------------------------------------
Health & Retirement Properties Trust 8,200 153,750
- ------------------------------------------------------------------------------------------------------------------------------------
ING Groep NV 2,752 115,569
- ------------------------------------------------------------------------------------------------------------------------------------
Lend Lease Corp. Ltd. 4,000 81,652
- ------------------------------------------------------------------------------------------------------------------------------------
Meditrust Corp., Paired Stock 4,100 175,275
- ------------------------------------------------------------------------------------------------------------------------------------
Money Store, Inc. (The) 2,000 56,750
- ------------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co. 3,500 171,500
- ------------------------------------------------------------------------------------------------------------------------------------
Nichiei Co. Ltd. 1,000 109,753
- ------------------------------------------------------------------------------------------------------------------------------------
Perlis Plantations Berhad 32,500 59,179
- ------------------------------------------------------------------------------------------------------------------------------------
Salomon, Inc. 1,900 147,606
- ------------------------------------------------------------------------------------------------------------------------------------
Sirrom Capital Corp. 2,800 141,050
- ------------------------------------------------------------------------------------------------------------------------------------
Southcorp Holdings Ltd. 16,000 53,500
- ------------------------------------------------------------------------------------------------------------------------------------
Swire Pacific Ltd., Cl. B 100,000 106,087
</TABLE>
34 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DIVERSIFIED FINANCIAL (CONTINUED)
Travelers Group, Inc. 2,900 $ 203,000
------------
2,718,109
- ------------------------------------------------------------------------------------------------------------------------------------
INSURANCE - 2.2%
AFLAC, Inc. 1,400 71,225
- ------------------------------------------------------------------------------------------------------------------------------------
Allstate Corp. 1,300 107,819
- ------------------------------------------------------------------------------------------------------------------------------------
Chubb Corp. 2,700 178,875
- ------------------------------------------------------------------------------------------------------------------------------------
Conseco, Inc. 5,700 248,662
- ------------------------------------------------------------------------------------------------------------------------------------
Equitable Cos., Inc. 4,900 201,819
- ------------------------------------------------------------------------------------------------------------------------------------
HSB Group, Inc. 3,000 156,562
- ------------------------------------------------------------------------------------------------------------------------------------
Pre-Paid Legal Services, Inc. (1) 1,800 54,450
- ------------------------------------------------------------------------------------------------------------------------------------
Torchmark Corp. 4,200 167,475
- ------------------------------------------------------------------------------------------------------------------------------------
Travelers Property Casualty Corp., Cl. A 3,900 140,888
------------
1,327,775
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 10.2%
- ------------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.7%
ABB AG 70 91,486
- ------------------------------------------------------------------------------------------------------------------------------------
Johnson Electric Holdings Ltd. 42,000 114,652
- ------------------------------------------------------------------------------------------------------------------------------------
Power Technologies, Inc. (1) 3,900 120,413
- ------------------------------------------------------------------------------------------------------------------------------------
Siebe plc 5,000 96,003
------------
422,554
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 4.2%
Adecco SA 300 95,604
- ------------------------------------------------------------------------------------------------------------------------------------
American Disposal Services, Inc. (1) 5,700 200,925
- ------------------------------------------------------------------------------------------------------------------------------------
Caribiner International, Inc. (1) 3,200 143,400
- ------------------------------------------------------------------------------------------------------------------------------------
Central Parking Corp. 1,800 98,325
- ------------------------------------------------------------------------------------------------------------------------------------
Computer Horizons Corp. (1) 7,500 227,813
- ------------------------------------------------------------------------------------------------------------------------------------
Computer Task Group, Inc. 9,000 254,250
- ------------------------------------------------------------------------------------------------------------------------------------
Corestaff, Inc. (1) 6,800 168,300
- ------------------------------------------------------------------------------------------------------------------------------------
Eastern Environmental Services, Inc. (1) 7,300 186,150
- ------------------------------------------------------------------------------------------------------------------------------------
Guilbert SA 625 81,437
- ------------------------------------------------------------------------------------------------------------------------------------
Hays plc 14,000 164,336
- ------------------------------------------------------------------------------------------------------------------------------------
Helix Technology Corp. 2,800 126,000
- ------------------------------------------------------------------------------------------------------------------------------------
Kurita Water Industries Ltd. 6,000 105,762
- ------------------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co. (1) 4,100 138,888
- ------------------------------------------------------------------------------------------------------------------------------------
SpeedFam International, Inc. (1) 1,500 55,688
- ------------------------------------------------------------------------------------------------------------------------------------
Tetra Tech, Inc. (1) 6,425 167,853
- ------------------------------------------------------------------------------------------------------------------------------------
Transaction Systems Architects, Inc., Cl. A (1) 5,400 211,275
- ------------------------------------------------------------------------------------------------------------------------------------
Viad Corp. 5,000 91,250
------------
2,517,256
- ------------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 4.4%
Aeroquip-Vickers, Inc. 2,500 130,156
- ------------------------------------------------------------------------------------------------------------------------------------
AGCO Corp. 3,900 113,100
- ------------------------------------------------------------------------------------------------------------------------------------
Canon Sales Co., Inc. 300 5,463
- ------------------------------------------------------------------------------------------------------------------------------------
Case Corp. 3,900 233,269
- ------------------------------------------------------------------------------------------------------------------------------------
Deere & Co. 4,400 231,550
- ------------------------------------------------------------------------------------------------------------------------------------
Halter Marine Group, Inc. (1) 2,100 109,856
- ------------------------------------------------------------------------------------------------------------------------------------
Ingersoll-Rand Co. 4,200 163,538
</TABLE>
35 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MANUFACTURING (CONTINUED)
Mannesmann AG 350 $ 148,447
- ------------------------------------------------------------------------------------------------------------------------------------
NSK Ltd. 8,000 33,259
- ------------------------------------------------------------------------------------------------------------------------------------
PACCAR, Inc. 10,700 482,169
- ------------------------------------------------------------------------------------------------------------------------------------
Parker-Hannifin Corp. 2,900 121,256
- ------------------------------------------------------------------------------------------------------------------------------------
Ricoh Co. Ltd. 10,000 128,877
- ------------------------------------------------------------------------------------------------------------------------------------
SMC Corp. 500 43,236
- ------------------------------------------------------------------------------------------------------------------------------------
Smiths Industries plc 6,000 86,528
- ------------------------------------------------------------------------------------------------------------------------------------
Societe BIC SA 1,600 109,251
- ------------------------------------------------------------------------------------------------------------------------------------
Textron, Inc. 4,600 265,938
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Industries, Inc. 9,300 249,938
------------
2,655,831
- ------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 0.9%
Brambles Industries Ltd. 4,600 88,161
- ------------------------------------------------------------------------------------------------------------------------------------
Burlington Northern Santa Fe Corp. 1,300 123,500
- ------------------------------------------------------------------------------------------------------------------------------------
GATX Corp. 4,100 264,706
- ------------------------------------------------------------------------------------------------------------------------------------
Gulfmark Offshore, Inc. (1) 500 18,188
- ------------------------------------------------------------------------------------------------------------------------------------
MotivePower Industries, Inc. (1) 2,400 63,900
------------
558,455
- ------------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 15.1%
- ------------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 1.6%
General Dynamics Corp. 4,100 332,869
- ------------------------------------------------------------------------------------------------------------------------------------
Lockheed Martin Corp. 2,700 256,669
- ------------------------------------------------------------------------------------------------------------------------------------
REMEC, Inc. (1) 3,100 78,663
- ------------------------------------------------------------------------------------------------------------------------------------
TRW, Inc. 5,000 286,250
------------
954,451
- ------------------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE - 2.6%
Apex PC Solutions, Inc. (1) 3,400 87,550
- ------------------------------------------------------------------------------------------------------------------------------------
CFM Technologies, Inc. (1) 2,000 36,500
- ------------------------------------------------------------------------------------------------------------------------------------
CHS Electronics, Inc. (1) 1,200 29,325
- ------------------------------------------------------------------------------------------------------------------------------------
Compaq Computer Corp. (1) 3,100 197,625
- ------------------------------------------------------------------------------------------------------------------------------------
Digital Lightwave, Inc. (1) 1,900 34,675
- ------------------------------------------------------------------------------------------------------------------------------------
Insight Enterprises, Inc. (1) 5,400 211,275
- ------------------------------------------------------------------------------------------------------------------------------------
International Business Machines Corp. 1,900 186,319
- ------------------------------------------------------------------------------------------------------------------------------------
Level One Communications, Inc. (1) 1,100 49,500
- ------------------------------------------------------------------------------------------------------------------------------------
Lexmark International Group, Inc., Cl. A (1) 900 27,506
- ------------------------------------------------------------------------------------------------------------------------------------
Network Appliance, Inc. (1) 3,600 180,900
- ------------------------------------------------------------------------------------------------------------------------------------
Quantum Corp. (1) 4,400 139,150
- ------------------------------------------------------------------------------------------------------------------------------------
Semtech Corp. (1) 1,700 79,156
- ------------------------------------------------------------------------------------------------------------------------------------
Storage Technology Corp. (New) (1) 4,800 281,700
------------
1,541,181
- ------------------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 3.6%
BEA Systems, Inc. (1) 8,600 116,100
- ------------------------------------------------------------------------------------------------------------------------------------
Electronic Data Systems Corp. 1,400 54,163
- ------------------------------------------------------------------------------------------------------------------------------------
HNC Software, Inc. (1) 3,000 111,000
- ------------------------------------------------------------------------------------------------------------------------------------
JDA Software Group, Inc. (1) 3,900 121,875
- ------------------------------------------------------------------------------------------------------------------------------------
Pegasystems, Inc. (1) 6,000 109,500
- ------------------------------------------------------------------------------------------------------------------------------------
Remedy Corp. (1) 3,400 159,800
</TABLE>
36 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMPUTER SOFTWARE/SERVICES (CONTINUED)
SAP AG, Preference 700 $ 209,249
- ------------------------------------------------------------------------------------------------------------------------------------
Sapient Corp. (1) 2,800 149,100
- ------------------------------------------------------------------------------------------------------------------------------------
Security Dynamics Technologies, Inc. (1) 4,500 152,438
- ------------------------------------------------------------------------------------------------------------------------------------
Summit Design, Inc. (1) 1,600 23,200
- ------------------------------------------------------------------------------------------------------------------------------------
Sykes Enterprises, Inc. (1) 6,750 167,906
- ------------------------------------------------------------------------------------------------------------------------------------
Technology Solutions Co. (1) 7,250 228,375
- ------------------------------------------------------------------------------------------------------------------------------------
Veritas Software Corp. (1) 3,950 164,419
- ------------------------------------------------------------------------------------------------------------------------------------
Viasoft, Inc. (1) 3,100 127,100
- ------------------------------------------------------------------------------------------------------------------------------------
Visio Corp. (1) 3,600 133,875
- ------------------------------------------------------------------------------------------------------------------------------------
Wind River Systems (1) 3,700 141,988
------------
2,170,088
- ------------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS - 4.1%
ATMI, Inc. (1) 3,800 102,125
- ------------------------------------------------------------------------------------------------------------------------------------
Bowthorpe plc 12,000 79,083
- ------------------------------------------------------------------------------------------------------------------------------------
Electro Scientific Industries, Inc. (1) 2,600 126,100
- ------------------------------------------------------------------------------------------------------------------------------------
Electrocomponents plc 15,000 116,335
- ------------------------------------------------------------------------------------------------------------------------------------
Getronics NV 4,000 132,116
- ------------------------------------------------------------------------------------------------------------------------------------
Hirose Electric Co. 2,000 130,540
- ------------------------------------------------------------------------------------------------------------------------------------
Keyence Corp. 660 98,778
- ------------------------------------------------------------------------------------------------------------------------------------
Matsushita Electric Industrial Co. 5,000 83,978
- ------------------------------------------------------------------------------------------------------------------------------------
National Semiconductor Corp. (1) 3,200 115,200
- ------------------------------------------------------------------------------------------------------------------------------------
Omron Corp. 7,000 118,733
- ------------------------------------------------------------------------------------------------------------------------------------
Philips Electronics NV 2,000 156,643
- ------------------------------------------------------------------------------------------------------------------------------------
Philips Electronics NV, NY Shares 1,600 125,400
- ------------------------------------------------------------------------------------------------------------------------------------
Samsung Electronics Ltd., Sponsored GDR (2) 2,700 27,500
- ------------------------------------------------------------------------------------------------------------------------------------
Samsung Electronics Ltd., Sponsored GDR (1)(2) 44 919
- ------------------------------------------------------------------------------------------------------------------------------------
Sawtek, Inc. (1) 2,500 85,000
- ------------------------------------------------------------------------------------------------------------------------------------
SCI Systems, Inc. (1) 3,000 132,000
- ------------------------------------------------------------------------------------------------------------------------------------
Sony Corp. 2,100 174,432
- ------------------------------------------------------------------------------------------------------------------------------------
TDK Corp. 1,000 82,980
- ------------------------------------------------------------------------------------------------------------------------------------
Vitesse Semiconductor Corp. (1) 4,250 184,344
- ------------------------------------------------------------------------------------------------------------------------------------
VTech Holdings Ltd. 60,000 117,213
- ------------------------------------------------------------------------------------------------------------------------------------
Waters Corp. (1) 6,700 294,800
------------
2,484,219
- ------------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY - 3.2%
Boston Communications Group, Inc. (1) 2,300 33,925
- ------------------------------------------------------------------------------------------------------------------------------------
British Sky Broadcasting Group plc 11,500 81,573
- ------------------------------------------------------------------------------------------------------------------------------------
Comverse Technology, Inc. (1) 5,500 226,875
- ------------------------------------------------------------------------------------------------------------------------------------
DSP Communications, Inc. (1) 10,000 185,000
- ------------------------------------------------------------------------------------------------------------------------------------
Ericsson LM, B Shares 3,720 164,025
- ------------------------------------------------------------------------------------------------------------------------------------
Inter-Tel, Inc. 3,900 97,134
- ------------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., Cl. A (1) 154 4,043
- ------------------------------------------------------------------------------------------------------------------------------------
Nippon Telegraph & Telephone Corp. 17 144,176
- ------------------------------------------------------------------------------------------------------------------------------------
P-COM, Inc. (1) 7,800 156,975
- ------------------------------------------------------------------------------------------------------------------------------------
Pacific Gateway Exchange, Inc. (1) 3,900 149,175
- ------------------------------------------------------------------------------------------------------------------------------------
SK Telecommunications Co. Ltd., ADR 7,300 40,150
- ------------------------------------------------------------------------------------------------------------------------------------
Tekelec (1) 3,800 159,125
</TABLE>
37 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TELECOMMUNICATIONS-TECHNOLOGY (CONTINUED)
Telecom Italia Mobile SpA 35,000 $ 130,048
- ------------------------------------------------------------------------------------------------------------------------------------
Uniphase Corp. (1) 2,400 161,100
- ------------------------------------------------------------------------------------------------------------------------------------
Vodafone Group plc 29,000 159,385
------------
1,892,709
- ------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 7.1%
- ------------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 2.1%
Duke Energy Corp. 4,961 239,368
- ------------------------------------------------------------------------------------------------------------------------------------
FPL Group, Inc. 6,300 325,631
- ------------------------------------------------------------------------------------------------------------------------------------
Illinova Corp. 5,300 117,925
- ------------------------------------------------------------------------------------------------------------------------------------
Kansas City Power & Light Co. 6,700 196,394
- ------------------------------------------------------------------------------------------------------------------------------------
Veba AG 3,000 169,073
- ------------------------------------------------------------------------------------------------------------------------------------
Western Resources, Inc. 5,000 186,250
------------
1,234,641
- ------------------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES - 2.3%
Columbia Gas System, Inc. 5,500 397,375
- ------------------------------------------------------------------------------------------------------------------------------------
El Paso Natural Gas Co. 5,400 323,663
- ------------------------------------------------------------------------------------------------------------------------------------
MCN Energy Group, Inc. 5,200 180,050
- ------------------------------------------------------------------------------------------------------------------------------------
National Fuel Gas Co. 4,800 211,800
- ------------------------------------------------------------------------------------------------------------------------------------
Questar Corp. 4,500 173,813
- ------------------------------------------------------------------------------------------------------------------------------------
RWE AG, Preference 2,500 92,162
------------
1,378,863
- ------------------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES - 2.7%
Ameritech Corp. 3,000 195,000
- ------------------------------------------------------------------------------------------------------------------------------------
Bell Atlantic Corp. 5,264 420,462
- ------------------------------------------------------------------------------------------------------------------------------------
Frontier Corp. 10,700 231,388
- ------------------------------------------------------------------------------------------------------------------------------------
Tel-Save Holdings, Inc. (1) 7,300 156,950
- ------------------------------------------------------------------------------------------------------------------------------------
Telefonica de Espana 3,500 95,236
- ------------------------------------------------------------------------------------------------------------------------------------
U S West Communications Group 12,300 489,694
------------
1,588,730
------------
Total Common Stocks (Cost $36,155,153) 43,623,574
- ------------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS - 0.3%
- ------------------------------------------------------------------------------------------------------------------------------------
Case Corp., $4.50 Cum. Cv., Series A, Non-Vtg. (Cost $114,800) 1,200 174,000
<CAPTION>
UNITS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES - 0.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Australis Media Ltd. Wts., Exp. 10/01 (3) 100 1
- ------------------------------------------------------------------------------------------------------------------------------------
Dairy Mart Convenience Stores, Inc. Wts., Exp. 12/01 (3) 333 333
- ------------------------------------------------------------------------------------------------------------------------------------
Haw Par Brothers International Ltd. Wts., Exp. 7/01 3,300 1,091
- ------------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc. Wts., Exp. 6/00 (3) 50 3,500
- ------------------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc.:
Conditional Wts., Exp. 12/97 (3) 500 313
Wts., Exp. 12/97 (3) 500 6,500
- ------------------------------------------------------------------------------------------------------------------------------------
Price Communications Corp. Wts., 8/07 344 3
</TABLE>
38 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
UNITS SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
Signature Brands, Inc. Wts., Exp. 12/49 (3) 50 $ 750
------------
Total Rights, Warrants and Certificates (Cost $9,834) 12,491
<CAPTION>
FACE
AMOUNT
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSET-BACKED SECURITIES - 0.2%
- ------------------------------------------------------------------------------------------------------------------------------------
IROQUOIS Trust, Asset-Backed Amortizing Nts.,
Series 1997-2, Cl. A, 6.752%, 6/25/07 (3) $ 50,000 50,242
- ------------------------------------------------------------------------------------------------------------------------------------
Olympic Automobile Receivables Trust, Receivables-Backed Nts.,
Series 1997-A, Cl. A5, 6.80%, 2/15/05 50,000 51,099
- ------------------------------------------------------------------------------------------------------------------------------------
Olympic Automobile Receivables Trust, Series 1996-A, Cl. A4, 5.85%, 7/15/01 15,000 14,979
------------
Total Asset-Backed Securities (Cost $114,813) 116,320
- ------------------------------------------------------------------------------------------------------------------------------------
Mortgage-Backed Obligations - 2.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Countrywide Funding Corp., Mtg. Pass-Through Certificates,
Series 1994-10, Cl. A3, 6%, 5/25/09 100,000 99,125
- ------------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation
Certificates, Series 1711, Cl. EA, 7%, 3/15/24 100,000 102,375
Gtd. Multiclass Mtg. Participation Certificates:
6%, 3/1/09 24,554 24,362
Series 1574, Cl. PD, 5.55%, 3/15/13 100,000 99,750
Series 1843, Cl. VB, 7%, 4/15/03 20,000 20,587
Series 1849, Cl. VA, 6%, 12/15/10 24,470 24,195
Interest-Only Stripped Mtg.-Backed Security:
Series 1542, Cl. QC, 8.675%, 10/15/20 (4) 400,000 89,203
Series 1583, Cl. IC, 9.283%, 1/15/20 (4) 250,000 40,000
- ------------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6%, 12/1/03 46,088 45,864
6.50%, 4/1/26 46,862 46,155
7%, 4/1/00 76,854 77,591
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Trust 1993-181, Cl. C, 5.40%,
10/25/02 70,930 70,576
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Trust 1993-190, Cl. Z, 5.85%,
7/25/08 50,458 50,197
Medium-Term Nts., 6.56%, 11/13/01 100,000 100,250
Trust 1994-13, Cl. B, 6.50%, 2/25/09 100,000 99,906
- ------------------------------------------------------------------------------------------------------------------------------------
GE Capital Mortgage Services, Inc., Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Series 1994-7, Cl. A18, 6%, 2/25/09 99,442 93,228
- ------------------------------------------------------------------------------------------------------------------------------------
PNC Mortgage Securities Corp., Commercial Mtg. Pass-Through Certificates,
Series 1995-2, Cl. A3, 6.50%, 2/25/12 50,000 50,227
</TABLE>
39 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MORTGAGE-BACKED OBLIGATIONS (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
Residential Accredit Loans, Inc., Mortgage Asset-Backed Pass-Through
Certificates, Series 1997-QS9, Cl. A2, 6.75%, 9/25/27 $ 50,000 $ 50,074
------------
Total Mortgage-Backed Obligations (Cost $1,165,842) 1,183,665
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 3.1%
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 7.50%, 11/15/16 1,070,000 1,223,479
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
6.50%, 8/15/05 450,000 466,734
7.50%, 11/15/01 175,000 185,883
------------
Total U.S. Government Obligations (Cost $1,776,050) 1,876,096
- ------------------------------------------------------------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES - 12.6%
- ------------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 1.6%
- ------------------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 0.8%
Burmah Castrol plc, 7% Gtd. Medium-Term Nts., 12/15/97 (2) 20,000 20,027
- ------------------------------------------------------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co., 8.50% Debs., 2/15/03 40,000 42,598
- ------------------------------------------------------------------------------------------------------------------------------------
Harris Chemical North America, Inc., 10.25% Gtd. Sr. Sec. Disc. Nts., 7/15/01 50,000 52,250
- ------------------------------------------------------------------------------------------------------------------------------------
Laroche Industries, Inc., 9.50% Sr. Sub. Nts., 9/15/07 (2) 75,000 75,375
- ------------------------------------------------------------------------------------------------------------------------------------
Morton International, Inc., 9.25% Credit Sensitive Nts., 6/1/20 20,000 25,545
- ------------------------------------------------------------------------------------------------------------------------------------
NL Industries, Inc., 0%/13% Sr. Sec. Disc. Nts., 10/15/05 (5) 100,000 98,000
- ------------------------------------------------------------------------------------------------------------------------------------
PPG Industries, Inc., 9% Debs., 5/1/21 20,000 24,485
- ------------------------------------------------------------------------------------------------------------------------------------
Sterling Chemical Holdings, Inc., 0%/13.50% Sr. Disc. Nts., 8/15/08 (5) 75,000 54,750
- ------------------------------------------------------------------------------------------------------------------------------------
Texas Petrochemical Corp., 11.125% Sr. Sub. Nts., Series B, 7/1/06 75,000 82,875
------------
475,905
- ------------------------------------------------------------------------------------------------------------------------------------
METALS - 0.5%
Alcan Aluminum Ltd., 9.625% Debs., 7/15/19 50,000 53,913
- ------------------------------------------------------------------------------------------------------------------------------------
Gulf States Steel, Inc. (Alabama), 13.50% First Mtg. Nts., Series B,
4/15/03 50,000 51,500
- ------------------------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 10.875% Sr. Nts., 10/15/06 50,000 54,750
- ------------------------------------------------------------------------------------------------------------------------------------
NS Group, Inc., 13.50% Gtd. Sr. Sec. Nts., 7/15/03 20,000 22,950
- ------------------------------------------------------------------------------------------------------------------------------------
Republic Engineered Steels, Inc., 9.875% First Mtg. Nts., 12/15/01 25,000 24,250
- ------------------------------------------------------------------------------------------------------------------------------------
WCI Steel, Inc., 10% Sr. Nts., Series B, 12/1/04 50,000 52,375
- ------------------------------------------------------------------------------------------------------------------------------------
Weirton Steel Corp., 10.75% Sr. Nts., 6/1/05 50,000 52,875
------------
312,613
- ------------------------------------------------------------------------------------------------------------------------------------
PAPER - 0.3%
Celulosa Arauco y Constitucion SA, 7.25% Debs., 6/11/98 (3) 20,000 20,050
- ------------------------------------------------------------------------------------------------------------------------------------
Gaylord Container Corp., 12.75% Sr. Sub. Disc. Debs., 5/15/05 50,000 54,500
- ------------------------------------------------------------------------------------------------------------------------------------
Malette, Inc., 12.25% Sr. Sec. Nts., 7/15/04 (3) 50,000 56,875
- ------------------------------------------------------------------------------------------------------------------------------------
Stone Container Corp., 9.875% Sr. Nts., 2/1/01 50,000 51,125
------------
182,550
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 3.7%
- ------------------------------------------------------------------------------------------------------------------------------------
AUTOS & HOUSING - 0.3%
Black & Decker Corp., 6.625% Nts., 11/15/00 20,000 20,222
</TABLE>
40 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AUTOS & HOUSING (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
First Industrial LP, 7.15% Bonds, 5/15/27 $ 50,000 $ 51,453
- ------------------------------------------------------------------------------------------------------------------------------------
IHF Holdings, Inc., 0%/15% Sr. Sub. Disc. Nts., Series B, 11/15/04 (5) 75,000 64,500
- ------------------------------------------------------------------------------------------------------------------------------------
Signature Brands, Inc., 13% Sr. Sub. Nts., 8/15/02 (3) 50,000 53,187
------------
189,362
- ------------------------------------------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 1.3%
American Skiing Corp., 12% Sr. Sub. Nts., Series B, 7/15/06 (3) 75,000 83,625
- ------------------------------------------------------------------------------------------------------------------------------------
Bally Total Fitness Holdings Corp., 9.875% Sr. Sub. Nts., 10/15/07 (2) 75,000 73,875
- ------------------------------------------------------------------------------------------------------------------------------------
Blockbuster Entertainment Corp., 6.625% Sr. Nts., 2/15/98 20,000 20,027
- ------------------------------------------------------------------------------------------------------------------------------------
Casino America, Inc., 12.50% Sr. Nts., 8/1/03 75,000 80,250
- ------------------------------------------------------------------------------------------------------------------------------------
Casino Magic of Louisiana Corp., 13% First Mtg. Nts., 8/15/03 75,000 71,625
- ------------------------------------------------------------------------------------------------------------------------------------
GB Property Funding Corp., 10.875% First Mtg. Nts., 1/15/04 50,000 43,750
- ------------------------------------------------------------------------------------------------------------------------------------
Hilton Hotels Corp., 7.375% Nts., 6/1/02 50,000 51,327
- ------------------------------------------------------------------------------------------------------------------------------------
HMH Properties, Inc., 8.875% Sr. Nts., 7/15/07 (2) 50,000 51,250
- ------------------------------------------------------------------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 (2) 75,000 76,875
- ------------------------------------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority (Connecticut), 13.50% Sr. Sec. Nts.,
Series B, 11/15/02 25,000 32,125
- ------------------------------------------------------------------------------------------------------------------------------------
Players International, Inc., 10.875% Sr. Nts., 4/15/05 75,000 80,437
- ------------------------------------------------------------------------------------------------------------------------------------
Prime Hospitality Corp., 9.25% First Mtg. Bonds, 1/15/06 75,000 78,375
- ------------------------------------------------------------------------------------------------------------------------------------
Santa Fe Hotel, Inc., 11% Gtd. First Mtg. Nts., 12/15/00 45,000 38,475
------------
782,016
- ------------------------------------------------------------------------------------------------------------------------------------
MEDIA - 1.7%
Adelphia Communications Corp., 10.50% Sr. Nts., 7/15/04 (2) 75,000 78,375
- ------------------------------------------------------------------------------------------------------------------------------------
Allbritton Communications Co., 9.75% Sr. Sub. Debs., Series B,
11/30/97 50,000 50,250
- ------------------------------------------------------------------------------------------------------------------------------------
Australis Holdings PTY Ltd., 0%/15% Sr. Sec. Disc. Nts., 11/1/02 (5) 100,000 70,500
- ------------------------------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp., 9.875% Sr. Sub. Debs., 2/15/13 50,000 53,375
- ------------------------------------------------------------------------------------------------------------------------------------
Comcast Corp., 9.375% Sr. Sub. Debs., 5/15/05 50,000 53,500
- ------------------------------------------------------------------------------------------------------------------------------------
EchoStar Satellite Broadcasting Corp., 0%/13.125%
Sr. Sec. Disc. Nts., 3/15/04 (5) 50,000 39,750
- ------------------------------------------------------------------------------------------------------------------------------------
Falcon Holdings Group LP, 11% Sr. Sub. Nts., 9/15/03 (6) 61,941 63,403
- ------------------------------------------------------------------------------------------------------------------------------------
Fox Kids Worldwide, Inc., 0%/10.25% Sr. Disc. Nts., 11/1/07 (2)(5) 75,000 43,312
- ------------------------------------------------------------------------------------------------------------------------------------
Fox/Liberty Networks LLC, 8.875% Sr. Nts., 8/15/07 (2) 25,000 25,000
- ------------------------------------------------------------------------------------------------------------------------------------
James Cable Partners LP, 10.75% Sr. Nts., 8/15/04 (2) 75,000 78,562
- ------------------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co., 8.625% Sr. Sub. Nts., 9/15/07 (2) 75,000 75,750
- ------------------------------------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., 8.875% Sr. Nts., 7/15/07 75,000 74,437
- ------------------------------------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., 10% Sr. Sub. Nts., 9/30/05 50,000 52,625
- ------------------------------------------------------------------------------------------------------------------------------------
TCI Satellite Entertainment, Inc., 10.875% Sr. Sub. Nts., 2/15/07 (2) 100,000 103,500
- ------------------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc., 7.45% Nts., 2/1/98 20,000 20,067
- ------------------------------------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 50,000 55,343
- ------------------------------------------------------------------------------------------------------------------------------------
United International Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts.,
Series B, 14%, 11/15/99 (7) 100,000 82,500
------------
1,020,249
- ------------------------------------------------------------------------------------------------------------------------------------
RETAIL: GENERAL - 0.3%
Costco Cos., Inc., 7.125% Sr. Nts., 6/15/05 60,000 61,064
- ------------------------------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc., 10% Sr. Nts., 2/15/01 10,000 11,054
- ------------------------------------------------------------------------------------------------------------------------------------
Parisian, Inc., 9.875% Sr. Sub. Nts., 7/15/03 (3) 50,000 52,500
</TABLE>
41 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RETAIL: GENERAL (CONTINUED)
Sears Roebuck & Co., 8.39% Medium-Term Nts., 3/23/99 $ 40,000 $ 41,281
------------
165,899
- ------------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 0.1%
K Mart Corp., 7.75% Debs., 10/1/12 50,000 47,250
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 1.3%
- ------------------------------------------------------------------------------------------------------------------------------------
FOOD - 0.5%
AmeriServe Food Distribution, Inc., 8.875% Sr. Nts., 10/15/06 (2) 75,000 75,187
- ------------------------------------------------------------------------------------------------------------------------------------
Dairy Mart Convenience Stores, Inc., 10.25% Sr. Sub. Nts., 3/15/04 50,000 49,250
- ------------------------------------------------------------------------------------------------------------------------------------
Dole Food Distributing, Inc., 6.75% Nts., 7/15/00 40,000 40,510
- ------------------------------------------------------------------------------------------------------------------------------------
Fresh Del Monte Produce NV, 10% Sr. Nts., Series B, 5/1/03 43,000 45,580
- ------------------------------------------------------------------------------------------------------------------------------------
Great Atlantic & Pacific Tea Co., 9.125% Debs., 1/15/98 15,000 15,087
- ------------------------------------------------------------------------------------------------------------------------------------
Jitney-Jungle Stores of America, Inc., 12% Gtd. Sr. Nts., 3/1/06 50,000 56,250
------------
281,864
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/DRUGS - 0.1%
Integrated Health Services, Inc., 9.50% Sr. Sub. Nts., 9/15/07 (2) 50,000 51,875
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 0.5%
Columbia/HCA Healthcare Corp., 6.875% Nts., 7/15/01 45,000 45,045
- ------------------------------------------------------------------------------------------------------------------------------------
Dade International, Inc., 11.125% Sr. Sub. Nts., 5/1/06 75,000 83,812
- ------------------------------------------------------------------------------------------------------------------------------------
Mariner Health Group, Inc., 9.50% Sr. Sub. Nts., Series B, 4/1/06 (3) 75,000 78,000
- ------------------------------------------------------------------------------------------------------------------------------------
Paracelsus Healthcare Corp., 10% Sr. Sub. Unsec. Nts., 8/15/06 50,000 52,250
- ------------------------------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp., 8% Sr. Nts., 1/15/05 50,000 50,562
------------
309,669
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD GOODS - 0.2%
Dyersburg Corp., 9.75% Sr. Sub. Nts., 9/1/07 (2) 50,000 51,250
- ------------------------------------------------------------------------------------------------------------------------------------
Kimberly-Clark Corp., 7.875% Debs., 2/1/23 20,000 21,558
- ------------------------------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 9.375% Sr. Nts., 4/1/01 50,000 51,875
------------
124,683
- ------------------------------------------------------------------------------------------------------------------------------------
ENERGY - 0.9%
- ------------------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 0.5%
Coastal Corp., 8.125% Sr. Nts., 9/15/02 20,000 21,435
- ------------------------------------------------------------------------------------------------------------------------------------
Falcon Drilling Co., Inc., 9.75% Sr. Nts., Series B, 1/15/01 25,000 26,125
- ------------------------------------------------------------------------------------------------------------------------------------
Forcenergy, Inc., 8.50% Sr. Sub. Nts., 2/15/07 75,000 75,000
- ------------------------------------------------------------------------------------------------------------------------------------
Louisiana Land & Exploration Co., 7.65% Debs., 12/1/23 20,000 21,378
- ------------------------------------------------------------------------------------------------------------------------------------
Mesa Operating Co., 0%/11.625% Gtd. Sr. Sub. Disc. Nts., 7/1/06 (5) 75,000 60,375
- ------------------------------------------------------------------------------------------------------------------------------------
Transamerican Energy Corp., 11.50% Sr. Nts., 6/15/02 (2) 50,000 51,500
- ------------------------------------------------------------------------------------------------------------------------------------
Williams Holdings of Delaware, Inc., 6.25% Sr. Unsec. Debs., 2/1/06 25,000 24,445
------------
280,258
- ------------------------------------------------------------------------------------------------------------------------------------
OIL-INTEGRATED - 0.4%
Gulf Canada Resources Ltd., 8.25% Sr. Nts., 3/15/17 50,000 54,221
- ------------------------------------------------------------------------------------------------------------------------------------
HS Resources, Inc., 9.25% Sr. Sub. Nts., 11/15/06 75,000 77,250
- ------------------------------------------------------------------------------------------------------------------------------------
Norcen Energy Resources Ltd., 6.80% Debs., 7/2/02 50,000 50,950
- ------------------------------------------------------------------------------------------------------------------------------------
Petroleum Geo-Services ASA, 7.50% Nts., 3/31/07 50,000 52,610
- ------------------------------------------------------------------------------------------------------------------------------------
Standard Oil/British Petroleum Co. plc, 9% Debs., 6/1/19 20,000 20,869
------------
255,900
</TABLE>
42 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FINANCIAL - 1.2%
- ------------------------------------------------------------------------------------------------------------------------------------
BANKS - 0.1%
Citicorp, 5.625% Sr. Nts., 2/15/01 $ 20,000 $ 19,768
- ------------------------------------------------------------------------------------------------------------------------------------
Fleet Mtg./Norstar Group, Inc., 9.90% Sub. Nts., 6/15/01 20,000 22,310
- ------------------------------------------------------------------------------------------------------------------------------------
Integra Financial Corp., 6.50% Sub. Nts., 4/15/00 20,000 20,198
- ------------------------------------------------------------------------------------------------------------------------------------
Mellon Financial Bank Corp., 6.50% Gtd. Sr. Nts., 12/1/97 30,000 30,016
------------
92,292
- ------------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 0.8%
American General Institutional Capital, 8.125% Bonds, Series B,
3/15/46 (2) 50,000 53,764
- ------------------------------------------------------------------------------------------------------------------------------------
Beneficial Corp., 9.125% Debs., 2/15/98 20,000 20,180
- ------------------------------------------------------------------------------------------------------------------------------------
Capital One Financial Corp., 6.83% Sr. Nts., 5/17/99 10,000 10,098
- ------------------------------------------------------------------------------------------------------------------------------------
Capital One Funding Corp., 7.25% Nts., 12/1/03 40,000 40,281
- ------------------------------------------------------------------------------------------------------------------------------------
Chelsea GCA Realty Partner, Inc., 7.75% Gtd. Unsec. Unsub.
Nts., 1/26/01 40,000 41,078
- ------------------------------------------------------------------------------------------------------------------------------------
Commercial Credit Co., 5.55% Unsec. Nts., 2/15/01 20,000 19,636
- ------------------------------------------------------------------------------------------------------------------------------------
Countrywide Home Loans, Inc., 6.05% Gtd. Medium-Term Nts., Series D, 3/1/01 20,000 19,887
- ------------------------------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 6.25% Unsub. Nts., 2/26/98 20,000 20,085
- ------------------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 5.625% Nts., 2/15/01 50,000 49,229
- ------------------------------------------------------------------------------------------------------------------------------------
MCII Holdings (USA), Inc., 0%/15% Sec. Nts., 11/15/02 (5) 75,000 62,531
- ------------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 6.50% Nts., 4/1/01 20,000 20,237
- ------------------------------------------------------------------------------------------------------------------------------------
Olympic Financial Ltd., Units (each unit consists of
$1,000 principal amount of 11.50% sr. nts., 3/15/07
and one warrant to purchase 6.84 shares of common stock) (8) 75,000 77,250
- ------------------------------------------------------------------------------------------------------------------------------------
Salomon, Inc., 8.69% Sr. Medium-Term Nts., Series D, 3/1/99 50,000 51,694
------------
485,950
- ------------------------------------------------------------------------------------------------------------------------------------
INSURANCE - 0.3%
Cigna Corp., 7.90% Nts., 12/14/98 40,000 40,768
- ------------------------------------------------------------------------------------------------------------------------------------
Conseco Financing Trust III, 8.796% Bonds, 4/1/27 50,000 54,533
- ------------------------------------------------------------------------------------------------------------------------------------
SunAmerica, Inc., 9% Sr. Nts., 1/15/99 50,000 51,554
- ------------------------------------------------------------------------------------------------------------------------------------
Travelers Property Casualty Corp., 6.75% Nts., 4/15/01 20,000 20,341
------------
167,196
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 1.3%
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL MATERIALS - 0.1%
American Standard, Inc., 10.875% Sr. Nts., 5/15/99 (3) 60,000 63,750
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 0.3%
Shop Vac Corp., 10.625% Sr. Nts., 9/1/03 75,000 81,563
- ------------------------------------------------------------------------------------------------------------------------------------
Sun Co., Inc., 7.95% Debs., 12/15/01 50,000 52,906
- ------------------------------------------------------------------------------------------------------------------------------------
USI American Holdings, Inc., 7.25% Gtd. Sr. Nts., 12/1/06 50,000 49,079
------------
183,548
- ------------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 0.6%
Day International Group, Inc., 11.125% Sr. Sub. Nts., Series B, 6/1/05 (3) 50,000 53,750
- ------------------------------------------------------------------------------------------------------------------------------------
Interlake Corp., 12.125% Sr. Sub. Debs., 3/1/02 50,000 52,125
- ------------------------------------------------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., 6/1/05 50,000 54,875
- ------------------------------------------------------------------------------------------------------------------------------------
Jordan Industries, Inc., 10.375% Sr. Nts., 8/1/07 75,000 75,750
- ------------------------------------------------------------------------------------------------------------------------------------
Mark IV Industries, Inc., 8.75% Sub. Nts., 4/1/03 (3) 10,000 10,475
- ------------------------------------------------------------------------------------------------------------------------------------
Specialty Equipment Co., 11.375% Sr. Sub. Nts., 12/1/03 50,000 54,375
</TABLE>
43 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MANUFACTURING (CONTINUED)
Titan Wheel International, Inc., 8.75% Sr. Sub. Nts., 4/1/07 $ 50,000 $ 52,000
------------
353,350
- ------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 0.3%
CSX Corp., 7.05% Debs., 5/1/02 75,000 76,758
- ------------------------------------------------------------------------------------------------------------------------------------
Federal Express Corp., 6.25% Nts., 4/15/98 20,000 20,025
- ------------------------------------------------------------------------------------------------------------------------------------
Norfolk Southern Corp., 7.35% Nts., 5/15/07 50,000 52,503
- ------------------------------------------------------------------------------------------------------------------------------------
Union Pacific Corp., 7% Nts., 6/15/00 20,000 20,374
------------
169,660
- ------------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 2.2%
- ------------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 0.1%
GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98 50,000 51,000
- ------------------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE - 0.1%
Digital Equipment Corp., 7% Nts., 11/15/97 45,000 45,014
- ------------------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 0.3%
Celestica International, Inc., 10.50% Gtd. Sr. Sub. Nts., 12/31/06 75,000 81,000
- ------------------------------------------------------------------------------------------------------------------------------------
DII Group, Inc., 8.50% Sr. Sub. Nts., 9/15/07 (2) 75,000 74,344
- ------------------------------------------------------------------------------------------------------------------------------------
Unisys Corp., 12% Sr. Nts., Series B, 4/15/03 50,000 56,250
------------
211,594
- ------------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY - 1.7%
American Communications Services, Inc., 0%/13% Sr. Disc. Nts., 11/1/05 (5) 100,000 70,500
- ------------------------------------------------------------------------------------------------------------------------------------
Brooks Fiber Properties, Inc., 0%/11.875% Sr. Disc. Nts., 11/1/06 (5) 50,000 39,438
- ------------------------------------------------------------------------------------------------------------------------------------
Centennial Cellular Corp., 10.125% Sr. Nts., 5/15/05 50,000 53,250
- ------------------------------------------------------------------------------------------------------------------------------------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc. Debs., 11/15/07 (5) 50,000 38,750
- ------------------------------------------------------------------------------------------------------------------------------------
Diamond Cable Communications plc, 0%/10.75% Sr. Disc. Nts., 2/15/07 (5) 75,000 48,375
- ------------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 0%/11.25% Sr. Disc. Nts., 7/15/07 (5) 75,000 49,875
- ------------------------------------------------------------------------------------------------------------------------------------
International CableTel, Inc., 0%/11.50% Sr. Deferred Coupon Nts.,
Series B, 2/1/06 (5) 150,000 110,250
- ------------------------------------------------------------------------------------------------------------------------------------
IXC Communications, Inc., 12.50% Sr. Nts., Series B, 10/1/05 75,000 85,500
- ------------------------------------------------------------------------------------------------------------------------------------
McLeodUSA, Inc., 0%/10.50% Sr. Disc. Nts., 3/1/07 (5) 50,000 34,750
- ------------------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc., 0%/14% Sr. Disc. Nts.,
Series B, 6/1/06 (5) 75,000 50,250
- ------------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 0%/9.75% Sr. Disc. Nts., 8/15/04 (5) 100,000 84,750
- ------------------------------------------------------------------------------------------------------------------------------------
Price Communications Cellular Holdings, Inc., 0%/13.50%
Sr. Disc. Nts., 8/1/07 (3)(5) 100,000 57,000
- ------------------------------------------------------------------------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum Finance Corp., 11% Sr. Nts., 8/15/06 75,000 83,063
- ------------------------------------------------------------------------------------------------------------------------------------
Teleport Communications Group, Inc.:
0%/11.125% Sr. Disc. Nts., 7/1/07 (5) 50,000 39,438
9.875% Sr. Nts., 7/1/06 50,000 54,875
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. West Capital Funding, Inc., 6.85% Gtd. Nts., 1/15/02 75,000 76,228
- ------------------------------------------------------------------------------------------------------------------------------------
Western Wireless Corp., 10.50% Sr. Sub. Nts., 2/1/07 50,000 53,875
------------
1,030,167
- ------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 0.4%
- ------------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 0.2%
Consumers Energy Co., 8.75% First Mtg. Nts., 2/15/98 20,000 20,131
- ------------------------------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 7.25% First Mtg. Nts., Series A, 2/1/99 (3) 10,000 10,100
</TABLE>
44 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ELECTRIC UTILITIES (CONTINUED)
Panda Global Energy Co., 12.50% Sr. Nts., 4/15/04 (3) $ 75,000 $ 72,375
------------
102,606
- ------------------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES - 0.2%
Northern Illinois Gas Co., 6.45% First Mtg. Bonds, 8/1/01 70,000 70,875
- ------------------------------------------------------------------------------------------------------------------------------------
Tennessee Gas Pipeline Co., 7.50% Bonds, 4/1/17 50,000 52,615
------------
123,490
------------
Total Non-Convertible Corporate Bonds and Notes (Cost $7,276,470) 7,559,710
- ------------------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE CORPORATE BONDS AND NOTES - 0.1%
- ------------------------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc., 12% Cv. Sr. Sub. Nts., 2/15/01 (Cost $45,421) (3) 50,000 41,750
- ------------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 7.8%
- ------------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Zion First National Bank, 5.68%, dated 10/31/97, to be
repurchased at $4,675,212 on 11/3/97, collateralized by U.S. Treasury Nts.,
7.25%, 8/15/04, with a
value of $4,774,636 (Cost $4,673,000) 4,673,000 4,673,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $51,331,382) 98.9% 59,260,606
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.1 658,188
------------ ------------
NET ASSETS 100.0% $ 59,918,794
------------ ------------
------------ ------------
</TABLE>
1. Non-income producing security.
2. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Directors. These securities amount to $1,180,306 or 1.97% of the Fund's net
assets as of October 31, 1997.
3. Identifies issues considered to be illiquid or restricted - See Note 5 of
Notes to Financial Statements.
4. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows.
5. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
6. Interest or dividend is paid in kind.
7. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
8. Units may be comprised of several components, such as debt and equity and/or
warrants to purchase equity at some point in the future. For units which
represent debt securities, face amount disclosed represents total underlying
principal.
See accompanying Notes to Financial Statements.
45 Oppenheimer LifeSpan Funds
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES OCTOBER 31, 1997
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER
LIFESPAN LIFESPAN LIFESPAN
INCOME BALANCED GROWTH
FUND FUND FUND
-----------------------------------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (cost *) - see accompanying statements $29,794,676 $66,792,544 $59,260,606
Cash 353,691 552,070 474,933
Receivables:
Dividends, interest and principal paydowns 419,993 534,812 288,273
Shares of capital stock sold 24,155 9,723 17,266
Investments sold -- 510,982 510,408
Other 1,639 1,812 1,731
-----------------------------------------
Total assets 30,594,154 68,401,943 60,553,217
-----------------------------------------
LIABILITIES:
Payables and other liabilities:
Investments purchased 433,257 594,944 538,459
Shareholder reports 21,296 18,494 8,631
Shares of capital stock redeemed 15,096 1,269 3,418
Distribution and service plan fees 6,556 15,174 13,306
Directors' fees - Note 1 32,164 27,898 26,666
Transfer and shareholder servicing agent fees -- 1,418 3,343
Custodian fees 14,554 15,915 15,344
Other 16,948 20,075 25,256
-----------------------------------------
Total liabilities 539,871 695,187 634,423
-----------------------------------------
NET ASSETS $30,054,283 $67,706,756 $59,918,794
-----------------------------------------
-----------------------------------------
COMPOSITION OF NET ASSETS:
Par value of shares of capital stock $2,716 $5,348 $4,385
Additional paid-in capital 27,574,543 56,641,705 47,659,568
Undistributed net investment income 2,079 209,750 858,469
Accumulated net realized gain from investments and foreign
currency transactions 404,251 3,257,932 3,466,954
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 2,070,694 7,592,021 7,929,418
-----------------------------------------
NET ASSETS $30,054,283 $67,706,756 $59,918,794
-----------------------------------------
-----------------------------------------
*Cost $27,723,982 $59,200,693 $51,331,382
-----------------------------------------
-----------------------------------------
</TABLE>
46 Oppenheimer LifeSpan Funds
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER
LIFESPAN LIFESPAN LIFESPAN
INCOME BALANCED GROWTH
FUND FUND FUND
-----------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE PER SHARE:
CLASS A SHARES:
Netasset value and redemption price per share (based on net assets and shares of
capital stock outstanding):
Net assets $29,205,770 $62,261,972 $53,318,387
Shares of capital stock 2,639,654 4,919,634 3,900,030
Price per share $11.06 $12.66 $13.67
Maximum offering price per share (net asset value plus sales
charge of 5.75% of offering price for each fund) $11.73 $13.43 $14.50
-----------------------------------------
CLASS B SHARES:
Netasset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets and shares of
capital stock outstanding):
Net assets $816,411 $4,761,973 $5,390,939
Shares of capital stock 73,513 374,239 395,745
Price per share $11.11 $12.72 $13.62
-----------------------------------------
CLASS C SHARES:
Netasset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets and shares of
capital stock outstanding):
Net assets $32,102 $682,811 $1,209,468
Shares of capital stock 2,893 54,094 89,402
Price per share $11.10 $12.62 $13.53
-----------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
47 Oppenheimer LifeSpan Funds
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS For the Year Ended October 31, 1997
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER
LIFESPAN LIFESPAN LIFESPAN
INCOME BALANCED GROWTH
FUND FUND FUND
-----------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 1,686,587 $ 2,157,148 $ 1,159,982
Dividends (net of foreign withholding taxes of $837, $12,509
and $15,954, respectively) 273,552 626,821 670,676
-----------------------------------------
Total income 1,960,139 2,783,969 1,830,658
-----------------------------------------
EXPENSES:
Management fees - Note 4 212,649 527,770 457,316
Distribution and service plan fees - Note 4:
Class A 69,406 145,068 123,431
Class B 6,756 34,948 39,156
Class C 199 8,787 7,192
Transfer and shareholder servicing agent fees - Note 4 4,186 17,573 34,890
Accounting service fees 15,000 15,000 15,000
Custodian fees and expenses 6,961 49,727 46,602
Legal and auditing fees 24,064 31,475 35,958
Shareholder reports 32,380 42,866 41,370
Directors' fees and expenses - Note 1 35,289 29,321 31,956
Insurance expenses 3,188 3,645 3,500
Registration and filing fees:
Class A 802 1,885 1,882
Class B 106 747 822
Class C 9 2 291
Other 4,684 7,463 6,038
-----------------------------------------
Total expenses 415,679 916,277 845,404
-----------------------------------------
Less expenses paid indirectly - Note 4 (6,961) (14,168) (9,362)
-----------------------------------------
Net expenses 408,718 902,109 836,042
-----------------------------------------
NET INVESTMENT INCOME 1,551,421 1,881,860 994,616
-----------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) from:
Investments 425,024 3,580,369 3,818,755
Foreign currency transactions -- (304,895) (324,763)
-----------------------------------------
Net realized gain 425,024 3,275,474 3,493,992
Net change in unrealized appreciation or depreciation on:
Investments 1,052,959 2,130,004 2,117,903
Translation of assets and liabilities denominated in
foreign currencies -- (5,158) (17,066)
-----------------------------------------
Net change 1,052,959 2,124,846 2,100,837
-----------------------------------------
Net realized and unrealized gain 1,477,983 5,400,320 5,594,829
-----------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 3,029,404 $ 7,282,180 $ 6,589,445
-----------------------------------------
-----------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
48 Oppenheimer LifeSpan Funds
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED OCTOBER 31, 1997 AND
1996
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER
LIFESPAN LIFESPAN LIFESPAN
INCOME BALANCED GROWTH
FUND FUND FUND
----------------------------------------------------------------------------
1997 1996(1) 1997 1996(1) 1997 1996(1)
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $1,551,421 $1,166,091 $1,881,860 $1,269,662 $994,616 $610,399
Net realized gain 425,024 375,456 3,275,474 1,455,276 3,493,992 2,207,221
Net change in unrealized appreciation or depreciation 1,052,959 (394,375) 2,124,846 1,910,667 2,100,837 2,238,220
----------------------------------------------------------------------------
Net increase in net assets resulting from operations 3,029,404 1,147,172 7,282,180 4,635,605 6,589,445 5,055,840
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
Dividends from net investment income:
Class A (1,519,218) (1,164,346) (1,751,264) (919,554) (279,883) (289,194)
Class B (31,306) (14,052) (86,844) (21,226) (11,776) (9,326)
Class C (908) (24) (20,115) (10,575) (1,248) (143)
Distributions from net realized gain:
Class A (381,291) (63,862) (1,432,693) (140,249) (2,163,698) (129,620)
Class B (7,459) (925) (69,269) (3,811) (128,434) (4,802)
Class C (77) (2) (23,260) (1,725) (11,808) (65)
CAPITAL STOCK TRANSACTIONS:
Net increase (decrease) in net assets resulting from capital stock - Note 2:
Class A 1,816,130 1,803,488 6,516,290 6,793,292 5,756,041 5,139,745
Class B 334,568 264,631 2,657,192 1,370,222 2,665,936 1,697,392
Class C 29,825 1,000 (190,802) 821,670 978,007 137,860
----------------------------------------------------------------------------
NET ASSETS:
Total increase 3,269,668 1,973,080 12,881,415 12,523,649 13,392,582 11,597,687
Beginning of period 26,784,615 24,811,535 54,825,341 42,301,692 46,526,212 34,928,525
----------------------------------------------------------------------------
End of period $30,054,283 $26,784,615 $67,706,756 $54,825,341 $59,918,794 $46,526,212
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Undistributed net investment income $2,079 $11 $209,750 $194,574 $858,469 $171,706
</TABLE>
1. The Funds changed their fiscal year end from December 31 to October 31.
See accompanying Notes to Financial Statements.
49 Oppenheimer LifeSpan Funds
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Oppenheimer LifeSpan Income Fund
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------- --------------------------------------
PERIOD ENDED PERIOD ENDED
YEAR ENDED OCTOBER 31, DECEMBER 31, YEAR ENDED OCTOBER 31, DECEMBER 31,
1997 1996(3) 1995(4) 1997 1996(3) 1995(2)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.65 $10.70 $10.00 $10.69 $10.74 $10.45
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .59 .48 .37 .51 .41 .12
Net realized and unrealized gain (loss) .56 (.02) .73 .57 (.02) .32
- -----------------------------------------------------------------------------------------------------------------------------------
Total income from investment
operations 1.15 .46 1.10 1.08 .39 .44
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.59) (.48) (.36) (.51) (.41) (.11)
Distributions from net realized gain (.15) (.03) (.04) (.15) (.03) (.04)
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.74) (.51) (.40) (.66) (.44) (.15)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.06 $10.65 $10.70 $11.11 $10.69 $10.74
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 11.30% 4.45% 11.22% 10.51% 3.69% 4.30%
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $29,206 $26,328 $24,619 $816 $456 $192
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $27,678 $25,463 $22,128 $677 $350 $107
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.49% 5.43%(6) 5.35%(6) 4.69% 4.93%(6) 5.23%(6)
Expenses 1.45%(7) 1.56%(6) 1.50%(6) 2.18%(7) 2.31%(6) 2.25%(6)
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 39.6% 75.3% 45.8% 39.6% 75.3% 45.8%
Average brokerage commission rate(9) $0.0681 $0.0694 -- $0.0681 $0.0694 --
<CAPTION>
CLASS C
-----------------------
YEAR ENDED OCTOBER 31,
1997 1996(1)
- --------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.66 $10.53
- --------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .55 .25
Net realized and unrealized gain (loss) .58 .16
- --------------------------------------------------------------------
Total income from investment
operations 1.13 .41
- --------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.54) (.25)
Distributions from net realized gain (.15) (.03)
- --------------------------------------------------------------------
Total dividends and distributions
to shareholders (.69) (.28)
- --------------------------------------------------------------------
Net asset value, end of period $11.10 $10.66
-----------------------
-----------------------
- --------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 11.03% 3.96%
- --------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $32 $1
- --------------------------------------------------------------------
Average net assets (in thousands) $20 $1
- --------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.64% 4.68%(6)
Expenses 2.20%(7) 2.25%(6)
- --------------------------------------------------------------------
Portfolio turnover rate(8) 39.6% 75.3%
Average brokerage commission rate(9) $0.0681 $0.0694
</TABLE>
1. For the period from May 1, 1996 (inception of offering) to October 31, 1996.
2. For the period from October 2, 1995 (inception of offering) to December 31,
1995.
3. For the ten months ended October 31, 1996. The Fund changed its fiscal year
end from December 31 to October 31. On March 18, 1996, OppenheimerFunds, Inc.
became the investment advisor to the Fund.
4. For the period from May 1, 1995 (commencement of operations) to December 31,
1995.
5. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
6. Annualized.
7. The expense ratio reflects the effect of expenses paid indirectly by the
Fund.
8. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended October 31, 1997 were $12,166,241 and $10,297,628, respectively.
9. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold.
See accompanying Notes to Financial Statements.
50 Oppenheimer LifeSpan Funds
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Oppenheimer LifeSpan Balanced Fund
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------- --------------------------------------
PERIOD ENDED PERIOD ENDED
YEAR ENDED OCTOBER 31, DECEMBER 31, YEAR ENDED OCTOBER 31, DECEMBER 31,
1997 1996(3) 1995(4) 1997 1996(3) 1995(2)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $11.90 $11.05 $10.00 $11.98 $11.16 $10.95
- -----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .37 .29 .24 .27 .20 .05
Net realized and unrealized gain 1.08 .81 1.29 1.08 .82 .45
- -----------------------------------------------------------------------------------------------------------------------------------
Total income from investment
operations 1.45 1.10 1.53 1.35 1.02 .50
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.37) (.22) (.25) (.29) (.17) (.06)
Distributions from net realized gain (.32) (.03) (.23) (.32) (.03) (.23)
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.69) (.25) (.48) (.61) (.20) (.29)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.66 $11.90 $11.05 $12.72 $11.98 $11.16
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 12.66% 10.04% 15.33% 11.70% 9.22% 4.49%
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $62,262 $52,104 $41,861 $4,762 $1,893 $441
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $57,769 $47,116 $37,417 $3,504 $1,225 $247
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 3.08% 3.15%(6) 3.47%(6) 2.31% 2.41%(6) 3.01%(6)
Expenses 1.42%(7) 1.56%(6) 1.55%(6) 2.18%(7) 2.32%(6) 2.30%(6)
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 59.7% 61.0% 76.3% 59.7% 61.0% 76.3%
Average brokerage commission rate(9) $0.0067 $0.0078 -- $0.0067 $0.0078 --
<CAPTION>
CLASS C
-----------------------
YEAR ENDED OCTOBER 31,
1997 1996(1)
- --------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $11.88 $11.74
- --------------------------------------------------------------------
Income from investment operations:
Net investment income .28 .13
Net realized and unrealized gain 1.07 .24
- --------------------------------------------------------------------
Total income from investment
operations 1.35 .37
- --------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.29) (.20)
Distributions from net realized gain (.32) (.03)
- --------------------------------------------------------------------
Total dividends and distributions
to shareholders (.61) (.23)
- --------------------------------------------------------------------
Net asset value, end of period $12.62 $11.88
-----------------------
-----------------------
- --------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 11.73% 3.21%
- --------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $683 $828
- --------------------------------------------------------------------
Average net assets (in thousands) $879 $551
- --------------------------------------------------------------------
Ratios to average net assets:
Net investment income 2.37% 2.53%(6)
Expenses 2.16%(7) 2.27%(6)
- --------------------------------------------------------------------
Portfolio turnover rate(8) 59.7% 61.0%
Average brokerage commission rate(9) $0.0067 $0.0078
</TABLE>
1. For the period from May 1, 1996 (inception of offering) to October 31, 1996.
2. For the period from October 2, 1995 (inception of offering) to December 31,
1995.
3. For the ten months ended October 31, 1996. The Fund changed its fiscal year
end from December 31 to October 31. On March 18, 1996, OppenheimerFunds, Inc.
became the investment advisor to the Fund.
4. For the period from May 1, 1995 (commencement of operations) to December 31,
1995.
5. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
6. Annualized.
7. The expense ratio reflects the effect of expenses paid indirectly by the
Fund.
8. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended October 31, 1997 were $42,186,840 and $34,319,496, respectively.
9. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold. Generally, non-U.S. commissions are lower than U.S.
commissions when expressed as cents per share but higher when expressed as a
percentage of transactions because of the lower per-share prices of many
non-U.S. securities.
See accompanying Notes to Financial Statements.
51 Oppenheimer LifeSpan Funds
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------- --------------------------------------
PERIOD ENDED PERIOD ENDED
YEAR ENDED OCTOBER 31, DECEMBER 31, YEAR ENDED OCTOBER 31, DECEMBER 31,
1997 1996(3) 1995(4) 1997 1996(3) 1995(2)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $12.78 $11.39 $10.00 $12.81 $11.47 $11.14
- -----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .24 .18 .16 .14 .08 .03
Net realized and unrealized gain 1.35 1.34 1.63 1.35 1.36 .56
- -----------------------------------------------------------------------------------------------------------------------------------
Total income from investment
operations 1.59 1.52 1.79 1.49 1.44 .59
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.08) (.09) (.17) (.06) (.06) (.03)
Distributions from net realized gain (.62) (.04) (.23) (.62) (.04) (.23)
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.70) (.13) (.40) (.68) (.10) (.26)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.67 $12.78 $11.39 $13.62 $12.81 $11.47
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 12.96% 13.37% 18.02% 12.07% 12.58% 5.34%
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $53,318 $43,980 $34,368 $5,391 $2,405 $561
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $49,213 $39,576 $29,046 $3,925 $1,475 $230
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.91% 1.81%(6) 2.32%(6) 1.14% 1.11%(6) 1.70%(6)
Expenses 1.50%(7) 1.61%(6) 1.55%(6) 2.27%(7) 2.37%(6) 2.30%(6)
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 66.0% 64.2% 71.8% 66.0% 64.2% 71.8%
Average brokerage commission rate(9) $0.0069 $0.0059 -- $0.0069 $0.0059 --
<CAPTION>
CLASS C
-----------------------
YEAR ENDED OCTOBER 31,
1997 1996(1)
- --------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $12.74 $12.49
- --------------------------------------------------------------------
Income from investment operations:
Net investment income .14 .11
Net realized and unrealized gain 1.34 .27
- --------------------------------------------------------------------
Total income from investment
operations 1.48 .38
- --------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.07) (.09)
Distributions from net realized gain (.62) (.04)
- --------------------------------------------------------------------
Total dividends and distributions
to shareholders (.69) (.13)
- --------------------------------------------------------------------
Net asset value, end of period $13.53 $12.74
-----------------------
-----------------------
- --------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 12.05% 3.04%
- --------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $1,209 $141
- --------------------------------------------------------------------
Average net assets (in thousands) $722 $54
- --------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.11% 1.32%(6)
Expenses 2.29%(7) 2.43%(6)
- --------------------------------------------------------------------
Portfolio turnover rate(8) 66.0% 64.2%
Average brokerage commission rate(9) $0.0069 $0.0059
</TABLE>
1. For the period from May 1, 1996 (inception of offering) to October 31, 1996.
2. For the period from October 2, 1995 (inception of offering) to December 31,
1995.
3. For the ten months ended October 31, 1996. The Fund changed its fiscal year
end from December 31 to October 31. On March 18, 1996, OppenheimerFunds, Inc.
became the investment advisor to the Fund.
4. For the period from May 1, 1995 (commencement of operations) to December 31,
1995.
5. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
6. Annualized.
7. The expense ratio reflects the effect of expenses paid indirectly by the
Fund.
8. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended October 31, 1997 were $39,384,627 and $31,934,908, respectively.
9. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold. Generally, non-U.S. commissions are lower than U.S.
commissions when expressed as cents per share but higher when expressed as a
percentage of transactions because of the lower per-share prices of many
non-U.S. securities.
See accompanying Notes to Financial Statements.
52 Oppenheimer LifeSpan Funds
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer LifeSpan Income Fund, Oppenheimer LifeSpan Balanced Fund and
Oppenheimer LifeSpan Growth Fund (the Funds), are separate series of
Oppenheimer Series Fund, Inc. (the Company), a diversified, open-end
management investment company registered under the Investment Company Act of
1940, as amended. The Fund's investment advisor is OppenheimerFunds, Inc.
(the Manager). The Funds' investment objectives are as follows:
OPPENHEIMER LIFESPAN INCOME FUND seeks a high level of current income, with
opportunities for capital appreciation. It invests in a strategically
allocated portfolio consisting primarily of bond instruments.
OPPENHEIMER LIFESPAN BALANCED FUND seeks a blend of capital appreciation and
income. It invests in a strategically allocated portfolio of stocks and
bonds with a slightly stronger emphasis on stocks.
OPPENHEIMER LIFESPAN GROWTH FUND seeks long-term capital appreciation. It
invests in a strategically allocated portfolio consisting primarily of
stocks.
The Funds offer Class A, Class B and Class C shares. Class A shares are sold
with a front-end sales charge. Class B and Class C shares may be subject to
a contingent deferred sales charge. All classes of shares have identical
rights to earnings, assets and voting privileges, except that each class has
its own distribution and/or service plan, expenses directly attributable to
a particular class and exclusive voting rights with respect to matters
affecting a single class. Class B shares will automatically convert to Class
A shares six years after the date of purchase. The following is a summary of
significant accounting policies consistently followed by the Funds.
INVESTMENT VALUATION. Portfolio securities are valued at the close of the
New York Stock Exchange on each trading day. Listed and unlisted securities
for which such information is regularly reported are valued at the last sale
price of the day or, in the absence of sales, at values based on the closing
bid or the last sale price on the prior trading day. Long-term and
short-term "non-money market" debt securities are valued by a portfolio
pricing service approved by the Board of Directors. Such securities which
cannot be valued by the approved portfolio pricing service are valued using
dealer-supplied valuations provided the Manager is satisfied that the firm
rendering the quotes is reliable and that the quotes reflect current market
value, or are valued under consistently applied procedures established by
the Board of Directors to determine fair value in good faith. Short-term
"money market type" debt securities having a remaining maturity of 60 days
or less are valued at cost (or last determined market value) adjusted for
amortization to maturity of any premium or discount.
FOREIGN CURRENCY TRANSLATION. The accounting records of the Funds are
maintained in U.S. dollars. Prices of securities denominated in foreign
currencies are translated into U.S. dollars at the closing rates of
exchange. Amounts related to the purchase and sale of securities and
investment income are translated at the rates of exchange prevailing on the
respective dates of such transactions.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains
and losses in the Funds' Statements of Operations.
REPURCHASE AGREEMENTS. The Funds require the custodian to take possession,
to have legally segregated in the Federal Reserve Book Entry System or to
have segregated within the custodian's vault, all securities held as
collateral for repurchase agreements. The market value of the underlying
securities is required to be at least 102% of the resale price at the time
of purchase. If the seller of the agreement defaults and the value of the
collateral declines, or if the seller enters an insolvency proceeding,
realization of the value of the collateral by the Funds may be delayed or
limited.
ALLOCATION OF INCOME, EXPENSES, AND GAINS AND LOSSES. Income, expenses
(other than those attributable to a specific class) and gains and losses are
allocated daily to each class of shares based upon the relative proportion
of net assets represented by such class. Operating expenses directly
attributable to a specific class are charged against the operations of that
class.
53 Oppenheimer LifeSpan Funds
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
DIRECTORS' FEES AND EXPENSES. The Funds have adopted a nonfunded retirement
plan for the Funds' independent directors. Benefits are based on years of
service and fees paid to each director during the years of service. During
the year ended October 31, 1997, the provision for projected benefit
obligations, payments to retired directors and the accumulated liability for
each of the Funds is as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------
LifeSpan Income Fund LifeSpan Balanced Fund LifeSpan Growth Fund
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Provision for projected benefit
obligations $34,321 $28,138 $28,147
- ------------------------------------------------------------------------------------------------------------
Payments to retired directors 1,509 1,509 1,509
- ------------------------------------------------------------------------------------------------------------
Accumulated liability as of
October 31, 1997 32,882 27,628 26,878
- ------------------------------------------------------------------------------------------------------------
</TABLE>
FEDERAL TAXES. Each Fund intends to continue to comply with provisions of
the Internal Revenue Code applicable to regulated investment companies and
to distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders
are recorded on the ex-dividend date.
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income
(loss) and net realized gain (loss) may differ for financial statement and
tax purposes. The character of the distributions made during the year from
net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gain was recorded by the
Funds.
The Funds adjusted the classification of net investment income and capital
gain (loss) to reflect other differences between financial statement amounts
and distributions determined in accordance with income tax regulations.
Changes in classification during the year ended October 31, 1997 are shown
below:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Adjustments for the Year Ended October 31, 1997
- --------------------------------------------------------------------------------------------------------------
Undistributed Net Investment Income Accumulated Net Realized Gain on Investments
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LifeSpan Income Fund $ 2,079 $(2,079)
- --------------------------------------------------------------------------------------------------------------
LifeSpan Balanced Fund (8,461) 8,461
- --------------------------------------------------------------------------------------------------------------
LifeSpan Growth Fund (14,946) 14,946
- --------------------------------------------------------------------------------------------------------------
</TABLE>
OTHER. Investment transactions are accounted for on the date the investments
are purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. Discount on securities purchased is amortized over the
life of the respective securities, in accordance with federal income tax
requirements. Realized gains and losses on investments and unrealized
appreciation and depreciation are determined on an identified cost basis,
which is the same basis used for federal income tax purposes. Interest on
payment-in-kind debt instruments is accrued as income at the coupon rate and
a market adjustment is made periodically.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the
reporting period. Actual results could differ from those estimates.
54 Oppenheimer LifeSpan Funds
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SHARES OF CAPITAL STOCK
Each Fund has authorized 450 million shares of $0.001 par value capital
stock. Transactions in shares of capital stock were as follows:
<TABLE>
<CAPTION>
OPPENHEIMER LIFESPAN INCOME FUND
YEAR ENDED OCTOBER 31, 1997 PERIOD ENDED OCTOBER 31, 1996(1)
----------------------------------- -----------------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Class A:
Sold 76,799 $ 839,632 146,543 $ 1,546,169
Dividends and distributions reinvested 169,781 1,828,122 112,062 1,180,611
Redeemed (78,072) (851,624) (88,357) (923,292)
-------------- -------------- -------------- --------------
Net increase 168,508 $ 1,816,130 170,248 $ 1,803,488
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Class B:
Sold 35,037 $ 380,109 23,725 $ 253,904
Dividends and distributions reinvested 3,360 36,336 1,286 13,606
Redeemed (7,512) (81,877) (271) (2,879)
-------------- -------------- -------------- --------------
Net increase 30,885 334,568 24,740 $ 264,631
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Class C:
Sold 2,712 $ 28,892 95 $ 1,000
Dividends and distributions reinvested 86 933 -- --
Redeemed -- -- -- --
-------------- -------------- -------------- --------------
Net increase 2,798 $ 29,825 95 $ 1,000
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
OPPENHEIMER LIFESPAN BALANCED FUND
SHARES AMOUNT SHARES AMOUNT
Class A:
Sold 672,918 $ 8,115,315 591,611 $ 6,806,310
Dividends and distributions reinvested 263,094 3,160,977 90,394 1,056,157
Redeemed (393,016) (4,760,002) (92,638) (1,069,175)
-------------- -------------- -------------- --------------
Net increase 542,996 $ 6,516,290 589,367 $ 6,793,292
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Class B:
Sold 253,560 $ 3,096,696 118,679 $ 1,371,576
Dividends and distributions reinvested 12,325 149,308 2,108 24,736
Redeemed (49,667) (588,812) (2,244) (26,090)
-------------- -------------- -------------- --------------
Net increase 216,218 $ 2,657,192 118,543 $ 1,370,222
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Class C:
Sold 47,180 $ 560,673 68,739 $ 810,364
Dividends and distributions reinvested 3,637 43,355 1,054 12,284
Redeemed (66,431) (794,830) (85) (978)
-------------- -------------- -------------- --------------
Net increase (decrease) (15,614) $ (190,802) 69,708 $ 821,670
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
OPPENHEIMER LIFESPAN GROWTH FUND
SHARES AMOUNT SHARES AMOUNT
Class A:
Sold 590,543 $ 7,650,233 424,020 $ 5,146,023
Dividends and distributions reinvested 195,679 2,440,118 33,590 418,507
Redeemed (327,056) (4,334,310) (35,427) (424,785)
-------------- -------------- -------------- --------------
Net increase 459,166 $ 5,756,041 422,183 $ 5,139,745
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Class B:
Sold 227,007 $ 2,916,327 154,309 $ 1,879,045
Dividends and distributions reinvested 11,173 139,662 1,098 13,603
Redeemed (30,185) (390,053) (16,551) (195,256)
-------------- -------------- -------------- --------------
Net increase 207,995 $ 2,665,936 138,856 $ 1,697,392
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Class C:
Sold 86,490 $ 1,086,489 11,124 $ 138,640
Dividends and distributions reinvested 846 10,506 16 198
Redeemed (8,994) (118,988) (80) (978)
-------------- -------------- -------------- --------------
Net increase 78,342 $ 978,007 11,060 $ 137,860
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
1. For the ten months ended October 31, 1996 for Class A and Class B shares and
for the period from May 1, 1996 (inception of offering) to October 31, 1996 for
Class C shares. The Funds changed their fiscal year end from December 31 to
October 31.
55 Oppenheimer LifeSpan Funds
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At October 31, 1997, net unrealized appreciation on investments consisted of
the following:
<TABLE>
<CAPTION>
--------------------------------------------------------------------
LifeSpan Income Fund LifeSpan Balanced Fund LifeSpan Growth Fund
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross appreciation $2,305,354 $8,991,592 $9,439,956
- ------------------------------------------------------------------------------------------------------------
Gross depreciation 234,660 1,399,741 1,510,732
- ------------------------------------------------------------------------------------------------------------
Net unrealized appreciation $2,070,694 $7,591,851 $7,929,224
- ------------------------------------------------------------------------------------------------------------
</TABLE>
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreements with the Funds. For Oppenheimer LifeSpan Income Fund,
the agreement provides for a fee of 0.75% on the first $250 million of the
Fund's average annual net assets and 0.65% on average annual net assets over
$250 million. For Oppenheimer LifeSpan Balanced Fund and Oppenheimer
LifeSpan Growth Fund, the fees are 0.85% on the first $250 million of
average annual net assets and 0.75% on average annual net assets in excess
of $250 million. The Manager acts as the accounting agent for the Funds at
an annual fee of $15,000 per Fund, plus out-of-pocket costs and expenses
reasonably incurred.
For Oppenheimer LifeSpan Income Fund, the Manager has entered into a
sub-advisory agreement with BEA Associates to assist in the selection of
portfolio investments for the components of the Fund. For these services,
the Manager pays BEA Associates negotiated fees. For Oppenheimer LifeSpan
Balanced Fund and Oppenheimer LifeSpan Growth Fund, the Manager has entered
into sub-advisory agreements with three sub-advisors to assist in the
selection of portfolio investments for the components of the Funds. For
these services, the Manager pays Babson-Stewart Ivory International, BEA
Associates and Pilgrim Baxter & Associates negotiated fees.
OppenheimerFunds Services (OFS), a division of the Manager, is the transfer
and shareholder servicing agent for the Funds, and for other registered
investment companies. OFS's total costs of providing such services are
allocated ratably to these companies.
For the year ended October 31, 1997, (1) commissions (sales charges paid by
investors) on sales of Class A shares, (2) commission amounts retained by
OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the Manager, as
general distributor, and by affiliated broker/dealers, (3) sales charges
advanced to broker/dealers by OFDI on sales of the Funds' Class B and Class
C shares, (4) sales charges advanced to affiliated broker/dealers and (5)
contingent deferred sales charges retained by OFDI were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
(1) Commissions (2) Commissions (3) Sales Charges (4) Paid to Affiliates (5) Contingent
Retained Advanced Deferred Sales
Charges
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LifeSpan Income Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Class A $19,537 $13,796 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Class B -- -- $14,373 $11,515 $5,923
- ----------------------------------------------------------------------------------------------------------------------------------
Class C -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
LifeSpan Balanced Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Class A $100,461 $67,205 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Class B -- -- $114,889 $67,463 --
- ----------------------------------------------------------------------------------------------------------------------------------
Class C -- -- $5,414 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
LifeSpan Growth Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Class A $137,511 $111,486 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Class B -- -- $102,107 $64,131 $2,500
- ----------------------------------------------------------------------------------------------------------------------------------
Class C -- -- $9,869 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
56 Oppenheimer LifeSpan Funds
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (continued)
The Funds have adopted Service Plans for Class A shares to reimburse OFDI
for a portion of its costs incurred in connection with the personal service
and maintenance of shareholder accounts that hold Class A shares.
Reimbursement is made quarterly at an annual rate that may not exceed 0.25%
of the average annual net assets of Class A shares of the Funds. OFDI uses
the service fee to reimburse brokers, dealers, banks and other financial
institutions quarterly for providing personal service and maintenance of
accounts of their customers that hold Class A shares. During the year ended
October 31, 1997, OFDI made payments to an affiliated broker/dealer as
reimbursement for Class A personal service and maintenance expenses as
follows:
LifeSpan Income Fund. . . . . . . .$ 68,271
LifeSpan Balanced Fund. . . . . . .$ 141,239
LifeSpan Growth Fund. . . . . . . .$ 117,788
The Funds have adopted Distribution and Service Plans for Class B and Class
C shares to compensate OFDI for its costs in distributing Class B and Class
C shares and servicing accounts. Under the Plans, the Funds pay OFDI an
annual asset-based sales charge of 0.75% per year on Class B and Class C
shares for its services rendered in distributing Class B and Class C shares.
OFDI also receives a service fee of 0.25% per year to compensate dealers for
providing services for accounts that hold Class B and C shares. Each fee is
computed on the average annual net assets of Class B and Class C shares,
determined as of the close of each regular business day. If the Plans are
terminated by the Funds, the Board of Directors may allow the Funds to
continue payments of the asset-based sales charge to OFDI for certain
expenses they incurred before the Plans were terminated. During the year
ended October 31, 1997, OFDI retained certain amounts as compensation for
Class B and Class C personal service and maintenance expenses. These
amounts, as well as unreimbursed expenses incurred by OFDI at October 31,
1997 are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Amount Retained by OFDI Unreimbursed Expenses
- ------------------------------------------------------------------------------------------
<S> <C> <C>
LifeSpan Income Fund, Class B $ 5,749 $ 8,787
- ------------------------------------------------------------------------------------------
LifeSpan Balanced Fund, Class B 25,286 135,290
- ------------------------------------------------------------------------------------------
LifeSpan Balanced Fund, Class C 5,576 14,197
- ------------------------------------------------------------------------------------------
LifeSpan Growth Fund, Class B 34,240 131,807
- ------------------------------------------------------------------------------------------
LifeSpan Growth Fund, Class C 6,064 12,680
- ------------------------------------------------------------------------------------------
</TABLE>
5. ILLIQUID AND RESTRICTED SECURITIES
At October 31, 1997, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933,
may have contractual restrictions on resale, and are valued under methods
approved by the Board of Directors as reflecting fair value. A security may
be considered illiquid if it lacks a readily-available market or if its
valuation has not changed for a certain period of time. The Funds intend to
invest no more than 10% of their net assets (determined at the time of
purchase and reviewed periodically) in illiquid or restricted securities.
Certain restricted securities, eligible for resale to qualified
institutional investors, are not subject to that limit. The aggregate value
of illiquid or restricted securities subject to this limitation at October
31, 1997 are as follows:
- --------------------------------------------------------------------------------
Amount Percentage to Net Assets as of
October 31, 1997
- --------------------------------------------------------------------------------
LifeSpan Income Fund $1,108,880 3.69%
- --------------------------------------------------------------------------------
LifeSpan Balanced Fund 1,605,278 2.37
- --------------------------------------------------------------------------------
LifeSpan Growth Fund 715,076 1.19
- --------------------------------------------------------------------------------
57 Oppenheimer LifeSpan Funds
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
6. BORROWINGS
The Funds may borrow from a bank for temporary or emergency purposes
including, without limitation, funding of shareholder redemptions provided
asset coverage for borrowings exceeds 300%. The Funds have entered into an
agreement which enables them to participate with other Oppenheimer funds in
an unsecured line of credit with a bank, which permits borrowings up to $400
million, collectively. Interest is charged to each fund, based on its
borrowings, at a rate equal to the Federal Funds Rate plus 0.35%. Borrowings
are payable 30 days after such loan is executed. Each fund also pays a
commitment fee equal to its pro rata share of the average unutilized amount
of the credit facility at a rate of 0.0575% per annum.
The Funds had no borrowings outstanding during the year ended October 31,
1997.
7. SUBSEQUENT EVENT
On December 11, 1997, the Board of Directors approved the reorganization of
Oppenheimer LifeSpan Income Fund with and into Oppenheimer Bond Fund,
Oppenheimer LifeSpan Balanced Fund with and into Oppenheimer Disciplined
Allocation Fund and Oppenheimer LifeSpan Growth Fund with and into
Oppenheimer Disciplined Value Fund. Shareholders of each of the Oppenheimer
LifeSpan Funds will be asked to approve a reorganization whereby
shareholders would receive shares of Oppenheimer Bond Fund, Oppenheimer
Disciplined Allocation Fund and Oppenheimer Disciplined Value Fund, as
applicable, and the Oppenheimer LifeSpan Funds would be liquidated. If
shareholder approval is received, it is expected that the reorganization
will occur during the second quarter of calendar 1998.
58 Oppenheimer LifeSpan Funds
<PAGE>
Appendix A
Corporate Industry Classifications
Aerospace/Defense Food
Air Transportation Gas Utilities
Auto Parts Distribution Gold
Automotive Health Care/Drugs
Bank Holding Companies Health Care/Supplies & Services
Banks Homebuilders/Real Estate
Beverages Hotel/Gaming
Broadcasting Industrial Services
Broker-Dealers Information Technology
Building Materials Insurance
Cable Television Leasing & Factoring
Chemicals Leisure
Commercial Finance Manufacturing
Computer Hardware Metals/Mining
Computer Software Nondurable Household Goods
Conglomerates Oil - Integrated
Consumer Finance Paper
Containers Publishing/Printing
Convenience Stores Railroads
Department Stores Restaurants
Diversified Financial Savings & Loans
Diversified Media Shipping
Drug Stores Special Purpose Financial
Drug Wholesalers Specialty Retailing
Durable Household Goods Steel
Education Supermarkets
Electric Utilities Telecommunications - Technology
Electrical Equipment Telephone - Utility
Electronics Textile/Apparel
Energy Services & Producers Tobacco
Entertainment/Film Toys
Environmental Trucking
Wireless Services
A-1
<PAGE>
Oppenheimer LifeSpan Growth Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Income Fund
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Advisor
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 1015
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, NY 10036
<PAGE>
<PAGE>
ANNUAL REPORT DECEMBER 31, 1997
OPPENHEIMER
BOND FUND
[PHOTO]
[OPPENHEIMERFUNDS LOGO]
THE RIGHT TO INVEST
<PAGE>
INTERNET
24-hr access to account information
WWW.OPPENHEIMERFUNDS.COM
GENERAL INFORMATION
Mon-Fri 8:30am-9pm ET
Sat 10am-4pm ET
1-800-525-7048
ACCOUNT TRANSACTIONS
Mon-Fri 8:30am-9pm ET
Sat 10am-4pm ET
1-800-852-8457
PHONELINK
24-hr automated information
and automated transactions
1-800-533-3310
TELECOMMUNICATION DEVICE
FOR THE DEAF (TDD)
Mon-Fri 8:30am-2pm ET
1-800-843-4461
OPPENHEIMERFUNDS INFORMATION HOTLINE 24 hours a day, timely and insightful
messages on the economy and issues that affect your investments 1-800-835-3104
INFORMATION and services
As an Oppenheimer fund shareholder, you have some special privileges. Whether
it's automatic investment plans, informative newsletters and hotlines, or ready
account access, you can benefit from services designed to make investing simple.
And when you need help, our Customer Service Representatives are only
a toll-free phone call away. They can provide information about your account and
handle administrative requests. You can reach them at our General Information
number.
When you want to make a transaction, you can do it easily by calling
our toll-free Telephone Transactions number. And, by enrolling in AccountLink, a
convenient service that "links" your Oppenheimer funds accounts and your bank
checking or savings account, you can use the Telephone Transactions number to
make investments.
For added convenience, you can get automated information with
OppenheimerFunds PhoneLink service, available 24 hours a day, 7 days a week.
PhoneLink gives you access to a variety of fund, account, and market
information. Of course, you can always speak with a Customer Service
Representative during the General Information hours shown at the left.
You can count on us whenever you need assistance. That's why the
International Customer Service Association, an independent, nonprofit
organization made up of over 3,200 customer service management professionals
from around the country, honored the Oppenheimer funds' transfer agent,
OppenheimerFunds Services, with their Award of Excellence in 1993.
So call us today, or visit us at our website at
www.oppenheimerfunds.com--we're here to help.
[OPPENHEIMERFUNDS LOGO]
<PAGE>
CONTENTS
3 President's Letter
4 Fund Performance
6 An Interview with the Fund's Managers
10 Statement of Investments
24 Statement of Assets & Liabilities
26 Statement of Operations
27 Statements of Changes in Net Assets
28 Financial Highlights
30 Notes to Financial Statements
40 Independent Auditors' Report
41 Federal Income Tax Information
42 Officers & Trustees
44 Information & Services
REPORT HIGHLIGHTS
- - BOND PRICES RALLIED IN 1997 in response to low inflation and declining
interest rates.
- - U.S. GOVERNMENT SECURITIES AND CORPORATE BONDS, two of the best performing
bond market sectors, comprised about 90% of the portfolio.
- - IF U.S. ECONOMIC GROWTH SLOWS
in 1998, we believe bonds should continue to do well.
AVG ANNUAL TOTAL RETURNS
For the 1-year period ended
12/31/97 (without sales charges)(1)
CLASS A
10.13%
Class B
9.41%
Class C
9.39%
Total returns include changes in share price and reinvestment of dividends and
capital gains distributions in a hypothetical investment for the periods shown.
IN REVIEWING PERFORMANCE AND RANKINGS, PLEASE REMEMBER THAT PAST PERFORMANCE
DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST.
1. Includes changes in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken into
account.
2 Oppenheimer Bond Fund
<PAGE>
[PHOTO]
JAMES C. SWAIN
Chairman
Oppenheimer
Bond Fund
[PHOTO]
BRIDGET A. MACASKILL
President
Oppenheimer
Bond Fund
Dear SHAREHOLDER,
- -------------------------------------------------------------------------------
These have been very positive times for many American investors. The U.S.
economy has continued to grow at a moderate pace, unemployment has fallen to its
lowest level in 30 years and inflation has also fallen to a record low. In fact,
long-term interest rates have fallen to their lowest level since the government
began issuing 30-year Treasury bonds in 1977.
What benefits does this provide to the average American? First, when
unemployment levels are low, many individuals tend to feel a greater sense of
job security and can command higher wages because there are fewer unemployed
workers vying for their jobs. Second, many homeowners are opting to refinance
their existing home mortgage loans and take advantage of lower financing rates.
And third, because wages are increasing faster than the rate of inflation, a
paycheck may stretch further and investors, as consumers, are able to enjoy a
higher level of disposable income. This extra income can be put to use in many
ways, including allocating more money to investment opportunities.
Some industry analysts have tempered such positive news by suggesting
that if the rate of inflation falls any lower, it might actually trigger a
period of deflation, where we see the prices of American goods and services
decline. While lower prices may sound like positive news, in reality it isn't:
When prices fall too low, it erodes the value of those goods to the producer.
That is, when economic conditions force a decrease in the price of goods,
companies have to sell more of those items in order to make the same amount of
profit, which translates into greater difficulties for corporations to improve
their bottom lines.
At OppenheimerFunds, we do not believe we will see a period of
deflation in the United States. The fundamental factors that have driven the
U.S. market still appear to be in place: an economy that's in its eighth year of
expansion with moderate growth, low unemployment, virtually no inflation and low
interest rates. However, because of economic uncertainties in other parts of the
world, particularly Asia, we expect to see slower growth for stocks in 1998 and
a year in which double-digit returns from the equity markets are unlikely. It's
also possible that we may continue to see investors favor the fixed, more secure
interest payments offered from the bond markets.
In closing, we'd like to reassure you that as professional money
managers, we continue to keep a watchful eye on these situations and are closely
monitoring your fund's investments. In times like these, your financial advisor
can be of invaluable assistance to you in helping review your financial plan and
guide your investments accordingly.
Thank you for your confidence in OppenheimerFunds, The Right Way to
Invest. We look forward to helping you reach your investment goals in the
future.
/s/ JAMES C. SWAIN /s/ BRIDGET A. MACASKILL
James C. Swain Bridget A. Macaskill
January 23, 1998
3 Oppenheimer Bond Fund
<PAGE>
AVG ANNUAL TOTAL RETURNS
For the Period Ended 12/31/97(1)
CLASS A
<TABLE>
<CAPTION>
Since
1 year 5 year Inception
<S> <C> <C> <C>
4.90% 6.40% 7.93%
</TABLE>
CLASS B
<TABLE>
<CAPTION>
Since
1 year 5 year Inception
<S> <C> <C> <C>
4.41% N/A 5.61%
</TABLE>
CLASS C
<TABLE>
<CAPTION>
Since
1 year 5 year Inception
<S> <C> <C> <C>
8.39% N/A 6.94%
</TABLE>
CUMULATIVE TOTAL RETURN
For the Period Ended 12/31/97(1)
CLASS A
5 year
36.40% $13,640(3)
PERFORMANCE UPDATE
- --------------------------------------------------------------------------------
Oppenheimer Bond Fund performed well over the past twelve months. In fact, the
Fund's Class A shares were in the first quartile, ranking 16 out of 137
Corporate Debt A Rated funds ranked by Lipper Analytical Services for the
one-year period ended 12/31/97.(2)
GROWTH OF $10,000
Over five years
(without sales charges)
<TABLE>
<CAPTION>
Oppenheimer
Bond Fund Lehman Aggregate
Class A Shares Bond Index(3)
- -------------- ----------------
<S> <C>
10000 10000
10487 10413.9
10759.7 10690.5
11091.5 10969.1
11030.4 10975.1
10681.6 10659.7
10531.6 10550.1
10579.7 10614.6
10603.8 10654.8
11129.4 11192.2
11824.1 11874.1
11933.9 12107.7
12399.6 12623.4
12235.6 12398.2
12296.2 12469
12572.9 12698.5
13002.9 13079.6
12984.1 13006.6
13483.6 13484.2
13965 13932.2
14319.9 14342.4
</TABLE>
1. Total returns include changes in share price and reinvestment of dividends
and capital gains distributions in a hypothetical investment for the periods
shown. Class A returns include the current maximum initial sales charge of
4.75%. Class A shares were first publicly offered on 4/15/88. The Fund's maximum
sales charge for Class A shares was lower prior to 3/29/91, so actual
performance may have been higher. Class B returns include the applicable
contingent deferred sales charge of 5% (1-year) and 2% (since inception on
5/1/93). Class C returns for the one-year result include the contingent deferred
sales charge of 1%. Class C shares have an inception date of 7/11/95. An
explanation of the different performance calculations is in the Fund's
prospectus. Class B and C shares are subject to an annual 0.75% asset-based
sales charge.
2. Source: Lipper Analytical Services, Inc., 12/31/97. Based on the comparisons
between changes in net asset value without considering sales charges, with
dividends and capital gains distributions of the Fund's Class A shares
reinvested. The Fund's Class A shares were ranked 16 of 137 (1-year), 25 of 59
(5-year) and 24 of 35 (10-year) among Corporate Debt A Rated funds for the
period ended 12/31/97.
4 Oppenheimer Bond Fund
<PAGE>
CREDIT ALLOCATION(5)
Treasury/Agency 42.6%
AAA/AA 5.4
A/BBB 29.7
BB/B 16.7
CCC/C 0.1
Other 5.5
Portfolio REVIEW
Oppenheimer Bond Fund is for investors looking for solid income potential from a
fund emphasizing quality securities.
WHAT WE LOOK FOR
- - Sectors of the market that offer RELATIVE VALUE.
- - Primarily INVESTMENT-GRADE SECURITIES that help reduce credit risk.(4)
- - High income potential from different types of GOVERNMENT AND CORPORATE
securities.
CORPORATE BONDS & NOTES--TOP 10 INDUSTRIES
(Percentage of net assets)(4)
<TABLE>
<S> <C> <C> <C>
Diversified Financial 7.3% Capital Goods 2.1%
Energy Services & Producers 5.4 Insurance 1.7
Automotive 2.7 Hotel/Gaming 1.6
Information Technology 2.7 Banks & Thrifts 1.4
Aerospace 2.3 Chemicals 1.4
</TABLE>
3. Results of a hypothetical $10,000 investment in Class A shares on December
31, 1992. The Lehman Aggregate Bond Index includes a broad range of U.S.
government and corporate bonds. It is an unmanaged index including reinvestment
of income, and cannot be purchased directly by investors.
4. Portfolio data is as of December 31, 1997 and is based on net assets and is
subject to change.
5. Pie chart is based on total market value of investments as of December 31,
1997 and is subject to change. Average credit quality and ratings allocations
include rated securities and those not rated by a national rating organization
(currently 6.6% of total assets) but to which the ratings given above have been
assigned by the Manager for internal purposes as being comparable, in the
Manager's judgment, to securities rated by a rating agency in the same category.
Under normal market conditions, the Fund invests at least 65% of its assets in
investment-grade securities. Securities rated below investment-grade (up to 35%
of Fund assets) carry a greater risk of default. While the Fund has generally
invested under 10% of its assets in foreign securities, which are subject to
exchange rate and political uncertainties, it is not restricted to any amount by
prospectus.
5 Oppenheimer Bond Fund
<PAGE>
"We created a portfolio that was more sensitive to DECLINING INTEREST RATES."
AN INTERVIEW WITH YOUR FUND'S MANAGERS
- --------------------------------------------------------------------------------
HOW HAS THE FUND PERFORMED DURING THE 12-MONTH PERIOD ENDED DECEMBER 31, 1997?
Oppenheimer Bond Fund's Class A shares provided an average annual total return
of 10.13% for the one-year period ended December 31, 1997.(1) These results
reflect changes in share price, plus reinvested income distributions, but are
calculated before sales charges are considered. Class A shares of the Fund also
performed well relative to our peers, ranking 16 of 137 funds in the Corporate
Debt category, as measured by Lipper Analytical Services.(2)
HOW DID THE U.S. BOND MARKET RESPOND TO 1997'S ECONOMY?
Early in the year, fixed-income investors became concerned that the economy was
growing too rapidly, and they feared that the rate of inflation would
accelerate. The Federal Reserve raised a key short-term interest rate in late
March in an attempt to forestall this resurgence of inflation. As a result, bond
prices fell.
Toward mid-year, however, it became apparent that inflation would
probably remain low because of improvements in productivity and the need for
prices of goods to remain competitive with overseas companies. As investors
became more comfortable investing in bonds, interest rates declined steadily
during the second half of 1997. Because interest rates and bond prices move in
opposite directions, the result was attractive total rates of return for most
bonds during 1997.
1. Includes changes in net asset value per share without deducting any sales
charges. Such performance would have been lower if sales charges were taken into
account.
2. Source: Lipper Analytical Services, Inc., 12/31/97. Based on the comparisons
between changes in net asset value without considering sales charges, with
dividends and capital gains distributions of the Fund's Class A shares
reinvested. The Fund's Class A shares were ranked 16 of 137 (1-year), 25 of 59
(5-year) and 24 of 35 (10-year) among Corporate Debt A Rated funds for the
period ended 12/31/97.
6 Oppenheimer Bond Fund
<PAGE>
[PHOTO]
PORTFOLIO MANAGEMENT TEAM (L TO R)
Leslie Falconio
David Negri (Fund Manager)
Gina Palmieri
Len Darling
HOW WAS THE FUND MANAGED IN THAT ENVIRONMENT?
As our view of the interest-rate environment became more positive, we increased
the Fund's average duration, a measure of the portfolio's sensitivity to changes
in interest rates. By increasing the average duration from about 4.8 years early
in the year to a high of 5.3 years, we created a portfolio that was more
sensitive to declining interest rates, which helped produce higher rates of
capital appreciation.
DID THE MIX OF BONDS FROM DIFFERENT MARKET SECTORS CHANGE DURING THE PERIOD?
Our allocation of assets among the various types of bonds did not change
significantly. Throughout the year, we have kept about 50% of the Fund's assets
in U.S. government securities, including U.S. Treasuries and mortgage-backed
securities issued and backed by federal agencies. Another 45% of the portfolio
was invested in corporate bonds, which performed particularly well. Our
corporate bond position was split evenly between high-yield bonds and
investment-grade corporate securities. In addition, about 3% of the portfolio
was invested in bonds issued by governments and corporations overseas.(3)
3. The Fund invests in below-investment-grade securities, which may entail
greater credit risks, as described in the prospectus. The Fund invests in
foreign securities which entails special risks, such as currency fluctuations,
described in the prospectus.
7 Oppenheimer Bond Fund
<PAGE>
"Commercial mortgage bonds offered ATTRACTIVELY HIGH YIELDS compared to other
bonds..."
AN INTERVIEW WITH YOUR FUND'S MANAGERS
- -------------------------------------------------------------------------------
WHERE DID YOU FIND THE BEST OPPORTUNITIES IN THE CORPORATE BOND MARKET SECTOR?
Our positions in investment-grade corporate bonds were primarily in the cable
television, media and commercial banking industries. In the high-yield area,
we've emphasized telecommunications companies, including wireless
communications, cable television and financial services. These industries are in
the midst of deregulation, which we believe will be good for their businesses.
On the other hand, we've de-emphasized companies in the metals, paper and retail
industries because, at this late stage of the economic cycle, we don't want
exposure to companies that are too sensitive to changes in the economy.
At the end of the period, about 19% of our corporate bond position
was allocated to commercial private mortgage securities, which represent pools
of mortgages on hotels, shopping malls, apartment buildings and other
enterprises. Commercial mortgage bonds offered attractively high yields compared
to other bonds, as well as the relative safety of secured underlying assets.
DID THE PROBLEMS IN SOUTHEAST ASIA AFFECT THE FUND'S INVESTMENTS?
The impact has been very slight, because the Fund had virtually no exposure to
Southeast Asia. However, we do have some positions in bonds issued in New
Zealand and Australia. While the bond markets there have recently performed very
well, the ripple effect from the Asian economic crisis caused a devaluation of
their currencies relative to the U.S. dollar, which offset the returns from the
bond market rallies in those countries for U.S. investors.
8 Oppenheimer Bond Fund
<PAGE>
"...as well as the RELATIVE SAFETY of secured underlying assets."
WHAT IS YOUR OUTLOOK FOR THE FORESEEABLE FUTURE?
We are optimistic about prospects for the U.S. bond market during 1998. Perhaps
most important, we believe economic conditions should remain favorable. We
expect economic growth to slow from current levels, in large part in response to
declining demand for U.S. products overseas. We believe the rate of inflation
should remain at its current low levels as growth moderates. The federal
government's progress toward a balanced budget should contribute to less
issuance of U.S. Treasury securities. Yet, demand for these bonds should remain
high as economic problems overseas cause investors to seek the safety of bonds
issued by the most creditworthy government in the world. We expect these factors
and others to cause long-term interest rates to decline modestly from current
levels.
We intend to maintain the Fund's current strategic orientation. We
intend to keep the portfolio's average duration relatively long to hold higher
yielding securities for as long as possible while interest rates fall. What's
more, we plan to continue to allocate assets among those sectors of the bond
market that we believe will provide the best yields relative to risk. We believe
this strategy should help the Fund to provide a competitive level of income and
the opportunity for attractive total returns for its shareholders.
9 Oppenheimer Bond Fund
<PAGE>
STATEMENT OF INVESTMENTS December 31, 1997
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE (1)
================================================================================================================================
<S> <C> <C>
MORTGAGE-BACKED OBLIGATIONS--55.6%
- --------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY--36.7%
- --------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED--26.7%
Federal Home Loan Mortgage Corp.:
Certificates of Participation:
9%, 3/1/17 $ 445,202 $ 476,977
Series 17-039, 13.50%, 11/1/10 48,485 57,732
Series 17-094, 12.50%, 4/1/14 27,295 31,974
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation
Certificates:
Series 1343, Cl. LA, 8%, 8/15/22 1,600,000 1,751,426
Series 151, Cl. F, 9%, 5/15/21 1,000,000 1,085,287
Series 1712, Cl. B, 6%, 3/15/09 1,000,000 975,000
Series 1714, Cl. M, 7%, 8/15/23 1,000,000 1,005,000
Gtd. Multiclass Mtg. Participation Certificates:
Series 1460, Cl. H, 7%, 5/15/07 1,500,000 1,538,430
Series G056, Cl. H, 9%, 7/20/24 2,493,000 2,717,370
Gtd. Real Estate Mtg. Investment Conduit Pass-Through
Certificates, Series 1914, Cl. G, 6.50%, 2/15/24 3,000,000 2,951,250
Interest-Only Stripped Mtg.-Backed Security,
Series 177, Cl. B, 9.335%-10.914%, 7/1/26(2) 16,225,514 4,743,428
Principal-Only Stripped Mtg.-Backed Security,
Series 1690, Cl. B, 3.748%, 11/15/23(3) 1,892,161 1,052,515
- --------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
11%, 7/1/16 4,322,515 4,926,317
7%, 1/1/09-11/1/25 956,476 972,909
7%, 1/1/13-1/25/28(4) 22,060,000 22,240,811
7.50%, 2/1/08-3/1/08 621,862 639,256
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Trust 1992-34, Cl. G, 8%, 3/25/22 540,000 584,717
Gtd. Mtg. Pass-Through Certificates, 8%, 8/1/17 484,158 498,369
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates:
Trust 1991-170, Cl. E, 8%, 12/25/06 2,500,000 2,616,991
Trust 1992-162, Cl. C, 7%, 10/25/21 8,400,000 8,486,604
Trust 1995-4, Cl. PC, 8%, 5/25/25 869,210 952,053
Trust 1997-25, Cl. B, 7%, 12/18/22 510,000 516,345
Trust 1997-27, Cl. J, 7.50%, 4/18/27 844,594 898,896
Interest-Only Stripped Mtg.-Backed Security, Trust 249, Cl. 2, 9.958%,
10/25/23(2) 11,029,757 3,367,523
Principal-Only Stripped Mtg.-Backed Security,
Trust 277-C1, 8.142%, 4/1/27(3) 1,508,371 1,180,301
-----------
66,267,481
</TABLE>
10 Oppenheimer Bond Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE (1)
- --------------------------------------------------------------------------------------------------------------------------------
GNMA/GUARANTEED--10.0%
Government National Mortgage Assn.:
<S> <C> <C>
7%, 1/1/28(4) $ 9,950,000 $10,021,540
10%, 11/15/09 244,986 271,774
10.50%, 12/15/17-5/15/21 249,447 280,187
11%, 10/20/19 928,361 1,064,710
12%, 1/15/99-5/15/14 9,380 9,701
13%, 12/15/14 27,374 32,789
6%, 7/20/27 248,188 251,718
7%, 1/1/28(4) 2,200,000 2,217,886
7%, 7/15/09-7/20/25 1,617,774 1,657,314
7.50%, 12/1/27(4) 6,900,000 7,068,222
8%, 6/15/05-10/15/06 1,413,602 1,468,716
9%, 2/15/09-6/15/09 422,630 456,835
-----------
24,801,392
- --------------------------------------------------------------------------------------------------------------------------------
PRIVATE--18.9%
- --------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL--15.3%
Amresco Commercial Mortgage Funding I Corp., Multiclass Mtg.
Pass-Through Certificates, Series 1997-C1, Cl. E, 7%, 6/17/29(5) 150,000 138,656
- --------------------------------------------------------------------------------------------------------------------------------
Asset Securitization Corp.:
Commercial Mtg. Pass-Through Certificates:
Series 1996-D3, Cl. A5, 8.33%, 10/13/26(5)(6) 800,000 859,250
Series 1996-MD6, Cl. A5, 6.957%, 11/13/26(6) 2,000,000 2,080,000
Series 1997-D4, Cl. B1, 7.525%, 4/14/29(6) 333,000 329,878
Series 1997-D4, Cl. B2, 7.525%, 4/14/29(6) 333,000 321,709
Series 1997-D4, Cl. B3, 7.525%, 4/14/29(6) 334,000 309,524
Series 1997-D5, Cl. A6, 7.184%, 2/14/41 1,500,000 1,503,750
Series 1997-D5, Cl. B1, 6.93%, 2/14/41 2,000,000 1,826,562
Series 1997-MD7, Cl. A6, 8.11%, 1/13/30(6) 200,000 211,219
Interest-Only Stripped Mtg.-Backed Security,
Series 1997-D5, Cl. PS1, 1.367%, 2/14/41(2) 6,250,000 678,711
- --------------------------------------------------------------------------------------------------------------------------------
Capital Lease Funding Securitization LP, Interest-Only Corporate-Backed
Pass-Through Certificates, Series 1997-CTL1, 9.55%, 6/22/24(2)(5) 13,750,315 657,265
- --------------------------------------------------------------------------------------------------------------------------------
CBA Mortgage Corp., Mtg. Pass-Through Certificates,
Series 1993-C1, Cl. E, 7.76%, 12/25/03(6) 250,000 252,675
- --------------------------------------------------------------------------------------------------------------------------------
CMC Securities Corp. I, Collateralized Mtg. Obligation,
Series 1993-D, Cl. D-3, 10%, 7/25/23(5) 536,614 565,753
- --------------------------------------------------------------------------------------------------------------------------------
Commercial Mortgage Acceptance Corp., Interest-Only Stripped
Mtg.-Backed Security, Series 1996-C1, Cl. X-2, 0.981%, 12/25/20(2)(5) 18,624,900 529,646
- --------------------------------------------------------------------------------------------------------------------------------
FDIC Trust, Gtd. Real Estate Mtg. Investment Conduit Pass-Through
Certificates, Series 1994-C1:
Cl. 2-D, 8.70%, 9/25/25(5) 1,000,000 1,037,500
Cl. 2-E, 8.70%, 9/25/25(5) 1,000,000 1,038,700
- --------------------------------------------------------------------------------------------------------------------------------
First Chicago/Lennar Trust 1, Commercial Mtg. Pass-Through
Certificates, Series 1997-CHL1:
8.116%, 2/25/11(5)(6) 750,000 638,475
8.116%, 5/25/08(5)(6) 750,000 760,725
</TABLE>
11 Oppenheimer Bond Fund
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
- --------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL (CONTINUED)
<S> <C> <C>
General Motors Acceptance Corp., Collateralized Mtg. Obligations:
Series 1995-C2, Cl. D, 7.192%, 1/15/08 $1,500,000 $ 1,503,750
Series 1997-C2, Cl. F, 6.75%, 4/16/29 1,000,000 857,187
- --------------------------------------------------------------------------------------------------------------------------------
GS Mortgage Securities Corp. II, Commercial Mtg. Pass-Through
Certificates, Series 1997-CL1, Cl. F:
7.353%, 7/13/30 1,000,000 1,018,125
7.823%, 7/13/30 1,000,000 1,035,937
- --------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Mortgage Investors, Inc., Mtg. Pass-Through Certificates:
Series 1996-C1, Cl. D, 7.42%, 4/25/28 1,500,000 1,529,648
Series 1997-C2, Cl. D, 7.075%, 12/10/29 1,000,000 997,188
- --------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc., Commercial Mtg. Pass-Through
Certificates:
Series 1996-C1:
Cl. D-1, 7.51%, 2/15/28(5)(6) 1,000,000 1,016,563
Cl. E, 7.51%, 2/15/28(5)(6) 1,100,000 1,051,359
Series 1997-HF1, Cl. F, 6.86%, 2/15/10(5) 225,000 205,031
- --------------------------------------------------------------------------------------------------------------------------------
NationsCommercial Corp., NB Commercial Mtg. Pass-Through
Certificates, Series-DMC, Cl. B, 8.562%, 8/12/11(5) 3,000,000 3,181,875
- --------------------------------------------------------------------------------------------------------------------------------
Potomac Gurnee Financial Corp., Commercial Mtg. Pass-Through
Certificates, Series 1, Cl. D, 7.683%, 12/21/26(5) 1,500,000 1,547,400
- --------------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates:
Series 1993-C1, Cl. B, 8.75%, 5/25/24 322,008 321,127
Series 1994-C1, Cl. C, 8%, 6/25/26 1,500,000 1,530,900
Series 1995-C1, Cl. D, 6.90%, 2/25/27 2,500,000 2,489,266
- --------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Series 1996-C1, Cl. E,
9.187%, 1/20/06 700,000 736,094
- --------------------------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp.:
Commercial Mtg. Pass-Through Certificates,
Series 1997-LLI, Cl. D, 7.15%, 4/12/12 2,500,000 2,538,281
Multiclass Pass-Through Certificates, Series 1996-C3, Cl. D, 8%, 6/25/30(5) 2,500,000 2,531,641
------------
37,831,370
- --------------------------------------------------------------------------------------------------------------------------------
MANUFACTURED HOUSING--0.1%
Green Tree Financial Corp., Series 1994-6, Cl. A3, 7.70%, 1/15/20 151,555 152,123
- --------------------------------------------------------------------------------------------------------------------------------
MULTI-FAMILY--1.1%
Mortgage Capital Funding, Inc.:
Commercial Mtg. Pass-Through Certificates,
Series 1997-MC1, Cl. F, 7.452%, 5/20/07(5) 254,890 242,783
Multifamily Mtg. Pass-Through Certificates, Series 1996-MC1,
Cl. G, 7.15%, 6/15/06(7) 2,250,000 2,138,203
- --------------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through Certificates,
Series 1991-M5, Cl. A, 9%, 3/25/17 391,747 396,419
------------
2,777,405
</TABLE>
12 Oppenheimer Bond Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE (1)
- --------------------------------------------------------------------------------------------------------------------------------
OTHER--0.7%
<S> <C> <C>
GE Capital Mortgage Services, Inc., Series 1994-14, Cl. A1,
6.50%, 4/25/24 $ 47,944 $ 47,780
- --------------------------------------------------------------------------------------------------------------------------------
JHM Mtg. Acceptance Corp., Collateralized Mtg. Obligation Bonds,
Series E, Cl. 5, 8.96%, 4/1/19 1,548,082 1,619,682
- --------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VI:
Interest-Only Stripped Mtg.-Backed Security,
Series 1987-3, Cl. B, 12.50%, 10/23/17(2) 105,837 30,180
Principal-Only Stripped Mtg.-Backed Security,
Series 1987-3, Cl. A, 10/23/17(3) 154,135 131,255
------------
1,828,897
- --------------------------------------------------------------------------------------------------------------------------------
RESIDENTIAL--1.7%
CS First Boston Mortgage Securities Corp., Mtg. Pass-Through
Certificates, Series 1997-C1:
Cl. E, 7.50%, 3/1/11(5) 1,000,000 1,035,300
Cl. F, 7.50%, 6/20/13(5) 150,000 145,500
Cl. G, 7.50%, 6/20/14(5) 150,000 138,705
Cl. H, 7.50%, 8/20/14(5) 105,000 82,908
- --------------------------------------------------------------------------------------------------------------------------------
NationsBank Trust, Lease Pass-Through Certificates,
Series 1997A-1, 7.442%, 1/10/11(6) 500,000 520,938
- --------------------------------------------------------------------------------------------------------------------------------
Residential Funding Corp., Mtg. Pass-Through Certificates,
Series 1993-S10, Cl. A9, 8.50%, 2/25/23 490,776 507,340
- --------------------------------------------------------------------------------------------------------------------------------
Ryland Mortgage Securities Corp. III, Sub. Bonds,
Series 1992-A, Cl. 1A, 8.268%, 3/29/30(6) 343,559 349,357
- --------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Series 1996-B, Cl. 1,
7.136%, 4/25/26 1,965,016 1,387,793
------------
4,167,841
------------
Total Mortgage-Backed Obligations (Cost $135,028,453) 137,826,509
================================================================================================================================
U.S. GOVERNMENT OBLIGATIONS--12.5%
- --------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
10.375%, 11/15/09 5,500,000 6,876,721
11.625%, 11/15/04 2,375,000 3,151,331
12.75%, 11/15/10 1,000,000 1,427,501
8.875%, 8/15/17(8) 6,000,000 7,963,128
STRIPS, 6.374%, 2/15/07(9) 725,000 427,004
STRIPS, 6.52%, 8/15/22(9) 2,000,000 456,670
- --------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
6%, 8/15/00 1,000,000 1,007,501
6.125%, 8/15/07 6,000,000 6,168,756
7.50%, 10/31/99 3,430,000 3,537,191
------------
Total U.S. Government Obligations (Cost $29,886,433) 31,015,803
</TABLE>
13 Oppenheimer Bond Fund
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE (1)
================================================================================================================================
CORPORATE BONDS AND NOTES--43.4%
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BASIC INDUSTRY--2.0%
- --------------------------------------------------------------------------------------------------------------------------------
CHEMICALS--1.4%
FMC Corp., 8.75% Sr. Nts., 4/1/99 $ 250,000 $ 257,366
- --------------------------------------------------------------------------------------------------------------------------------
Harris Chemical North America, Inc., 10.75% Gtd. Sr. Sub.
Nts., 10/15/03 100,000 107,250
- --------------------------------------------------------------------------------------------------------------------------------
Laroche Industries, Inc., 9.50% Sr. Sub. Nts., 9/15/07(7) 150,000 148,500
- --------------------------------------------------------------------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr. Sec. Nts., 10/15/03 492,000 547,350
- --------------------------------------------------------------------------------------------------------------------------------
Pioneer Americas Acquisition Corp., 9.25% Sr. Nts., 6/15/07 200,000 202,500
- --------------------------------------------------------------------------------------------------------------------------------
Quantum Chemical Corp., 10.375% First Mtg. Nts., 6/1/03 900,000 944,395
- --------------------------------------------------------------------------------------------------------------------------------
Rohm & Haas Co., 9.50% Debs., 4/1/21 500,000 572,630
- --------------------------------------------------------------------------------------------------------------------------------
Sovereign Specialty Chemicals, Inc., 9.50% Sr. Sub. Nts., 8/1/07(7) 175,000 180,250
- --------------------------------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc., 11.75% Sr. Unsec. Sub. Nts., 8/15/06 470,000 481,750
-----------
3,441,991
- --------------------------------------------------------------------------------------------------------------------------------
CONTAINERS--0.1%
U.S. Can Corp., 10.125% Sr. Sub. Nts., Series B, 10/15/06 250,000 266,250
- --------------------------------------------------------------------------------------------------------------------------------
PAPER--0.3%
Repap New Brunswick, Inc., 9.063% First Priority Sr. Sec.
Nts., 7/15/00(6) 100,000 99,000
- --------------------------------------------------------------------------------------------------------------------------------
Riverwood International Corp., 10.625% Sr. Unsec. Nts., 8/1/07 200,000 204,000
- --------------------------------------------------------------------------------------------------------------------------------
Scotia Pacific Holding Co., 7.95% Timber Collateralized
Nts., 7/20/15 415,538 431,251
-----------
734,251
- --------------------------------------------------------------------------------------------------------------------------------
STEEL--0.2%
AK Steel Corp., 9.125% Sr. Nts., 12/15/06 350,000 360,500
- --------------------------------------------------------------------------------------------------------------------------------
Keystone Consolidated Industries, Inc., 9.625% Sr. Nts., 8/1/07(7) 200,000 201,750
-----------
562,250
- --------------------------------------------------------------------------------------------------------------------------------
CONSUMER RELATED--4.4%
- --------------------------------------------------------------------------------------------------------------------------------
CONSUMER PRODUCTS--0.4%
Icon Health & Fitness, Inc., 13% Sr. Sub. Nts., Series B, 7/15/02 400,000 449,000
- --------------------------------------------------------------------------------------------------------------------------------
TAG Heuer International SA, 12% Sr. Sub. Nts., 12/15/05(5) 370,000 445,850
-----------
894,850
- --------------------------------------------------------------------------------------------------------------------------------
FOOD/BEVERAGES/TOBACCO--0.9%
B.A.T. Capital Corp., 6.66% Medium-Term Nts., 3/22/00(7) 250,000 251,975
- --------------------------------------------------------------------------------------------------------------------------------
Coca-Cola Enterprises, Inc., 6.95% Debs., 11/15/26 2,000,000 2,030,054
-----------
2,282,029
</TABLE>
14 Oppenheimer Bond Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE (1)
- --------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE--0.5%
<S> <C> <C>
HEALTHSOUTH Corp., 9.50% Sr. Sub. Nts., 4/1/01 $ 500,000 $ 525,000
- --------------------------------------------------------------------------------------------------------------------------------
Imcera Group, Inc., 6% Nts., 10/15/03 500,000 492,542
- --------------------------------------------------------------------------------------------------------------------------------
Integrated Health Services, Inc., 9.50% Sr. Sub. Nts., 9/15/07(7) 30,000 30,900
- --------------------------------------------------------------------------------------------------------------------------------
Sun Healthcare Group, Inc., 9.50% Sr. Sub. Nts., 7/1/07(7) 220,000 226,600
-----------
1,275,042
- --------------------------------------------------------------------------------------------------------------------------------
HOTEL/GAMING---1.6%
Capstar Hotel Co., 8.75% Sr. Sub. Nts., 8/15/07 150,000 155,250
- --------------------------------------------------------------------------------------------------------------------------------
Casino Magic of Louisiana Corp., 13% First Mtg. Nts., Series B, 8/15/03 300,000 289,500
- --------------------------------------------------------------------------------------------------------------------------------
Grand Casinos, Inc., 10.125% Gtd. First Mtg. Nts., 12/1/03 300,000 324,000
- --------------------------------------------------------------------------------------------------------------------------------
Hilton Hotels Corp., 7.95% Sr. Nts., 4/15/07 1,000,000 1,076,652
- --------------------------------------------------------------------------------------------------------------------------------
HMC Acquisition Properties, Inc., 9% Sr. Nts., Series B, 12/15/07 800,000 834,000
- --------------------------------------------------------------------------------------------------------------------------------
HMH Properties, Inc., 8.875% Sr. Nts., 7/15/07 500,000 528,750
- --------------------------------------------------------------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 100,000 105,250
- --------------------------------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority (Connecticut),
13.50% Sr. Sec. Nts., Series B, 11/15/02 310,000 398,350
- --------------------------------------------------------------------------------------------------------------------------------
Rio Hotel & Casino, Inc., 10.625% Sr. Sub. Nts., 7/15/05 100,000 108,500
- --------------------------------------------------------------------------------------------------------------------------------
Signature Resorts, Inc., 9.75% Sr. Sub. Nts., 10/1/07(7) 150,000 150,750
-----------
3,971,002
- --------------------------------------------------------------------------------------------------------------------------------
RESTAURANTS--0.7%
Ameriking, Inc., 10.75% Sr. Nts., 12/1/06 160,000 168,800
- --------------------------------------------------------------------------------------------------------------------------------
Foodmaker, Inc.:
9.25% Sr. Nts., 3/1/99 689,000 704,502
9.75% Sr. Sub. Nts., 6/1/02 750,000 774,375
-----------
1,647,677
- --------------------------------------------------------------------------------------------------------------------------------
TEXTILE/APPAREL--0.3%
Dan River, Inc., 10.125% Sr. Sub. Nts., 12/15/03 100,000 107,375
- --------------------------------------------------------------------------------------------------------------------------------
Fruit of the Loom, Inc., 7% Debs., 3/15/11 500,000 492,877
- --------------------------------------------------------------------------------------------------------------------------------
William Carter Co., 10.375% Sr. Sub. Nts., Series A, 12/1/06 200,000 211,000
-----------
811,252
- --------------------------------------------------------------------------------------------------------------------------------
ENERGY--5.4%
- --------------------------------------------------------------------------------------------------------------------------------
Belden & Blake Corp., 9.875% Sr. Sub. Nts., 6/15/07 400,000 406,000
- --------------------------------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp., 12% Gtd. Sr. Exchangeable Nts., 3/1/01 675,000 710,437
- --------------------------------------------------------------------------------------------------------------------------------
Clark R&M, Inc., 8.375% Sr. Nts., 11/15/07(7) 200,000 201,750
- --------------------------------------------------------------------------------------------------------------------------------
Cliffs Drilling Co., 10.25% Sr. Nts., 5/15/03 50,000 54,687
- --------------------------------------------------------------------------------------------------------------------------------
Coastal Corp., 8.75% Sr. Nts., 5/15/99 325,000 335,998
- --------------------------------------------------------------------------------------------------------------------------------
Eastern Energy Ltd., 6.75% Sr. Nts., 12/1/06(7) 2,000,000 2,013,104
- --------------------------------------------------------------------------------------------------------------------------------
Enterprise Oil plc, 6.70% Sr. Nts., 9/15/07 1,000,000 1,027,105
</TABLE>
15 Oppenheimer Bond Fund
<PAGE>
STATEMENT OF INVESTMENT (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE (1)
- --------------------------------------------------------------------------------------------------------------------------------
ENERGY (CONTINUED)
<S> <C> <C>
Global Marine, Inc., 7.125% Nts., 9/1/07(5) $2,000,000 $ 2,020,000
- --------------------------------------------------------------------------------------------------------------------------------
Gothic Energy Corp., 12.25% Sr. Nts., 9/1/04(5) 200,000 210,000
- --------------------------------------------------------------------------------------------------------------------------------
J. Ray McDermott SA, 9.375% Sr. Sub. Bonds, 7/15/06 600,000 645,750
- --------------------------------------------------------------------------------------------------------------------------------
McDermott, Inc., 9.375% Nts., 3/15/02 100,000 106,485
- --------------------------------------------------------------------------------------------------------------------------------
Occidental Petroleum Corp., 11.125% Sr. Debs., 6/1/19 2,000,000 2,236,314
- --------------------------------------------------------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc., 9.375% Sub. Debs., 2/1/06 750,000 678,750
- --------------------------------------------------------------------------------------------------------------------------------
Phillips Petroleum Co., 7.53% Pass-Through Certificates,
Series 1994-A1, 9/27/98 198,646 200,689
- --------------------------------------------------------------------------------------------------------------------------------
Stone Energy Corp., 8.75% Sr. Sub. Nts., 9/15/07 400,000 409,000
- --------------------------------------------------------------------------------------------------------------------------------
TransCanada PipeLines Ltd., 9.875% Debs., 1/1/21 1,500,000 1,995,000
- --------------------------------------------------------------------------------------------------------------------------------
Wiser Oil Co., 9.50% Sr. Sub. Nts., 5/15/07 65,000 64,025
-----------
13,315,094
- --------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES--10.4%
- --------------------------------------------------------------------------------------------------------------------------------
BANKS AND THRIFTS--1.4%
Banque Nationale de Paris, 9.875% Debs., 5/25/98 205,000 207,945
- --------------------------------------------------------------------------------------------------------------------------------
Chase Manhattan Corp. (New), 6.625% Sr. Nts., 1/15/98 25,000 25,004
- --------------------------------------------------------------------------------------------------------------------------------
Citicorp Capital I, 7.933% Gtd. Bonds, 2/15/27 1,000,000 1,069,495
- --------------------------------------------------------------------------------------------------------------------------------
First Fidelity Bancorp, 8.50% Sub. Capital Nts., 4/1/98 325,000 326,728
- --------------------------------------------------------------------------------------------------------------------------------
First Nationwide Holdings, Inc.:
10.625% Sr. Sub. Nts., 10/1/03 150,000 168,750
9.125% Sr. Sub. Nts., 1/15/03 500,000 527,500
- --------------------------------------------------------------------------------------------------------------------------------
National Westminster Bank plc, 9.375% Gtd. Capital Nts., 11/15/03 70,000 80,557
Royal Bank of Scotland Group (The) plc, 10.125% Gtd. Sub.
- --------------------------------------------------------------------------------------------------------------------------------
Capital Nts., 3/1/04 500,000 591,194
- --------------------------------------------------------------------------------------------------------------------------------
Suntrust Banks, Inc., 8.875% Debs., 2/1/98 500,000 501,029
-----------
3,498,202
- --------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL--7.3%
Associates Corp. of North America, 7.40% Medium-Term Nts., 7/7/99 300,000 305,592
- --------------------------------------------------------------------------------------------------------------------------------
Beneficial Corp., 12.875% Debs., 8/1/13 20,000 21,734
- --------------------------------------------------------------------------------------------------------------------------------
BHP Finance (USA) Ltd., 8.50% Gtd. Debs., 12/1/12 1,500,000 1,756,584
- --------------------------------------------------------------------------------------------------------------------------------
Enterprise Rent-A-Car USA Finance Co., 7.875% Nts., 3/15/98(7) 1,500,000 1,505,331
- --------------------------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 6.75% Nts., 8/15/08 1,000,000 1,012,842
- --------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 6.875% Nts., 3/1/03 750,000 770,451
- --------------------------------------------------------------------------------------------------------------------------------
Midland American Capital Corp., 12.75% Gtd. Nts., 11/15/03 205,000 215,084
- --------------------------------------------------------------------------------------------------------------------------------
NationsBank Corp., 10.20% Sub. Nts., 7/15/15 1,300,000 1,748,590
- --------------------------------------------------------------------------------------------------------------------------------
Ocwen Capital Trust I, 10.875% Gtd. Bonds, 8/1/27 300,000 327,000
- --------------------------------------------------------------------------------------------------------------------------------
Penske Truck Leasing Co. LP, 7.75% Sr. Nts., 5/15/99 1,825,000 1,868,676
- --------------------------------------------------------------------------------------------------------------------------------
Rank Group Finance plc, 6.75% Gtd. Nts., 11/30/04 1,000,000 1,003,500
- --------------------------------------------------------------------------------------------------------------------------------
Ryder System, Inc., 8.75% Debs., Series J, 3/15/17 1,600,000 1,671,586
- --------------------------------------------------------------------------------------------------------------------------------
Salomon, Inc, 7.30% Nts., 5/15/02 1,000,000 1,035,115
</TABLE>
16 Oppenheimer Bond Fund
<PAGE>
<TABLE>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE (1)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Saul (B.F.) Real Estate Investment Trust, 11.625% Sr. Sec. Nts.,
Series B, 4/1/02 $1,125,000 $ 1,209,375
- --------------------------------------------------------------------------------------------------------------------------------
Source One Mortgage Services Corp., 9% Debs., 6/1/12 1,250,000 1,379,060
- --------------------------------------------------------------------------------------------------------------------------------
Washington Mutual Capital I, 8.375% Gtd. Bonds, 6/1/27 2,000,000 2,180,952
-----------
18,011,472
- --------------------------------------------------------------------------------------------------------------------------------
INSURANCE--1.7%
Aetna Services, Inc., 8% Debs., 1/15/17 849,000 868,270
- --------------------------------------------------------------------------------------------------------------------------------
Allmerica Capital I, 8.207% Debs., 2/3/27 2,000,000 2,209,596
- --------------------------------------------------------------------------------------------------------------------------------
Liberty Mutual Insurance Co., 7.697% Nts., 10/15/2097(5) 1,000,000 1,051,292
- --------------------------------------------------------------------------------------------------------------------------------
Veritas Holdings, Inc., 9.625% Sr. Nts., 12/15/03 200,000 214,000
-----------
4,343,158
- --------------------------------------------------------------------------------------------------------------------------------
HOUSING RELATED--0.8%
- --------------------------------------------------------------------------------------------------------------------------------
BUILDING MATERIALS--0.1%
Nortek, Inc., 9.25% Sr. Nts., Series B, 3/15/07 250,000 256,250
- --------------------------------------------------------------------------------------------------------------------------------
HOMEBUILDERS/REAL ESTATE--0.7%
Continental Homes Holding Corp., 10% Gtd. Unsec. Bonds, 4/15/06 50,000 54,750
- --------------------------------------------------------------------------------------------------------------------------------
Greystone Homes, Inc., 10.75% Sr. Gtd. Nts., 3/1/04(5) 50,000 54,750
- --------------------------------------------------------------------------------------------------------------------------------
Nortek, Inc., 9.125% Sr. Nts., Series B, 9/1/07 250,000 255,000
- --------------------------------------------------------------------------------------------------------------------------------
Trizec Hahn Corp., 7.95% Sr. Unsec. Debs., 6/1/07CAD 2,000,000 1,450,435
-----------
1,814,935
- --------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING--7.1%
- --------------------------------------------------------------------------------------------------------------------------------
AEROSPACE--2.3%
Amtran, Inc., 10.50% Sr. Nts., 8/1/04(7) 100,000 104,500
- --------------------------------------------------------------------------------------------------------------------------------
Atlas Air, Inc.:
10.75% Sr. Nts., 8/1/05 125,000 132,500
12.25% Pass-Through Certificates, 12/1/02 1,000,000 1,115,000
- --------------------------------------------------------------------------------------------------------------------------------
Boeing Co., 7.50% Debs., 8/15/42 2,000,000 2,254,914
- --------------------------------------------------------------------------------------------------------------------------------
Rolls-Royce Capital, Inc., 7.125% Gtd. Nts., 7/29/03 1,000,000 1,028,125
- --------------------------------------------------------------------------------------------------------------------------------
SC International Services, Inc., 9.25% Sr. Sub. Nts., 9/1/07(7) 250,000 260,000
- --------------------------------------------------------------------------------------------------------------------------------
Southwest Airlines Co., 9.25% Debs., 2/15/98 500,000 501,700
- --------------------------------------------------------------------------------------------------------------------------------
Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04(7) 250,000 252,500
-----------
5,649,239
- --------------------------------------------------------------------------------------------------------------------------------
AUTOMOTIVE--2.7%
Cambridge Industries, Inc., 10.25% Sr. Sub. Nts., 7/15/07(7) 100,000 105,000
- --------------------------------------------------------------------------------------------------------------------------------
Chrysler Corp., 7.40% Debs., 8/1/2097 3,000,000 3,212,247
- --------------------------------------------------------------------------------------------------------------------------------
Ford Motor Co., 8.875% Debs., 11/15/22 2,000,000 2,267,818
- --------------------------------------------------------------------------------------------------------------------------------
Hayes Wheels International, Inc., 11% Sr. Sub. Nts., 7/15/06 200,000 224,000
- --------------------------------------------------------------------------------------------------------------------------------
Johnson Controls, Inc., 7.70% Debs., 3/1/15 500,000 564,073
- --------------------------------------------------------------------------------------------------------------------------------
Key Plastics, Inc., 10.25% Sr. Sub. Nts., Series B, 3/15/07 200,000 213,500
-----------
6,586,638
</TABLE>
17 Oppenheimer Bond Fund
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE (1)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL GOODS--2.1%
Caterpillar, Inc., 9.75% Debs., 6/1/19 $1,750,000 $1,895,626
- --------------------------------------------------------------------------------------------------------------------------------
Clark-Schwebel, Inc.:
10.50% Sr. Nts., 4/15/06 650,000 711,750
12.50% Debs., 7/15/07(7)(10) 137,982 148,331
- --------------------------------------------------------------------------------------------------------------------------------
Communications & Power Industries, Inc., 12% Sr. Sub. Nts.,
Series B, 8/1/05 500,000 560,000
- --------------------------------------------------------------------------------------------------------------------------------
Hydrochem Industrial Services, Inc., 10.375% Sr. Sub. Nts., 8/1/07 325,000 337,187
- --------------------------------------------------------------------------------------------------------------------------------
Polymer Group, Inc., 9% Sr. Sub. Nts., 7/1/07 150,000 150,375
- --------------------------------------------------------------------------------------------------------------------------------
Roller Bearing Co. of America, Inc., 9.625% Gtd. Sr. Sub. Nts., 6/15/07(5) 200,000 202,500
- --------------------------------------------------------------------------------------------------------------------------------
Titan Wheel International, Inc., 8.75% Sr. Sub. Nts., 4/1/07 250,000 263,125
- --------------------------------------------------------------------------------------------------------------------------------
Westinghouse Electric Corp., 8.375% Nts., 6/15/02 1,000,000 1,050,813
-----------
5,319,707
- --------------------------------------------------------------------------------------------------------------------------------
MEDIA--2.9%
- --------------------------------------------------------------------------------------------------------------------------------
BROADCASTING--0.9%
Allbritton Communications Co., 11.50% Sr. Sub. Debs., 8/15/04 675,000 710,437
- --------------------------------------------------------------------------------------------------------------------------------
Capstar Broadcasting Partners, Inc., 9.25% Sr. Sub. Nts., 7/1/07 175,000 179,812
- --------------------------------------------------------------------------------------------------------------------------------
Paxson Communications Corp., 11.625% Sr. Sub. Nts., 10/1/02 520,000 559,000
- --------------------------------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., 10% Sr. Sub. Nts., 9/30/05 200,000 211,500
- --------------------------------------------------------------------------------------------------------------------------------
Young Broadcasting, Inc.:
8.75% Sr. Sub. Debs., 6/15/07 300,000 298,500
9% Sr. Sub. Nts., Series B, 1/15/06 400,000 402,000
-----------
2,361,249
- --------------------------------------------------------------------------------------------------------------------------------
CABLE TELEVISION--1.2%
Adelphia Communications Corp.:
9.25% Sr. Nts., 10/1/02 150,000 153,750
9.875% Sr. Nts., Series B, 3/1/07 200,000 212,500
- --------------------------------------------------------------------------------------------------------------------------------
EchoStar Communications Corp., 0%/12.875% Sr. Disc. Nts., 6/1/04(11) 250,000 230,000
- --------------------------------------------------------------------------------------------------------------------------------
EchoStar DBS Corp., 12.50% Gtd. Nts., 7/1/02 525,000 569,625
- --------------------------------------------------------------------------------------------------------------------------------
Knology Holdings, Inc., Units (each unit consists of $1,000 principal
amount of 0%/11.875% sr. disc. nts., 10/15/07 and one warrant to
purchase .003734 shares of preferred stock)(5)(11)(12) 200,000 110,000
- --------------------------------------------------------------------------------------------------------------------------------
Optel, Inc., 13% Sr. Nts., Series B, 2/15/05 100,000 106,500
- --------------------------------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., 8.75% Sr. Nts., 7/15/07CAD 600,000 409,445
- --------------------------------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 1,000,000 1,111,644
-----------
2,903,464
</TABLE>
18 Oppenheimer Bond Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE (1)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DIVERSIFIED MEDIA--0.6%
Heritage Media Corp., 8.75% Sr. Sub. Nts., 2/15/06 $ 500,000 $ 530,000
- --------------------------------------------------------------------------------------------------------------------------------
Hollywood Theaters, Inc., 10.625% Sr. Sub. Nts., 8/1/07(7) 100,000 106,750
- --------------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co.:
8.625% Sr. Sub. Nts., 9/15/07 400,000 413,000
9.625% Sr. Sub. Nts., 12/1/06 150,000 162,188
- --------------------------------------------------------------------------------------------------------------------------------
Outdoor Systems, Inc., 8.875% Sr. Sub. Nts., 6/15/07 200,000 209,000
-----------
1,420,938
- --------------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT/FILM--0.1%
Blockbuster Entertainment Corp., 6.625% Sr. Nts., 2/15/98 250,000 250,090
- --------------------------------------------------------------------------------------------------------------------------------
PUBLISHING/PRINTING--0.1%
American Lawyer Media Holdings, Inc., 9.75% Sr. Nts., 12/15/07(7) 250,000 255,000
- --------------------------------------------------------------------------------------------------------------------------------
OTHER--1.2%
- --------------------------------------------------------------------------------------------------------------------------------
CONGLOMERATES--0.0%
Maxxam Group, Inc., 0%/12.25% Sr. Sec. Disc. Nts., 8/1/03(11) 100,000 99,500
- --------------------------------------------------------------------------------------------------------------------------------
SERVICES--1.2%
Archer Daniels Midland Co., 7.125% Debs., 3/1/13 750,000 800,963
- --------------------------------------------------------------------------------------------------------------------------------
ENSCO International, Inc.:
6.75% Nts., 11/15/07 1,000,000 1,007,035
7.20% Nts., 11/15/27 1,000,000 1,018,462
- --------------------------------------------------------------------------------------------------------------------------------
Oxford Automotive, Inc., 10.125% Sr. Unsec. Sub. Nts., 6/15/07 200,000 211,250
-----------
3,037,710
- --------------------------------------------------------------------------------------------------------------------------------
RETAIL--1.7%
- --------------------------------------------------------------------------------------------------------------------------------
DEPARTMENT STORES--0.3%
Sears Canada, Inc., 11.70% Debs., 7/10/00CAD 500,000 397,807
- --------------------------------------------------------------------------------------------------------------------------------
Sears Roebuck & Co., 8.39% Medium-Term Nts., 3/23/99 300,000 308,082
-----------
705,889
- --------------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAILING--0.3%
May Department Stores Cos., 10.625% Debs., 11/1/10 405,000 545,305
- --------------------------------------------------------------------------------------------------------------------------------
Specialty Retailers, Inc., 9% Gtd. Unsec. Sr. Sub. Nts., 7/15/07 100,000 102,500
-----------
647,805
- --------------------------------------------------------------------------------------------------------------------------------
SUPERMARKETS--1.1%
Fleming Cos., Inc., 10.625% Sr. Sub. Nts., 7/31/07(7) 550,000 583,000
- --------------------------------------------------------------------------------------------------------------------------------
Kroger Co., 8.50% Sr. Sec. Debs., 6/15/03 1,000,000 1,050,837
- --------------------------------------------------------------------------------------------------------------------------------
Ralph's Grocery Co., 10.45% Sr. Nts., 6/15/04 300,000 337,500
- --------------------------------------------------------------------------------------------------------------------------------
Randall's Food Markets, Inc., 9.375% Sr. Sub. Nts., 7/1/07(7) 500,000 520,000
- --------------------------------------------------------------------------------------------------------------------------------
Stater Brothers Holdings, Inc., 9% Unsec. Sr. Sub. Nts., 7/1/04 150,000 157,500
-----------
2,648,837
</TABLE>
19 Oppenheimer Bond Fund
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE (1)
- --------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY--3.1%
- --------------------------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--2.7%
<S> <C> <C>
Cellular Communications International, Inc., Zero Coupon
Sr. Disc. Nts., 11.198%, 8/15/00(9) $1,450,000 $1,167,250
- --------------------------------------------------------------------------------------------------------------------------------
Dial Call Communications, Inc., 0%/12.25% Sr. Disc. Nts., 4/15/04(11) 300,000 287,250
- --------------------------------------------------------------------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 250,000 255,000
- --------------------------------------------------------------------------------------------------------------------------------
General Electric Capital Corp., 8.75% Debs., 5/21/07 1,000,000 1,172,150
- --------------------------------------------------------------------------------------------------------------------------------
Metrocall, Inc., 9.75% Sr. Sub. Nts., 11/1/07(7) 50,000 49,625
- --------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc.:
0%/10.65% Sr. Disc. Nts., 9/15/07(7)(11) 50,000 31,750
0%/11.50% Sr. Disc. Nts., 9/1/03(11) 250,000 250,000
- --------------------------------------------------------------------------------------------------------------------------------
Omnipoint Corp., 11.625% Sr. Nts., 8/15/06 70,000 74,200
- --------------------------------------------------------------------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital Corp., 14% Sr. Nts., 8/15/04 65,000 70,850
- --------------------------------------------------------------------------------------------------------------------------------
Orion Network Systems, Inc., 0%/12.50% Sr. Disc. Nts., 1/15/07(11) 200,000 149,500
- --------------------------------------------------------------------------------------------------------------------------------
PriCellular Wireless Corp.:
0%/12.25% Sr. Sub. Disc. Nts., 10/1/03(11) 200,000 206,000
0%/14% Sr. Sub. Disc. Nts., 11/15/01(11) 1,050,000 1,170,750
10.75% Sr. Nts., 11/1/04 520,000 565,500
- --------------------------------------------------------------------------------------------------------------------------------
Real Time Data, Inc., Units (each unit consists of $1,000 principal
amount of 0%/13.50% sub. disc. nts., 8/15/06 and one warrant to
purchase six ordinary shares)(5)(11)(12) 1,000,000 380,000
- --------------------------------------------------------------------------------------------------------------------------------
Star Choice Communications, Inc., Units (each unit consists of
$1,000 principal amount of 13% sr. sec. nts., 12/15/05 and one
warrant to buy common stock)(12) 200,000 206,000
- --------------------------------------------------------------------------------------------------------------------------------
Tracor, Inc., 8.50% Sr. Sub. Nts., 3/1/07 200,000 206,000
- --------------------------------------------------------------------------------------------------------------------------------
Unisys Corp., 11.75% Sr. Nts., 10/15/04 300,000 344,250
- --------------------------------------------------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II, 9.50% Sr. Nts., 2/1/04 100,000 98,000
-----------
6,684,075
- --------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS/TECHNOLOGY--0.4%
Brooks Fiber Properties, Inc., 0%/11.875% Sr. Disc. Nts., 11/1/06(11) 145,000 116,725
- --------------------------------------------------------------------------------------------------------------------------------
COLT Telecom Group plc, Units (each unit consists of $1,000 principal
amount of 0%/12% sr. disc. nts., 12/15/06 and one warrant to purchase
7.8 ordinary shares)(11)(12) 350,000 273,000
- --------------------------------------------------------------------------------------------------------------------------------
GST Telecommunications, Inc., 0%/13.875%
Cv. Sr. Sub. Disc. Nts., 12/15/05(7)(11) 100,000 76,813
- --------------------------------------------------------------------------------------------------------------------------------
McLeodUSA, Inc., 0%/10.50% Sr. Disc. Nts., 3/1/07(11) 65,000 47,125
- --------------------------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc., 9.625% Sr. Nts., 10/1/07 100,000 104,000
- --------------------------------------------------------------------------------------------------------------------------------
NTL, Inc., 10% Sr. Nts., 2/15/07 100,000 105,750
- --------------------------------------------------------------------------------------------------------------------------------
Qwest Communications International, Inc., 0%/9.47%
Sr. Disc. Nts., 10/15/07(7)(11) 365,000 248,200
- --------------------------------------------------------------------------------------------------------------------------------
Teleport Communications Group, Inc., 0%/11.125%
Sr. Disc. Nts., 7/1/07(11) 150,000 122,625
-----------
1,094,238
</TABLE>
20 Oppenheimer Bond Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE (1)
- --------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--1.6%
- --------------------------------------------------------------------------------------------------------------------------------
RAILROADS--1.3%
<S> <C> <C>
Canadian Pacific Ltd., 9.45% Debs., 8/1/21 $1,000,000 $ 1,278,950
- --------------------------------------------------------------------------------------------------------------------------------
Kansas City Southern Industries, Inc., 6.625% Nts., 3/1/05 750,000 758,272
- --------------------------------------------------------------------------------------------------------------------------------
Transtar Holdings LP/Transtar Capital Corp., 0%/13.375%
Sr. Disc. Nts., Series B, 12/15/03(11) 1,100,000 968,000
- --------------------------------------------------------------------------------------------------------------------------------
Union Pacific Corp., 9.65% Medium-Term Nts., 4/17/00 100,000 107,286
------------
3,112,508
- --------------------------------------------------------------------------------------------------------------------------------
SHIPPING--0.2%
Navigator Gas Transport plc:
10.50% First Priority Ship Mtg. Nts., 6/30/07(7) 400,000 426,000
Units (each unit consists of $1,000 principal amount of 12%
second priority ship mtg. nts., 6/30/07 and 7.66 warrants)(7)(12) 100,000 113,000
------------
539,000
- --------------------------------------------------------------------------------------------------------------------------------
TRUCKING--0.1%
Coach USA, Inc., 9.375% Gtd. Sr. Sub. Nts., Series B, 7/1/07 350,000 362,250
- --------------------------------------------------------------------------------------------------------------------------------
UTILITIES--2.8%
- --------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--0.7%
California Energy, Inc., 10.25% Sr. Disc. Nts., 1/15/04 300,000 324,000
- --------------------------------------------------------------------------------------------------------------------------------
Calpine Corp., 8.75% Sr. Nts., 7/15/07(7) 185,000 189,625
- --------------------------------------------------------------------------------------------------------------------------------
Consumers Energy Co., 8.75% First Mtg. Nts., 2/15/98 250,000 250,597
- --------------------------------------------------------------------------------------------------------------------------------
First PV Funding Corp., 10.15% Lease Obligation Bonds,
Series 1986B, 1/15/16(5) 197,000 209,063
- --------------------------------------------------------------------------------------------------------------------------------
Public Service Co. of Colorado, 8.75% First Mtg. Bonds, 3/1/22 250,000 276,115
- --------------------------------------------------------------------------------------------------------------------------------
South Carolina Electric & Gas Co., 9% Mtg. Bonds, 7/15/06 500,000 583,366
------------
1,832,766
- --------------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES--0.8%
Laclede Gas Co., 8.50% First Mtg. Bonds, 11/15/04 500,000 557,739
- --------------------------------------------------------------------------------------------------------------------------------
National Fuel Gas Co., 7.75% Debs., 2/1/04 500,000 532,226
- --------------------------------------------------------------------------------------------------------------------------------
Texas Gas Transmission Corp., 8.625% Nts., 4/1/04 500,000 555,629
- --------------------------------------------------------------------------------------------------------------------------------
Union Gas Ltd., 13% Debs., 6/30/03CAD 464,000 338,197
------------
1,983,791
- --------------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES--1.3%
GTE Corp., 8.85% Debs., 3/1/98 300,000 301,217
- --------------------------------------------------------------------------------------------------------------------------------
New York Telephone Co., 9.375% Debs., 7/15/31 2,500,000 2,817,648
------------
3,118,865
------------
Total Corporate Bonds and Notes (Cost $103,314,823) 107,739,264
</TABLE>
21 Oppenheimer Bond Fund
<PAGE>
STATEMENT OF INVESTMENT (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE (1)
================================================================================================================================
COMMON STOCKS--0.0%
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Optel, Inc. (Cost $0)(5)(13) 100 $ --
================================================================================================================================
PREFERRED STOCKS--1.4%
- --------------------------------------------------------------------------------------------------------------------------------
Allstate Financing I, 7.95% Gtd. Quarterly Income Preferred
Securities, Series A 80,000 2,075,000
- --------------------------------------------------------------------------------------------------------------------------------
CRIIMI MAE, Inc., 10.875% Cum. Cv. Preferred Stock, Series B, Non-Vtg. 13,000 444,437
- --------------------------------------------------------------------------------------------------------------------------------
EchoStar Communications Corp., 12.125% Sr. Redeemable
Exchangeable Preferred Stock, Series B(7)(10) 100 104,750
- --------------------------------------------------------------------------------------------------------------------------------
Fresenius Medical Care Trust, 9% Preferred Securities 505,000 530,250
- --------------------------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc., 14% Sr. Exchangeable Preferred(10) 3,381 210,467
- --------------------------------------------------------------------------------------------------------------------------------
SFX Broadcasting, Inc., 12.625% Cum., Series E, Non-Vtg.(10) 53 60,554
-----------
Total Preferred Stocks (Cost $3,165,304) 3,425,458
UNITS
================================================================================================================================
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- --------------------------------------------------------------------------------------------------------------------------------
American Communications Services, Inc. Wts., Exp. 11/05(5) 300 28,650
- --------------------------------------------------------------------------------------------------------------------------------
Cellular Communications International, Inc. Wts., Exp. 8/03(5) 500 8,500
- --------------------------------------------------------------------------------------------------------------------------------
Gothic Energy Corp. Wts., Exp. 9/04 2,800 5,600
- --------------------------------------------------------------------------------------------------------------------------------
ICG Communications, Inc. Wts., Exp. 9/05(5) 1,980 24,750
- --------------------------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc. Wts., Exp. 2/09(5) 3,050 31
Orion Network Systems, Inc. Wts., Exp. 1/07(5) 200 2,500
-----------
Total Rights, Warrants and Certificates (Cost $3,500) 70,031
FACE AMOUNT(1)
================================================================================================================================
STRUCTURED INSTRUMENTS--0.5%
- --------------------------------------------------------------------------------------------------------------------------------
Bayerische Landesbank Girozentrale (New York Branch)
Lehman Brothers High Yield Bond Index Nts., 12.50%, 2/4/98 $ 500,000 499,200
- --------------------------------------------------------------------------------------------------------------------------------
Shoshone Partners Loan Trust, 7.50% Sr. Nts., 5/31/02(5)(6) 742,000 786,944
------------
Total Structured Instruments (Cost $1,242,000) 1,286,144
================================================================================================================================
REPURCHASE AGREEMENTS--2.1%
- --------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets, 6.60%, dated 12/31/97,
to be repurchased at $5,201,907 on 1/2/98, collateralized by U.S. Treasury
Bonds, 8%-10.625%, 8/15/15-11/15/21, with a value of $3,854,252, and U.S.
Treasury Nts., 5.875%-7.50%, 9/30/01-12/31/01,
with a value of $1,452,554 (Cost $5,200,000) 5,200,000 5,200,000
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $277,840,513) 115.5% 286,563,209
- --------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (15.5) (38,414,567)
----------- ------------
NET ASSETS 100.0% $248,148,642
=========== ============
</TABLE>
22 Oppenheimer Bond Fund
<PAGE>
- --------------------------------------------------------------------------------
1. Face amount is reported in U.S. Dollars, except for those denoted in the
following currency: CAD--Canadian Dollar.
2. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline and prepayment rates increase. Most
other fixed income securities increase in price when interest rates decline. The
principal amount of the underlying pool represents the notional amount on which
current interest is calculated. The price of these securities is typically more
sensitive to changes in prepayment rates than traditional mortgage-backed
securities (for example, GNMA pass-throughs). Interest rates disclosed represent
current yields based upon the current cost basis and estimated timing and amount
of future cash flows.
3. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these securities
generally increases as interest rates decline and prepayment rates rise. The
price of these securities is typically more volatile than that of coupon-bearing
bonds of the same maturity. Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing of future cash flows.
4. When-issued security to be delivered and settled after December 31, 1997.
5. Identifies issues considered to be illiquid or restricted--See Note 8 of
Notes to Financial Statements.
6. Represents the current interest rate for a variable rate security.
7. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $10,623,957 or 4.28% of the Fund's net
assets as of December 31, 1997.
8. Securities with an aggregate market value of $929,032 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 6 of Notes to Financial Statements.
9. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
10. Interest or dividend is paid in kind.
11. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
12. Units may be comprised of several components, such as debt and equity and/or
warrants to purchase equity at some point in the future. For units which
represent debt securities, face amount disclosed represents total underlying
principal.
13. Non-income producing security.
See accompanying Notes to Financial Statements.
23 Oppenheimer Bond Fund
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES December 31, 1997
<TABLE>
====================================================================================================================
<S> <C>
ASSETS
Investments, at value (cost $277,840,513) $286,563,209
- --------------------------------------------------------------------------------------------------------------------
Cash 390,159
- --------------------------------------------------------------------------------------------------------------------
Unrealized appreciation on forward foreign currency
exchange contracts--Note 5 20,641
- --------------------------------------------------------------------------------------------------------------------
Receivables:
Investments sold 16,365,960
Interest and principal paydowns 3,656,399
Shares of beneficial interest sold 301,417
Daily variation on futures contracts--Note 6 82,564
- --------------------------------------------------------------------------------------------------------------------
Other 5,691
------------
Total assets 307,386,040
===================================================================================================================
LIABILITIES Payables and other liabilities:
Investments purchased (including $57,811,085 purchased on a
when-issued basis)--Note 1 58,014,647
Dividends 631,775
Shares of beneficial interest redeemed 258,531
Distribution and service plan fees 150,358
Transfer and shareholder servicing agent fees 47,292
Other 134,795
------------
Total liabilities 59,237,398
===================================================================================================================
NET ASSETS $248,148,642
============
===================================================================================================================
COMPOSITION OF NET ASSETS
Paid-in capital $241,988,295
- --------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 6,579
- --------------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and
foreign currency transactions (2,819,276)
- --------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 8,973,044
-------------
Net assets $248,148,642
=============
</TABLE>
24 Oppenheimer Bond Fund
<PAGE>
<TABLE>
=======================================================================================================================
<S> <C>
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on
net assets of $190,705,711 and 17,383,073 shares of beneficial interest outstanding) $10.97
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $11.52
- -----------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $48,254,895
and 4,399,924 shares of beneficial interest outstanding) $10.97
- -----------------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $9,188,036
and 837,017 shares of beneficial interest outstanding) $10.98
</TABLE>
See accompanying Notes to Financial Statements.
25 Oppenheimer Bond Fund
<PAGE>
STATEMENT OF OPERATIONS For the Year Ended December 31, 1997
<TABLE>
===============================================================================================================
<S> <C>
INVESTMENT INCOME
Interest $19,692,749
- ---------------------------------------------------------------------------------------------------------------
Dividends 196,995
-----------
Total income 19,889,744
===============================================================================================================
EXPENSES
Management fees--Note 4 1,751,986
- ---------------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 461,146
Class B 414,137
Class C 61,208
- ---------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 412,037
- ---------------------------------------------------------------------------------------------------------------
Shareholder reports 154,722
- ---------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 49,736
- ---------------------------------------------------------------------------------------------------------------
Legal and auditing fees 18,708
- ---------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 6,839
- ---------------------------------------------------------------------------------------------------------------
Other 15,848
-----------
Total expenses 3,346,367
===============================================================================================================
NET INVESTMENT INCOME 16,543,377
===============================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on:
Investments 2,873,379
Closing of futures contracts--Note 6 (688,832)
Closing and expiration of options written--Note 7 (29,905)
Foreign currency transactions 42,729
-----------
Net realized gain 2,197,371
- ---------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 3,870,507
Translation of assets and liabilities denominated in foreign currencies (205,493)
-----------
Net change 3,665,014
-----------
Net realized and unrealized gain 5,862,385
===============================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $22,405,762
===========
</TABLE>
See accompanying Notes to Financial Statements.
26 Oppenheimer Bond Fund
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1997 1996
=============================================================================================================================
<S> <C> <C>
OPERATIONS
Net investment income $ 16,543,377 $ 15,830,998
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain 2,197,371 313,209
- -----------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 3,665,014 (5,325,416)
------------ ------------
Net increase in net assets resulting from operations 22,405,762 10,818,791
=============================================================================================================================
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment
income:
Class A (13,459,796) (12,577,460)
Class B (2,655,088) (2,405,982)
Class C (389,245) (214,115)
- ------------------------------------------------------------------------------------------------------------------------------
Tax return of capital distribution:
Class A -- (517,955)
Class B -- (103,919)
Class C -- (11,567)
=============================================================================================================================
BENEFICIAL INTEREST TRANSACTIONS Net increase (decrease) in net assets resulting
from beneficial interest transactions--Note 2:
Class A (7,491,024) 28,392,776
Class B 8,379,500 659,280
Class C 4,696,745 404,645
=============================================================================================================================
NET ASSETS
Total increase 11,486,854 24,444,494
- -----------------------------------------------------------------------------------------------------------------------------
Beginning of period 236,661,788 212,217,294
------------ ------------
End of period (including undistributed net investment
income of $6,579 for the year ended 12/31/97) $248,148,642 $236,661,788
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
27 Oppenheimer Bond Fund
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1997 1996 1995 1994 1993
===================================================================================================================================
PER SHARE OPERATING DATA:
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.70 $10.98 $10.01 $11.12 $10.74
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .77 .78 .69 .65 .69
Net realized and unrealized gain (loss) .27 (.28) .96 (1.08) .40
---- ---- ---- ---- ----
Total income (loss) from
investment operations 1.04 .50 1.65 (.43) 1.09
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.77) (.75) (.68) (.65) (.71)
Dividends in excess of net
investment income -- -- -- (.03) --
Tax return of capital -- (.03) -- -- --
---- ---- ---- ---- ----
Total dividends and distributions
to shareholders (.77) (.78) (.68) (.68) (.71)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.97 $10.70 $10.98 $10.01 $11.12
====== ====== ====== ====== ======
===================================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(3) 10.13% 4.87% 16.94% (3.87)% 10.30%
===================================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $190,706 $193,515 $169,059 $ 96,640 $110,759
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $187,458 $178,130 $116,940 $102,168 $111,702
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 7.20% 7.35% 6.47% 6.25% 6.20%
Expenses, before voluntary
reimbursement by the Manager 1.27% 1.30% 1.27% 1.06% 1.06%
Expenses, net of voluntary
reimbursement by the Manager N/A N/A 1.26% N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 50.5% 53.7% 175.4% 70.3% 110.1%
</TABLE>
1. For the period from July 11, 1995 (inception of offering) to December 31,
1995.
2. For the period from May 1, 1993 (inception of offering) to December 31, 1993.
3. 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.
4. Annualized.
28 Oppenheimer Bond Fund
<PAGE>
<TABLE>
<CAPTION>
CLASS B CLASS C
-------------------------------------------------------------------------- -------------------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1997 1996 1995 1994 1993(2) 1997 1996 1995(1)
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
$10.69 $10.98 $10.01 $11.11 $11.10 $10.70 $10.99 $10.89
- ---------------------------------------------------------------------------------------------------------------------------------
.69 .70 .63 .58 .40 .69 .70 .28
.28 (.29) .94 (1.08) .03 .28 (.29) .10
---- ---- ----- ---- ---- ---- ---- ----
.97 .41 1.57 (.50) .43 .97 .41 .38
- ---------------------------------------------------------------------------------------------------------------------------------
(.69) (.67) (.60) (.57) (.42) (.69) (.67) (.28)
-- -- -- (.03) -- -- -- --
-- (.03) -- -- -- -- (.03) --
---- ---- ---- ---- ---- ---- ---- ----
(.69) (.70) (.60) (.60) (.42) (.69) (.70) (.28)
- ---------------------------------------------------------------------------------------------------------------------------------
$10.97 $10.69 $10.98 $10.01 $11.11 $10.98 $10.70 $10.99
====== ====== ====== ====== ====== ====== ====== ======
=================================================================================================================================
9.41% 3.99% 16.06% (4.53)% 3.91% 9.39% 4.00% 3.76%
=================================================================================================================================
$48,255 $38,826 $39,187 $3,451 $1,809 $9,188 $4,322 $3,971
- ---------------------------------------------------------------------------------------------------------------------------------
$41,439 $38,068 $12,823 $2,747 $ 922 $6,134 $3,404 $ 979
- ---------------------------------------------------------------------------------------------------------------------------------
6.42% 6.59% 5.84% 5.53% 4.80%(4) 6.36% 6.60% 6.32%(4)
2.02% 2.05% 2.12% 1.78% 1.90%(4) 2.02% 2.05% 2.25%(4)
N/A N/A 2.08% N/A N/A N/A N/A 1.96%(4)
- ---------------------------------------------------------------------------------------------------------------------------------
50.5% 53.7% 175.4% 70.3% 110.1% 50.5% 53.7% 175.4%
</TABLE>
5. The lesser of purchases or sales of portfolio securities for a period, 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 and mortgage
$134,090,911, respectively. For the year ended December 31, 1995, purchases and
sales of investment securities included mortgage "dollar-rolls."
See accompanying Notes to Financial Statements.
29 Oppenheimer Bond Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
================================================================================
1.SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Bond Fund (the Fund) is a separate fund of Oppenheimer Integrity
Funds, a diversified, open-end management investment company registered under is
to seek a high level of current income by investing mainly in debt instruments.
The Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The Fund
offers Class A, Class B and Class C shares. Class A shares are sold with a
front-end sales charge. Class B and Class C shares may be identical rights to
earnings, assets and voting privileges, except that each attributable to that
class and exclusive voting rights with respect to matters affecting that class.
Class B shares will automatically convert to Class A shares six years after the
date of purchase. The following is a summary of significant accounting policies
consistently followed by the Fund.
- -------------------------------------------------------------------------------
INVESTMENT VALUATION. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of 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. Forward foreign currency contracts are valued based on the
closing prices of the forward currency contract rates in the London foreign
exchange markets on a daily basis as provided by a reliable bank or dealer.
Options are valued based upon the last sale price on the principal exchange on
which the option is traded or, in the absence of any transactions that day, the
value is based upon the last sale price on the prior trading date if it is
within the spread between the closing bid and asked prices. If the last sale
price is outside the spread, the closing bid is used.
30 Oppenheimer Bond Fund
<PAGE>
================================================================================
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS. Delivery and payment for securities
that have been purchased by the Fund on a forward commitment or when-issued
basis can take place a month or more after the transaction date. During this
period, such securities do not earn interest, are subject to market fluctuation
and may increase or decrease in value prior to their delivery. The Fund
maintains, in a segregated account with its custodian, assets with a market
value equal to the amount of its purchase commitments. The purchase of
securities on a when-issued or forward commitment basis may increase the
volatility of the Fund's net asset value to the extent the Fund makes such
purchases while remaining substantially fully invested. As of December 31, 1997,
the Fund had entered into outstanding when-issued or forward commitments of
$57,811,085.
In connection with its ability to purchase securities on a
when-issued or forward commitment basis, the Fund may enter into mortgage
"dollar-rolls" in which the Fund sells securities for delivery in the current
month and simultaneously contracts with the same counterparty to repurchase
similar (same type, coupon and maturity) but not identical securities on a
specified future date. The Fund records each dollar-roll as a sale and a new
purchase transaction.
- --------------------------------------------------------------------------------
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 foreign 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.
31 Oppenheimer Bond Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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. At December 31, 1997, the
Fund had available for federal income tax purposes an unused capital loss
carryover of approximately $7,038,000 which expires between 2002 and 2004.
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to declare dividends separately
for Class A, Class B and Class C shares from net investment income each day the
New York Stock Exchange is open for business and pay such dividends monthly.
Distributions from net realized gains on investments, if any, will be declared
at least once each year.
- --------------------------------------------------------------------------------
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of paydown gains and losses and the recognition of certain
foreign currency gains (losses) as ordinary income (loss) for tax purposes. The
character of the distributions made during the year from net investment income
or net realized gains may differ from its ultimate characterization for federal
income tax purposes. Also, due to timing of dividend distributions, the fiscal
year in which amounts are distributed may differ from the fiscal year in which
the income or realized gain was recorded by the Fund.
The Fund adjusts the classification of distributions to
shareholders to reflect the differences between financial statement amounts and
distributions determined in accordance with income tax regulations. Accordingly,
during the year ended December 31, 1997, amounts have been reclassified to
reflect a decrease in undistributed net investment income of $32,669, an
increase in accumulated net realized loss of $870,459 and an increase in paid-in
capital of $903,128.
- --------------------------------------------------------------------------------
OTHER. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date). Discount on securities purchased is amortized
over the life of the respective securities, in accordance with federal income
tax requirements. Realized gains and losses on investments and unrealized
appreciation and depreciation are determined on an identified cost basis, which
is the same basis used for federal income tax purposes.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
32 Oppenheimer Bond Fund
<PAGE>
================================================================================
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>
YEAR ENDED DECEMBER 31, 1997 YEAR ENDED DECEMBER 31, 1996
----------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------------------------
Class A:
<S> <C> <C> <C> <C>
Sold 2,678,397 $ 28,887,221 1,955,093 $ 20,810,615
Dividends reinvested 831,219 8,947,815 815,100 8,651,382
Issued in connection with
the acquisition of:
Connecticut Mutual Income
Account--Note 9 -- -- 3,020,216 31,863,280
Jefferson-Pilot Investment Grade
Bond Fund, Inc.--Note 9 -- -- 1,801,334 19,273,967
Redeemed (4,216,384) (45,326,060) (4,901,741) (52,206,468)
----------- ------------- ---------- ------------
Net increase (decrease) (706,768) $ (7,491,024) 2,690,002 $ 28,392,776
=========== ============= ========== ============
- --------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 1,711,754 $ 18,512,789 946,117 $ 10,072,138
Dividends reinvested 168,332 1,813,048 163,467 1,735,740
Issued in connection with
the acquisition of
Connecticut Mutual Income
Account--Note 9 -- -- 8,156 86,045
Redeemed (1,110,660) (11,946,337) (1,057,712) (11,234,643)
----------- ------------- ---------- ------------
Net increase 769,426 $ 8,379,500 60,028 $ 659,280
=========== ============= ========== ============
- --------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 536,735 $ 5,809,737 279,925 $ 2,989,461
Dividends reinvested 25,947 280,265 17,112 181,810
Redeemed (129,410) (1,393,257) (254,743) (2,766,626)
----------- ------------- ---------- ------------
Net increase 433,272 $ 4,696,745 42,294 $ 404,645
=========== ============= ========== ============
</TABLE>
================================================================================
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At December 31, 1997, net unrealized appreciation on investments of $8,722,696
was composed of gross appreciation of $10,899,814, and gross depreciation of
$2,177,118.
33 Oppenheimer Bond Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
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
$200 million of the Fund's average annual net assets, 0.72% of the next $200
million, 0.69% of the next $200 million, 0.66% of the next $200 million, 0.60%
of the next $200 million, and 0.50% of average annual net assets in excess of $1
billion.
For the year ended December 31, 1997, commissions (sales
charges paid by investors) on sales of Class A shares totaled $346,782, of which
$134,951 was retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary
of the Manager, as general distributor, and by an affiliated broker/dealer.
Sales charges advanced to broker/dealers by OFDI on sales of the Fund's Class B
shares and C totaled $591,879 and $49,753, respectively, of which $39,149 and
$1,770, respectively, was paid to an affiliated broker/dealer. During the year
ended December 31, 1997, OFDI received contingent deferred sales charges of
$156,781 and $1,757, respectively, upon redemption of Class B and Class C shares
as reimbursement for sales commissions advanced by OFDI at the time of sale of
such shares.
OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer and shareholder servicing agent for the Fund and for other
registered investment companies. OFS's total costs of providing such services
are allocated ratably to these companies.
The Fund has adopted a Service Plan for Class A shares to
reimburse OFDI for a portion of its costs incurred in connection with the
personal service and maintenance of shareholder accounts that hold Class A
shares. Reimbursement is made quarterly at an annual rate that may not exceed
0.25% of the average annual net assets of Class A shares of the Fund. OFDI uses
the service fee to reimburse brokers, dealers, banks and other financial
institutions quarterly for providing personal service and maintenance of
accounts of their customers that hold Class A shares. During the year ended
December 31, 1997, OFDI paid $153,632 to an affiliated broker/dealer as
reimbursement for Class A personal service and maintenance expenses.
The Fund has adopted Distribution and Service Plans for
Class B and Class C shares to compensate OFDI for its costs in distributing
Class B and Class C shares and servicing accounts. Under the Plans, the Fund
pays OFDI an annual asset-based sales charge of 0.75% per year on Class B and
Class C shares for its services rendered in distributing Class B and Class C
shares. OFDI also receives a service fee of 0.25% per year to compensate dealers
for providing personal services for accounts that hold Class B and Class C
shares. Each fee is computed on the average annual net assets of Class B and
Class C shares, determined as of the close of each regular business day.
34 Oppenheimer Bond Fund
<PAGE>
================================================================================
During the year ended December 31, 1997, OFDI paid $5,726 to an affiliated
broker/dealer as compensation for Class B personal service and maintenance
expenses and retained $333,996 and $31,990, respectively, as compensation for
Class B and Class C sales commissions and service fee advances, as well as
financing costs. If either Plan is terminated by the Fund, the Board of Trustees
may allow the Fund to continue payments of the asset-based sales charge to OFDI
distributing shares before the Plan was terminated. At December 31, 1997, OFDI
had incurred unreimbursed expenses of $1,268,141 for Class B and $120,021 for
Class C.
================================================================================
5. FORWARD CONTRACTS
A forward foreign currency exchange contract (forward contract) is a commitment
to purchase or sell a foreign currency at a future date, at a negotiated rate.
The Fund uses forward contracts to seek to manage foreign
currency risks. They may also be used to tactically shift portfolio currency
risk. The Fund generally enters into forward contracts as a hedge upon the
purchase or sale of a security denominated in a foreign currency. In addition,
the Fund may enter into such contracts as a hedge against changes in foreign
currency exchange rates on portfolio positions.
Forward contracts are valued based on the closing prices of
the forward currency contract rates in the London foreign exchange markets on a
daily basis as provided by a reliable bank or dealer. The Fund will realize a
gain or loss upon the closing or settlement of the forward transaction.
Securities held in segregated accounts to cover net
exposure on outstanding forward contracts are noted in the Statement of
Investments where applicable. Unrealized appreciation or depreciation on forward
contracts is reported in the Statement of Assets and Liabilities. Realized gains
and losses are reported with all other foreign currency gains and losses in the
Fund's Statement of Operations.
Risks include the potential inability of the counterparty
to meet the terms of the contract and unanticipated movements in the value of a
foreign currency relative to the U.S. dollar.
At December 31, 1997, the Fund had outstanding forward contracts as follows:
<TABLE>
<CAPTION>
EXPIRATION CONTRACT AMOUNT VALUATION AS OF UNREALIZED
DATE (000S) DECEMBER 31, 1997 APPRECIATION
- ------------------------------------------------------------------------------------------------------------------------
CONTRACTS TO SELL
<S> <C> <C> <C> <C>
Canadian Dollar (CAD) 1/21/98 600 CAD $419,758 $20,641
</TABLE>
35 Oppenheimer Bond Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
6. FUTURES CONTRACTS
The Fund may buy and sell interest rate futures contracts in order to gain
exposure to or protect against changes in interest rates. The Fund may also buy
or write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against
increases in interest rates and the resulting negative effect on the value of
fixed rate portfolio securities. The Fund may also purchase futures contracts to
gain exposure to changes in interest rates as it may be more efficient or cost
effective than actually buying fixed income securities.
Upon entering into a futures contract, the Fund is required
to deposit either cash or securities (initial margin)
in an amount equal to a certain percentage of the contract value. Subsequent
payments (variation margin) are made or received by the Fund each day. The
variation margin payments are equal to the daily changes in the contract value
and are recorded as unrealized gains and losses. The Fund recognizes a realized
gain or loss when the contract is closed or expires.
Securities held in collateralized accounts to cover initial
margin requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable or
payable for the daily mark to market for variation margin.
Risks of entering into futures contracts (and related
options) include the possibility that there may be an illiquid market and that a
change in the value of the contract or option may not correlate with changes in
the value of the underlying securities.
At December 31, 1997, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
VALUATION AS OF UNREALIZED
EXPIRATION NUMBER OF DECEMBER 31, APPRECIATION
DATE CONTRACTS 1997 (DEPRECIATION)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CONTRACTS TO PURCHASE
- ---------------------
U.S. Treasury Bonds, 30 yr. 3/98 233 $28,069,219 $ 347,438
----------
CONTRACTS TO SELL
- -----------------
U.S. Treasury Nts., 2 yr. 3/98 10 2,077,500 (4,531)
U.S. Treasury Nts., 5 yr. 3/98 222 24,114,750 (109,406)
U.S. Treasury Nts., 10 yr. 3/98 5 560,781 (2,969)
----------
(116,906)
----------
$ 230,532
==========
</TABLE>
36 Oppenheimer Bond Fund
<PAGE>
================================================================================
7. OPTION ACTIVITY
The Fund may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered
call options to hedge against adverse movements in the
value of portfolio holdings. When an option is written, the Fund receives a
premium and becomes obligated to sell or purchase the underlying securities at a
fixed price, upon exercise of the option.
Options are valued daily based upon the last sale price on
the principal exchange on which the option is traded
and unrealized appreciation or depreciation is recorded. The Fund will realize a
gain or loss upon the expiration or closing of the option transaction. When an
option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option, or the cost of the security for a
purchased put or call option is adjusted by the amount of premium received or
paid.
Securities designated to cover outstanding call options are
noted in the Statement of Investments where applicable. Shares subject to call,
expiration date, exercise price, premium received and market value are detailed
in a footnote to the Statement of Investments. Options written are reported as a
liability in the Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
The risk in writing a call option is that the Fund gives up
the opportunity for profit if the market price of the security increases and the
option is exercised. The risk in writing a put option is that the Fund may incur
a loss if the market price of the security decreases and the option is
exercised. The risk in buying an option is that the Fund pays a premium whether
or not the option is exercised. The Fund also has the additional risk of not
being able to enter into a closing transaction if a liquid secondary market does
not exist.
Written option activity for the year ended December 31, 1997 was as follows:
<TABLE>
<CAPTION>
CALL OPTIONS PUT OPTIONS
---------------------------- ---------------------------
NUMBER OF AMOUNT OF NUMBER OF AMOUNT OF
OPTIONS PREMIUMS OPTIONS PREMIUMS
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options outstanding at December 31, 1996 -- $ -- -- $ --
Options written 10,100 59,063 9 2,618
Options closed or expired (10,100) (59,063) (9) (2,618)
-------- -------- --------- -------
Options outstanding at December 31, 1997 -- $ -- -- $ --
======== ======== ========= =======
</TABLE>
37 Oppenheimer Bond Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
8. ILLIQUID AND RESTRICTED SECURITIES
At December 31, 1997, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933, may
have contractual restrictions on resale, and are valued under methods approved
by the Board of Trustees as reflecting fair value. A security may be considered
illiquid if it lacks a readily available market or if its valuation has not
changed for a certain period of time. The Fund intends to invest no more than
10% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limit. The aggregate value of illiquid or restricted securities
subject to this limitation at December 31, 1997 was $22,939,865, which
represents 9.24% of the Fund's net assets.
================================================================================
9. ACQUISITION OF CONNECTICUT MUTUAL INCOME ACCOUNT AND JEFFERSON-PILOT
INVESTMENT GRADE BOND FUND, INC.
On April 26, 1996, the Fund acquired all the net assets of Connecticut Mutual
Income Account, pursuant to an agreement and plan of reorganization approved by
the Connecticut Mutual Income Account shareholders on March 18, 1996. The Fund
issued 3,020,216 and 8,156 shares of beneficial interest for Class A and Class
B, respectively, valued at $31,863,280 and $86,045, in exchange for the net
assets, resulting in combined Class A net assets of $189,629,984 and Class B net
assets of $6,106,676 on April 26, 1996. The net assets acquired included net
unrealized depreciation of $633,177. The exchange qualified as a tax-free
reorganization for federal income tax purposes.
On December 20, 1996, the Fund acquired all the net assets
of Jefferson-Pilot Investment Grade Bond Fund, Inc. pursuant to an agreement and
plan of reorganization approved by the Jefferson-Pilot Investment Grade Bond
Fund, Inc. shareholders on December 3, 1996. The Fund issued 1,801,334 shares of
beneficial interest for Class A, valued at $19,273,967, in exchange for the net
assets, resulting in combined Class A net assets of $202,088,473 on December 20,
1996. The net assets acquired included net unrealized appreciation of
$1,288,511. The exchange qualified as a tax-free reorganization for federal
income tax purposes.
38 Oppenheimer Bond Fund
<PAGE>
================================================================================
10. BANK BORROWINGS
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.
The Fund had no borrowings outstanding during the year ended December 31, 1997.
39 Oppenheimer Bond Fund
<PAGE>
INDEPENDENT AUDITORS' REPORT
================================================================================
The Board of Trustees and Shareholders of
Oppenheimer Bond Fund:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Bond Fund as of December 31, 1997,
the related statement of operations for the year then ended, the statements of
changes in net assets for the years ended December 31, 1997 and 1996, and the
financial highlights for the period January 1, 1993 to December 31, 1997. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned at December 31, 1997 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 Bond Fund at December 31, 1997, the results of its operations, the
changes in its net assets, and the financial highlights for the respective
stated periods, in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Denver, Colorado
January 23, 1998
40 Oppenheimer Bond Fund
<PAGE>
FEDERAL INCOME TAX INFORMATION (Unaudited)
================================================================================
In early 1998, shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1997. Regulations of
the U.S. Treasury Department require the Fund to report this information to the
Internal Revenue Service.
Dividends paid by the Fund during the fiscal year ended
December 31, 1997 which are not designated as capital gain distributions should
be multiplied by 1.21% to arrive at the net amount eligible for the corporate
dividend-received deduction.
The foregoing information is presented to assist
shareholders in reporting distributions received from the Fund to the Internal
Revenue Service. Because of the complexity of the federal regulations which may
affect your individual tax return and the many variations in the state and local
tax regulations, we recommend that you consult your tax advisor for specific
guidance.
41 Oppenheimer Bond Fund
<PAGE>
OPPENHEIMER BOND FUND
================================================================================
OFFICERS AND TRUSTEES James C. Swain, Chairman and Chief Executive
Officer
Bridget A. Macaskill, President
Robert G. Avis, Trustee
William A. Baker, Trustee
Charles Conrad, Jr., Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
George C. Bowen, Vice President, Treasurer and
Assistant Secretary
Andrew J. Donohue, Vice President and Secretary
David P. Negri, Vice President
Jerry Webman, Vice President
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Robert G. Zack, Assistant Secretary
================================================================================
INVESTMENT ADVISOR OppenheimerFunds, Inc.
================================================================================
DISTRIBUTOR OppenheimerFunds Distributor, Inc.
================================================================================
TRANSFER AND SHAREHOLDER OppenheimerFunds Services
SERVICING AGENT
================================================================================
CUSTODIAN OF The Bank of New York
PORTFOLIO SECURITIES
================================================================================
INDEPENDENT AUDITORS Deloitte & Touche LLP
================================================================================
LEGAL COUNSEL Myer, Swanson, Adams & Wolf, P.C.
This is a copy of a report to shareholders of
Oppenheimer Bond Fund. This report must be preceded
by a Prospectus of Oppenheimer Bond Fund. For
material information concerning the Fund, see the
Prospectus. Shares of Oppenheimer funds are not
deposits or obligations of any bank, are not
guaranteed by any bank, and are not insured by the
FDIC or any other agency, and involve investment
risks, including possible loss of the principal
amount invested.
42 Oppenheimer Bond Fund
<PAGE>
OPPENHEIMERFUNDS FAMILY
<TABLE>
<S> <C> <C>
==================================================================================================================================
REAL ASSET FUNDS
- ----------------------------------------------------------------------------------------------------------------------------------
Real Asset Fund Gold & Special Minerals Fund
==================================================================================================================================
STOCK FUNDS
- ----------------------------------------------------------------------------------------------------------------------------------
Developing Markets Fund Discovery Fund Growth Fund
International Small Quest Small Cap Value Fund Global Fund
Company Fund MidCap Fund Quest Global Value Fund
Enterprise Fund Capital Appreciation Fund(1) Disciplined Value Fund
International Growth Fund Quest Capital Value Fund Quest Value Fund
==================================================================================================================================
STOCK & BOND FUNDS
- ----------------------------------------------------------------------------------------------------------------------------------
Main Street Income & Quest Growth & Income Disciplined Allocation Fund
Growth Fund Value Fund Multiple Strategies Fund(2)
Quest Opportunity Value Fund Global Growth & Income Fund Bond Fund for Growth
Total Return Fund Equity Income Fund
==================================================================================================================================
BOND FUNDS
- ----------------------------------------------------------------------------------------------------------------------------------
International Bond Fund Champion Income Fund U.S. Government Trust
High Yield Fund Strategic Income Fund Limited-Term Government Fund
Bond Fund
==================================================================================================================================
MUNICIPAL FUNDS
- ----------------------------------------------------------------------------------------------------------------------------------
California Municipal Fund(3) Pennsylvania Municipal Fund(3) Rochester Division:
Florida Municipal Fund(3) Municipal Bond Fund Rochester Fund Municipals
New Jersey Municipal Fund(3) Insured Municipal Fund Limited Term New York
New York Municipal Fund(3) Intermediate Municipal Fund Municipal Fund
==================================================================================================================================
MONEY MARKET FUNDS(4)
- ----------------------------------------------------------------------------------------------------------------------------------
Money Market Fund Cash Reserves
==================================================================================================================================
LIFESPAN
- ----------------------------------------------------------------------------------------------------------------------------------
Growth Fund Balanced Fund Income Fund
</TABLE>
1. On 12/18/96, the Fund's name was changed from "Target Fund."
2. On 3/16/97, the Fund's name was changed from "Asset Allocation Fund."
3. Available only to investors in certain states.
4. An investment in money market funds is neither insured nor guaranteed by the
U.S. government and there can be no assurance that a money market fund will be
able to maintain a stable net asset value of $1.00 per share. Oppenheimer funds
are distributed by OppenheimerFunds Distributor, Inc., Two World Trade Center,
New York, NY 10048-0203.
(C) Copyright 1998 OppenheimerFunds, Inc. All rights reserved.
43 Oppenheimer Bond Fund
<PAGE>
<PAGE>
OPPENHEIMER LIFESPAN FUNDS
Annual Report October 31, 1997
OPPENHEIMER LIFESPAN BALANCED FUND
OPPENHEIMER LIFESPAN GROWTH FUND
OPPENHEIMER LIFESPAN INCOME FUND
[LOGO] OPPENHEIMERFUNDS-SM-
THE RIGHT WAY TO INVEST
<PAGE>
Oppenheimer LifeSpan Funds offer you THREE portfolios, each of which has a mix
of securities to help meet your investment GOALS.
- --------------------------------------------------------------------------------
HOW YOUR FUND IS MANAGED
- --------------------------------------------------------------------------------
Oppenheimer LifeSpan Balanced Fund in a strategically allocated
seeks a blend of capital portfolio consisting primarily of
appreciation and income. The Fund stocks. Current income is not a
actively allocates assets across primary consideration.
two broad asset categories--stocks
and fixed-income securities, with Oppenheimer LifeSpan Income
a stronger emphasis on stocks--to Fund seeks high current income,
meet clearly distinguished risk with opportunities for capital
and return objectives. appreciation. It invests in a
strategically allocated portfolio
Oppenheimer LifeSpan Growth consisting primarily of bond
Fund seeks long-term capital instruments.
appreciation. It invests
- --------------------------------------------------------------------------------
MARKET UPDATE
- --------------------------------------------------------------------------------
For most of the one-year period While many feared that this
ended October 31, 1997, the signaled the end of the bull
economy was marked by steady market, as we ended the fiscal
growth and low inflation. After a year, recovery seemed well on its
brief period of volatility way.
triggered by the Federal Reserve's
slight interest rate increase in To deal with this ever-changing
late March, the stock and bond volatile environment, each of the
markets resumed their generally LifeSpan portfolios includes a
positive trends. Starting in diversified spectrum of investments
June, the stock market posted a aimed at achieving good performance
string of new highs, with the Dow while limiting overall portfolio risk
Jones Industrial Average in a variety of market conditions.
ultimately topping 8000. However, Over the past year, the strategic
troubles in the Asian currency allocation of assets over a broad
markets, which began during the range of stocks and bonds has helped
summer, escalated to crisis level position the Funds to capture the
in October. This created turmoil strength of the large-cap stock
in stock and bond markets around market while limiting the effects of
the world, leading to the largest some of the declines of the small-cap
one-day point decline in the Dow equity and bond markets.
on October 27, 1997.
2 Oppenheimer LifeSpan Funds
<PAGE>
BRIDGET A. MACASKILL
President
Oppenheimer
LifeSpan Funds
Dear Shareholder,
As you are no doubt aware, during the end of October and early November many
stock markets around the world recorded their all-time largest point declines,
followed by subsequent gains and continued volatility, leaving investors
uncertain about what would occur next.
To put those events in focus, let's look at a "snapshot" of the two-week
time period. Sharp declines in the overseas stock markets, particularly in Asia,
triggered a series of sell-offs throughout Europe, Latin America and the United
States. In response, the U.S. stock market, as measured by the Dow Jones
Industrial Average, dropped 554 points on October 27, its largest point decline
in history. However, almost as quickly, the U.S. stock market bounced back over
the succeeding few days, regaining nearly all of its losses.
While no one could have predicted the timing or extent of these
fluctuations, many analysts, including our fund managers here at
OppenheimerFunds, had warned of a correction for several months. We believed
that U.S. valuations were too high, stocks were expensive relative to bonds,
recent corporate earnings were somewhat disappointing and that Federal Reserve
Chairman Alan Greenspan could possibly seek a short-term interest rate hike.
While only one short-term interest rate hike occurred in March of 1997, the
other factors have held true.
We'd like to take this opportunity to remind shareholders that stock
market volatility is a normal and expected part of the business cycle. As
Alan Greenspan suggested, in years to come this period will likely be
remembered as a positive change for a market that was growing too quickly.
For frequent market updates, please visit our web site at
WWW.OPPENHEIMERFUNDS.COM or call 1-800-835-3104 to listen to our recorded
messages. In the meantime, thank you for your confidence in OppenheimerFunds,
THE RIGHT WAY TO INVEST. We look forward to helping you reach your investment
goals in the future.
/s/Bridget A. Macaskill
Bridget A. Macaskill
November 21, 1997
3 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<S> <C> <C> <C>
----------- FUND OVERVIEW
PERFORMANCE
----------- Following is a brief The HIGH YIELD On the fixed-income
commentary on each segment offered good, side, the HIGH YIELD
Average Annual Total Returns LifeSpan Fund, including though volatile returns, segment was fueled by
for the period ended 10/31/97 discussions about some of especially in strong solid returns in the
(without sales charges)(1): the investments that growth sectors such as telecommunications sector.
affected the performance telecommunications The GOVERNMENT/CORPORATE
- ------------------------------ within each of the Funds' technology. Our BOND and SHORT-TERM BOND
A SHARES B SHARES C SHARES components over the past GOVERNMENT/CORPORATE BOND segments also delivered
- ------------------------------ year. segment benefited from the solid returns for the year.
controlled,
LIFESPAN GROWTH FUND OPPENHEIMER LIFESPAN non-inflationary growth in OPPENHEIMER LIFESPAN
1 year GROWTH FUND the United States. INCOME FUND
- ------------------------------
12.96% 12.07% 12.05% Not surprisingly, the OPPENHEIMER LIFESPAN In spite of frequent bouts
- ------------------------------ Fund's stock holdings were BALANCED FUND of short-term volatility,
Since inception the major contributors to the bond market enjoyed
- ------------------------------ performance. A relatively For most of the year, the favorable returns over the
17.97% 14.65% 10.06% large number of stocks in strong stock market was a past year, aided by the
- ------------------------------ the financial and significant boon to the noninflationary growth
technology industries did Fund, which had roughly environment in the United
LIFESPAN BALANCED FUND very well, and in the last 60% of the Fund's assets States. That's because
1 year quarter of the period allocated to equities. when inflation is low,
- ------------------------------ small-cap stocks staged a Financial and technology interest rates generally
12.66% 11.70% 11.73% rally. stocks were leading stay low, which helps
- ------------------------------ performers, followed by stabilize bond prices.
Since inception During the year ended small cap and
- ------------------------------ October 31, 1997, the international stocks. The Fund's strongest
15.38% 12.37% 9.96% strongest performers were Fund returns were further performer, which benefited
- ------------------------------ the VALUE/GROWTH helped in the final from overall superior
component, followed by the quarter by a bond market stock market returns, was
LIFESPAN INCOME FUND GROWTH/INCOME component. rally. the GROWTH/INCOME segment.
1 year The SMALL-CAP EQUITY The HIGH YIELD segment
- ------------------------------ component ended the year The Fund's largest also proved to be
11.30% 10.51% 11.03% on a positive note, as gains came from the beneficial, as well as the
- ------------------------------ well. The INTERNATIONAL VALUE/GROWTH segment and GOVERNMENT/CORPORATE BOND
Since inception EQUITY component also the GROWTH/INCOME and the SHORT-TERM BOND
- ------------------------------ finished strongly for the component. The SMALL-CAP components, which both saw
10.82% 8.94% 10.04% year. This was due in EQUITY segment generated competive returns for the
- ------------------------------ large part to the fact moderate gains. By period.
that we were able to generally avoiding the
Average Annual Total Returns almost entirely avoid the currency crisis in
for the period ended 9/30/97 difficulties in Southeast Southeast Asia, our
(after sales charges)(2): Asia. INTERNATIONAL EQUITY
component performed very
LIFESPAN GROWTH FUND well.
1 year
- ------------------------------
11.23% 12.10% 16.12%
- ------------------------------
Since inception Total returns include changes in share price and reinvestment of dividends and
- ------------------------------ capital gains distributions in a hypothetical investment for the periods shown.
18.17% 16.56% 14.66% IN REVIEWING THE PERFORMANCE AND RANKINGS, PLEASE REMEMBER THAT PAST
- ------------------------------ PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL
VALUE OF AN INVESTMENT IN A FUND WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES,
LIFESPAN BALANCED FUND WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST. For more
1 year complete information, please review the prospectus. Prior to March 1, 1996, the
- ------------------------------ Funds had a different investment advisor. However, the prior portfolio
9.94% 10.81% 14.87% management team is now employed by OppenheimerFunds, Inc. Additionally,
- ------------------------------ Babson-Stewart Ivory International became the Subadvisor for the international
Since inception component of the Funds' portfolios on 3/1/96. BEA Associates and Pilgrim
- ------------------------------ Baxter & Associates have continued as Subadvisors to certain components of the
14.88% 13.35% 13.62% Funds' portfolios.
- ------------------------------
1. Includes changes in net asset value per share without deducting any sales
LIFESPAN INCOME FUND charges. Such performance would have been lower if sales charges were taken
1 year into account.
- ------------------------------
7.37% 7.92% 12.54% 2. Class A returns include the current maximum initial sales charge of 5.75%
- ------------------------------ unless otherwise stated. Class A shares were first offered on 5/1/95. The
Since inception maximum Class A sales charge rate was lower during a portion of the periods
- ------------------------------ shown, and actual investment results will be different as a result. Class B
8.73% 7.69% 11.02% average annual total returns include the applicable contingent deferred sales
- ------------------------------ charge of 5% (1-year) and 4% (since inception on 10/2/95). Class C total returns
include the applicable contingent deferred sales charge of 1% for the 1-year
period. Class C shares have an inception date of 5/1/96. An explanation of the
different performance calculations is in the Funds' prospectus. Class B and C
shares are subject to an annual asset-based sales charge of 0.75%.
</TABLE>
4 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS OCTOBER 31, 1997
Oppenheimer LifeSpan Income Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSET-BACKED SECURITIES - 2.0%
- -----------------------------------------------------------------------------------------------------------------------------
Dayton Hudson Credit Card Master Trust, Asset Backed Certificates, Series
1997-1, Cl. A, 6.25%, 8/25/05 $ 125,000 $ 124,945
- -----------------------------------------------------------------------------------------------------------------------------
IROQUOIS Trust, Asset-Backed Amortizing Nts., Series
1997-2, Cl. A, 6.752%, 6/25/07 (1) 175,000 175,848
- -----------------------------------------------------------------------------------------------------------------------------
Olympic Automobile Receivables Trust:
Receivables-Backed Nts., Series 1997-A, Cl. A5, 6.80%, 2/15/05 150,000 153,296
Series 1996-A, Cl. A4, 5.85%, 7/15/01 145,000 144,796
---------------
Total Asset-Backed Securities (Cost $593,509) 598,885
- -----------------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS - 10.1%
- -----------------------------------------------------------------------------------------------------------------------------
Countrywide Funding Corp., Mtg. Pass-Through Certificates,
Series 1994-10, Cl. A3, 6%, 5/25/09 250,000 247,813
- -----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg.
Participation Certificates:
5.50%, 5/1/98 8,327 8,250
Series 1711, Cl. EA, 7%, 3/15/24 200,000 204,750
Gtd. Multiclass Mtg. Participation Certificates:
6%, 3/1/09 308,916 306,489
Series 1574, Cl. PD, 5.55%, 3/15/13 75,000 74,812
Series 1843, Cl. VB, 7%, 4/15/03 85,000 87,496
Series 1849, Cl. VA, 6%, 12/15/10 244,705 241,953
Interest-Only Stripped Mtg.-Backed Security:
Series 1583, Cl. IC, 9.283%, 1/15/20 (2) 500,000 80,000
Series 1661, Cl. PK, 5.965%, 11/15/06 (2) 874,957 74,098
- -----------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6%, 12/1/03 233,155 232,017
6.50%, 4/1/26 187,449 184,621
7%, 4/1/00 115,282 116,387
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Trust 1993-181, Cl. C, 5.40%,
10/25/02 226,979 225,844
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Trust 1993-190, Cl. Z, 5.85%,
7/25/08 189,438 188,455
Medium-Term Nts., 6.56%, 11/13/01 125,000 125,313
Trust 1994-13, Cl. B, 6.50%, 2/25/09 200,000 199,812
- -----------------------------------------------------------------------------------------------------------------------------
GE Capital Mortgage Services, Inc., Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Series 1994-7, C1. A18, 6%, 2/25/09 198,885 186,455
- -----------------------------------------------------------------------------------------------------------------------------
PNC Mortgage Securities Corp., Commercial Mtg. Pass-Through
Certificates, Series 1995-2, Cl. A3, 6.50%, 2/25/12 74,000 74,335
- -----------------------------------------------------------------------------------------------------------------------------
Residential Accredit Loans, Inc., Mortgage Asset-Backed Pass-Through
Certificates, Series 1997-QS9, Cl. A2, 6.75%, 9/25/27 175,000 175,260
---------------
Total Mortgage-Backed Obligations (Cost $2,987,639) 3,034,160
</TABLE>
5 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS - 14.2%
- -----------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 7.50%, 11/15/16 $ 1,795,000 $ 2,052,471
- -----------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
6.50%, 8/15/05 650,000 674,172
6.75%, 6/30/99 380,000 386,769
7.50%, 11/15/01 1,100,000 1,168,407
---------------
Total U.S. Government Obligations (Cost $4,121,898) 4,281,819
- -----------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES - 42.3%
- -----------------------------------------------------------------------------------------------------------------------------
BASIC INDUSTRY - 5.0%
- -----------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 2.2%
Burmah Castrol plc, 7% Gtd. Medium-Term Nts., 12/15/97 (3) 145,000 145,197
- -----------------------------------------------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co., 8.50% Debs., 2/15/03 150,000 159,743
- -----------------------------------------------------------------------------------------------------------------------------
Harris Chemical North America, Inc., 10.25% Gtd.
Sr. Sec. Disc. Nts., 7/15/01 50,000 52,250
- -----------------------------------------------------------------------------------------------------------------------------
Laroche Industries, Inc., 9.50% Sr. Sub. Nts., 9/15/07 (3) 50,000 50,250
- -----------------------------------------------------------------------------------------------------------------------------
Morton International, Inc., 9.25% Credit Sensitive Nts., 6/1/20 85,000 108,567
- -----------------------------------------------------------------------------------------------------------------------------
PPG Industries, Inc., 9% Debs., 5/1/21 85,000 104,061
- -----------------------------------------------------------------------------------------------------------------------------
Texas Petrochemical Corp., 11.125% Sr.
Sub. Nts., Series B, 7/1/06 50,000 55,250
---------------
675,318
- -----------------------------------------------------------------------------------------------------------------------------
METALS/MINING - 0.8%
Alcan Aluminum Ltd., 9.625% Debs., 7/15/19 165,000 177,913
- -----------------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 2/1/03 50,000 53,875
---------------
231,788
- -----------------------------------------------------------------------------------------------------------------------------
PAPER - 1.2%
Celulosa Arauco y Constitucion SA, 7.25% Debs., 6/11/98 (1) 145,000 145,362
- -----------------------------------------------------------------------------------------------------------------------------
Gaylord Container Corp., 12.75% Sr. Sub. Disc. Debs., 5/15/05 50,000 54,500
- -----------------------------------------------------------------------------------------------------------------------------
Malette, Inc., 12.25% Sr. Sec. Nts., 7/15/04 (1) 50,000 56,875
- -----------------------------------------------------------------------------------------------------------------------------
Stone Container Corp., 9.875% Sr. Nts., 2/1/01 100,000 102,250
---------------
358,987
- -----------------------------------------------------------------------------------------------------------------------------
STEEL - 0.8%
Gulf States Steel, Inc. (Alabama), 13.50% First Mtg. Nts.,
Series B, 4/15/03 50,000 51,500
- -----------------------------------------------------------------------------------------------------------------------------
NS Group, Inc., 13.50% Gtd. Sr. Sec. Nts., 7/15/03 45,000 51,637
- -----------------------------------------------------------------------------------------------------------------------------
Republic Engineered Steels, Inc., 9.875% First Mtg. Nts., 12/15/01 25,000 24,250
- -----------------------------------------------------------------------------------------------------------------------------
WCI Steel, Inc., 10% Sr. Nts., Series B, 12/1/04 50,000 52,375
- -----------------------------------------------------------------------------------------------------------------------------
Weirton Steel Corp., 10.75% Sr. Nts., 6/1/05 50,000 52,875
---------------
232,637
- -----------------------------------------------------------------------------------------------------------------------------
CONSUMER RELATED - 5.6%
- -----------------------------------------------------------------------------------------------------------------------------
CONSUMER PRODUCTS - 1.3%
Black & Decker Corp., 6.625% Nts., 11/15/00 145,000 146,609
- -----------------------------------------------------------------------------------------------------------------------------
Dyersburg Corp., 9.75% Sr. Sub. Nts., 9/1/07 (3) 50,000 51,250
- -----------------------------------------------------------------------------------------------------------------------------
IHF Holdings, Inc., 0%/15% Sr. Sub. Disc.
Nts., Series B, 11/15/04 (4) 50,000 43,000
- -----------------------------------------------------------------------------------------------------------------------------
Kimberly-Clark Corp., 7.875% Debs., 2/1/23 85,000 91,622
- -----------------------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 9.375% Sr. Nts., 4/1/01 50,000 51,875
---------------
384,356
</TABLE>
6 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FOOD/BEVERAGES/TOBACCO - 0.7%
AmeriServe Food Distribution, Inc., 8.875% Sr. Nts., 10/15/06 (3) $ 50,000 $ 50,125
- -----------------------------------------------------------------------------------------------------------------------------
Dole Food Co., 6.75% Nts., 7/15/00 150,000 151,913
---------------
202,038
- -----------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 1.2%
Columbia/HCA Healthcare Corp., 6.875% Nts., 7/15/01 160,000 160,161
- -----------------------------------------------------------------------------------------------------------------------------
Integrated Health Services, Inc., 9.50% Sr. Sub. Nts., 9/15/07 (3) 50,000 51,875
- -----------------------------------------------------------------------------------------------------------------------------
Mariner Health Group, Inc., 9.50% Sr. Sub. Nts., Series B, 4/1/06 (1) 50,000 52,000
- -----------------------------------------------------------------------------------------------------------------------------
Paracelsus Healthcare Corp., 10% Sr. Sub. Unsec. Nts., 8/15/06 50,000 52,250
- -----------------------------------------------------------------------------------------------------------------------------
Signature Brands, Inc., 13% Sr. Sub. Nts., 8/15/02 (1) 50,000 53,187
---------------
369,473
- -----------------------------------------------------------------------------------------------------------------------------
HOTEL/GAMING - 2.2%
Casino America, Inc., 12.50% Sr. Nts., 8/1/03 50,000 53,500
- -----------------------------------------------------------------------------------------------------------------------------
Casino Magic of Louisiana Corp., 13% First Mtg. Nts., 8/15/03 100,000 95,500
- -----------------------------------------------------------------------------------------------------------------------------
GB Property Funding Corp., 10.875% First Mtg. Nts., 1/15/04 50,000 43,750
- -----------------------------------------------------------------------------------------------------------------------------
Hilton Hotels Corp., 7.375% Nts., 6/1/02 75,000 76,991
- -----------------------------------------------------------------------------------------------------------------------------
HMH Properties, Inc., 8.875% Sr. Nts., 7/15/07 (3) 50,000 51,250
- -----------------------------------------------------------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 (3) 50,000 51,250
- -----------------------------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority, 13.50% Sr. Sec. Nts., Series B, 11/15/02 25,000 32,125
- -----------------------------------------------------------------------------------------------------------------------------
Players International, Inc., 10.875% Sr. Nts., 4/15/05 50,000 53,625
- -----------------------------------------------------------------------------------------------------------------------------
Prime Hospitality Corp., 9.25% First Mtg. Bonds, 1/15/06 50,000 52,250
- -----------------------------------------------------------------------------------------------------------------------------
Rio Hotel & Casino, Inc., 10.625% Sr. Sub. Nts., 7/15/05 100,000 108,500
- -----------------------------------------------------------------------------------------------------------------------------
Santa Fe Hotel, Inc., 11% Gtd. First Mtg. Nts., 12/15/00 45,000 38,475
---------------
657,216
- -----------------------------------------------------------------------------------------------------------------------------
LEISURE - 0.2%
Bally Total Fitness Holdings, 9.875% Sr. Sub. Nts., 10/15/07 (3) 50,000 49,250
- -----------------------------------------------------------------------------------------------------------------------------
ENERGY - 3.1%
- -----------------------------------------------------------------------------------------------------------------------------
Coastal Corp.:
8.125% Sr. Nts., 9/15/02 85,000 91,098
8.75% Sr. Nts., 5/15/99 55,000 57,104
- -----------------------------------------------------------------------------------------------------------------------------
Falcon Drilling Co., Inc., 9.75% Sr. Nts., Series B, 1/15/01 70,000 73,150
- -----------------------------------------------------------------------------------------------------------------------------
Forcenergy, Inc., 8.50% Sr. Sub. Nts., 2/15/07 50,000 50,000
- -----------------------------------------------------------------------------------------------------------------------------
Gulf Canada Resources Ltd.:
8.25% Sr. Nts., 3/15/17 75,000 81,331
9% Debs., 8/15/99 75,000 78,561
- -----------------------------------------------------------------------------------------------------------------------------
HS Resources, Inc., 9.25% Sr. Sub. Nts., 11/15/06 50,000 51,500
- -----------------------------------------------------------------------------------------------------------------------------
Louisiana Land & Exploration Co., 7.65% Debs., 12/1/23 100,000 106,892
- -----------------------------------------------------------------------------------------------------------------------------
Mesa Operating Co., 0%/11.625% Gtd. Sr. Sub. Disc. Nts., 7/1/06 (4) 75,000 60,375
- -----------------------------------------------------------------------------------------------------------------------------
Petroleum Geo-Services ASA, 7.50% Nts., 3/31/07 75,000 78,915
- -----------------------------------------------------------------------------------------------------------------------------
Standard Oil/British Petroleum Co. plc, 9% Debs., 6/1/19 85,000 88,692
- -----------------------------------------------------------------------------------------------------------------------------
Transamerican Energy Corp., 11.50% Sr. Nts., 6/15/02 (3) 25,000 25,750
- -----------------------------------------------------------------------------------------------------------------------------
Williams Holdings of Delaware, Inc., 6.25% Sr. Unsec. Debs., 2/1/06 100,000 97,781
---------------
941,149
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES - 10.7%
- -----------------------------------------------------------------------------------------------------------------------------
BANKS & THRIFTS - 2.7%
Barnett Banks, Inc., 8.50% Sub. Exchangeable Nts., 3/1/99 60,000 61,898
- -----------------------------------------------------------------------------------------------------------------------------
Chase Manhattan Corp. (New), 6.625% Sr. Nts., 1/15/98 55,000 55,093
</TABLE>
7 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BANKS & THRIFTS (CONTINUED)
Citicorp, 5.625% Sr. Nts., 2/15/01 $ 90,000 $ 88,955
- -----------------------------------------------------------------------------------------------------------------------------
First Fidelity Bancorporation, 8.50% Sub. Capital Nts., 4/1/98 55,000 55,521
- -----------------------------------------------------------------------------------------------------------------------------
First Union Corp., 6.75% Sr. Nts., 1/15/98 55,000 55,106
- -----------------------------------------------------------------------------------------------------------------------------
Fleet Mtg./Norstar Group, Inc., 9.90% Sub. Nts., 6/15/01 145,000 161,749
- -----------------------------------------------------------------------------------------------------------------------------
Integra Financial Corp., 6.50% Sub. Nts., 4/15/00 145,000 146,437
- -----------------------------------------------------------------------------------------------------------------------------
Mellon Financial Bank Corp., 6.50% Gtd. Sr. Nts., 12/1/97 185,000 185,098
---------------
809,857
- -----------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 6.2%
American General Finance Corp., 8.50% Sr. Nts., 8/15/98 60,000 61,213
- -----------------------------------------------------------------------------------------------------------------------------
American General Institutional Capital, 8.125% Bonds, Series B,
3/15/46 (3) 75,000 80,645
- -----------------------------------------------------------------------------------------------------------------------------
Beneficial Corp., 9.125% Debs., 2/15/98 145,000 146,302
- -----------------------------------------------------------------------------------------------------------------------------
Capital One Financial Corp., 6.83% Sr. Nts., 5/17/99 75,000 75,736
- -----------------------------------------------------------------------------------------------------------------------------
Capital One Funding Corp., 7.25% Nts., 12/1/03 50,000 50,351
- -----------------------------------------------------------------------------------------------------------------------------
Chelsea GCA Realty Partner, Inc., 7.75% Gtd. Unsec. Unsub.
Nts., 1/26/01 60,000 61,616
- -----------------------------------------------------------------------------------------------------------------------------
Commercial Credit Co., 5.55% Unsec. Nts., 2/15/01 145,000 142,362
- -----------------------------------------------------------------------------------------------------------------------------
Countrywide Home Loans, Inc.:
6.05% Gtd. Medium-Term Nts., Series D, 3/1/01 90,000 89,490
6.085% Gtd. Medium-Term Nts., Series B, 7/14/99 60,000 60,013
- -----------------------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 6.25% Unsub. Nts., 2/26/98 145,000 145,616
- -----------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp.:
5.625% Nts., 2/15/01 175,000 172,302
5.65% Medium-Term Nts., 12/15/97 300,000 299,963
- -----------------------------------------------------------------------------------------------------------------------------
Golden West Financial Corp., 8.625% Sub. Nts., 8/30/98 55,000 56,212
- -----------------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 6.50% Nts., 4/1/01 150,000 151,778
- -----------------------------------------------------------------------------------------------------------------------------
MCII Holdings (USA), Inc., 0%/15% Sec. Nts., 11/15/02 (4) 50,000 41,688
- -----------------------------------------------------------------------------------------------------------------------------
Olympic Financial Ltd., Units (each unit consists of $1,000
principal amount of 11.50% sr. nts., 3/15/07 and one (5) 50,000 51,500
warrant to purchase 6.84 shares of common stock)
- -----------------------------------------------------------------------------------------------------------------------------
Salomon, Inc., 8.69% Sr. Medium-Term Nts., Series D, 3/1/99 160,000 165,421
---------------
1,852,208
- -----------------------------------------------------------------------------------------------------------------------------
INSURANCE - 1.8%
- -----------------------------------------------------------------------------------------------------------------------------
Cigna Corp., 7.90% Nts., 12/14/98 150,000 152,879
- -----------------------------------------------------------------------------------------------------------------------------
Conseco Financing Trust III, 8.796% Bonds, 4/1/27 100,000 109,067
- -----------------------------------------------------------------------------------------------------------------------------
SunAmerica, Inc., 9% Sr. Nts., 1/15/99 120,000 123,728
- -----------------------------------------------------------------------------------------------------------------------------
Travelers Property Casualty Corp., 6.75% Nts., 4/15/01 145,000 147,469
---------------
533,143
- -----------------------------------------------------------------------------------------------------------------------------
HOUSING RELATED - 0.4%
- -----------------------------------------------------------------------------------------------------------------------------
BUILDING MATERIALS - 0.2%
American Standard, Inc., 10.875% Sr. Nts., 5/15/99 (1) 70,000 74,375
- -----------------------------------------------------------------------------------------------------------------------------
HOMEBUILDERS/REAL ESTATE - 0.2%
First Industrial LP, 7.15% Bonds, 5/15/27 75,000 77,179
- -----------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 1.1%
- -----------------------------------------------------------------------------------------------------------------------------
AEROSPACE - 0.1%
GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98 25,000 25,500
</TABLE>
8 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL GOODS - 1.0%
- -----------------------------------------------------------------------------------------------------------------------------
Day International Group, Inc., 11.125% Sr. Sub. Nts., Series B, 6/1/05 (1) $ 50,000 $ 53,750
- -----------------------------------------------------------------------------------------------------------------------------
Interlake Corp., 12.125% Sr. Sub. Debs., 3/1/02 50,000 52,125
- -----------------------------------------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., 6/1/05 50,000 54,875
- -----------------------------------------------------------------------------------------------------------------------------
Jordan Industries, Inc., 10.375% Sr. Nts., 8/1/07 50,000 50,500
- -----------------------------------------------------------------------------------------------------------------------------
Mark IV Industries, Inc., 8.75% Sub. Nts., 4/1/03 (1) 40,000 41,900
- -----------------------------------------------------------------------------------------------------------------------------
Specialty Equipment Co., 11.375% Sr. Sub. Nts., 12/1/03 50,000 54,375
---------------
307,525
- -----------------------------------------------------------------------------------------------------------------------------
MEDIA - 4.2%
- -----------------------------------------------------------------------------------------------------------------------------
BROADCASTING - 0.4%
Allbritton Communications Co., 9.75% Sr. Sub. Debs.,
Series B, 11/30/07 50,000 50,250
- -----------------------------------------------------------------------------------------------------------------------------
Fox Kids Worldwide, Inc., 0%/10.25% Sr. Disc. Nts., 11/1/07 (3)(4) 50,000 28,875
- -----------------------------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., 10% Sr. Sub. Nts., 9/30/05 50,000 52,625
---------------
131,750
- -----------------------------------------------------------------------------------------------------------------------------
CABLE TELEVISION - 2.3%
Adelphia Communications Corp., 10.50% Sr. Nts., 7/15/04 (3) 50,000 52,250
- -----------------------------------------------------------------------------------------------------------------------------
Australis Media Ltd., 1.75%/15.75% Gtd. Sr. Sec. Disc. Nts., 5/15/03 (6) 75,664 55,235
- -----------------------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp., 9.875% Sr. Sub. Debs., 2/15/13 50,000 53,375
- -----------------------------------------------------------------------------------------------------------------------------
Comcast Corp., 9.375% Sr. Sub. Debs., 5/15/05 50,000 53,500
- -----------------------------------------------------------------------------------------------------------------------------
EchoStar Communications Corp., 0%/12.875% Sr. Disc. Nts., 6/1/04 (4) 50,000 44,500
- -----------------------------------------------------------------------------------------------------------------------------
Falcon Holdings Group LP, 11% Sr. Sub. Nts., 9/15/03 (7) 65,347 66,890
- -----------------------------------------------------------------------------------------------------------------------------
James Cable Partners LP, 10.75% Sr. Nts., 8/15/04 (3) 50,000 52,375
- -----------------------------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., 8.875% Sr. Nts., 7/15/07 50,000 49,625
- -----------------------------------------------------------------------------------------------------------------------------
TCI Satellite Entertainment, Inc., 10.875% Sr. Sub. Nts., 2/15/07 (3) 50,000 51,750
- -----------------------------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 125,000 138,356
- -----------------------------------------------------------------------------------------------------------------------------
United International Holdings, Inc., Zero Coupon Sr.
Sec. Disc. Nts., Series B, 14%, 11/15/99 (8) 100,000 82,500
---------------
700,356
- -----------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED MEDIA - 0.7%
Fox/Liberty Networks LLC, 8.875% Sr. Nts., 8/15/07 (3) 25,000 25,000
- -----------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co., 8.625% Sr. Sub. Nts., 9/15/07 (3) 50,000 50,500
- -----------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc., 7.45% Nts., 2/1/98 145,000 145,486
---------------
220,986
- -----------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT/FILM - 0.8%
American Skiing Corp., 12% Sr. Sub. Nts., Series B, 7/15/06 (1) 75,000 83,625
- -----------------------------------------------------------------------------------------------------------------------------
Blockbuster Entertainment Corp., 6.625% Sr. Nts., 2/15/98 145,000 145,194
---------------
228,819
- -----------------------------------------------------------------------------------------------------------------------------
OTHER - 1.1%
- -----------------------------------------------------------------------------------------------------------------------------
SERVICES - 1.1%
Employee Solutions, Inc., 10% Sr. Nts., 10/15/04 (1) 50,000 49,250
- -----------------------------------------------------------------------------------------------------------------------------
Maxim Group, Inc. (The), 9.25% Sr. Nts., 10/15/07 (3) 50,000 48,750
- -----------------------------------------------------------------------------------------------------------------------------
Shop Vac Corp., 10.625% Sr. Nts., 9/1/03 75,000 81,563
- -----------------------------------------------------------------------------------------------------------------------------
Sun Co., Inc., 7.95% Debs., 12/15/01 75,000 79,359
- -----------------------------------------------------------------------------------------------------------------------------
USI American Holdings, Inc., 7.25% Gtd. Sr. Nts., 12/1/06 80,000 78,526
---------------
337,448
</TABLE>
9 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
RETAIL - 2.7%
- -----------------------------------------------------------------------------------------------------------------------------
DEPARTMENT STORES - 1.8%
Costco Cos., Inc., 7.125% Sr. Nts., 6/15/05 $ 120,000 $ 122,129
- -----------------------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc., 10% Sr. Nts., 2/15/01 60,000 66,326
- -----------------------------------------------------------------------------------------------------------------------------
Parisian, Inc., 9.875% Sr. Sub. Nts., 7/15/03 (1) 50,000 52,500
- -----------------------------------------------------------------------------------------------------------------------------
Sears Roebuck & Co., 8.39% Medium-Term Nts., 3/23/99 290,000 299,285
---------------
540,240
- -----------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAILING - 0.1%
K Mart Corp., 7.75% Debs., 10/1/12 50,000 47,250
- -----------------------------------------------------------------------------------------------------------------------------
SUPERMARKETS - 0.8%
Dairy Mart Convenience Stores, Inc., 10.25% Sr. Sub. Nts., 3/15/04 50,000 49,250
- -----------------------------------------------------------------------------------------------------------------------------
Great Atlantic & Pacific Tea Co., 9.125% Debs., 1/15/98 145,000 145,840
- -----------------------------------------------------------------------------------------------------------------------------
Jitney-Jungle Stores of America, Inc., 12% Gtd. Sr. Nts., 3/1/06 50,000 56,250
---------------
251,340
- -----------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 4.1%
- -----------------------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY - 2.5%
DecisionOne Corp., 9.75% Sr. Sub. Nts., 8/1/07 50,000 51,750
- -----------------------------------------------------------------------------------------------------------------------------
Digital Equipment Corp., 7% Nts., 11/15/97 215,000 215,068
- -----------------------------------------------------------------------------------------------------------------------------
DII Group, Inc., 8.50% Sr. Sub. Nts., 9/15/07 (3) 50,000 49,563
- -----------------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc., 12% Cv. Sr. Sub. Nts., 2/15/01 (1) 25,000 20,875
- -----------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc., 0%/14%
Sr. Disc. Nts., Series B, 6/1/06 (4) 50,000 33,500
- -----------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 0%/9.75% Sr. Disc. Nts., 8/15/04 (4) 100,000 84,750
- -----------------------------------------------------------------------------------------------------------------------------
Plantronics, Inc., 10% Sr. Nts., 1/15/01 (1) 75,000 78,000
- -----------------------------------------------------------------------------------------------------------------------------
Price Communications Cellular Holdings, Inc.,
0%/13.50% Sr. Disc. Nts., 8/1/07 (1)(4) 75,000 42,750
- -----------------------------------------------------------------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum Finance Corp., 11% Sr. Nts.,
8/15/06 50,000 55,375
- -----------------------------------------------------------------------------------------------------------------------------
Unisys Corp., 12% Sr. Nts., Series B, 4/15/03 50,000 56,250
- -----------------------------------------------------------------------------------------------------------------------------
Western Wireless Corp., 10.50% Sr. Sub. Nts., 2/1/07 50,000 53,875
---------------
741,756
- -----------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS/TECHNOLOGY - 1.6%
American Communications Services, Inc., 0%/13% Sr. Disc. Nts.,
11/1/05 (4) 75,000 52,875
- -----------------------------------------------------------------------------------------------------------------------------
Brooks Fiber Properties, Inc., 0%/11.875% Sr. Disc. Nts., 11/1/06 (4) 75,000 59,156
- -----------------------------------------------------------------------------------------------------------------------------
Centennial Cellular Corp., 10.125% Sr. Nts., 5/15/05 25,000 26,625
- -----------------------------------------------------------------------------------------------------------------------------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc. Debs., 11/15/07 (4) 75,000 58,125
- -----------------------------------------------------------------------------------------------------------------------------
Diamond Cable Communications plc, 0%/10.75% Sr. Disc. Nts., 2/15/07 (4) 50,000 32,250
- -----------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 0%/11.25% Sr. Disc. Nts., 7/15/07 (4) 50,000 33,250
- -----------------------------------------------------------------------------------------------------------------------------
International CableTel, Inc., 0%/11.50%
Sr. Deferred Coupon Nts., Series B, 2/1/06 (4) 100,000 73,500
- -----------------------------------------------------------------------------------------------------------------------------
IXC Communications, Inc., 12.50% Sr. Nts., Series B, 10/1/05 50,000 57,000
- -----------------------------------------------------------------------------------------------------------------------------
McLeodUSA, Inc., 0%/10.50% Sr. Disc. Nts., 3/1/07 (4) 50,000 34,750
- -----------------------------------------------------------------------------------------------------------------------------
Teleport Communications Group, Inc.:
0%/11.125% Sr. Disc. Nts., 7/1/07 (4) 25,000 19,719
9.875% Sr. Nts., 7/1/06 25,000 27,438
---------------
474,688
</TABLE>
10 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 1.9%
- -----------------------------------------------------------------------------------------------------------------------------
RAILROADS - 1.1%
CSX Corp., 7.05% Debs., 5/1/02 $ 85,000 $ 86,993
- -----------------------------------------------------------------------------------------------------------------------------
Norfolk Southern Corp., 7.35% Nts., 5/15/07 75,000 78,755
- -----------------------------------------------------------------------------------------------------------------------------
Union Pacific Corp., 7% Nts., 6/15/00 150,000 152,803
---------------
318,551
- -----------------------------------------------------------------------------------------------------------------------------
SHIPPING - 0.8%
Federal Express Corp., 6.25% Nts., 4/15/98 240,000 240,297
- -----------------------------------------------------------------------------------------------------------------------------
UTILITIES - 2.4%
- -----------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 0.9%
Consumers Energy Co., 8.75% First Mtg. Nts., 2/15/98 145,000 145,947
- -----------------------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 7.25% First Mtg. Nts., Series A, 2/1/99 (1) 75,000 75,750
- -----------------------------------------------------------------------------------------------------------------------------
Panda Global Energy Co., 12.50% Sr. Nts., 4/15/04 (1) 50,000 48,250
---------------
269,947
- -----------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES - 1.1%
Northern Illinois Gas Co., 6.45% First Mtg. Bonds, 8/1/01 220,000 222,749
- -----------------------------------------------------------------------------------------------------------------------------
Tennessee Gas Pipeline Co., 7.50% Bonds, 4/1/17 100,000 105,230
---------------
327,979
- -----------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES - 0.4%
GTE Corp., 8.85% Debs., 3/1/98 60,000 60,528
- -----------------------------------------------------------------------------------------------------------------------------
Peoples Telephone Co., Inc., 12.25% Sr. Nts., 7/15/02 50,000 52,125
---------------
112,653
---------------
Total Corporate Bonds and Notes (Cost $12,488,086) 12,726,059
SHARES
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
COMMON STOCKS - 23.6%
- -----------------------------------------------------------------------------------------------------------------------------
BASIC INDUSTRY - 2.9%
- -----------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 1.3%
Dexter Corp. 4,300 168,775
- -----------------------------------------------------------------------------------------------------------------------------
Ethyl Corp. 13,300 114,712
- -----------------------------------------------------------------------------------------------------------------------------
IMC Global, Inc. 3,149 106,082
---------------
389,569
- -----------------------------------------------------------------------------------------------------------------------------
PAPER - 0.4%
Unisource Worldwide, Inc. 6,900 112,556
- -----------------------------------------------------------------------------------------------------------------------------
STEEL - 1.2%
Carpenter Technology Corp. 3,200 154,800
- -----------------------------------------------------------------------------------------------------------------------------
Oregon Steel Mills, Inc. 4,500 94,781
- -----------------------------------------------------------------------------------------------------------------------------
UNR Industries, Inc. 23,000 117,875
---------------
367,456
- -----------------------------------------------------------------------------------------------------------------------------
CONSUMER RELATED - 0.8%
- -----------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 0.5%
Glaxo Wellcome plc, Sponsored ADR 3,800 162,687
- -----------------------------------------------------------------------------------------------------------------------------
RESTAURANTS - 0.3%
Piccadilly Cafeterias, Inc. 6,900 102,637
</TABLE>
11 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
MARKET VALUE
SHARES SEE NOTE 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
ENERGY - 3.4%
- -----------------------------------------------------------------------------------------------------------------------------
Amoco Corp. 1,400 $ 128,362
- -----------------------------------------------------------------------------------------------------------------------------
Atlantic Richfield Co. 2,400 197,550
- -----------------------------------------------------------------------------------------------------------------------------
Chevron Corp. 2,300 190,756
- -----------------------------------------------------------------------------------------------------------------------------
Exxon Corp. 3,000 184,312
- -----------------------------------------------------------------------------------------------------------------------------
Mobil Corp. 2,400 174,750
- -----------------------------------------------------------------------------------------------------------------------------
Occidental Petroleum Corp. 4,700 131,012
---------------
1,006,742
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES - 4.8%
- -----------------------------------------------------------------------------------------------------------------------------
BANKS & THRIFTS - 2.1%
BankAmerica Corp. 1,000 71,500
- -----------------------------------------------------------------------------------------------------------------------------
BankBoston Corp. 2,000 162,125
- -----------------------------------------------------------------------------------------------------------------------------
First Union Corp. 2,700 132,469
- -----------------------------------------------------------------------------------------------------------------------------
NationsBank Corp. 1,900 113,762
- -----------------------------------------------------------------------------------------------------------------------------
Wells Fargo & Co. 500 145,687
---------------
625,543
- -----------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL -2.3%
- -----------------------------------------------------------------------------------------------------------------------------
Camden Property Trust 4,800 144,000
- -----------------------------------------------------------------------------------------------------------------------------
Capstone Capital Corp. 5,900 139,387
- -----------------------------------------------------------------------------------------------------------------------------
Crescent Real Estate Equities, Inc. 4,200 151,200
- -----------------------------------------------------------------------------------------------------------------------------
Health & Retirement Properties Trust 6,800 127,500
- -----------------------------------------------------------------------------------------------------------------------------
Meditrust Corp., Paired Stock 3,100 132,525
---------------
694,612
- -----------------------------------------------------------------------------------------------------------------------------
INSURANCE - 0.4%
HSB Group, Inc. 2,500 130,469
- -----------------------------------------------------------------------------------------------------------------------------
Housing Related - 0.9%
- -----------------------------------------------------------------------------------------------------------------------------
Homebuilders/Real Estate - 0.9%
Cornerstone Properties, Inc. 8,300 153,031
- -----------------------------------------------------------------------------------------------------------------------------
Tower Realty Trust, Inc. (9) 5,000 126,250
---------------
279,281
- -----------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 2.2%
- -----------------------------------------------------------------------------------------------------------------------------
AEROSPACE - 1.5%
General Dynamics Corp. 2,300 186,731
- -----------------------------------------------------------------------------------------------------------------------------
Lockheed Martin Corp. 1,200 114,075
- -----------------------------------------------------------------------------------------------------------------------------
TRW, Inc. 2,400 137,400
---------------
438,206
- -----------------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS - 0.7%
PACCAR, Inc. 5,000 225,312
- -----------------------------------------------------------------------------------------------------------------------------
RETAIL - 1.2%
- -----------------------------------------------------------------------------------------------------------------------------
DEPARTMENT STORES - 0.4%
Penney (J.C.) Co., Inc. 2,100 123,244
- -----------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAILING - 0.8%
Brown Group, Inc. 6,500 98,313
- -----------------------------------------------------------------------------------------------------------------------------
New England Business Service, Inc. 5,000 145,625
---------------
243,938
</TABLE>
12 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
MARKET VALUE
SHARES SEE NOTE 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 0.0%
- -----------------------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY - 0.0%
Nextel Communications, Inc., Cl. A (9) 154 $ 4,043
- -----------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 0.7%
- -----------------------------------------------------------------------------------------------------------------------------
RAILROADS - 0.7%
GATX Corp. 3,100 200,144
- -----------------------------------------------------------------------------------------------------------------------------
UTILITIES - 6.7%
- -----------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 2.4%
Duke Energy Corp. 3,704 178,718
- -----------------------------------------------------------------------------------------------------------------------------
FPL Group, Inc. 3,000 155,063
- -----------------------------------------------------------------------------------------------------------------------------
Illinova Corp. 4,000 89,000
- -----------------------------------------------------------------------------------------------------------------------------
Kansas City Power & Light Co. 5,000 146,563
- -----------------------------------------------------------------------------------------------------------------------------
Western Resources, Inc. 3,900 145,275
---------------
714,619
- -----------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES - 2.2%
El Paso Natural Gas Co. 3,800 227,763
- -----------------------------------------------------------------------------------------------------------------------------
MCN Energy Group, Inc. 3,700 128,113
- -----------------------------------------------------------------------------------------------------------------------------
National Fuel Gas Co. 3,700 163,263
- -----------------------------------------------------------------------------------------------------------------------------
Questar Corp. 3,300 127,463
---------------
646,602
- -----------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES - 2.1%
- -----------------------------------------------------------------------------------------------------------------------------
Ameritech Corp. 2,100 136,500
- -----------------------------------------------------------------------------------------------------------------------------
Bell Atlantic Corp. 2,473 197,531
- -----------------------------------------------------------------------------------------------------------------------------
Frontier Corp. 5,700 123,263
- -----------------------------------------------------------------------------------------------------------------------------
U S West Communications Group 4,200 167,213
---------------
624,507
---------------
Total Common Stocks (Cost $5,534,380) 7,092,167
- -----------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS - 0.6%
- -----------------------------------------------------------------------------------------------------------------------------
Case Corp., $4.50 Cum. Cv., Series A, Non-Vtg. (Cost $115,000) 1,200 174,000
UNITS
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES - 0.0%
- -----------------------------------------------------------------------------------------------------------------------------
Australis Media Ltd. Wts., Exp. 5/00 (1) 75 --
- -----------------------------------------------------------------------------------------------------------------------------
Dairy Mart Convenience Stores, Inc. Wts., Exp. 12/01 (1) 333 333
- -----------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc. Wts., Exp. 6/00 (1) 50 3,500
- -----------------------------------------------------------------------------------------------------------------------------
Price Communications Corp. Wts., 8/07 258 3
- -----------------------------------------------------------------------------------------------------------------------------
Signature Brands, Inc. Wts., Exp. 12/49 (1) 50 750
---------------
Total Rights, Warrants and Certificates (Cost $470) 4,586
</TABLE>
13 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Income Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENTS - 6.3%
- -----------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Zion First National Bank, 5.68%,
dated 10/31/97, to be repurchased at $1,883,891 on 11/3/97,
collateralized by U.S. Treasury Nts., 7.25%, 8/15/04, with a
value of $1,923,955 (Cost $1,883,000) $ 1,883,000 $ 1,883,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $27,723,982) 99.1% 29,794,676
- -----------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.9 259,607
-------------- ---------------
NET ASSETS 100.0% $ 30,054,283
-------------- ---------------
-------------- ---------------
</TABLE>
1. Identifies issues considered to be illiquid or restricted - See Note 5
of Notes to Financial Statements.
2. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans.
These securities typically decline in price as interest rates decline. Most
other fixed income securities increase in price when interest rates decline.
The principal amount of the underlying pool represents the notional amount on
which current interest is calculated. The price of these securities is
typically more sensitive to changes in prepayment rates than traditional
mortgage-backed securities (for example, GNMA pass-throughs). Interest rates
disclosed represent current yields based upon the current cost basis and
estimated timing and amount of future cash flows.
3. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These
securities have been determined to be liquid under guidelines established
by the Board of Directors. These securities amount to $965,905 or 3.21% of
the Fund's net assets as of October 31, 1997.
4. Denotes a step bond: a zero coupon bond that converts to a fixed or
variable interest rate at a designated future date.
5. Units may be comprised of several components, such as debt and equity
and/or warrants to purchase equity at some point in the future. For units
which represent debt securities, face amount disclosed represents total
underlying principal.
6. Represents the current interest rate for an increasing rate security.
7. Interest or dividend is paid in kind.
8. For zero coupon bonds, the interest rate shown is the effective yield on
the date of purchase.
9. Non-income producing security.
See accompanying Notes to Financial Statements.
14 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS OCTOBER 31, 1997
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 57.7%
- -----------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 2.7%
- -----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 1.0%
Ciba Specialty Chemicals AG (1) 1,200 $ 118,162
- -----------------------------------------------------------------------------------------------------------------------------------
Dexter Corp. 5,000 196,250
- -----------------------------------------------------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co. 2,100 119,437
- -----------------------------------------------------------------------------------------------------------------------------------
Ethyl Corp. 15,900 137,137
- -----------------------------------------------------------------------------------------------------------------------------------
Fuji Photo Film Co. 1,000 36,252
- -----------------------------------------------------------------------------------------------------------------------------------
IMC Global, Inc. 2,834 95,470
---------------
702,708
- -----------------------------------------------------------------------------------------------------------------------------------
METALS - 0.8%
Allegheny Teledyne, Inc. 4,000 105,250
- -----------------------------------------------------------------------------------------------------------------------------------
Carpenter Technology Corp. 3,700 178,987
- -----------------------------------------------------------------------------------------------------------------------------------
Oregon Steel Mills, Inc. 7,400 155,862
- -----------------------------------------------------------------------------------------------------------------------------------
UNR Industries, Inc. 25,000 128,125
---------------
568,224
- -----------------------------------------------------------------------------------------------------------------------------------
PAPER - 0.9%
Fletcher Challenge Forest 80,000 77,345
- -----------------------------------------------------------------------------------------------------------------------------------
Fort James Corp. 4,675 185,539
- -----------------------------------------------------------------------------------------------------------------------------------
International Paper Co. 2,900 130,500
- -----------------------------------------------------------------------------------------------------------------------------------
Kimberly-Clark de Mexico, SA 16,000 69,582
- -----------------------------------------------------------------------------------------------------------------------------------
Unisource Worldwide, Inc. 8,100 132,131
---------------
595,097
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 7.1%
- -----------------------------------------------------------------------------------------------------------------------------------
AUTOS & HOUSING - 1.1%
Bridgestone Corp. 3,000 64,854
- -----------------------------------------------------------------------------------------------------------------------------------
Cornerstone Properties, Inc. 9,900 182,531
- -----------------------------------------------------------------------------------------------------------------------------------
Goodyear Tire & Rubber Co. 2,600 162,825
- -----------------------------------------------------------------------------------------------------------------------------------
Groupe SEB SA 700 79,823
- -----------------------------------------------------------------------------------------------------------------------------------
Lear Corp. (1) 1,400 67,287
- -----------------------------------------------------------------------------------------------------------------------------------
Rinnai Corp. 3,000 48,890
- -----------------------------------------------------------------------------------------------------------------------------------
Tower Realty Trust, Inc. (1) 6,000 151,500
---------------
757,710
- -----------------------------------------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 1.7%
Alaska Air Group, Inc. (1) 2,200 73,425
- -----------------------------------------------------------------------------------------------------------------------------------
America West Holdings Corp., Cl. B (1) 4,100 60,731
- -----------------------------------------------------------------------------------------------------------------------------------
AMR Corp. (1) 1,700 197,944
- -----------------------------------------------------------------------------------------------------------------------------------
CDL Hotels International Ltd. 290,000 83,479
- -----------------------------------------------------------------------------------------------------------------------------------
Granada Group plc 9,000 124,057
- -----------------------------------------------------------------------------------------------------------------------------------
Landry's Seafood Restaurants, Inc. (1) 2,500 70,000
- -----------------------------------------------------------------------------------------------------------------------------------
Piccadilly Cafeterias, Inc. 7,900 117,512
- -----------------------------------------------------------------------------------------------------------------------------------
Regal Cinemas, Inc. (1) 5,800 133,400
- -----------------------------------------------------------------------------------------------------------------------------------
UAL Corp. (1) 900 78,862
- -----------------------------------------------------------------------------------------------------------------------------------
Vistana, Inc. (1) 10,100 231,037
---------------
1,170,447
- -----------------------------------------------------------------------------------------------------------------------------------
MEDIA - 0.9%
Applied Graphics Technologies, Inc. (1) 4,200 224,700
- -----------------------------------------------------------------------------------------------------------------------------------
Benpres Holdings Corp., Sponsored GDR (1) 5,000 23,125
</TABLE>
15 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MEDIA (CONTINUED)
Reed International plc 9,000 $ 88,968
- -----------------------------------------------------------------------------------------------------------------------------------
Reuters Holdings plc 8,000 86,729
- -----------------------------------------------------------------------------------------------------------------------------------
Television Broadcasts Ltd. 26,000 72,320
- -----------------------------------------------------------------------------------------------------------------------------------
Wolters Kluwer NV 900 110,557
---------------
606,399
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL: GENERAL - 1.6%
adidas AG 900 131,249
- -----------------------------------------------------------------------------------------------------------------------------------
Dayton Hudson Corp. 1,500 94,219
- -----------------------------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc. (1) 1,600 70,400
- -----------------------------------------------------------------------------------------------------------------------------------
Marks & Spencer plc 13,000 131,888
- -----------------------------------------------------------------------------------------------------------------------------------
North Face, Inc. (The) (1) 5,100 120,487
- -----------------------------------------------------------------------------------------------------------------------------------
Penney (J.C.) Co., Inc. 5,700 334,519
- -----------------------------------------------------------------------------------------------------------------------------------
Wolverine World Wide, Inc. 7,975 175,450
---------------
1,058,212
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 1.8%
Argos plc 10,000 105,896
- -----------------------------------------------------------------------------------------------------------------------------------
Brown Group, Inc. 8,300 125,537
- -----------------------------------------------------------------------------------------------------------------------------------
Brylane, Inc. (1) 400 17,375
- -----------------------------------------------------------------------------------------------------------------------------------
Dickson Concepts International Ltd. 42,000 90,472
- -----------------------------------------------------------------------------------------------------------------------------------
Eagle Hardware & Garden, Inc. (1) 7,100 120,700
- -----------------------------------------------------------------------------------------------------------------------------------
Guitar Center, Inc. (1) 4,300 93,525
- -----------------------------------------------------------------------------------------------------------------------------------
Hennes & Mauritz AB, B Shares 2,700 110,573
- -----------------------------------------------------------------------------------------------------------------------------------
Koninklijke Ahold NV 3,600 92,192
- -----------------------------------------------------------------------------------------------------------------------------------
New England Business Service, Inc. 5,800 168,925
- -----------------------------------------------------------------------------------------------------------------------------------
Payless ShoeSource, Inc. (1) 1,500 83,625
- -----------------------------------------------------------------------------------------------------------------------------------
Shimamura Co. Ltd. 2,000 54,045
- -----------------------------------------------------------------------------------------------------------------------------------
Stage Stores, Inc. (1) 4,300 156,950
---------------
1,219,815
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 7.9%
- -----------------------------------------------------------------------------------------------------------------------------------
BEVERAGES - 0.4%
Embotelladora Andina SA, Series A, Sponsored ADR 3,200 76,800
- -----------------------------------------------------------------------------------------------------------------------------------
Embotelladora Andina SA, Series B, Sponsored ADR 3,200 65,600
- -----------------------------------------------------------------------------------------------------------------------------------
Quilmes Industrial Quinsa SA, Sponsored ADR 3,750 46,406
- -----------------------------------------------------------------------------------------------------------------------------------
Scottish & Newcastle plc 6,000 67,361
---------------
256,167
- -----------------------------------------------------------------------------------------------------------------------------------
FOOD - 1.7%
American Stores Co. 5,400 138,712
- -----------------------------------------------------------------------------------------------------------------------------------
Carrefour Supermarche SA 190 98,962
- -----------------------------------------------------------------------------------------------------------------------------------
Colruyt SA 250 134,126
- -----------------------------------------------------------------------------------------------------------------------------------
Jeronimo Martins & Filho, SA 1,400 91,218
- -----------------------------------------------------------------------------------------------------------------------------------
JP Foodservice, Inc. (1) 4,000 127,750
- -----------------------------------------------------------------------------------------------------------------------------------
Kroger Co. (1) 5,300 172,912
- -----------------------------------------------------------------------------------------------------------------------------------
Morningstar Group, Inc. (1) 3,500 149,625
- -----------------------------------------------------------------------------------------------------------------------------------
Safeway, Inc. (1) 2,000 116,250
- -----------------------------------------------------------------------------------------------------------------------------------
William Morrison Supermarkets plc 40,000 132,140
---------------
1,161,695
</TABLE>
16 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE/DRUGS - 2.3%
Dura Pharmaceuticals, Inc. (1) 3,500 $ 169,312
- -----------------------------------------------------------------------------------------------------------------------------------
Gedeon Richter (2) 1,000 92,066
- -----------------------------------------------------------------------------------------------------------------------------------
Glaxo Wellcome plc, Sponsored ADR 4,300 184,094
- -----------------------------------------------------------------------------------------------------------------------------------
Incyte Pharmaceuticals, Inc. (1) 1,200 96,600
- -----------------------------------------------------------------------------------------------------------------------------------
Medicis Pharmaceutical Corp., Cl. A (1) 4,250 204,531
- -----------------------------------------------------------------------------------------------------------------------------------
Novartis AG 100 157,048
- -----------------------------------------------------------------------------------------------------------------------------------
Novo-Nordisk AS, B Shares 1,000 108,382
- -----------------------------------------------------------------------------------------------------------------------------------
Roche Holding AG 12 105,744
- -----------------------------------------------------------------------------------------------------------------------------------
Schering AG 1,000 98,190
- -----------------------------------------------------------------------------------------------------------------------------------
SKW Trostberg AG 3,000 103,710
- -----------------------------------------------------------------------------------------------------------------------------------
Takeda Chemical Industries Ltd. 5,000 136,360
- -----------------------------------------------------------------------------------------------------------------------------------
Zeneca Group plc 4,000 126,170
---------------
1,582,207
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 2.7%
Acuson Corp. (1) 5,800 108,750
- -----------------------------------------------------------------------------------------------------------------------------------
Alternative Living Services, Inc. (1) 4,000 98,000
- -----------------------------------------------------------------------------------------------------------------------------------
Concentra Managed Care, Inc. (1) 1,000 32,625
- -----------------------------------------------------------------------------------------------------------------------------------
FPA Medical Management, Inc. (1) 4,800 115,800
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare Financial Partners, Inc. (1) 700 24,150
- -----------------------------------------------------------------------------------------------------------------------------------
Luxottica Group SpA, Sponsored ADR 1,500 95,812
- -----------------------------------------------------------------------------------------------------------------------------------
National Surgery Centers, Inc. (1) 8,800 220,000
- -----------------------------------------------------------------------------------------------------------------------------------
Pediatrix Medical Group, Inc. (1) 4,700 198,575
- -----------------------------------------------------------------------------------------------------------------------------------
Renal Treatment Centers, Inc. (1) 3,400 112,837
- -----------------------------------------------------------------------------------------------------------------------------------
Rural/Metro Corp. (1) 6,200 215,450
- -----------------------------------------------------------------------------------------------------------------------------------
SmithKline Beecham plc 16,894 160,062
- -----------------------------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp. (1) 4,635 141,657
- -----------------------------------------------------------------------------------------------------------------------------------
Total Renal Care Holdings, Inc. (1) 6,166 189,990
- -----------------------------------------------------------------------------------------------------------------------------------
WellPoint Health Networks, Inc. (1) 1,800 82,350
---------------
1,796,058
- -----------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD GOODS - 0.8%
Blyth Industries, Inc. (1) 4,050 100,744
- -----------------------------------------------------------------------------------------------------------------------------------
L'OREAL 350 123,793
- -----------------------------------------------------------------------------------------------------------------------------------
Premark International, Inc. 5,600 151,550
- -----------------------------------------------------------------------------------------------------------------------------------
Reckitt & Colman plc 9,000 138,017
---------------
514,104
- -----------------------------------------------------------------------------------------------------------------------------------
ENERGY - 5.3%
- -----------------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 1.4%
Diamond Offshore Drilling, Inc. 4,600 286,350
- -----------------------------------------------------------------------------------------------------------------------------------
Global Marine, Inc. (1) 4,300 133,838
- -----------------------------------------------------------------------------------------------------------------------------------
Oryx Energy Co. (1) 4,300 118,519
- -----------------------------------------------------------------------------------------------------------------------------------
Pool Energy Services Co. (1) 2,700 91,631
- -----------------------------------------------------------------------------------------------------------------------------------
Tidewater, Inc. 3,000 197,063
- -----------------------------------------------------------------------------------------------------------------------------------
Varco International, Inc. (1) 2,200 134,063
---------------
961,464
- -----------------------------------------------------------------------------------------------------------------------------------
OIL-INTEGRATED - 3.9%
Amoco Corp. 3,100 284,231
- -----------------------------------------------------------------------------------------------------------------------------------
Atlantic Richfield Co. 3,000 246,938
</TABLE>
17 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OIL-INTEGRATED (CONTINUED)
Chevron Corp. 5,900 $ 489,331
- -----------------------------------------------------------------------------------------------------------------------------------
Cliffs Drilling Co. (1) 1,100 79,956
- -----------------------------------------------------------------------------------------------------------------------------------
Exxon Corp. 5,500 337,906
- -----------------------------------------------------------------------------------------------------------------------------------
Mobil Corp. 5,000 364,063
- -----------------------------------------------------------------------------------------------------------------------------------
Occidental Petroleum Corp. 9,800 273,175
- -----------------------------------------------------------------------------------------------------------------------------------
Patterson Energy, Inc. (1) 2,400 134,400
v-----------------------------------------------------------------------------------------------------------------------------------
Quinenco SA, ADR (1) 2,700 39,488
- -----------------------------------------------------------------------------------------------------------------------------------
Shell Transport & Trading Co. plc 14,000 99,189
- -----------------------------------------------------------------------------------------------------------------------------------
Total SA, B Shares 1,641 181,734
- -----------------------------------------------------------------------------------------------------------------------------------
UTI Energy Corp. (1) 2,200 98,175
---------------
2,628,586
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL - 9.2%
- -----------------------------------------------------------------------------------------------------------------------------------
BANKS - 3.8%
Banco Popular Espanol SA 1,600 94,202
- -----------------------------------------------------------------------------------------------------------------------------------
Bank of Tokyo-Mitsubishi Ltd. 6,000 78,324
- -----------------------------------------------------------------------------------------------------------------------------------
BankAmerica Corp. 4,200 300,300
- -----------------------------------------------------------------------------------------------------------------------------------
BankBoston Corp. 4,800 389,100
- -----------------------------------------------------------------------------------------------------------------------------------
Bayerische Vereinsbank AG 1,850 107,379
- -----------------------------------------------------------------------------------------------------------------------------------
Credit Suisse Group 700 98,880
- -----------------------------------------------------------------------------------------------------------------------------------
Credito Italiano (1) 48,000 128,225
- -----------------------------------------------------------------------------------------------------------------------------------
First Union Corp. 7,400 363,063
- -----------------------------------------------------------------------------------------------------------------------------------
Halifax plc (1) 9,000 102,098
- -----------------------------------------------------------------------------------------------------------------------------------
Lloyds TSB Group plc 17,000 212,380
- -----------------------------------------------------------------------------------------------------------------------------------
Mitsubishi Trust & Banking Corp. 8,000 98,445
- -----------------------------------------------------------------------------------------------------------------------------------
NationsBank Corp. 4,400 263,450
- -----------------------------------------------------------------------------------------------------------------------------------
Wells Fargo & Co. 1,200 349,650
---------------
2,585,496
- -----------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 3.6%
Amresco, Inc. (1) 7,300 229,038
- -----------------------------------------------------------------------------------------------------------------------------------
Camden Property Trust 5,400 162,000
- -----------------------------------------------------------------------------------------------------------------------------------
Capstone Capital Corp. 6,700 158,287
- -----------------------------------------------------------------------------------------------------------------------------------
Cattles plc 12,000 75,259
- -----------------------------------------------------------------------------------------------------------------------------------
Crescent Real Estate Equities, Inc. 9,200 331,200
- -----------------------------------------------------------------------------------------------------------------------------------
Haw Par Brothers International Ltd. 41,000 66,464
- -----------------------------------------------------------------------------------------------------------------------------------
Health & Retirement Properties Trust 7,800 146,250
- -----------------------------------------------------------------------------------------------------------------------------------
ING Groep NV 2,552 107,170
- -----------------------------------------------------------------------------------------------------------------------------------
Lend Lease Corp. Ltd. 3,600 73,487
- -----------------------------------------------------------------------------------------------------------------------------------
Meditrust Corp., Paired Stock 3,900 166,725
- -----------------------------------------------------------------------------------------------------------------------------------
Money Store, Inc. (The) 1,700 48,238
- -----------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co. 3,300 161,700
- -----------------------------------------------------------------------------------------------------------------------------------
Nichiei Co. Ltd. 1,300 142,679
- -----------------------------------------------------------------------------------------------------------------------------------
Perlis Plantations Berhad 28,000 50,985
- -----------------------------------------------------------------------------------------------------------------------------------
Salomon, Inc. 1,600 124,300
- -----------------------------------------------------------------------------------------------------------------------------------
Sirrom Capital Corp. 2,400 120,900
- -----------------------------------------------------------------------------------------------------------------------------------
Southcorp Holdings Ltd. 14,000 46,813
- -----------------------------------------------------------------------------------------------------------------------------------
Swire Pacific Ltd., Cl. B 87,000 92,296
</TABLE>
18 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DIVERSIFIED FINANCIAL (CONTINUED)
Travelers Group, Inc. 2,600 $ 182,000
---------------
2,485,791
- -----------------------------------------------------------------------------------------------------------------------------------
INSURANCE - 1.8%
AFLAC, Inc. 1,500 76,313
- -----------------------------------------------------------------------------------------------------------------------------------
Allstate Corp. 1,200 99,525
- -----------------------------------------------------------------------------------------------------------------------------------
Chubb Corp. 2,500 165,625
- -----------------------------------------------------------------------------------------------------------------------------------
Conseco, Inc. 5,300 231,213
- -----------------------------------------------------------------------------------------------------------------------------------
Equitable Cos., Inc. 4,500 185,344
- -----------------------------------------------------------------------------------------------------------------------------------
HSB Group, Inc. 2,700 140,906
- -----------------------------------------------------------------------------------------------------------------------------------
Pre-Paid Legal Services, Inc. (1) 1,500 45,375
- -----------------------------------------------------------------------------------------------------------------------------------
Torchmark Corp. 3,900 155,513
- -----------------------------------------------------------------------------------------------------------------------------------
Travelers Property Casualty Corp., Cl. A 3,600 130,050
---------------
1,229,864
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 8.3%
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.6%
ABB AG 65 84,951
- -----------------------------------------------------------------------------------------------------------------------------------
Johnson Electric Holdings Ltd. 42,000 114,652
- -----------------------------------------------------------------------------------------------------------------------------------
Power Technologies, Inc. (1) 3,400 104,975
- -----------------------------------------------------------------------------------------------------------------------------------
Siebe plc 5,000 96,003
---------------
400,581
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 3.3%
Adecco SA 300 95,604
- -----------------------------------------------------------------------------------------------------------------------------------
American Disposal Services, Inc. (1) 5,000 176,250
- -----------------------------------------------------------------------------------------------------------------------------------
Caribiner International, Inc. (1) 2,800 125,475
- -----------------------------------------------------------------------------------------------------------------------------------
Central Parking Corp. 1,500 81,938
- -----------------------------------------------------------------------------------------------------------------------------------
Computer Horizons Corp. (1) 6,550 198,956
- -----------------------------------------------------------------------------------------------------------------------------------
Computer Task Group, Inc. 7,800 220,350
- -----------------------------------------------------------------------------------------------------------------------------------
Corestaff, Inc. (1) 5,900 146,025
- -----------------------------------------------------------------------------------------------------------------------------------
Eastern Environmental Services, Inc. (1) 6,300 160,650
- -----------------------------------------------------------------------------------------------------------------------------------
Guilbert SA 625 81,437
- -----------------------------------------------------------------------------------------------------------------------------------
Hays plc 13,000 152,598
- -----------------------------------------------------------------------------------------------------------------------------------
Helix Technology Corp. 2,500 112,500
- -----------------------------------------------------------------------------------------------------------------------------------
Kurita Water Industries Ltd. 5,000 88,135
- -----------------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co. (1) 3,800 128,725
- -----------------------------------------------------------------------------------------------------------------------------------
SpeedFam International, Inc. (1) 1,300 48,263
- -----------------------------------------------------------------------------------------------------------------------------------
Tetra Tech, Inc. (1) 5,600 146,300
- -----------------------------------------------------------------------------------------------------------------------------------
Transaction Systems Architects, Inc., Cl. A (1) 4,700 183,888
- -----------------------------------------------------------------------------------------------------------------------------------
Viad Corp. 4,700 85,775
---------------
2,232,869
- -----------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 3.6%
Aeroquip-Vickers, Inc. 2,000 104,125
- -----------------------------------------------------------------------------------------------------------------------------------
AGCO Corp. 4,000 116,000
- -----------------------------------------------------------------------------------------------------------------------------------
Canon Sales Co., Inc. 300 5,463
- -----------------------------------------------------------------------------------------------------------------------------------
Case Corp. 3,700 221,306
- -----------------------------------------------------------------------------------------------------------------------------------
Deere & Co. 4,300 226,288
- -----------------------------------------------------------------------------------------------------------------------------------
Halter Marine Group, Inc. (1) 1,800 94,163
- -----------------------------------------------------------------------------------------------------------------------------------
Ingersoll-Rand Co. 4,200 163,538
</TABLE>
19 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING (CONTINUED)
Mannesmann AG 250 $ 106,034
- -----------------------------------------------------------------------------------------------------------------------------------
NSK Ltd. 7,000 29,101
- -----------------------------------------------------------------------------------------------------------------------------------
PACCAR, Inc. 9,000 405,563
- -----------------------------------------------------------------------------------------------------------------------------------
Parker-Hannifin Corp. 2,600 108,713
- -----------------------------------------------------------------------------------------------------------------------------------
Ricoh Co. Ltd. 11,000 141,764
- -----------------------------------------------------------------------------------------------------------------------------------
SMC Corp. 500 43,236
- -----------------------------------------------------------------------------------------------------------------------------------
Smiths Industries plc 5,000 72,107
- -----------------------------------------------------------------------------------------------------------------------------------
Societe BIC SA 1,400 95,594
- -----------------------------------------------------------------------------------------------------------------------------------
Textron, Inc. 4,200 242,813
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Industries, Inc. 8,550 229,781
---------------
2,405,589
- -----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 0.8%
Brambles Industries Ltd. 4,100 78,578
- -----------------------------------------------------------------------------------------------------------------------------------
Burlington Northern Santa Fe Corp. 1,300 123,500
- -----------------------------------------------------------------------------------------------------------------------------------
GATX Corp. 3,600 232,425
- -----------------------------------------------------------------------------------------------------------------------------------
Gulfmark Offshore, Inc. (1) 500 18,188
- -----------------------------------------------------------------------------------------------------------------------------------
MotivePower Industries, Inc. (1) 2,100 55,913
---------------
508,604
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 11.8%
- -----------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 1.3%
General Dynamics Corp. 3,900 316,631
- -----------------------------------------------------------------------------------------------------------------------------------
Lockheed Martin Corp. 2,600 247,163
- -----------------------------------------------------------------------------------------------------------------------------------
REMEC, Inc. (1) 2,700 68,513
- -----------------------------------------------------------------------------------------------------------------------------------
TRW, Inc. 4,600 263,350
---------------
895,657
- -----------------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE - 2.0%
Apex PC Solutions, Inc. (1) 3,000 77,250
- -----------------------------------------------------------------------------------------------------------------------------------
CFM Technologies, Inc. (1) 1,700 31,025
- -----------------------------------------------------------------------------------------------------------------------------------
CHS Electronics, Inc. (1) 1,050 25,659
- -----------------------------------------------------------------------------------------------------------------------------------
Compaq Computer Corp. (1) 2,800 178,500
- -----------------------------------------------------------------------------------------------------------------------------------
Digital Lightwave, Inc. (1) 1,600 29,200
- -----------------------------------------------------------------------------------------------------------------------------------
Insight Enterprises, Inc. (1) 4,650 181,931
- -----------------------------------------------------------------------------------------------------------------------------------
International Business Machines Corp. 1,700 166,706
- -----------------------------------------------------------------------------------------------------------------------------------
Level One Communications, Inc. (1) 900 40,500
- -----------------------------------------------------------------------------------------------------------------------------------
Lexmark International Group, Inc., Cl. A (1) 800 24,450
- -----------------------------------------------------------------------------------------------------------------------------------
Network Appliance, Inc. (1) 3,200 160,800
- -----------------------------------------------------------------------------------------------------------------------------------
Quantum Corp. (1) 3,900 123,338
- -----------------------------------------------------------------------------------------------------------------------------------
Semtech Corp. (1) 1,500 69,844
- -----------------------------------------------------------------------------------------------------------------------------------
Storage Technology Corp. (New) (1) 4,500 264,094
---------------
1,373,297
- -----------------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 2.8%
BEA Systems, Inc. (1) 7,500 101,250
- -----------------------------------------------------------------------------------------------------------------------------------
Electronic Data Systems Corp. 1,200 46,425
- -----------------------------------------------------------------------------------------------------------------------------------
HNC Software, Inc. (1) 2,600 96,200
- -----------------------------------------------------------------------------------------------------------------------------------
JDA Software Group, Inc. (1) 3,400 106,250
- -----------------------------------------------------------------------------------------------------------------------------------
Pegasystems, Inc. (1) 5,300 96,725
- -----------------------------------------------------------------------------------------------------------------------------------
Remedy Corp. (1) 3,000 141,000
</TABLE>
20 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER SOFTWARE/SERVICES (CONTINUED)
SAP AG, Preference 500 $ 149,464
- -----------------------------------------------------------------------------------------------------------------------------------
Sapient Corp. (1) 2,500 133,125
- -----------------------------------------------------------------------------------------------------------------------------------
Security Dynamics Technologies, Inc. (1) 4,000 135,500
- -----------------------------------------------------------------------------------------------------------------------------------
Summit Design, Inc. (1) 1,400 20,300
- -----------------------------------------------------------------------------------------------------------------------------------
Sykes Enterprises, Inc. (1) 5,800 144,275
- -----------------------------------------------------------------------------------------------------------------------------------
Technology Solutions Co. (1) 6,350 200,025
- -----------------------------------------------------------------------------------------------------------------------------------
Veritas Software Corp. (1) 3,500 145,688
- -----------------------------------------------------------------------------------------------------------------------------------
Viasoft, Inc. (1) 2,700 110,700
- -----------------------------------------------------------------------------------------------------------------------------------
Visio Corp. (1) 3,100 115,281
- -----------------------------------------------------------------------------------------------------------------------------------
Wind River Systems (1) 3,200 122,800
---------------
1,865,008
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS - 3.2%
ATMI, Inc. (1) 3,300 88,688
- -----------------------------------------------------------------------------------------------------------------------------------
Bowthorpe plc 11,000 72,492
- -----------------------------------------------------------------------------------------------------------------------------------
Electro Scientific Industries, Inc. (1) 2,300 111,550
- -----------------------------------------------------------------------------------------------------------------------------------
Electrocomponents plc 15,000 116,335
- -----------------------------------------------------------------------------------------------------------------------------------
Getronics NV 3,000 99,087
- -----------------------------------------------------------------------------------------------------------------------------------
Hirose Electric Co. 2,000 130,540
- -----------------------------------------------------------------------------------------------------------------------------------
Keyence Corp. 660 98,778
- -----------------------------------------------------------------------------------------------------------------------------------
Matsushita Electric Industrial Co. 4,000 67,182
- -----------------------------------------------------------------------------------------------------------------------------------
National Semiconductor Corp. (1) 3,000 108,000
- -----------------------------------------------------------------------------------------------------------------------------------
Omron Corp. 4,000 67,847
- -----------------------------------------------------------------------------------------------------------------------------------
Philips Electronics NV 1,300 101,818
- -----------------------------------------------------------------------------------------------------------------------------------
Philips Electronics NV, NY Shares 1,400 109,725
- -----------------------------------------------------------------------------------------------------------------------------------
Samsung Electronics Ltd., Sponsored GDR (2) 2,400 24,444
- -----------------------------------------------------------------------------------------------------------------------------------
Samsung Electronics Ltd., Sponsored GDR (1)(2) 38 793
- -----------------------------------------------------------------------------------------------------------------------------------
Sawtek, Inc. (1) 2,200 74,800
- -----------------------------------------------------------------------------------------------------------------------------------
SCI Systems, Inc. (1) 2,400 105,600
- -----------------------------------------------------------------------------------------------------------------------------------
Sony Corp. 1,900 157,820
- -----------------------------------------------------------------------------------------------------------------------------------
TDK Corp. 1,000 82,980
- -----------------------------------------------------------------------------------------------------------------------------------
Vitesse Semiconductor Corp. (1) 3,650 158,319
- -----------------------------------------------------------------------------------------------------------------------------------
VTech Holdings Ltd. 50,000 97,678
- -----------------------------------------------------------------------------------------------------------------------------------
Waters Corp. (1) 5,900 259,600
---------------
2,134,076
- -----------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY - 2.5%
Boston Communications Group, Inc. (1) 2,000 29,500
- -----------------------------------------------------------------------------------------------------------------------------------
British Sky Broadcasting Group plc 9,500 67,386
- -----------------------------------------------------------------------------------------------------------------------------------
Comverse Technology, Inc. (1) 4,700 193,875
- -----------------------------------------------------------------------------------------------------------------------------------
DSP Communications, Inc. (1) 8,800 162,800
- -----------------------------------------------------------------------------------------------------------------------------------
Ericsson LM, B Shares 3,520 155,206
- -----------------------------------------------------------------------------------------------------------------------------------
Inter-Tel, Inc. 3,400 84,681
- -----------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., Cl. A (1) 309 8,111
- -----------------------------------------------------------------------------------------------------------------------------------
Nippon Telegraph & Telephone Corp. 14 118,733
- -----------------------------------------------------------------------------------------------------------------------------------
P-COM, Inc. (1) 6,800 136,850
- -----------------------------------------------------------------------------------------------------------------------------------
Pacific Gateway Exchange, Inc. (1) 3,400 130,050
- -----------------------------------------------------------------------------------------------------------------------------------
SK Telecommunications Co. Ltd., ADR 6,600 36,300
- -----------------------------------------------------------------------------------------------------------------------------------
Tekelec (1) 3,400 142,375
</TABLE>
21 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS-TECHNOLOGY (CONTINUED)
Telecom Italia Mobile SpA 30,000 $ 111,469
- -----------------------------------------------------------------------------------------------------------------------------------
Uniphase Corp. (1) 2,100 140,963
- -----------------------------------------------------------------------------------------------------------------------------------
Vodafone Group plc 28,000 153,889
---------------
1,672,188
- -----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 5.4%
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 1.6%
Duke Energy Corp. 4,449 214,664
- -----------------------------------------------------------------------------------------------------------------------------------
FPL Group, Inc. 5,800 299,788
- -----------------------------------------------------------------------------------------------------------------------------------
Illinova Corp. 4,500 100,125
- -----------------------------------------------------------------------------------------------------------------------------------
Kansas City Power & Light Co. 5,700 167,081
- -----------------------------------------------------------------------------------------------------------------------------------
Veba AG 2,000 112,715
- -----------------------------------------------------------------------------------------------------------------------------------
Western Resources, Inc. 4,600 171,350
---------------
1,065,723
- -----------------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES - 1.8%
Columbia Gas System, Inc. 4,900 354,025
- -----------------------------------------------------------------------------------------------------------------------------------
El Paso Natural Gas Co. 4,600 275,713
- -----------------------------------------------------------------------------------------------------------------------------------
MCN Energy Group, Inc. 4,400 152,350
- -----------------------------------------------------------------------------------------------------------------------------------
National Fuel Gas Co. 4,600 202,975
- -----------------------------------------------------------------------------------------------------------------------------------
Questar Corp. 4,200 162,225
- -----------------------------------------------------------------------------------------------------------------------------------
RWE AG, Preference 2,500 92,162
---------------
1,239,450
- -----------------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES - 2.0%
Ameritech Corp. 2,500 162,500
- -----------------------------------------------------------------------------------------------------------------------------------
Bell Atlantic Corp. 4,280 341,865
- -----------------------------------------------------------------------------------------------------------------------------------
Frontier Corp. 9,500 205,438
- -----------------------------------------------------------------------------------------------------------------------------------
Tel-Save Holdings, Inc. (1) 6,400 137,600
- -----------------------------------------------------------------------------------------------------------------------------------
Telefonica de Espana 3,500 95,236
- -----------------------------------------------------------------------------------------------------------------------------------
U S West Communications Group 11,200 445,900
---------------
1,388,539
---------------
Total Common Stocks (Cost $32,198,814) 39,061,625
SHARES
- -----------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS - 0.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Case Corp., $4.50 Cum. Cv., Series A, Non-Vtg. (Cost $114,800) 1,200 174,000
UNITS
- -----------------------------------------------------------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES - 0.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Australis Media Ltd. Wts., Exp. 5/00 (3) 150 --
- -----------------------------------------------------------------------------------------------------------------------------------
Dairy Mart Convenience Stores, Inc. Wts., Exp. 12/01 (3) 666 667
- -----------------------------------------------------------------------------------------------------------------------------------
Haw Par Brothers International Ltd. Wts., Exp. 7/01 3,000 992
- -----------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc. Wts., Exp. 6/00 (3) 100 7,000
- -----------------------------------------------------------------------------------------------------------------------------------
Mccaw International Ltd. Wts., Exp. 4/07 (3) 100 250
- -----------------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc.:
Conditional Wts., Exp. 12/97 (3) 500 313
Wts., Exp. 12/97 (3) 500 6,500
- -----------------------------------------------------------------------------------------------------------------------------------
Price Communications Corp. Wts., 8/07 516 5
</TABLE>
22 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
MARKET VALUE
UNITS SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
Signature Brands, Inc. Wts., Exp. 12/49 (3) 100 $ 1,500
---------------
Total Rights, Warrants and Certificates (Cost $10,124) 17,227
FACE
AMOUNT
- -----------------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES - 0.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Dayton Hudson Credit Card Master Trust, Asset Backed Certificates, Series
1997-1, Cl. A, 6.25%, 8/25/05 $ 125,000 124,945
- -----------------------------------------------------------------------------------------------------------------------------------
IROQUOIS Trust, Asset-Backed Amortizing Nts., Series 1997-2, Cl. A,
6.752%, 6/25/07 (3) 175,000 175,848
- -----------------------------------------------------------------------------------------------------------------------------------
Olympic Automobile Receivables Trust:
Receivables-Backed Nts., Series 1997-A, Cl. A5, 6.80%, 2/15/05 150,000 153,296
Series 1996-A, Cl. A4, 5.85%, 7/15/01 110,000 109,845
---------------
Total Asset-Backed Securities (Cost $558,742) 563,934
- -----------------------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS - 3.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Countrywide Funding Corp., Mtg. Pass-Through Certificates,
Series 1994-10, Cl. A3, 6%, 5/25/09 250,000 247,813
- -----------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation
Certificates:
5.50%, 6/1/98 7,400 7,331
Series 1711, Cl. EA, 7%, 3/15/24 200,000 204,750
Gtd. Multiclass Mtg. Participation Certificates:
6%, 3/1/09 178,221 176,820
Series 1574, Cl. PD, 5.55%, 3/15/13 100,000 99,750
Series 1843, Cl. VB, 7%, 4/15/03 65,000 66,909
Series 1849, Cl. VA, 6%, 12/15/10 179,450 177,432
Interest-Only Stripped Mtg.-Backed Security:
Series 1542, Cl. QC, 8.675%, 10/15/20 (4) 400,000 89,203
Series 1583, Cl. IC, 9.283%, 1/15/20 (4) 750,000 120,000
Series 1661, Cl. PK, 5.965%, 11/15/06 (4) 874,957 74,098
- -----------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6%, 12/1/03 165,377 164,571
6.50%, 4/1/26 140,587 138,466
7%, 4/1/00 76,854 77,591
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Trust 1993-181, Cl. C, 5.40%,
10/25/02 177,327 176,441
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Trust 1993-190, Cl. Z, 5.85%,
7/25/08 151,551 150,764
Medium-Term Nts., 6.56%, 11/13/01 100,000 100,250
Trust 1994-13, Cl. B, 6.50%, 2/25/09 150,000 149,859
</TABLE>
23 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MORTGAGE-BACKED OBLIGATIONS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
GE Capital Mortgage Services, Inc., Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Series 1994-7, Cl. A18, 6%, 2/25/09 $ 149,164 $ 139,841
- -----------------------------------------------------------------------------------------------------------------------------------
PNC Mortgage Securities Corp., Commercial Mtg. Pass-Through
Certificates, Series 1995-2, Cl. A3, 6.50%, 2/25/12 125,000 125,566
- -----------------------------------------------------------------------------------------------------------------------------------
Residential Accredit Loans, Inc., Mortgage Asset-Backed Pass-Through
Certificates, Series 1997-QS9, Cl. A2, 6.75%, 9/25/27 175,000 175,260
---------------
Total Mortgage-Backed Obligations (Cost $2,624,050) 2,662,715
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 6.6%
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 7.50%, 11/15/16 1,550,000 1,772,329
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
6.50%, 8/15/05 965,000 1,000,887
6.75%, 6/30/99 720,000 732,825
7.50%, 11/15/01 900,000 955,969
---------------
Total U.S. Government Obligations (Cost $4,308,612) 4,462,010
- -----------------------------------------------------------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES - 24.1%
- -----------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 3.0%
- -----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 1.4%
Burmah Castrol plc, 7% Gtd. Medium-Term Nts., 12/15/97 (2) 110,000 110,150
- -----------------------------------------------------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co., 8.50% Debs., 2/15/03 120,000 127,795
- -----------------------------------------------------------------------------------------------------------------------------------
Harris Chemical North America, Inc., 10.25% Gtd. Sr. Sec. Disc. Nts.,
7/15/01 100,000 104,500
- -----------------------------------------------------------------------------------------------------------------------------------
Laroche Industries, Inc., 9.50% Sr. Sub. Nts., 9/15/07 (2) 125,000 125,625
- -----------------------------------------------------------------------------------------------------------------------------------
Morton International, Inc., 9.25% Credit Sensitive Nts., 6/1/20 65,000 83,022
- -----------------------------------------------------------------------------------------------------------------------------------
NL Industries, Inc., 0%/13% Sr. Sec. Disc. Nts., 10/15/05 (5) 100,000 98,000
- -----------------------------------------------------------------------------------------------------------------------------------
PPG Industries, Inc., 9% Debs., 5/1/21 65,000 79,576
- -----------------------------------------------------------------------------------------------------------------------------------
Sterling Chemical Holdings, Inc., 0%/13.50% Sr. Disc. Nts., 8/15/08 (5) 125,000 91,250
- -----------------------------------------------------------------------------------------------------------------------------------
Texas Petrochemical Corp., 11.125% Sr. Sub. Nts., Series B, 7/1/06 125,000 138,125
---------------
958,043
- -----------------------------------------------------------------------------------------------------------------------------------
METALS - 1.0%
Alcan Aluminum Ltd., 9.625% Debs., 7/15/19 125,000 134,783
- -----------------------------------------------------------------------------------------------------------------------------------
Gulf States Steel, Inc. (Alabama), 13.50% First Mtg. Nts., Series B,
4/15/03 100,000 103,000
- -----------------------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 2/1/03 100,000 107,750
- -----------------------------------------------------------------------------------------------------------------------------------
NS Group, Inc., 13.50% Gtd. Sr. Sec. Nts., 7/15/03 75,000 86,062
- -----------------------------------------------------------------------------------------------------------------------------------
Republic Engineered Steels, Inc., 9.875% First Mtg. Nts., 12/15/01 50,000 48,500
- -----------------------------------------------------------------------------------------------------------------------------------
WCI Steel, Inc., 10% Sr. Nts., Series B, 12/1/04 100,000 104,750
- -----------------------------------------------------------------------------------------------------------------------------------
Weirton Steel Corp., 10.75% Sr. Nts., 6/1/05 100,000 105,750
---------------
690,595
- -----------------------------------------------------------------------------------------------------------------------------------
PAPER - 0.6%
Celulosa Arauco y Constitucion SA, 7.25% Debs., 6/11/98 (3) 110,000 110,275
- -----------------------------------------------------------------------------------------------------------------------------------
Gaylord Container Corp., 12.75% Sr. Sub. Disc. Debs., 5/15/05 100,000 109,000
- -----------------------------------------------------------------------------------------------------------------------------------
Malette, Inc., 12.25% Sr. Sec. Nts., 7/15/04 (3) 100,000 113,750
</TABLE>
24 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PAPER (CONTINUED)
Stone Container Corp., 9.875% Sr. Nts., 2/1/01 $ 50,000 $ 51,125
---------------
384,150
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 6.3%
- -----------------------------------------------------------------------------------------------------------------------------------
AUTOS & HOUSING - 0.6%
Black & Decker Corp., 6.625% Nts., 11/15/00 110,000 111,221
- -----------------------------------------------------------------------------------------------------------------------------------
First Industrial LP, 7.15% Bonds, 5/15/27 60,000 61,743
- -----------------------------------------------------------------------------------------------------------------------------------
IHF Holdings, Inc., 0%/15% Sr. Sub. Disc. Nts., Series B, 11/15/04 (5) 125,000 107,500
- -----------------------------------------------------------------------------------------------------------------------------------
Signature Brands, Inc., 13% Sr. Sub. Nts., 8/15/02 (3) 100,000 106,375
---------------
386,839
- -----------------------------------------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 2.4%
American Skiing Corp., 12% Sr. Sub. Nts., Series B, 7/15/06 (3) 125,000 139,375
- -----------------------------------------------------------------------------------------------------------------------------------
Bally Total Fitness Holdings Corp., 9.875% Sr. Sub. Nts., 10/15/07 (2) 125,000 123,125
- -----------------------------------------------------------------------------------------------------------------------------------
Blockbuster Entertainment Corp., 6.625% Sr. Nts., 2/15/98 110,000 110,147
- -----------------------------------------------------------------------------------------------------------------------------------
Casino America, Inc., 12.50% Sr. Nts., 8/1/03 125,000 133,750
- -----------------------------------------------------------------------------------------------------------------------------------
Casino Magic of Louisiana Corp., 13% First Mtg. Nts., 8/15/03 250,000 238,750
- -----------------------------------------------------------------------------------------------------------------------------------
GB Property Funding Corp., 10.875% First Mtg. Nts., 1/15/04 100,000 87,500
- -----------------------------------------------------------------------------------------------------------------------------------
Hilton Hotels Corp., 7.375% Nts., 6/1/02 50,000 51,327
- -----------------------------------------------------------------------------------------------------------------------------------
HMH Properties, Inc., 8.875% Sr. Nts., 7/15/07 (2) 125,000 128,125
- -----------------------------------------------------------------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 (2) 125,000 128,125
- -----------------------------------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority (Connecticut), 13.50% Sr. Sec. Nts.,
Series B, 11/15/02 50,000 64,250
- -----------------------------------------------------------------------------------------------------------------------------------
Players International, Inc., 10.875% Sr. Nts., 4/15/05 125,000 134,062
- -----------------------------------------------------------------------------------------------------------------------------------
Prime Hospitality Corp., 9.25% First Mtg. Bonds, 1/15/06 125,000 130,625
- -----------------------------------------------------------------------------------------------------------------------------------
Rio Hotel & Casino, Inc., 10.625% Sr. Sub. Nts., 7/15/05 100,000 108,500
- -----------------------------------------------------------------------------------------------------------------------------------
Santa Fe Hotel, Inc., 11% Gtd. First Mtg. Nts., 12/15/00 91,000 77,805
---------------
1,655,466
- -----------------------------------------------------------------------------------------------------------------------------------
MEDIA - 2.5%
Adelphia Communications Corp., 10.50% Sr. Nts., 7/15/04 (2) 125,000 130,625
- -----------------------------------------------------------------------------------------------------------------------------------
Allbritton Communications Co., 9.75% Sr. Sub. Debs., Series B,
11/30/07 100,000 100,500
- -----------------------------------------------------------------------------------------------------------------------------------
Australis Media Ltd., 1.75%/15.75% Gtd. Sr. Sec. Disc. Nts., 5/15/03 (6) 151,328 110,469
- -----------------------------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp., 9.875% Sr. Sub. Debs., 2/15/13 75,000 80,062
- -----------------------------------------------------------------------------------------------------------------------------------
Comcast Corp., 9.375% Sr. Sub. Debs., 5/15/05 100,000 107,000
- -----------------------------------------------------------------------------------------------------------------------------------
EchoStar Satellite Broadcasting Corp., 0%/13.125% Sr. Sec. Disc. Nts., 3/15/04 (5) 100,000 79,500
- -----------------------------------------------------------------------------------------------------------------------------------
Fox Kids Worldwide, Inc., 0%/10.25% Sr. Disc. Nts., 11/1/07 (2)(5) 125,000 72,187
- -----------------------------------------------------------------------------------------------------------------------------------
Fox/Liberty Networks LLC, 8.875% Sr. Nts., 8/15/07 (2) 50,000 50,000
- -----------------------------------------------------------------------------------------------------------------------------------
James Cable Partners LP, 10.75% Sr. Nts., 8/15/04 (2) 125,000 130,937
- -----------------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co., 8.625% Sr. Sub. Nts., 9/15/07 (2) 125,000 126,250
- -----------------------------------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., 8.875% Sr. Nts., 7/15/07 125,000 124,062
- -----------------------------------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., 10% Sr. Sub. Nts., 9/30/05 100,000 105,250
- -----------------------------------------------------------------------------------------------------------------------------------
TCI Satellite Entertainment, Inc., 10.875% Sr. Sub. Nts., 2/15/07 (2) 75,000 77,625
- -----------------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc., 7.45% Nts., 2/1/98 110,000 110,369
- -----------------------------------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 125,000 138,356
</TABLE>
25 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MEDIA (CONTINUED)
United International Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts.:
Series B, 14%, 11/15/99 (7) $ 100,000 $ 82,500
12.376%, 11/15/99 (7) 50,000 41,250
---------------
1,666,942
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL: GENERAL - 0.7%
Costco Cos., Inc., 7.125% Sr. Nts., 6/15/05 90,000 91,597
- -----------------------------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc., 10% Sr. Nts., 2/15/01 40,000 44,217
- -----------------------------------------------------------------------------------------------------------------------------------
Parisian, Inc., 9.875% Sr. Sub. Nts., 7/15/03 (3) 100,000 105,000
- -----------------------------------------------------------------------------------------------------------------------------------
Sears Roebuck & Co., 8.39% Medium-Term Nts., 3/23/99 220,000 227,044
---------------
467,858
- -----------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 0.1%
K Mart Corp., 7.75% Debs., 10/1/12 100,000 94,500
- -----------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 2.3%
- -----------------------------------------------------------------------------------------------------------------------------------
FOOD - 0.9%
AmeriServe Food Distribution, Inc., 8.875% Sr. Nts., 10/15/06 (2) 125,000 125,313
- -----------------------------------------------------------------------------------------------------------------------------------
Dairy Mart Convenience Stores, Inc., 10.25% Sr. Sub. Nts., 3/15/04 100,000 98,500
- -----------------------------------------------------------------------------------------------------------------------------------
Dole Food Distributing, Inc., 6.75% Nts., 7/15/00 120,000 121,531
- -----------------------------------------------------------------------------------------------------------------------------------
Great Atlantic & Pacific Tea Co., 9.125% Debs., 1/15/98 115,000 115,666
- -----------------------------------------------------------------------------------------------------------------------------------
Jitney-Jungle Stores of America, Inc., 12% Gtd. Sr. Nts., 3/1/06 150,000 168,750
---------------
629,760
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/DRUGS - 0.2%
Integrated Health Services, Inc., 9.50% Sr. Sub. Nts., 9/15/07 (2) 100,000 103,750
- -----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 0.8%
Columbia/HCA Healthcare Corp., 6.875% Nts., 7/15/01 120,000 120,121
- -----------------------------------------------------------------------------------------------------------------------------------
Dade International, Inc., 11.125% Sr. Sub. Nts., 5/1/06 125,000 139,688
- -----------------------------------------------------------------------------------------------------------------------------------
Mariner Health Group, Inc., 9.50% Sr. Sub. Nts., Series B, 4/1/06 (3) 125,000 130,000
- -----------------------------------------------------------------------------------------------------------------------------------
Paracelsus Healthcare Corp., 10% Sr. Sub. Unsec. Nts., 8/15/06 100,000 104,500
- -----------------------------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp., 8% Sr. Nts., 1/15/05 75,000 75,844
---------------
570,153
- -----------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD GOODS - 0.4%
Dyersburg Corp., 9.75% Sr. Sub. Nts., 9/1/07 (2) 100,000 102,500
- -----------------------------------------------------------------------------------------------------------------------------------
Kimberly-Clark Corp., 7.875% Debs., 2/1/23 65,000 70,064
- -----------------------------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 9.375% Sr. Nts., 4/1/01 100,000 103,750
---------------
276,314
- -----------------------------------------------------------------------------------------------------------------------------------
ENERGY - 1.5%
- -----------------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 0.9%
Coastal Corp.:
8.125% Sr. Nts., 9/15/02 65,000 69,663
8.75% Sr. Nts., 5/15/99 35,000 36,339
- -----------------------------------------------------------------------------------------------------------------------------------
Falcon Drilling Co., Inc., 9.75% Sr. Nts., Series B, 1/15/01 55,000 57,475
- -----------------------------------------------------------------------------------------------------------------------------------
Forcenergy, Inc., 8.50% Sr. Sub. Nts., 2/15/07 125,000 125,000
- -----------------------------------------------------------------------------------------------------------------------------------
Louisiana Land & Exploration Co., 7.65% Debs., 12/1/23 75,000 80,169
- -----------------------------------------------------------------------------------------------------------------------------------
Mesa Operating Co., 0%/11.625% Gtd. Sr. Sub. Disc. Nts., 7/1/06 (5) 150,000 120,750
- -----------------------------------------------------------------------------------------------------------------------------------
Transamerican Energy Corp., 11.50% Sr. Nts., 6/15/02 (2) 75,000 77,250
- -----------------------------------------------------------------------------------------------------------------------------------
Williams Holdings of Delaware, Inc., 6.25% Sr. Unsec. Debs., 2/1/06 75,000 73,336
---------------
639,982
</TABLE>
26 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OIL-INTEGRATED - 0.6%
Gulf Canada Resources Ltd.:
8.25% Sr. Nts., 3/15/17 $ 75,000 $ 81,332
9% Debs., 8/15/99 75,000 78,561
- -----------------------------------------------------------------------------------------------------------------------------------
HS Resources, Inc., 9.25% Sr. Sub. Nts., 11/15/06 125,000 128,750
- -----------------------------------------------------------------------------------------------------------------------------------
Petroleum Geo-Services ASA, 7.50% Nts., 3/31/07 75,000 78,915
- -----------------------------------------------------------------------------------------------------------------------------------
Standard Oil/British Petroleum Co. plc, 9% Debs., 6/1/19 65,000 67,824
---------------
435,382
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL - 3.7%
- -----------------------------------------------------------------------------------------------------------------------------------
BANKS - 0.8%
Chase Manhattan Corp. (New), 6.625% Sr. Nts., 1/15/98 35,000 35,059
- -----------------------------------------------------------------------------------------------------------------------------------
Citicorp, 5.625% Sr. Nts., 2/15/01 65,000 64,245
- -----------------------------------------------------------------------------------------------------------------------------------
First Fidelity Bancorp, 8.50% Sub. Capital Nts., 4/1/98 35,000 35,331
- -----------------------------------------------------------------------------------------------------------------------------------
First Union Corp., 6.75% Sr. Nts., 1/15/98 35,000 35,067
- -----------------------------------------------------------------------------------------------------------------------------------
Fleet Mtg./Norstar Group, Inc., 9.90% Sub. Nts., 6/15/01 110,000 122,706
- -----------------------------------------------------------------------------------------------------------------------------------
Integra Financial Corp., 6.50% Sub. Nts., 4/15/00 110,000 111,090
- -----------------------------------------------------------------------------------------------------------------------------------
Mellon Financial Bank Corp., 6.50% Gtd. Sr. Nts., 12/1/97 145,000 145,076
---------------
548,574
- -----------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 2.2%
American General Finance Corp., 8.50% Sr. Nts., 8/15/98 45,000 45,910
- -----------------------------------------------------------------------------------------------------------------------------------
American General Institutional Capital, 8.125% Bonds, Series B,
3/15/46 (2) 75,000 80,645
- -----------------------------------------------------------------------------------------------------------------------------------
Beneficial Corp., 9.125% Debs., 2/15/98 110,000 110,987
- -----------------------------------------------------------------------------------------------------------------------------------
Capital One Financial Corp., 6.83% Sr. Nts., 5/17/99 50,000 50,491
- -----------------------------------------------------------------------------------------------------------------------------------
Capital One Funding Corp., 7.25% Nts., 12/1/03 40,000 40,281
- -----------------------------------------------------------------------------------------------------------------------------------
Chelsea GCA Realty Partner, Inc., 7.75% Gtd. Unsec. Unsub.
Nts., 1/26/01 50,000 51,347
- -----------------------------------------------------------------------------------------------------------------------------------
Commercial Credit Co., 5.55% Unsec. Nts., 2/15/01 110,000 107,999
- -----------------------------------------------------------------------------------------------------------------------------------
Countrywide Home Loans, Inc.:
6.05% Gtd. Medium-Term Nts., Series D, 3/1/01 65,000 64,632
6.085% Gtd. Medium-Term Nts., Series B, 7/14/99 45,000 45,009
- -----------------------------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 6.25% Unsub. Nts., 2/26/98 110,000 110,468
- -----------------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp.:
5.625% Nts., 2/15/01 125,000 123,073
5.65% Medium-Term Nts., 12/15/97 200,000 199,975
- -----------------------------------------------------------------------------------------------------------------------------------
Golden West Financial Corp., 8.625% Sub. Nts., 8/30/98 35,000 35,771
- -----------------------------------------------------------------------------------------------------------------------------------
MCII Holdings (USA), Inc., 0%/15% Sec. Nts., 11/15/02 (5) 125,000 104,219
- -----------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 6.50% Nts., 4/1/01 100,000 101,186
- -----------------------------------------------------------------------------------------------------------------------------------
Olympic Financial Ltd., Units (each unit consists of $1,000 principal
amount of 11.50% sr. nts., 3/15/07 and one warrant to purchase 6.84 shares
of common stock) (8) 125,000 128,750
- -----------------------------------------------------------------------------------------------------------------------------------
Salomon, Inc., 8.69% Sr. Medium-Term Nts., Series D, 3/1/99 125,000 129,235
---------------
1,529,978
- -----------------------------------------------------------------------------------------------------------------------------------
INSURANCE - 0.7%
Cigna Corp., 7.90% Nts., 12/14/98 120,000 122,303
- -----------------------------------------------------------------------------------------------------------------------------------
Conseco Financing Trust III, 8.796% Bonds, 4/1/27 100,000 109,067
- -----------------------------------------------------------------------------------------------------------------------------------
SunAmerica, Inc., 9% Sr. Nts., 1/15/99 125,000 128,884
</TABLE>
27 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INSURANCE (CONTINUED)
Travelers Property Casualty Corp., 6.75% Nts., 4/15/01 $ 110,000 $ 111,873
---------------
472,127
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 2.7%
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL MATERIALS - 0.2%
American Standard, Inc., 10.875% Sr. Nts., 5/15/99 (3) 100,000 106,250
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 0.9%
Beverly Enterprises, Inc., 9% Gtd. Sr. Nts., 2/15/06 100,000 103,500
- -----------------------------------------------------------------------------------------------------------------------------------
Employee Solutions, Inc., 10% Sr. Nts., 10/15/04 (3) 125,000 123,125
- -----------------------------------------------------------------------------------------------------------------------------------
Shop Vac Corp., 10.625% Sr. Nts., 9/1/03 125,000 135,938
- -----------------------------------------------------------------------------------------------------------------------------------
Sun Co., Inc., 7.95% Debs., 12/15/01 125,000 132,264
- -----------------------------------------------------------------------------------------------------------------------------------
USI American Holdings, Inc., 7.25% Gtd. Sr. Nts., 12/1/06 80,000 78,526
---------------
573,353
- -----------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 1.0%
Day International Group, Inc., 11.125% Sr. Sub. Nts., Series B, 6/1/05 (3) 100,000 107,500
- -----------------------------------------------------------------------------------------------------------------------------------
Interlake Corp., 12.125% Sr. Sub. Debs., 3/1/02 100,000 104,250
- -----------------------------------------------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., 6/1/05 100,000 109,750
- -----------------------------------------------------------------------------------------------------------------------------------
Jordan Industries, Inc., 10.375% Sr. Nts., 8/1/07 125,000 126,250
- -----------------------------------------------------------------------------------------------------------------------------------
Mark IV Industries, Inc., 8.75% Sub. Nts., 4/1/03 (3) 30,000 31,425
- -----------------------------------------------------------------------------------------------------------------------------------
Specialty Equipment Co., 11.375% Sr. Sub. Nts., 12/1/03 100,000 108,750
- -----------------------------------------------------------------------------------------------------------------------------------
Titan Wheel International, Inc., 8.75% Sr. Sub. Nts., 4/1/07 100,000 104,000
---------------
691,925
- -----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 0.6%
CSX Corp., 7.05% Debs., 5/1/02 70,000 71,641
- -----------------------------------------------------------------------------------------------------------------------------------
Federal Express Corp., 6.25% Nts., 4/15/98 165,000 165,204
- -----------------------------------------------------------------------------------------------------------------------------------
Norfolk Southern Corp., 7.35% Nts., 5/15/07 75,000 78,755
- -----------------------------------------------------------------------------------------------------------------------------------
Union Pacific Corp., 7% Nts., 6/15/00 105,000 106,962
---------------
422,562
- -----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 3.6%
- -----------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 0.2%
GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98 100,000 102,000
- -----------------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE - 0.2%
Digital Equipment Corp., 7% Nts., 11/15/97 159,000 159,051
- -----------------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 0.5%
DecisionOne Corp., 9.75% Sr. Sub. Nts., 8/1/07 75,000 77,625
- -----------------------------------------------------------------------------------------------------------------------------------
DII Group, Inc., 8.50% Sr. Sub. Nts., 9/15/07 (2) 125,000 123,906
- -----------------------------------------------------------------------------------------------------------------------------------
Unisys Corp., 12% Sr. Nts., Series B, 4/15/03 100,000 112,500
---------------
314,031
- -----------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY - 2.7%
American Communications Services, Inc., 0%/13% Sr. Disc.
Nts., 11/1/05 (5) 125,000 88,125
- -----------------------------------------------------------------------------------------------------------------------------------
Brooks Fiber Properties, Inc., 0%/11.875% Sr. Disc. Nts., 11/1/06 (5) 125,000 98,594
- -----------------------------------------------------------------------------------------------------------------------------------
Centennial Cellular Corp., 10.125% Sr. Nts., 5/15/05 75,000 79,875
- -----------------------------------------------------------------------------------------------------------------------------------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc. Debs., 11/15/07 (5) 125,000 96,875
- -----------------------------------------------------------------------------------------------------------------------------------
Diamond Cable Communications plc, 0%/10.75% Sr. Disc. Nts., 2/15/07 (5) 125,000 80,625
- -----------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 0%/11.25% Sr. Disc. Nts., 7/15/07 (5) 125,000 83,125
- -----------------------------------------------------------------------------------------------------------------------------------
International CableTel, Inc., 0%/11.50% Sr. Deferred Coupon Nts., Series
B, 2/1/06 (5) 250,000 183,750
</TABLE>
28 Oppenheimer LifeSpan Funds
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS-TECHNOLOGY (CONTINUED)
IXC Communications, Inc., 12.50% Sr. Nts., Series B, 10/1/05 $ 125,000 $ 142,500
- -----------------------------------------------------------------------------------------------------------------------------------
McCaw International Ltd., 0%/13% Sr. Disc. Nts., 4/15/07 (5) 100,000 61,500
- -----------------------------------------------------------------------------------------------------------------------------------
McLeodUSA, Inc., 0%/10.50% Sr. Disc. Nts., 3/1/07 (5) 100,000 69,500
- -----------------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc., 0%/14% Sr. Disc. Nts., Series B,
6/1/06 (5) 125,000 83,750
- -----------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 0%/9.75% Sr. Disc. Nts., 8/15/04 (5) 200,000 169,500
- -----------------------------------------------------------------------------------------------------------------------------------
Price Communications Cellular Holdings, Inc., 0%/13.50% Sr. Disc. Nts.,
8/1/07 (3)(5) 150,000 85,500
- -----------------------------------------------------------------------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum Finance Corp., 11% Sr. Nts.,
8/15/06 100,000 110,750
- -----------------------------------------------------------------------------------------------------------------------------------
Teleport Communications Group, Inc.:
0%/11.125% Sr. Disc. Nts., 7/1/07 (5) 50,000 39,438
9.875% Sr. Nts., 7/1/06 50,000 54,875
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. West Capital Funding, Inc., 6.85% Gtd. Nts., 1/15/02 175,000 177,865
- -----------------------------------------------------------------------------------------------------------------------------------
Western Wireless Corp., 10.50% Sr. Sub. Nts., 2/1/07 100,000 107,750
---------------
1,813,897
- -----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 1.0%
- -----------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 0.4%
Consumers Energy Co., 8.75% First Mtg. Nts., 2/15/98 110,000 110,719
- -----------------------------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 7.25% First Mtg. Nts., Series A, 2/1/99 (3) 50,000 50,500
- -----------------------------------------------------------------------------------------------------------------------------------
Panda Global Energy Co., 12.50% Sr. Nts., 4/15/04 (3) 125,000 120,625
---------------
281,844
- -----------------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES - 0.5%
AES Corp., 8.50% Sr. Sub. Nts., 11/1/07 (2) 50,000 49,375
- -----------------------------------------------------------------------------------------------------------------------------------
Northern Illinois Gas Co., 6.45% First Mtg. Bonds, 8/1/01 180,000 182,249
- -----------------------------------------------------------------------------------------------------------------------------------
Tennessee Gas Pipeline Co., 7.50% Bonds, 4/1/17 75,000 78,922
---------------
310,546
- -----------------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES - 0.1%
GTE Corp., 8.85% Debs., 3/1/98 45,000 45,396
---------------
Total Non-Convertible Corporate Bonds and Notes (Cost $15,857,137) 16,331,268
- -----------------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE CORPORATE BONDS AND NOTES - 0.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Barnett Banks, Inc., 8.50% Sub. Exchangeable Nts., 3/1/99 40,000 41,265
- -----------------------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc., 12% Cv. Sr. Sub. Nts., 2/15/01 (3) 100,000 83,500
---------------
Total Convertible Corporate Bonds and Notes (Cost $133,413) 124,765
- -----------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 5.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Zion First National Bank, 5.68%,
dated 10/31/97, to be repurchased at $3,396,607 on 11/3/97,
collateralized by U.S. Treasury Nts., 7.25%, 8/15/04, with a
value of $3,468,840 (Cost $3,395,000) 3,395,000 3,395,000
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $59,200,693) 98.6% 66,792,544
- -----------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.4 914,212
--------------- ---------------
NET ASSETS 100.0% $ 67,706,756
--------------- ---------------
--------------- ---------------
</TABLE>
29 Oppenheimer LifeSpan Funds
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Balanced Fund
- --------------------------------------------------------------------------------
1. Non-income producing security.
2. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities
have been determined to be liquid under guidelines established by the Board
of Directors. These securities amount to $1,982,816 or 2.93% of the Fund's
net assets as of October 31, 1997.
3. Identifies issues considered to be illiquid or restricted - See Note 5 of
Notes to Financial Statements.
4. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income
securities increase in price when interest rates decline. The principal
amount of the underlying pool represents the notional amount on which current
interest is calculated. The price of these securities is typically more
sensitive to changes in prepayment rates than traditional mortgage-backed
securities (for example, GNMA pass-throughs). Interest rates disclosed
represent current yields based upon the current cost basis and estimated
timing and amount of future cash flows.
5. Denotes a step bond: a zero coupon bond that converts to a fixed or
variable interest rate at a designated future date.
6. Represents the current interest rate for an increasing rate security.
7. For zero coupon bonds, the interest rate shown is the effective yield on
the date of purchase.
8. Units may be comprised of several components, such as debt and equity
and/or warrants to purchase equity at some point in the future. For units
which represent debt securities, face amount disclosed represents total
underlying principal.
See accompanying Notes to Financial Statements.
30 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS OCTOBER 31, 1997
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS - 72.8%
- ------------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 3.5%
- ------------------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 1.3%
Ciba Specialty Chemicals AG (1) 1,200 $ 118,162
- ------------------------------------------------------------------------------------------------------------------------------------
Dexter Corp. 5,500 215,875
- ------------------------------------------------------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co. 2,300 130,812
- ------------------------------------------------------------------------------------------------------------------------------------
Ethyl Corp. 18,000 155,250
- ------------------------------------------------------------------------------------------------------------------------------------
Fuji Photo Film Co. 2,000 72,504
- ------------------------------------------------------------------------------------------------------------------------------------
IMC Global, Inc. 3,149 106,082
------------
798,685
- ------------------------------------------------------------------------------------------------------------------------------------
METALS - 1.1%
Allegheny Teledyne, Inc. 4,100 107,881
- ------------------------------------------------------------------------------------------------------------------------------------
Carpenter Technology Corp. 4,100 198,337
- ------------------------------------------------------------------------------------------------------------------------------------
Oregon Steel Mills, Inc. 8,800 185,350
- ------------------------------------------------------------------------------------------------------------------------------------
UNR Industries, Inc. 27,300 139,912
------------
631,480
- ------------------------------------------------------------------------------------------------------------------------------------
PAPER - 1.1%
Fletcher Challenge Forest 85,000 82,180
- ------------------------------------------------------------------------------------------------------------------------------------
Fort James Corp. 5,225 207,367
- ------------------------------------------------------------------------------------------------------------------------------------
International Paper Co. 3,100 139,500
- ------------------------------------------------------------------------------------------------------------------------------------
Kimberly-Clark de Mexico, SA 17,000 73,931
- ------------------------------------------------------------------------------------------------------------------------------------
Unisource Worldwide, Inc. 9,300 151,706
------------
654,684
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 9.0%
- ------------------------------------------------------------------------------------------------------------------------------------
AUTOS & HOUSING - 1.5%
Bridgestone Corp. 4,000 86,472
- ------------------------------------------------------------------------------------------------------------------------------------
Cornerstone Properties, Inc. 11,400 210,187
- ------------------------------------------------------------------------------------------------------------------------------------
Goodyear Tire & Rubber Co. 3,000 187,875
- ------------------------------------------------------------------------------------------------------------------------------------
Groupe SEB SA 900 102,630
- ------------------------------------------------------------------------------------------------------------------------------------
Lear Corp. (1) 1,500 72,094
- ------------------------------------------------------------------------------------------------------------------------------------
Rinnai Corp. 5,000 81,483
- ------------------------------------------------------------------------------------------------------------------------------------
Tower Realty Trust, Inc. (1) 6,800 171,700
------------
912,441
- ------------------------------------------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 2.2%
Alaska Air Group, Inc. (1) 2,300 76,762
- ------------------------------------------------------------------------------------------------------------------------------------
America West Holdings Corp., Cl. B (1) 4,500 66,656
- ------------------------------------------------------------------------------------------------------------------------------------
AMR Corp. (1) 1,900 221,231
- ------------------------------------------------------------------------------------------------------------------------------------
CDL Hotels International Ltd. 330,000 94,993
- ------------------------------------------------------------------------------------------------------------------------------------
Granada Group plc 10,000 137,841
- ------------------------------------------------------------------------------------------------------------------------------------
Landry's Seafood Restaurants, Inc. (1) 2,800 78,400
- ------------------------------------------------------------------------------------------------------------------------------------
Piccadilly Cafeterias, Inc. 8,700 129,412
- ------------------------------------------------------------------------------------------------------------------------------------
Regal Cinemas, Inc. (1) 6,775 155,825
- ------------------------------------------------------------------------------------------------------------------------------------
UAL Corp. (1) 1,000 87,625
- ------------------------------------------------------------------------------------------------------------------------------------
Vistana, Inc. (1) 11,600 265,350
------------
1,314,095
- ------------------------------------------------------------------------------------------------------------------------------------
MEDIA - 1.1%
Applied Graphics Technologies, Inc. (1) 4,800 256,800
</TABLE>
31 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MEDIA (CONTINUED)
Benpres Holdings Corp., Sponsored GDR (1) 5,000 $ 23,125
- ------------------------------------------------------------------------------------------------------------------------------------
Reed International plc 10,000 98,853
- ------------------------------------------------------------------------------------------------------------------------------------
Reuters Holdings plc 9,000 97,571
- ------------------------------------------------------------------------------------------------------------------------------------
Television Broadcasts Ltd. 28,000 77,883
- ------------------------------------------------------------------------------------------------------------------------------------
Wolters Kluwer NV 1,000 122,841
------------
677,073
- ------------------------------------------------------------------------------------------------------------------------------------
RETAIL: GENERAL - 2.0%
adidas AG 1,000 145,833
- ------------------------------------------------------------------------------------------------------------------------------------
Dayton Hudson Corp. 1,600 100,500
- ------------------------------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc. (1) 1,600 70,400
- ------------------------------------------------------------------------------------------------------------------------------------
Marks & Spencer plc 15,000 152,179
- ------------------------------------------------------------------------------------------------------------------------------------
North Face, Inc. (The) (1) 5,900 139,387
- ------------------------------------------------------------------------------------------------------------------------------------
Penney (J.C.) Co., Inc. 6,400 375,600
- ------------------------------------------------------------------------------------------------------------------------------------
Wolverine World Wide, Inc. 9,100 200,200
------------
1,184,099
- ------------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 2.2%
Argos plc 11,400 120,722
- ------------------------------------------------------------------------------------------------------------------------------------
Brown Group, Inc. 9,300 140,662
- ------------------------------------------------------------------------------------------------------------------------------------
Brylane, Inc. (1) 500 21,719
- ------------------------------------------------------------------------------------------------------------------------------------
Dickson Concepts International Ltd. 42,000 90,472
- ------------------------------------------------------------------------------------------------------------------------------------
Eagle Hardware & Garden, Inc. (1) 8,100 137,700
- ------------------------------------------------------------------------------------------------------------------------------------
Guitar Center, Inc. (1) 5,000 108,750
- ------------------------------------------------------------------------------------------------------------------------------------
Hennes & Mauritz AB, B Shares 2,550 104,430
- ------------------------------------------------------------------------------------------------------------------------------------
Koninklijke Ahold NV 3,600 92,192
- ------------------------------------------------------------------------------------------------------------------------------------
New England Business Service, Inc. 6,600 192,225
- ------------------------------------------------------------------------------------------------------------------------------------
Payless ShoeSource, Inc. (1) 1,500 83,625
- ------------------------------------------------------------------------------------------------------------------------------------
Shimamura Co. Ltd. 2,000 54,045
- ------------------------------------------------------------------------------------------------------------------------------------
Stage Stores, Inc. (1) 4,900 178,850
------------
1,325,392
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 9.8%
- ------------------------------------------------------------------------------------------------------------------------------------
BEVERAGES - 0.5%
Embotelladora Andina SA, Series A, Sponsored ADR 3,400 81,600
- ------------------------------------------------------------------------------------------------------------------------------------
Embotelladora Andina SA, Series B, Sponsored ADR 3,400 69,700
- ------------------------------------------------------------------------------------------------------------------------------------
Quilmes Industrial Quinsa SA, Sponsored ADR 4,000 49,500
- ------------------------------------------------------------------------------------------------------------------------------------
Scottish & Newcastle plc 7,000 78,588
------------
279,388
- ------------------------------------------------------------------------------------------------------------------------------------
FOOD - 2.0%
American Stores Co. 5,700 146,419
- ------------------------------------------------------------------------------------------------------------------------------------
Carrefour Supermarche SA 225 117,192
- ------------------------------------------------------------------------------------------------------------------------------------
Colruyt SA 250 134,126
- ------------------------------------------------------------------------------------------------------------------------------------
Jeronimo Martins & Filho, SA 1,600 104,249
- ------------------------------------------------------------------------------------------------------------------------------------
JP Foodservice, Inc. (1) 4,600 146,912
- ------------------------------------------------------------------------------------------------------------------------------------
Kroger Co. (1) 5,200 169,650
- ------------------------------------------------------------------------------------------------------------------------------------
Morningstar Group, Inc. (1) 4,000 171,000
- ------------------------------------------------------------------------------------------------------------------------------------
Safeway, Inc. (1) 2,200 127,875
- ------------------------------------------------------------------------------------------------------------------------------------
William Morrison Supermarkets plc 31,000 102,408
------------
1,219,831
</TABLE>
32 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
HEALTHCARE/DRUGS - 3.0%
Dura Pharmaceuticals, Inc. (1) 4,100 $ 198,337
- ------------------------------------------------------------------------------------------------------------------------------------
Gedeon Richter (2) 1,000 92,066
- ------------------------------------------------------------------------------------------------------------------------------------
Glaxo Wellcome plc, Sponsored ADR 4,800 205,500
- ------------------------------------------------------------------------------------------------------------------------------------
Incyte Pharmaceuticals, Inc. (1) 1,400 112,700
- ------------------------------------------------------------------------------------------------------------------------------------
Medicis Pharmaceutical Corp., Cl. A (1) 5,000 240,625
- ------------------------------------------------------------------------------------------------------------------------------------
Novartis AG 105 164,901
- ------------------------------------------------------------------------------------------------------------------------------------
Novo-Nordisk AS, B Shares 1,200 130,059
- ------------------------------------------------------------------------------------------------------------------------------------
Roche Holding AG 15 132,180
- ------------------------------------------------------------------------------------------------------------------------------------
Schering AG 1,075 105,554
- ------------------------------------------------------------------------------------------------------------------------------------
SKW Trostberg AG 3,750 129,637
- ------------------------------------------------------------------------------------------------------------------------------------
Takeda Chemical Industries Ltd. 5,000 136,360
- ------------------------------------------------------------------------------------------------------------------------------------
Zeneca Group plc 4,250 134,056
------------
1,781,975
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 3.4%
Acuson Corp. (1) 6,700 125,625
- ------------------------------------------------------------------------------------------------------------------------------------
Alternative Living Services, Inc. (1) 4,500 110,250
- ------------------------------------------------------------------------------------------------------------------------------------
Concentra Managed Care, Inc. (1) 1,200 39,150
- ------------------------------------------------------------------------------------------------------------------------------------
FPA Medical Management, Inc. (1) 5,600 135,100
- ------------------------------------------------------------------------------------------------------------------------------------
Healthcare Financial Partners, Inc. (1) 800 27,600
- ------------------------------------------------------------------------------------------------------------------------------------
Luxottica Group SpA, Sponsored ADR 2,000 127,750
- ------------------------------------------------------------------------------------------------------------------------------------
National Surgery Centers, Inc. (1) 10,000 250,000
- ------------------------------------------------------------------------------------------------------------------------------------
Pediatrix Medical Group, Inc. (1) 5,500 232,375
- ------------------------------------------------------------------------------------------------------------------------------------
Renal Treatment Centers, Inc. (1) 3,900 129,431
- ------------------------------------------------------------------------------------------------------------------------------------
Rural/Metro Corp. (1) 7,100 246,725
- ------------------------------------------------------------------------------------------------------------------------------------
SmithKline Beecham plc 17,724 167,926
- ------------------------------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp. (1) 5,210 159,231
- ------------------------------------------------------------------------------------------------------------------------------------
Total Renal Care Holdings, Inc. (1) 7,166 220,802
- ------------------------------------------------------------------------------------------------------------------------------------
WellPoint Health Networks, Inc. (1) 2,000 91,500
------------
2,063,465
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD GOODS - 0.9%
Blyth Industries, Inc. (1) 4,700 116,912
- ------------------------------------------------------------------------------------------------------------------------------------
L'OREAL 375 132,635
- ------------------------------------------------------------------------------------------------------------------------------------
Premark International, Inc. 5,800 156,962
- ------------------------------------------------------------------------------------------------------------------------------------
Reckitt & Colman plc 10,000 153,353
------------
559,862
- ------------------------------------------------------------------------------------------------------------------------------------
ENERGY - 6.5%
- ------------------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 1.7%
Diamond Offshore Drilling, Inc. 4,400 273,900
- ------------------------------------------------------------------------------------------------------------------------------------
Global Marine, Inc. (1) 4,800 149,400
- ------------------------------------------------------------------------------------------------------------------------------------
Oryx Energy Co. (1) 4,400 121,275
- ------------------------------------------------------------------------------------------------------------------------------------
Pool Energy Services Co. (1) 3,100 105,206
- ------------------------------------------------------------------------------------------------------------------------------------
Tidewater, Inc. 3,200 210,200
- ------------------------------------------------------------------------------------------------------------------------------------
Varco International, Inc. (1) 2,600 158,437
------------
1,018,418
- ------------------------------------------------------------------------------------------------------------------------------------
OIL-INTEGRATED - 4.8%
Amoco Corp. 3,600 330,075
- ------------------------------------------------------------------------------------------------------------------------------------
Atlantic Richfield Co. 3,400 279,862
</TABLE>
33 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OIL-INTEGRATED (CONTINUED)
Chevron Corp. 6,300 $ 522,506
- ------------------------------------------------------------------------------------------------------------------------------------
Cliffs Drilling Co. (1) 1,300 94,494
- ------------------------------------------------------------------------------------------------------------------------------------
Exxon Corp. 6,000 368,625
- ------------------------------------------------------------------------------------------------------------------------------------
Mobil Corp. 5,200 378,625
- ------------------------------------------------------------------------------------------------------------------------------------
Occidental Petroleum Corp. 10,800 301,050
- ------------------------------------------------------------------------------------------------------------------------------------
Patterson Energy, Inc. (1) 2,800 156,800
- ------------------------------------------------------------------------------------------------------------------------------------
Quinenco SA, ADR (1) 3,000 43,875
- ------------------------------------------------------------------------------------------------------------------------------------
Shell Transport & Trading Co. plc 16,000 113,359
- ------------------------------------------------------------------------------------------------------------------------------------
Total SA, B Shares 1,641 181,734
- ------------------------------------------------------------------------------------------------------------------------------------
UTI Energy Corp. (1) 2,500 111,562
------------
2,882,567
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL - 11.6%
- ------------------------------------------------------------------------------------------------------------------------------------
BANKS - 4.8%
Banco Popular Espanol SA 1,720 101,267
- ------------------------------------------------------------------------------------------------------------------------------------
Bank of Tokyo-Mitsubishi Ltd. 6,000 78,324
- ------------------------------------------------------------------------------------------------------------------------------------
BankAmerica Corp. 5,400 386,100
- ------------------------------------------------------------------------------------------------------------------------------------
BankBoston Corp. 5,400 437,737
- ------------------------------------------------------------------------------------------------------------------------------------
Bayerische Vereinsbank AG 2,000 116,085
- ------------------------------------------------------------------------------------------------------------------------------------
Credit Suisse Group 750 105,943
- ------------------------------------------------------------------------------------------------------------------------------------
Credito Italiano (1) 48,000 128,225
- ------------------------------------------------------------------------------------------------------------------------------------
First Union Corp. 8,400 412,125
- ------------------------------------------------------------------------------------------------------------------------------------
Halifax plc (1) 10,000 113,442
- ------------------------------------------------------------------------------------------------------------------------------------
Lloyds TSB Group plc 19,000 237,365
- ------------------------------------------------------------------------------------------------------------------------------------
Mitsubishi Trust & Banking Corp. 8,000 98,445
- ------------------------------------------------------------------------------------------------------------------------------------
NationsBank Corp. 4,700 281,412
- ------------------------------------------------------------------------------------------------------------------------------------
Wells Fargo & Co. 1,300 378,787
------------
2,875,257
- ------------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 4.6%
Amresco, Inc. (1) 8,400 263,550
- ------------------------------------------------------------------------------------------------------------------------------------
Camden Property Trust 6,100 183,000
- ------------------------------------------------------------------------------------------------------------------------------------
Capstone Capital Corp. 7,500 177,187
- ------------------------------------------------------------------------------------------------------------------------------------
Cattles plc 13,000 81,531
- ------------------------------------------------------------------------------------------------------------------------------------
Crescent Real Estate Equities, Inc. 10,100 363,600
- ------------------------------------------------------------------------------------------------------------------------------------
Haw Par Brothers International Ltd. 46,000 74,570
- ------------------------------------------------------------------------------------------------------------------------------------
Health & Retirement Properties Trust 8,200 153,750
- ------------------------------------------------------------------------------------------------------------------------------------
ING Groep NV 2,752 115,569
- ------------------------------------------------------------------------------------------------------------------------------------
Lend Lease Corp. Ltd. 4,000 81,652
- ------------------------------------------------------------------------------------------------------------------------------------
Meditrust Corp., Paired Stock 4,100 175,275
- ------------------------------------------------------------------------------------------------------------------------------------
Money Store, Inc. (The) 2,000 56,750
- ------------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co. 3,500 171,500
- ------------------------------------------------------------------------------------------------------------------------------------
Nichiei Co. Ltd. 1,000 109,753
- ------------------------------------------------------------------------------------------------------------------------------------
Perlis Plantations Berhad 32,500 59,179
- ------------------------------------------------------------------------------------------------------------------------------------
Salomon, Inc. 1,900 147,606
- ------------------------------------------------------------------------------------------------------------------------------------
Sirrom Capital Corp. 2,800 141,050
- ------------------------------------------------------------------------------------------------------------------------------------
Southcorp Holdings Ltd. 16,000 53,500
- ------------------------------------------------------------------------------------------------------------------------------------
Swire Pacific Ltd., Cl. B 100,000 106,087
</TABLE>
34 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DIVERSIFIED FINANCIAL (CONTINUED)
Travelers Group, Inc. 2,900 $ 203,000
------------
2,718,109
- ------------------------------------------------------------------------------------------------------------------------------------
INSURANCE - 2.2%
AFLAC, Inc. 1,400 71,225
- ------------------------------------------------------------------------------------------------------------------------------------
Allstate Corp. 1,300 107,819
- ------------------------------------------------------------------------------------------------------------------------------------
Chubb Corp. 2,700 178,875
- ------------------------------------------------------------------------------------------------------------------------------------
Conseco, Inc. 5,700 248,662
- ------------------------------------------------------------------------------------------------------------------------------------
Equitable Cos., Inc. 4,900 201,819
- ------------------------------------------------------------------------------------------------------------------------------------
HSB Group, Inc. 3,000 156,562
- ------------------------------------------------------------------------------------------------------------------------------------
Pre-Paid Legal Services, Inc. (1) 1,800 54,450
- ------------------------------------------------------------------------------------------------------------------------------------
Torchmark Corp. 4,200 167,475
- ------------------------------------------------------------------------------------------------------------------------------------
Travelers Property Casualty Corp., Cl. A 3,900 140,888
------------
1,327,775
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 10.2%
- ------------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.7%
ABB AG 70 91,486
- ------------------------------------------------------------------------------------------------------------------------------------
Johnson Electric Holdings Ltd. 42,000 114,652
- ------------------------------------------------------------------------------------------------------------------------------------
Power Technologies, Inc. (1) 3,900 120,413
- ------------------------------------------------------------------------------------------------------------------------------------
Siebe plc 5,000 96,003
------------
422,554
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 4.2%
Adecco SA 300 95,604
- ------------------------------------------------------------------------------------------------------------------------------------
American Disposal Services, Inc. (1) 5,700 200,925
- ------------------------------------------------------------------------------------------------------------------------------------
Caribiner International, Inc. (1) 3,200 143,400
- ------------------------------------------------------------------------------------------------------------------------------------
Central Parking Corp. 1,800 98,325
- ------------------------------------------------------------------------------------------------------------------------------------
Computer Horizons Corp. (1) 7,500 227,813
- ------------------------------------------------------------------------------------------------------------------------------------
Computer Task Group, Inc. 9,000 254,250
- ------------------------------------------------------------------------------------------------------------------------------------
Corestaff, Inc. (1) 6,800 168,300
- ------------------------------------------------------------------------------------------------------------------------------------
Eastern Environmental Services, Inc. (1) 7,300 186,150
- ------------------------------------------------------------------------------------------------------------------------------------
Guilbert SA 625 81,437
- ------------------------------------------------------------------------------------------------------------------------------------
Hays plc 14,000 164,336
- ------------------------------------------------------------------------------------------------------------------------------------
Helix Technology Corp. 2,800 126,000
- ------------------------------------------------------------------------------------------------------------------------------------
Kurita Water Industries Ltd. 6,000 105,762
- ------------------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co. (1) 4,100 138,888
- ------------------------------------------------------------------------------------------------------------------------------------
SpeedFam International, Inc. (1) 1,500 55,688
- ------------------------------------------------------------------------------------------------------------------------------------
Tetra Tech, Inc. (1) 6,425 167,853
- ------------------------------------------------------------------------------------------------------------------------------------
Transaction Systems Architects, Inc., Cl. A (1) 5,400 211,275
- ------------------------------------------------------------------------------------------------------------------------------------
Viad Corp. 5,000 91,250
------------
2,517,256
- ------------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 4.4%
Aeroquip-Vickers, Inc. 2,500 130,156
- ------------------------------------------------------------------------------------------------------------------------------------
AGCO Corp. 3,900 113,100
- ------------------------------------------------------------------------------------------------------------------------------------
Canon Sales Co., Inc. 300 5,463
- ------------------------------------------------------------------------------------------------------------------------------------
Case Corp. 3,900 233,269
- ------------------------------------------------------------------------------------------------------------------------------------
Deere & Co. 4,400 231,550
- ------------------------------------------------------------------------------------------------------------------------------------
Halter Marine Group, Inc. (1) 2,100 109,856
- ------------------------------------------------------------------------------------------------------------------------------------
Ingersoll-Rand Co. 4,200 163,538
</TABLE>
35 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MANUFACTURING (CONTINUED)
Mannesmann AG 350 $ 148,447
- ------------------------------------------------------------------------------------------------------------------------------------
NSK Ltd. 8,000 33,259
- ------------------------------------------------------------------------------------------------------------------------------------
PACCAR, Inc. 10,700 482,169
- ------------------------------------------------------------------------------------------------------------------------------------
Parker-Hannifin Corp. 2,900 121,256
- ------------------------------------------------------------------------------------------------------------------------------------
Ricoh Co. Ltd. 10,000 128,877
- ------------------------------------------------------------------------------------------------------------------------------------
SMC Corp. 500 43,236
- ------------------------------------------------------------------------------------------------------------------------------------
Smiths Industries plc 6,000 86,528
- ------------------------------------------------------------------------------------------------------------------------------------
Societe BIC SA 1,600 109,251
- ------------------------------------------------------------------------------------------------------------------------------------
Textron, Inc. 4,600 265,938
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Industries, Inc. 9,300 249,938
------------
2,655,831
- ------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 0.9%
Brambles Industries Ltd. 4,600 88,161
- ------------------------------------------------------------------------------------------------------------------------------------
Burlington Northern Santa Fe Corp. 1,300 123,500
- ------------------------------------------------------------------------------------------------------------------------------------
GATX Corp. 4,100 264,706
- ------------------------------------------------------------------------------------------------------------------------------------
Gulfmark Offshore, Inc. (1) 500 18,188
- ------------------------------------------------------------------------------------------------------------------------------------
MotivePower Industries, Inc. (1) 2,400 63,900
------------
558,455
- ------------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 15.1%
- ------------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 1.6%
General Dynamics Corp. 4,100 332,869
- ------------------------------------------------------------------------------------------------------------------------------------
Lockheed Martin Corp. 2,700 256,669
- ------------------------------------------------------------------------------------------------------------------------------------
REMEC, Inc. (1) 3,100 78,663
- ------------------------------------------------------------------------------------------------------------------------------------
TRW, Inc. 5,000 286,250
------------
954,451
- ------------------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE - 2.6%
Apex PC Solutions, Inc. (1) 3,400 87,550
- ------------------------------------------------------------------------------------------------------------------------------------
CFM Technologies, Inc. (1) 2,000 36,500
- ------------------------------------------------------------------------------------------------------------------------------------
CHS Electronics, Inc. (1) 1,200 29,325
- ------------------------------------------------------------------------------------------------------------------------------------
Compaq Computer Corp. (1) 3,100 197,625
- ------------------------------------------------------------------------------------------------------------------------------------
Digital Lightwave, Inc. (1) 1,900 34,675
- ------------------------------------------------------------------------------------------------------------------------------------
Insight Enterprises, Inc. (1) 5,400 211,275
- ------------------------------------------------------------------------------------------------------------------------------------
International Business Machines Corp. 1,900 186,319
- ------------------------------------------------------------------------------------------------------------------------------------
Level One Communications, Inc. (1) 1,100 49,500
- ------------------------------------------------------------------------------------------------------------------------------------
Lexmark International Group, Inc., Cl. A (1) 900 27,506
- ------------------------------------------------------------------------------------------------------------------------------------
Network Appliance, Inc. (1) 3,600 180,900
- ------------------------------------------------------------------------------------------------------------------------------------
Quantum Corp. (1) 4,400 139,150
- ------------------------------------------------------------------------------------------------------------------------------------
Semtech Corp. (1) 1,700 79,156
- ------------------------------------------------------------------------------------------------------------------------------------
Storage Technology Corp. (New) (1) 4,800 281,700
------------
1,541,181
- ------------------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 3.6%
BEA Systems, Inc. (1) 8,600 116,100
- ------------------------------------------------------------------------------------------------------------------------------------
Electronic Data Systems Corp. 1,400 54,163
- ------------------------------------------------------------------------------------------------------------------------------------
HNC Software, Inc. (1) 3,000 111,000
- ------------------------------------------------------------------------------------------------------------------------------------
JDA Software Group, Inc. (1) 3,900 121,875
- ------------------------------------------------------------------------------------------------------------------------------------
Pegasystems, Inc. (1) 6,000 109,500
- ------------------------------------------------------------------------------------------------------------------------------------
Remedy Corp. (1) 3,400 159,800
</TABLE>
36 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMPUTER SOFTWARE/SERVICES (CONTINUED)
SAP AG, Preference 700 $ 209,249
- ------------------------------------------------------------------------------------------------------------------------------------
Sapient Corp. (1) 2,800 149,100
- ------------------------------------------------------------------------------------------------------------------------------------
Security Dynamics Technologies, Inc. (1) 4,500 152,438
- ------------------------------------------------------------------------------------------------------------------------------------
Summit Design, Inc. (1) 1,600 23,200
- ------------------------------------------------------------------------------------------------------------------------------------
Sykes Enterprises, Inc. (1) 6,750 167,906
- ------------------------------------------------------------------------------------------------------------------------------------
Technology Solutions Co. (1) 7,250 228,375
- ------------------------------------------------------------------------------------------------------------------------------------
Veritas Software Corp. (1) 3,950 164,419
- ------------------------------------------------------------------------------------------------------------------------------------
Viasoft, Inc. (1) 3,100 127,100
- ------------------------------------------------------------------------------------------------------------------------------------
Visio Corp. (1) 3,600 133,875
- ------------------------------------------------------------------------------------------------------------------------------------
Wind River Systems (1) 3,700 141,988
------------
2,170,088
- ------------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS - 4.1%
ATMI, Inc. (1) 3,800 102,125
- ------------------------------------------------------------------------------------------------------------------------------------
Bowthorpe plc 12,000 79,083
- ------------------------------------------------------------------------------------------------------------------------------------
Electro Scientific Industries, Inc. (1) 2,600 126,100
- ------------------------------------------------------------------------------------------------------------------------------------
Electrocomponents plc 15,000 116,335
- ------------------------------------------------------------------------------------------------------------------------------------
Getronics NV 4,000 132,116
- ------------------------------------------------------------------------------------------------------------------------------------
Hirose Electric Co. 2,000 130,540
- ------------------------------------------------------------------------------------------------------------------------------------
Keyence Corp. 660 98,778
- ------------------------------------------------------------------------------------------------------------------------------------
Matsushita Electric Industrial Co. 5,000 83,978
- ------------------------------------------------------------------------------------------------------------------------------------
National Semiconductor Corp. (1) 3,200 115,200
- ------------------------------------------------------------------------------------------------------------------------------------
Omron Corp. 7,000 118,733
- ------------------------------------------------------------------------------------------------------------------------------------
Philips Electronics NV 2,000 156,643
- ------------------------------------------------------------------------------------------------------------------------------------
Philips Electronics NV, NY Shares 1,600 125,400
- ------------------------------------------------------------------------------------------------------------------------------------
Samsung Electronics Ltd., Sponsored GDR (2) 2,700 27,500
- ------------------------------------------------------------------------------------------------------------------------------------
Samsung Electronics Ltd., Sponsored GDR (1)(2) 44 919
- ------------------------------------------------------------------------------------------------------------------------------------
Sawtek, Inc. (1) 2,500 85,000
- ------------------------------------------------------------------------------------------------------------------------------------
SCI Systems, Inc. (1) 3,000 132,000
- ------------------------------------------------------------------------------------------------------------------------------------
Sony Corp. 2,100 174,432
- ------------------------------------------------------------------------------------------------------------------------------------
TDK Corp. 1,000 82,980
- ------------------------------------------------------------------------------------------------------------------------------------
Vitesse Semiconductor Corp. (1) 4,250 184,344
- ------------------------------------------------------------------------------------------------------------------------------------
VTech Holdings Ltd. 60,000 117,213
- ------------------------------------------------------------------------------------------------------------------------------------
Waters Corp. (1) 6,700 294,800
------------
2,484,219
- ------------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY - 3.2%
Boston Communications Group, Inc. (1) 2,300 33,925
- ------------------------------------------------------------------------------------------------------------------------------------
British Sky Broadcasting Group plc 11,500 81,573
- ------------------------------------------------------------------------------------------------------------------------------------
Comverse Technology, Inc. (1) 5,500 226,875
- ------------------------------------------------------------------------------------------------------------------------------------
DSP Communications, Inc. (1) 10,000 185,000
- ------------------------------------------------------------------------------------------------------------------------------------
Ericsson LM, B Shares 3,720 164,025
- ------------------------------------------------------------------------------------------------------------------------------------
Inter-Tel, Inc. 3,900 97,134
- ------------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., Cl. A (1) 154 4,043
- ------------------------------------------------------------------------------------------------------------------------------------
Nippon Telegraph & Telephone Corp. 17 144,176
- ------------------------------------------------------------------------------------------------------------------------------------
P-COM, Inc. (1) 7,800 156,975
- ------------------------------------------------------------------------------------------------------------------------------------
Pacific Gateway Exchange, Inc. (1) 3,900 149,175
- ------------------------------------------------------------------------------------------------------------------------------------
SK Telecommunications Co. Ltd., ADR 7,300 40,150
- ------------------------------------------------------------------------------------------------------------------------------------
Tekelec (1) 3,800 159,125
</TABLE>
37 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TELECOMMUNICATIONS-TECHNOLOGY (CONTINUED)
Telecom Italia Mobile SpA 35,000 $ 130,048
- ------------------------------------------------------------------------------------------------------------------------------------
Uniphase Corp. (1) 2,400 161,100
- ------------------------------------------------------------------------------------------------------------------------------------
Vodafone Group plc 29,000 159,385
------------
1,892,709
- ------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 7.1%
- ------------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 2.1%
Duke Energy Corp. 4,961 239,368
- ------------------------------------------------------------------------------------------------------------------------------------
FPL Group, Inc. 6,300 325,631
- ------------------------------------------------------------------------------------------------------------------------------------
Illinova Corp. 5,300 117,925
- ------------------------------------------------------------------------------------------------------------------------------------
Kansas City Power & Light Co. 6,700 196,394
- ------------------------------------------------------------------------------------------------------------------------------------
Veba AG 3,000 169,073
- ------------------------------------------------------------------------------------------------------------------------------------
Western Resources, Inc. 5,000 186,250
------------
1,234,641
- ------------------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES - 2.3%
Columbia Gas System, Inc. 5,500 397,375
- ------------------------------------------------------------------------------------------------------------------------------------
El Paso Natural Gas Co. 5,400 323,663
- ------------------------------------------------------------------------------------------------------------------------------------
MCN Energy Group, Inc. 5,200 180,050
- ------------------------------------------------------------------------------------------------------------------------------------
National Fuel Gas Co. 4,800 211,800
- ------------------------------------------------------------------------------------------------------------------------------------
Questar Corp. 4,500 173,813
- ------------------------------------------------------------------------------------------------------------------------------------
RWE AG, Preference 2,500 92,162
------------
1,378,863
- ------------------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES - 2.7%
Ameritech Corp. 3,000 195,000
- ------------------------------------------------------------------------------------------------------------------------------------
Bell Atlantic Corp. 5,264 420,462
- ------------------------------------------------------------------------------------------------------------------------------------
Frontier Corp. 10,700 231,388
- ------------------------------------------------------------------------------------------------------------------------------------
Tel-Save Holdings, Inc. (1) 7,300 156,950
- ------------------------------------------------------------------------------------------------------------------------------------
Telefonica de Espana 3,500 95,236
- ------------------------------------------------------------------------------------------------------------------------------------
U S West Communications Group 12,300 489,694
------------
1,588,730
------------
Total Common Stocks (Cost $36,155,153) 43,623,574
- ------------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS - 0.3%
- ------------------------------------------------------------------------------------------------------------------------------------
Case Corp., $4.50 Cum. Cv., Series A, Non-Vtg. (Cost $114,800) 1,200 174,000
<CAPTION>
UNITS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES - 0.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Australis Media Ltd. Wts., Exp. 10/01 (3) 100 1
- ------------------------------------------------------------------------------------------------------------------------------------
Dairy Mart Convenience Stores, Inc. Wts., Exp. 12/01 (3) 333 333
- ------------------------------------------------------------------------------------------------------------------------------------
Haw Par Brothers International Ltd. Wts., Exp. 7/01 3,300 1,091
- ------------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc. Wts., Exp. 6/00 (3) 50 3,500
- ------------------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc.:
Conditional Wts., Exp. 12/97 (3) 500 313
Wts., Exp. 12/97 (3) 500 6,500
- ------------------------------------------------------------------------------------------------------------------------------------
Price Communications Corp. Wts., 8/07 344 3
</TABLE>
38 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
MARKET VALUE
UNITS SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
Signature Brands, Inc. Wts., Exp. 12/49 (3) 50 $ 750
------------
Total Rights, Warrants and Certificates (Cost $9,834) 12,491
<CAPTION>
FACE
AMOUNT
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSET-BACKED SECURITIES - 0.2%
- ------------------------------------------------------------------------------------------------------------------------------------
IROQUOIS Trust, Asset-Backed Amortizing Nts.,
Series 1997-2, Cl. A, 6.752%, 6/25/07 (3) $ 50,000 50,242
- ------------------------------------------------------------------------------------------------------------------------------------
Olympic Automobile Receivables Trust, Receivables-Backed Nts.,
Series 1997-A, Cl. A5, 6.80%, 2/15/05 50,000 51,099
- ------------------------------------------------------------------------------------------------------------------------------------
Olympic Automobile Receivables Trust, Series 1996-A, Cl. A4, 5.85%, 7/15/01 15,000 14,979
------------
Total Asset-Backed Securities (Cost $114,813) 116,320
- ------------------------------------------------------------------------------------------------------------------------------------
Mortgage-Backed Obligations - 2.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Countrywide Funding Corp., Mtg. Pass-Through Certificates,
Series 1994-10, Cl. A3, 6%, 5/25/09 100,000 99,125
- ------------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
Collateralized Mtg. Obligations, Gtd. Multiclass Mtg. Participation
Certificates, Series 1711, Cl. EA, 7%, 3/15/24 100,000 102,375
Gtd. Multiclass Mtg. Participation Certificates:
6%, 3/1/09 24,554 24,362
Series 1574, Cl. PD, 5.55%, 3/15/13 100,000 99,750
Series 1843, Cl. VB, 7%, 4/15/03 20,000 20,587
Series 1849, Cl. VA, 6%, 12/15/10 24,470 24,195
Interest-Only Stripped Mtg.-Backed Security:
Series 1542, Cl. QC, 8.675%, 10/15/20 (4) 400,000 89,203
Series 1583, Cl. IC, 9.283%, 1/15/20 (4) 250,000 40,000
- ------------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6%, 12/1/03 46,088 45,864
6.50%, 4/1/26 46,862 46,155
7%, 4/1/00 76,854 77,591
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Trust 1993-181, Cl. C, 5.40%,
10/25/02 70,930 70,576
Collateralized Mtg. Obligations, Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Trust 1993-190, Cl. Z, 5.85%,
7/25/08 50,458 50,197
Medium-Term Nts., 6.56%, 11/13/01 100,000 100,250
Trust 1994-13, Cl. B, 6.50%, 2/25/09 100,000 99,906
- ------------------------------------------------------------------------------------------------------------------------------------
GE Capital Mortgage Services, Inc., Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates, Series 1994-7, Cl. A18, 6%, 2/25/09 99,442 93,228
- ------------------------------------------------------------------------------------------------------------------------------------
PNC Mortgage Securities Corp., Commercial Mtg. Pass-Through Certificates,
Series 1995-2, Cl. A3, 6.50%, 2/25/12 50,000 50,227
</TABLE>
39 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MORTGAGE-BACKED OBLIGATIONS (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
Residential Accredit Loans, Inc., Mortgage Asset-Backed Pass-Through
Certificates, Series 1997-QS9, Cl. A2, 6.75%, 9/25/27 $ 50,000 $ 50,074
------------
Total Mortgage-Backed Obligations (Cost $1,165,842) 1,183,665
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 3.1%
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 7.50%, 11/15/16 1,070,000 1,223,479
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
6.50%, 8/15/05 450,000 466,734
7.50%, 11/15/01 175,000 185,883
------------
Total U.S. Government Obligations (Cost $1,776,050) 1,876,096
- ------------------------------------------------------------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES - 12.6%
- ------------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 1.6%
- ------------------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 0.8%
Burmah Castrol plc, 7% Gtd. Medium-Term Nts., 12/15/97 (2) 20,000 20,027
- ------------------------------------------------------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co., 8.50% Debs., 2/15/03 40,000 42,598
- ------------------------------------------------------------------------------------------------------------------------------------
Harris Chemical North America, Inc., 10.25% Gtd. Sr. Sec. Disc. Nts., 7/15/01 50,000 52,250
- ------------------------------------------------------------------------------------------------------------------------------------
Laroche Industries, Inc., 9.50% Sr. Sub. Nts., 9/15/07 (2) 75,000 75,375
- ------------------------------------------------------------------------------------------------------------------------------------
Morton International, Inc., 9.25% Credit Sensitive Nts., 6/1/20 20,000 25,545
- ------------------------------------------------------------------------------------------------------------------------------------
NL Industries, Inc., 0%/13% Sr. Sec. Disc. Nts., 10/15/05 (5) 100,000 98,000
- ------------------------------------------------------------------------------------------------------------------------------------
PPG Industries, Inc., 9% Debs., 5/1/21 20,000 24,485
- ------------------------------------------------------------------------------------------------------------------------------------
Sterling Chemical Holdings, Inc., 0%/13.50% Sr. Disc. Nts., 8/15/08 (5) 75,000 54,750
- ------------------------------------------------------------------------------------------------------------------------------------
Texas Petrochemical Corp., 11.125% Sr. Sub. Nts., Series B, 7/1/06 75,000 82,875
------------
475,905
- ------------------------------------------------------------------------------------------------------------------------------------
METALS - 0.5%
Alcan Aluminum Ltd., 9.625% Debs., 7/15/19 50,000 53,913
- ------------------------------------------------------------------------------------------------------------------------------------
Gulf States Steel, Inc. (Alabama), 13.50% First Mtg. Nts., Series B,
4/15/03 50,000 51,500
- ------------------------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 10.875% Sr. Nts., 10/15/06 50,000 54,750
- ------------------------------------------------------------------------------------------------------------------------------------
NS Group, Inc., 13.50% Gtd. Sr. Sec. Nts., 7/15/03 20,000 22,950
- ------------------------------------------------------------------------------------------------------------------------------------
Republic Engineered Steels, Inc., 9.875% First Mtg. Nts., 12/15/01 25,000 24,250
- ------------------------------------------------------------------------------------------------------------------------------------
WCI Steel, Inc., 10% Sr. Nts., Series B, 12/1/04 50,000 52,375
- ------------------------------------------------------------------------------------------------------------------------------------
Weirton Steel Corp., 10.75% Sr. Nts., 6/1/05 50,000 52,875
------------
312,613
- ------------------------------------------------------------------------------------------------------------------------------------
PAPER - 0.3%
Celulosa Arauco y Constitucion SA, 7.25% Debs., 6/11/98 (3) 20,000 20,050
- ------------------------------------------------------------------------------------------------------------------------------------
Gaylord Container Corp., 12.75% Sr. Sub. Disc. Debs., 5/15/05 50,000 54,500
- ------------------------------------------------------------------------------------------------------------------------------------
Malette, Inc., 12.25% Sr. Sec. Nts., 7/15/04 (3) 50,000 56,875
- ------------------------------------------------------------------------------------------------------------------------------------
Stone Container Corp., 9.875% Sr. Nts., 2/1/01 50,000 51,125
------------
182,550
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 3.7%
- ------------------------------------------------------------------------------------------------------------------------------------
AUTOS & HOUSING - 0.3%
Black & Decker Corp., 6.625% Nts., 11/15/00 20,000 20,222
</TABLE>
40 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AUTOS & HOUSING (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
First Industrial LP, 7.15% Bonds, 5/15/27 $ 50,000 $ 51,453
- ------------------------------------------------------------------------------------------------------------------------------------
IHF Holdings, Inc., 0%/15% Sr. Sub. Disc. Nts., Series B, 11/15/04 (5) 75,000 64,500
- ------------------------------------------------------------------------------------------------------------------------------------
Signature Brands, Inc., 13% Sr. Sub. Nts., 8/15/02 (3) 50,000 53,187
------------
189,362
- ------------------------------------------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT - 1.3%
American Skiing Corp., 12% Sr. Sub. Nts., Series B, 7/15/06 (3) 75,000 83,625
- ------------------------------------------------------------------------------------------------------------------------------------
Bally Total Fitness Holdings Corp., 9.875% Sr. Sub. Nts., 10/15/07 (2) 75,000 73,875
- ------------------------------------------------------------------------------------------------------------------------------------
Blockbuster Entertainment Corp., 6.625% Sr. Nts., 2/15/98 20,000 20,027
- ------------------------------------------------------------------------------------------------------------------------------------
Casino America, Inc., 12.50% Sr. Nts., 8/1/03 75,000 80,250
- ------------------------------------------------------------------------------------------------------------------------------------
Casino Magic of Louisiana Corp., 13% First Mtg. Nts., 8/15/03 75,000 71,625
- ------------------------------------------------------------------------------------------------------------------------------------
GB Property Funding Corp., 10.875% First Mtg. Nts., 1/15/04 50,000 43,750
- ------------------------------------------------------------------------------------------------------------------------------------
Hilton Hotels Corp., 7.375% Nts., 6/1/02 50,000 51,327
- ------------------------------------------------------------------------------------------------------------------------------------
HMH Properties, Inc., 8.875% Sr. Nts., 7/15/07 (2) 50,000 51,250
- ------------------------------------------------------------------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr. Sub. Nts., 6/15/07 (2) 75,000 76,875
- ------------------------------------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority (Connecticut), 13.50% Sr. Sec. Nts.,
Series B, 11/15/02 25,000 32,125
- ------------------------------------------------------------------------------------------------------------------------------------
Players International, Inc., 10.875% Sr. Nts., 4/15/05 75,000 80,437
- ------------------------------------------------------------------------------------------------------------------------------------
Prime Hospitality Corp., 9.25% First Mtg. Bonds, 1/15/06 75,000 78,375
- ------------------------------------------------------------------------------------------------------------------------------------
Santa Fe Hotel, Inc., 11% Gtd. First Mtg. Nts., 12/15/00 45,000 38,475
------------
782,016
- ------------------------------------------------------------------------------------------------------------------------------------
MEDIA - 1.7%
Adelphia Communications Corp., 10.50% Sr. Nts., 7/15/04 (2) 75,000 78,375
- ------------------------------------------------------------------------------------------------------------------------------------
Allbritton Communications Co., 9.75% Sr. Sub. Debs., Series B,
11/30/97 50,000 50,250
- ------------------------------------------------------------------------------------------------------------------------------------
Australis Holdings PTY Ltd., 0%/15% Sr. Sec. Disc. Nts., 11/1/02 (5) 100,000 70,500
- ------------------------------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp., 9.875% Sr. Sub. Debs., 2/15/13 50,000 53,375
- ------------------------------------------------------------------------------------------------------------------------------------
Comcast Corp., 9.375% Sr. Sub. Debs., 5/15/05 50,000 53,500
- ------------------------------------------------------------------------------------------------------------------------------------
EchoStar Satellite Broadcasting Corp., 0%/13.125%
Sr. Sec. Disc. Nts., 3/15/04 (5) 50,000 39,750
- ------------------------------------------------------------------------------------------------------------------------------------
Falcon Holdings Group LP, 11% Sr. Sub. Nts., 9/15/03 (6) 61,941 63,403
- ------------------------------------------------------------------------------------------------------------------------------------
Fox Kids Worldwide, Inc., 0%/10.25% Sr. Disc. Nts., 11/1/07 (2)(5) 75,000 43,312
- ------------------------------------------------------------------------------------------------------------------------------------
Fox/Liberty Networks LLC, 8.875% Sr. Nts., 8/15/07 (2) 25,000 25,000
- ------------------------------------------------------------------------------------------------------------------------------------
James Cable Partners LP, 10.75% Sr. Nts., 8/15/04 (2) 75,000 78,562
- ------------------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co., 8.625% Sr. Sub. Nts., 9/15/07 (2) 75,000 75,750
- ------------------------------------------------------------------------------------------------------------------------------------
Rogers Communications, Inc., 8.875% Sr. Nts., 7/15/07 75,000 74,437
- ------------------------------------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., 10% Sr. Sub. Nts., 9/30/05 50,000 52,625
- ------------------------------------------------------------------------------------------------------------------------------------
TCI Satellite Entertainment, Inc., 10.875% Sr. Sub. Nts., 2/15/07 (2) 100,000 103,500
- ------------------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc., 7.45% Nts., 2/1/98 20,000 20,067
- ------------------------------------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 50,000 55,343
- ------------------------------------------------------------------------------------------------------------------------------------
United International Holdings, Inc., Zero Coupon Sr. Sec. Disc. Nts.,
Series B, 14%, 11/15/99 (7) 100,000 82,500
------------
1,020,249
- ------------------------------------------------------------------------------------------------------------------------------------
RETAIL: GENERAL - 0.3%
Costco Cos., Inc., 7.125% Sr. Nts., 6/15/05 60,000 61,064
- ------------------------------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc., 10% Sr. Nts., 2/15/01 10,000 11,054
- ------------------------------------------------------------------------------------------------------------------------------------
Parisian, Inc., 9.875% Sr. Sub. Nts., 7/15/03 (3) 50,000 52,500
</TABLE>
41 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RETAIL: GENERAL (CONTINUED)
Sears Roebuck & Co., 8.39% Medium-Term Nts., 3/23/99 $ 40,000 $ 41,281
------------
165,899
- ------------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 0.1%
K Mart Corp., 7.75% Debs., 10/1/12 50,000 47,250
- ------------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 1.3%
- ------------------------------------------------------------------------------------------------------------------------------------
FOOD - 0.5%
AmeriServe Food Distribution, Inc., 8.875% Sr. Nts., 10/15/06 (2) 75,000 75,187
- ------------------------------------------------------------------------------------------------------------------------------------
Dairy Mart Convenience Stores, Inc., 10.25% Sr. Sub. Nts., 3/15/04 50,000 49,250
- ------------------------------------------------------------------------------------------------------------------------------------
Dole Food Distributing, Inc., 6.75% Nts., 7/15/00 40,000 40,510
- ------------------------------------------------------------------------------------------------------------------------------------
Fresh Del Monte Produce NV, 10% Sr. Nts., Series B, 5/1/03 43,000 45,580
- ------------------------------------------------------------------------------------------------------------------------------------
Great Atlantic & Pacific Tea Co., 9.125% Debs., 1/15/98 15,000 15,087
- ------------------------------------------------------------------------------------------------------------------------------------
Jitney-Jungle Stores of America, Inc., 12% Gtd. Sr. Nts., 3/1/06 50,000 56,250
------------
281,864
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/DRUGS - 0.1%
Integrated Health Services, Inc., 9.50% Sr. Sub. Nts., 9/15/07 (2) 50,000 51,875
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 0.5%
Columbia/HCA Healthcare Corp., 6.875% Nts., 7/15/01 45,000 45,045
- ------------------------------------------------------------------------------------------------------------------------------------
Dade International, Inc., 11.125% Sr. Sub. Nts., 5/1/06 75,000 83,812
- ------------------------------------------------------------------------------------------------------------------------------------
Mariner Health Group, Inc., 9.50% Sr. Sub. Nts., Series B, 4/1/06 (3) 75,000 78,000
- ------------------------------------------------------------------------------------------------------------------------------------
Paracelsus Healthcare Corp., 10% Sr. Sub. Unsec. Nts., 8/15/06 50,000 52,250
- ------------------------------------------------------------------------------------------------------------------------------------
Tenet Healthcare Corp., 8% Sr. Nts., 1/15/05 50,000 50,562
------------
309,669
- ------------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD GOODS - 0.2%
Dyersburg Corp., 9.75% Sr. Sub. Nts., 9/1/07 (2) 50,000 51,250
- ------------------------------------------------------------------------------------------------------------------------------------
Kimberly-Clark Corp., 7.875% Debs., 2/1/23 20,000 21,558
- ------------------------------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 9.375% Sr. Nts., 4/1/01 50,000 51,875
------------
124,683
- ------------------------------------------------------------------------------------------------------------------------------------
ENERGY - 0.9%
- ------------------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS - 0.5%
Coastal Corp., 8.125% Sr. Nts., 9/15/02 20,000 21,435
- ------------------------------------------------------------------------------------------------------------------------------------
Falcon Drilling Co., Inc., 9.75% Sr. Nts., Series B, 1/15/01 25,000 26,125
- ------------------------------------------------------------------------------------------------------------------------------------
Forcenergy, Inc., 8.50% Sr. Sub. Nts., 2/15/07 75,000 75,000
- ------------------------------------------------------------------------------------------------------------------------------------
Louisiana Land & Exploration Co., 7.65% Debs., 12/1/23 20,000 21,378
- ------------------------------------------------------------------------------------------------------------------------------------
Mesa Operating Co., 0%/11.625% Gtd. Sr. Sub. Disc. Nts., 7/1/06 (5) 75,000 60,375
- ------------------------------------------------------------------------------------------------------------------------------------
Transamerican Energy Corp., 11.50% Sr. Nts., 6/15/02 (2) 50,000 51,500
- ------------------------------------------------------------------------------------------------------------------------------------
Williams Holdings of Delaware, Inc., 6.25% Sr. Unsec. Debs., 2/1/06 25,000 24,445
------------
280,258
- ------------------------------------------------------------------------------------------------------------------------------------
OIL-INTEGRATED - 0.4%
Gulf Canada Resources Ltd., 8.25% Sr. Nts., 3/15/17 50,000 54,221
- ------------------------------------------------------------------------------------------------------------------------------------
HS Resources, Inc., 9.25% Sr. Sub. Nts., 11/15/06 75,000 77,250
- ------------------------------------------------------------------------------------------------------------------------------------
Norcen Energy Resources Ltd., 6.80% Debs., 7/2/02 50,000 50,950
- ------------------------------------------------------------------------------------------------------------------------------------
Petroleum Geo-Services ASA, 7.50% Nts., 3/31/07 50,000 52,610
- ------------------------------------------------------------------------------------------------------------------------------------
Standard Oil/British Petroleum Co. plc, 9% Debs., 6/1/19 20,000 20,869
------------
255,900
</TABLE>
42 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FINANCIAL - 1.2%
- ------------------------------------------------------------------------------------------------------------------------------------
BANKS - 0.1%
Citicorp, 5.625% Sr. Nts., 2/15/01 $ 20,000 $ 19,768
- ------------------------------------------------------------------------------------------------------------------------------------
Fleet Mtg./Norstar Group, Inc., 9.90% Sub. Nts., 6/15/01 20,000 22,310
- ------------------------------------------------------------------------------------------------------------------------------------
Integra Financial Corp., 6.50% Sub. Nts., 4/15/00 20,000 20,198
- ------------------------------------------------------------------------------------------------------------------------------------
Mellon Financial Bank Corp., 6.50% Gtd. Sr. Nts., 12/1/97 30,000 30,016
------------
92,292
- ------------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 0.8%
American General Institutional Capital, 8.125% Bonds, Series B,
3/15/46 (2) 50,000 53,764
- ------------------------------------------------------------------------------------------------------------------------------------
Beneficial Corp., 9.125% Debs., 2/15/98 20,000 20,180
- ------------------------------------------------------------------------------------------------------------------------------------
Capital One Financial Corp., 6.83% Sr. Nts., 5/17/99 10,000 10,098
- ------------------------------------------------------------------------------------------------------------------------------------
Capital One Funding Corp., 7.25% Nts., 12/1/03 40,000 40,281
- ------------------------------------------------------------------------------------------------------------------------------------
Chelsea GCA Realty Partner, Inc., 7.75% Gtd. Unsec. Unsub.
Nts., 1/26/01 40,000 41,078
- ------------------------------------------------------------------------------------------------------------------------------------
Commercial Credit Co., 5.55% Unsec. Nts., 2/15/01 20,000 19,636
- ------------------------------------------------------------------------------------------------------------------------------------
Countrywide Home Loans, Inc., 6.05% Gtd. Medium-Term Nts., Series D, 3/1/01 20,000 19,887
- ------------------------------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 6.25% Unsub. Nts., 2/26/98 20,000 20,085
- ------------------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 5.625% Nts., 2/15/01 50,000 49,229
- ------------------------------------------------------------------------------------------------------------------------------------
MCII Holdings (USA), Inc., 0%/15% Sec. Nts., 11/15/02 (5) 75,000 62,531
- ------------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc., 6.50% Nts., 4/1/01 20,000 20,237
- ------------------------------------------------------------------------------------------------------------------------------------
Olympic Financial Ltd., Units (each unit consists of
$1,000 principal amount of 11.50% sr. nts., 3/15/07
and one warrant to purchase 6.84 shares of common stock) (8) 75,000 77,250
- ------------------------------------------------------------------------------------------------------------------------------------
Salomon, Inc., 8.69% Sr. Medium-Term Nts., Series D, 3/1/99 50,000 51,694
------------
485,950
- ------------------------------------------------------------------------------------------------------------------------------------
INSURANCE - 0.3%
Cigna Corp., 7.90% Nts., 12/14/98 40,000 40,768
- ------------------------------------------------------------------------------------------------------------------------------------
Conseco Financing Trust III, 8.796% Bonds, 4/1/27 50,000 54,533
- ------------------------------------------------------------------------------------------------------------------------------------
SunAmerica, Inc., 9% Sr. Nts., 1/15/99 50,000 51,554
- ------------------------------------------------------------------------------------------------------------------------------------
Travelers Property Casualty Corp., 6.75% Nts., 4/15/01 20,000 20,341
------------
167,196
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 1.3%
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL MATERIALS - 0.1%
American Standard, Inc., 10.875% Sr. Nts., 5/15/99 (3) 60,000 63,750
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 0.3%
Shop Vac Corp., 10.625% Sr. Nts., 9/1/03 75,000 81,563
- ------------------------------------------------------------------------------------------------------------------------------------
Sun Co., Inc., 7.95% Debs., 12/15/01 50,000 52,906
- ------------------------------------------------------------------------------------------------------------------------------------
USI American Holdings, Inc., 7.25% Gtd. Sr. Nts., 12/1/06 50,000 49,079
------------
183,548
- ------------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 0.6%
Day International Group, Inc., 11.125% Sr. Sub. Nts., Series B, 6/1/05 (3) 50,000 53,750
- ------------------------------------------------------------------------------------------------------------------------------------
Interlake Corp., 12.125% Sr. Sub. Debs., 3/1/02 50,000 52,125
- ------------------------------------------------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts., 6/1/05 50,000 54,875
- ------------------------------------------------------------------------------------------------------------------------------------
Jordan Industries, Inc., 10.375% Sr. Nts., 8/1/07 75,000 75,750
- ------------------------------------------------------------------------------------------------------------------------------------
Mark IV Industries, Inc., 8.75% Sub. Nts., 4/1/03 (3) 10,000 10,475
- ------------------------------------------------------------------------------------------------------------------------------------
Specialty Equipment Co., 11.375% Sr. Sub. Nts., 12/1/03 50,000 54,375
</TABLE>
43 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MANUFACTURING (CONTINUED)
Titan Wheel International, Inc., 8.75% Sr. Sub. Nts., 4/1/07 $ 50,000 $ 52,000
------------
353,350
- ------------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 0.3%
CSX Corp., 7.05% Debs., 5/1/02 75,000 76,758
- ------------------------------------------------------------------------------------------------------------------------------------
Federal Express Corp., 6.25% Nts., 4/15/98 20,000 20,025
- ------------------------------------------------------------------------------------------------------------------------------------
Norfolk Southern Corp., 7.35% Nts., 5/15/07 50,000 52,503
- ------------------------------------------------------------------------------------------------------------------------------------
Union Pacific Corp., 7% Nts., 6/15/00 20,000 20,374
------------
169,660
- ------------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 2.2%
- ------------------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE - 0.1%
GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98 50,000 51,000
- ------------------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE - 0.1%
Digital Equipment Corp., 7% Nts., 11/15/97 45,000 45,014
- ------------------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 0.3%
Celestica International, Inc., 10.50% Gtd. Sr. Sub. Nts., 12/31/06 75,000 81,000
- ------------------------------------------------------------------------------------------------------------------------------------
DII Group, Inc., 8.50% Sr. Sub. Nts., 9/15/07 (2) 75,000 74,344
- ------------------------------------------------------------------------------------------------------------------------------------
Unisys Corp., 12% Sr. Nts., Series B, 4/15/03 50,000 56,250
------------
211,594
- ------------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY - 1.7%
American Communications Services, Inc., 0%/13% Sr. Disc. Nts., 11/1/05 (5) 100,000 70,500
- ------------------------------------------------------------------------------------------------------------------------------------
Brooks Fiber Properties, Inc., 0%/11.875% Sr. Disc. Nts., 11/1/06 (5) 50,000 39,438
- ------------------------------------------------------------------------------------------------------------------------------------
Centennial Cellular Corp., 10.125% Sr. Nts., 5/15/05 50,000 53,250
- ------------------------------------------------------------------------------------------------------------------------------------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc. Debs., 11/15/07 (5) 50,000 38,750
- ------------------------------------------------------------------------------------------------------------------------------------
Diamond Cable Communications plc, 0%/10.75% Sr. Disc. Nts., 2/15/07 (5) 75,000 48,375
- ------------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 0%/11.25% Sr. Disc. Nts., 7/15/07 (5) 75,000 49,875
- ------------------------------------------------------------------------------------------------------------------------------------
International CableTel, Inc., 0%/11.50% Sr. Deferred Coupon Nts.,
Series B, 2/1/06 (5) 150,000 110,250
- ------------------------------------------------------------------------------------------------------------------------------------
IXC Communications, Inc., 12.50% Sr. Nts., Series B, 10/1/05 75,000 85,500
- ------------------------------------------------------------------------------------------------------------------------------------
McLeodUSA, Inc., 0%/10.50% Sr. Disc. Nts., 3/1/07 (5) 50,000 34,750
- ------------------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc., 0%/14% Sr. Disc. Nts.,
Series B, 6/1/06 (5) 75,000 50,250
- ------------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., 0%/9.75% Sr. Disc. Nts., 8/15/04 (5) 100,000 84,750
- ------------------------------------------------------------------------------------------------------------------------------------
Price Communications Cellular Holdings, Inc., 0%/13.50%
Sr. Disc. Nts., 8/1/07 (3)(5) 100,000 57,000
- ------------------------------------------------------------------------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum Finance Corp., 11% Sr. Nts., 8/15/06 75,000 83,063
- ------------------------------------------------------------------------------------------------------------------------------------
Teleport Communications Group, Inc.:
0%/11.125% Sr. Disc. Nts., 7/1/07 (5) 50,000 39,438
9.875% Sr. Nts., 7/1/06 50,000 54,875
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. West Capital Funding, Inc., 6.85% Gtd. Nts., 1/15/02 75,000 76,228
- ------------------------------------------------------------------------------------------------------------------------------------
Western Wireless Corp., 10.50% Sr. Sub. Nts., 2/1/07 50,000 53,875
------------
1,030,167
- ------------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 0.4%
- ------------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 0.2%
Consumers Energy Co., 8.75% First Mtg. Nts., 2/15/98 20,000 20,131
- ------------------------------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 7.25% First Mtg. Nts., Series A, 2/1/99 (3) 10,000 10,100
</TABLE>
44 Oppenheimer LifeSpan Funds
<PAGE>
- -------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (CONTINUED)
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ELECTRIC UTILITIES (CONTINUED)
Panda Global Energy Co., 12.50% Sr. Nts., 4/15/04 (3) $ 75,000 $ 72,375
------------
102,606
- ------------------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES - 0.2%
Northern Illinois Gas Co., 6.45% First Mtg. Bonds, 8/1/01 70,000 70,875
- ------------------------------------------------------------------------------------------------------------------------------------
Tennessee Gas Pipeline Co., 7.50% Bonds, 4/1/17 50,000 52,615
------------
123,490
------------
Total Non-Convertible Corporate Bonds and Notes (Cost $7,276,470) 7,559,710
- ------------------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE CORPORATE BONDS AND NOTES - 0.1%
- ------------------------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc., 12% Cv. Sr. Sub. Nts., 2/15/01 (Cost $45,421) (3) 50,000 41,750
- ------------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 7.8%
- ------------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Zion First National Bank, 5.68%,
dated 10/31/97, to be repurchased at $4,675,212 on 11/3/97,
collateralized by U.S. Treasury Nts., 7.25%, 8/15/04, with a
value of $4,774,636 (Cost $4,673,000) 4,673,000 4,673,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $51,331,382) 98.9% 59,260,606
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.1 658,188
------------ ------------
NET ASSETS 100.0% $ 59,918,794
------------ ------------
------------ ------------
</TABLE>
1. Non-income producing security.
2. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities
have been determined to be liquid under guidelines established by the Board
of Directors. These securities amount to $1,180,306 or 1.97% of the Fund's
net assets as of October 31, 1997.
3. Identifies issues considered to be illiquid or restricted - See Note 5 of
Notes to Financial Statements.
4. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income
securities increase in price when interest rates decline. The principal
amount of the underlying pool represents the notional amount on which current
interest is calculated. The price of these securities is typically more
sensitive to changes in prepayment rates than traditional mortgage-backed
securities (for example, GNMA pass-throughs). Interest rates disclosed
represent current yields based upon the current cost basis and estimated
timing and amount of future cash flows.
5. Denotes a step bond: a zero coupon bond that converts to a fixed or
variable interest rate at a designated future date.
6. Interest or dividend is paid in kind.
7. For zero coupon bonds, the interest rate shown is the effective yield on
the date of purchase.
8. Units may be comprised of several components, such as debt and equity
and/or warrants to purchase equity at some point in the future. For units
which represent debt securities, face amount disclosed represents total
underlying principal.
See accompanying Notes to Financial Statements.
45 Oppenheimer LifeSpan Funds
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES OCTOBER 31, 1997
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER
LIFESPAN LIFESPAN LIFESPAN
INCOME BALANCED GROWTH
FUND FUND FUND
-----------------------------------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (cost *) - see accompanying statements $29,794,676 $66,792,544 $59,260,606
Cash 353,691 552,070 474,933
Receivables:
Dividends, interest and principal paydowns 419,993 534,812 288,273
Shares of capital stock sold 24,155 9,723 17,266
Investments sold -- 510,982 510,408
Other 1,639 1,812 1,731
-----------------------------------------
Total assets 30,594,154 68,401,943 60,553,217
-----------------------------------------
LIABILITIES:
Payables and other liabilities:
Investments purchased 433,257 594,944 538,459
Shareholder reports 21,296 18,494 8,631
Shares of capital stock redeemed 15,096 1,269 3,418
Distribution and service plan fees 6,556 15,174 13,306
Directors' fees - Note 1 32,164 27,898 26,666
Transfer and shareholder servicing agent fees -- 1,418 3,343
Custodian fees 14,554 15,915 15,344
Other 16,948 20,075 25,256
-----------------------------------------
Total liabilities 539,871 695,187 634,423
-----------------------------------------
NET ASSETS $30,054,283 $67,706,756 $59,918,794
-----------------------------------------
-----------------------------------------
COMPOSITION OF NET ASSETS:
Par value of shares of capital stock $2,716 $5,348 $4,385
Additional paid-in capital 27,574,543 56,641,705 47,659,568
Undistributed net investment income 2,079 209,750 858,469
Accumulated net realized gain from investments and foreign
currency transactions 404,251 3,257,932 3,466,954
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 2,070,694 7,592,021 7,929,418
-----------------------------------------
NET ASSETS $30,054,283 $67,706,756 $59,918,794
-----------------------------------------
-----------------------------------------
*Cost $27,723,982 $59,200,693 $51,331,382
-----------------------------------------
-----------------------------------------
</TABLE>
46 Oppenheimer LifeSpan Funds
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER
LIFESPAN LIFESPAN LIFESPAN
INCOME BALANCED GROWTH
FUND FUND FUND
-----------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE PER SHARE:
CLASS A SHARES:
Net asset value and redemption price per share (based on net
assets and shares of capital stock outstanding):
Net assets $29,205,770 $62,261,972 $53,318,387
Shares of capital stock 2,639,654 4,919,634 3,900,030
Price per share $11.06 $12.66 $13.67
Maximum offering price per share (net asset value plus sales
charge of 5.75% of offering price for each fund) $11.73 $13.43 $14.50
-----------------------------------------
CLASS B SHARES:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets and shares of capital stock outstanding):
Net assets $816,411 $4,761,973 $5,390,939
Shares of capital stock 73,513 374,239 395,745
Price per share $11.11 $12.72 $13.62
-----------------------------------------
CLASS C SHARES:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net
assets and shares of capital stock outstanding):
Net assets $32,102 $682,811 $1,209,468
Shares of capital stock 2,893 54,094 89,402
Price per share $11.10 $12.62 $13.53
-----------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
47 Oppenheimer LifeSpan Funds
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS For the Year Ended October 31, 1997
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER
LIFESPAN LIFESPAN LIFESPAN
INCOME BALANCED GROWTH
FUND FUND FUND
-----------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 1,686,587 $ 2,157,148 $ 1,159,982
Dividends (net of foreign withholding taxes of $837, $12,509
and $15,954, respectively) 273,552 626,821 670,676
-----------------------------------------
Total income 1,960,139 2,783,969 1,830,658
-----------------------------------------
EXPENSES:
Management fees - Note 4 212,649 527,770 457,316
Distribution and service plan fees - Note 4:
Class A 69,406 145,068 123,431
Class B 6,756 34,948 39,156
Class C 199 8,787 7,192
Transfer and shareholder servicing agent fees - Note 4 4,186 17,573 34,890
Accounting service fees 15,000 15,000 15,000
Custodian fees and expenses 6,961 49,727 46,602
Legal and auditing fees 24,064 31,475 35,958
Shareholder reports 32,380 42,866 41,370
Directors' fees and expenses - Note 1 35,289 29,321 31,956
Insurance expenses 3,188 3,645 3,500
Registration and filing fees:
Class A 802 1,885 1,882
Class B 106 747 822
Class C 9 2 291
Other 4,684 7,463 6,038
-----------------------------------------
Total expenses 415,679 916,277 845,404
-----------------------------------------
Less expenses paid indirectly - Note 4 (6,961) (14,168) (9,362)
-----------------------------------------
Net expenses 408,718 902,109 836,042
-----------------------------------------
NET INVESTMENT INCOME 1,551,421 1,881,860 994,616
-----------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) from:
Investments 425,024 3,580,369 3,818,755
Foreign currency transactions -- (304,895) (324,763)
-----------------------------------------
Net realized gain 425,024 3,275,474 3,493,992
Net change in unrealized appreciation or depreciation on:
Investments 1,052,959 2,130,004 2,117,903
Translation of assets and liabilities denominated in
foreign currencies -- (5,158) (17,066)
-----------------------------------------
Net change 1,052,959 2,124,846 2,100,837
-----------------------------------------
Net realized and unrealized gain 1,477,983 5,400,320 5,594,829
-----------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 3,029,404 $ 7,282,180 $ 6,589,445
-----------------------------------------
-----------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
48 Oppenheimer LifeSpan Funds
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED OCTOBER 31, 1997 AND
1996
<TABLE>
<CAPTION>
OPPENHEIMER OPPENHEIMER OPPENHEIMER
LIFESPAN LIFESPAN LIFESPAN
INCOME BALANCED GROWTH
FUND FUND FUND
----------------------------------------------------------------------------
1997 1996(1) 1997 1996(1) 1997 1996(1)
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $1,551,421 $1,166,091 $1,881,860 $1,269,662 $994,616 $610,399
Net realized gain 425,024 375,456 3,275,474 1,455,276 3,493,992 2,207,221
Net change in unrealized appreciation or depreciation 1,052,959 (394,375) 2,124,846 1,910,667 2,100,837 2,238,220
----------------------------------------------------------------------------
Net increase in net assets resulting from operations 3,029,404 1,147,172 7,282,180 4,635,605 6,589,445 5,055,840
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
Dividends from net investment income:
Class A (1,519,218) (1,164,346) (1,751,264) (919,554) (279,883) (289,194)
Class B (31,306) (14,052) (86,844) (21,226) (11,776) (9,326)
Class C (908) (24) (20,115) (10,575) (1,248) (143)
Distributions from net realized gain:
Class A (381,291) (63,862) (1,432,693) (140,249) (2,163,698) (129,620)
Class B (7,459) (925) (69,269) (3,811) (128,434) (4,802)
Class C (77) (2) (23,260) (1,725) (11,808) (65)
CAPITAL STOCK TRANSACTIONS:
Net increase (decrease) in net assets resulting from
capital stock - Note 2:
Class A 1,816,130 1,803,488 6,516,290 6,793,292 5,756,041 5,139,745
Class B 334,568 264,631 2,657,192 1,370,222 2,665,936 1,697,392
Class C 29,825 1,000 (190,802) 821,670 978,007 137,860
----------------------------------------------------------------------------
NET ASSETS:
Total increase 3,269,668 1,973,080 12,881,415 12,523,649 13,392,582 11,597,687
Beginning of period 26,784,615 24,811,535 54,825,341 42,301,692 46,526,212 34,928,525
----------------------------------------------------------------------------
End of period $30,054,283 $26,784,615 $67,706,756 $54,825,341 $59,918,794 $46,526,212
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Undistributed net investment income $2,079 $11 $209,750 $194,574 $858,469 $171,706
</TABLE>
1. The Funds changed their fiscal year end from December 31 to October 31.
See accompanying Notes to Financial Statements.
49 Oppenheimer LifeSpan Funds
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Oppenheimer LifeSpan Income Fund
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------- --------------------------------------
PERIOD ENDED PERIOD ENDED
YEAR ENDED OCTOBER 31, DECEMBER 31, YEAR ENDED OCTOBER 31, DECEMBER 31,
1997 1996(3) 1995(4) 1997 1996(3) 1995(2)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.65 $10.70 $10.00 $10.69 $10.74 $10.45
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .59 .48 .37 .51 .41 .12
Net realized and unrealized gain (loss) .56 (.02) .73 .57 (.02) .32
- -----------------------------------------------------------------------------------------------------------------------------------
Total income from investment
operations 1.15 .46 1.10 1.08 .39 .44
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.59) (.48) (.36) (.51) (.41) (.11)
Distributions from net realized gain (.15) (.03) (.04) (.15) (.03) (.04)
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.74) (.51) (.40) (.66) (.44) (.15)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.06 $10.65 $10.70 $11.11 $10.69 $10.74
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 11.30% 4.45% 11.22% 10.51% 3.69% 4.30%
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $29,206 $26,328 $24,619 $816 $456 $192
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $27,678 $25,463 $22,128 $677 $350 $107
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.49% 5.43%(6) 5.35%(6) 4.69% 4.93%(6) 5.23%(6)
Expenses 1.45%(7) 1.56%(6) 1.50%(6) 2.18%(7) 2.31%(6) 2.25%(6)
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 39.6% 75.3% 45.8% 39.6% 75.3% 45.8%
Average brokerage commission rate(9) $0.0681 $0.0694 -- $0.0681 $0.0694 --
<CAPTION>
CLASS C
-----------------------
YEAR ENDED OCTOBER 31,
1997 1996(1)
- --------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.66 $10.53
- --------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .55 .25
Net realized and unrealized gain (loss) .58 .16
- --------------------------------------------------------------------
Total income from investment
operations 1.13 .41
- --------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.54) (.25)
Distributions from net realized gain (.15) (.03)
- --------------------------------------------------------------------
Total dividends and distributions
to shareholders (.69) (.28)
- --------------------------------------------------------------------
Net asset value, end of period $11.10 $10.66
-----------------------
-----------------------
- --------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 11.03% 3.96%
- --------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $32 $1
- --------------------------------------------------------------------
Average net assets (in thousands) $20 $1
- --------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.64% 4.68%(6)
Expenses 2.20%(7) 2.25%(6)
- --------------------------------------------------------------------
Portfolio turnover rate(8) 39.6% 75.3%
Average brokerage commission rate(9) $0.0681 $0.0694
</TABLE>
1. For the period from May 1, 1996 (inception of offering) to October 31, 1996.
2. For the period from October 2, 1995 (inception of offering) to December 31,
1995.
3. For the ten months ended October 31, 1996. The Fund changed its fiscal year
end from December 31 to October 31. On March 18, 1996, OppenheimerFunds, Inc.
became the investment advisor to the Fund.
4. For the period from May 1, 1995 (commencement of operations) to December 31,
1995.
5. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
6. Annualized.
7. The expense ratio reflects the effect of expenses paid indirectly by the
Fund.
8. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases
and sales of investment securities (excluding short-term securities) for the
period ended October 31, 1997 were $12,166,241 and $10,297,628, respectively.
9. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold.
See accompanying Notes to Financial Statements.
50 Oppenheimer LifeSpan Funds
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Oppenheimer LifeSpan Balanced Fund
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------- --------------------------------------
PERIOD ENDED PERIOD ENDED
YEAR ENDED OCTOBER 31, DECEMBER 31, YEAR ENDED OCTOBER 31, DECEMBER 31,
1997 1996(3) 1995(4) 1997 1996(3) 1995(2)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $11.90 $11.05 $10.00 $11.98 $11.16 $10.95
- -----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .37 .29 .24 .27 .20 .05
Net realized and unrealized gain 1.08 .81 1.29 1.08 .82 .45
- -----------------------------------------------------------------------------------------------------------------------------------
Total income from investment
operations 1.45 1.10 1.53 1.35 1.02 .50
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.37) (.22) (.25) (.29) (.17) (.06)
Distributions from net realized gain (.32) (.03) (.23) (.32) (.03) (.23)
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.69) (.25) (.48) (.61) (.20) (.29)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.66 $11.90 $11.05 $12.72 $11.98 $11.16
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 12.66% 10.04% 15.33% 11.70% 9.22% 4.49%
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $62,262 $52,104 $41,861 $4,762 $1,893 $441
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $57,769 $47,116 $37,417 $3,504 $1,225 $247
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 3.08% 3.15%(6) 3.47%(6) 2.31% 2.41%(6) 3.01%(6)
Expenses 1.42%(7) 1.56%(6) 1.55%(6) 2.18%(7) 2.32%(6) 2.30%(6)
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 59.7% 61.0% 76.3% 59.7% 61.0% 76.3%
Average brokerage commission rate(9) $0.0067 $0.0078 -- $0.0067 $0.0078 --
<CAPTION>
CLASS C
-----------------------
YEAR ENDED OCTOBER 31,
1997 1996(1)
- --------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $11.88 $11.74
- --------------------------------------------------------------------
Income from investment operations:
Net investment income .28 .13
Net realized and unrealized gain 1.07 .24
- --------------------------------------------------------------------
Total income from investment
operations 1.35 .37
- --------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.29) (.20)
Distributions from net realized gain (.32) (.03)
- --------------------------------------------------------------------
Total dividends and distributions
to shareholders (.61) (.23)
- --------------------------------------------------------------------
Net asset value, end of period $12.62 $11.88
-----------------------
-----------------------
- --------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 11.73% 3.21%
- --------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $683 $828
- --------------------------------------------------------------------
Average net assets (in thousands) $879 $551
- --------------------------------------------------------------------
Ratios to average net assets:
Net investment income 2.37% 2.53%(6)
Expenses 2.16%(7) 2.27%(6)
- --------------------------------------------------------------------
Portfolio turnover rate(8) 59.7% 61.0%
Average brokerage commission rate(9) $0.0067 $0.0078
</TABLE>
1. For the period from May 1, 1996 (inception of offering) to October 31, 1996.
2. For the period from October 2, 1995 (inception of offering) to December 31,
1995.
3. For the ten months ended October 31, 1996. The Fund changed its fiscal year
end from December 31 to October 31. On March 18, 1996, OppenheimerFunds, Inc.
became the investment advisor to the Fund.
4. For the period from May 1, 1995 (commencement of operations) to December 31,
1995.
5. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
6. Annualized.
7. The expense ratio reflects the effect of expenses paid indirectly by the
Fund.
8. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases
and sales of investment securities (excluding short-term securities) for the
period ended October 31, 1997 were $42,186,840 and $34,319,496, respectively.
9. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold. Generally, non-U.S. commissions are lower than U.S.
commissions when expressed as cents per share but higher when expressed as a
percentage of transactions because of the lower per-share prices of many
non-U.S. securities.
See accompanying Notes to Financial Statements.
51 Oppenheimer LifeSpan Funds
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Oppenheimer LifeSpan Growth Fund
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------- --------------------------------------
PERIOD ENDED PERIOD ENDED
YEAR ENDED OCTOBER 31, DECEMBER 31, YEAR ENDED OCTOBER 31, DECEMBER 31,
1997 1996(3) 1995(4) 1997 1996(3) 1995(2)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $12.78 $11.39 $10.00 $12.81 $11.47 $11.14
- -----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .24 .18 .16 .14 .08 .03
Net realized and unrealized gain 1.35 1.34 1.63 1.35 1.36 .56
- -----------------------------------------------------------------------------------------------------------------------------------
Total income from investment
operations 1.59 1.52 1.79 1.49 1.44 .59
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.08) (.09) (.17) (.06) (.06) (.03)
Distributions from net realized gain (.62) (.04) (.23) (.62) (.04) (.23)
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.70) (.13) (.40) (.68) (.10) (.26)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.67 $12.78 $11.39 $13.62 $12.81 $11.47
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 12.96% 13.37% 18.02% 12.07% 12.58% 5.34%
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $53,318 $43,980 $34,368 $5,391 $2,405 $561
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $49,213 $39,576 $29,046 $3,925 $1,475 $230
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.91% 1.81%(6) 2.32%(6) 1.14% 1.11%(6) 1.70%(6)
Expenses 1.50%(7) 1.61%(6) 1.55%(6) 2.27%(7) 2.37%(6) 2.30%(6)
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 66.0% 64.2% 71.8% 66.0% 64.2% 71.8%
Average brokerage commission rate(9) $0.0069 $0.0059 -- $0.0069 $0.0059 --
<CAPTION>
CLASS C
-----------------------
YEAR ENDED OCTOBER 31,
1997 1996(1)
- --------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $12.74 $12.49
- --------------------------------------------------------------------
Income from investment operations:
Net investment income .14 .11
Net realized and unrealized gain 1.34 .27
- --------------------------------------------------------------------
Total income from investment
operations 1.48 .38
- --------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.07) (.09)
Distributions from net realized gain (.62) (.04)
- --------------------------------------------------------------------
Total dividends and distributions
to shareholders (.69) (.13)
- --------------------------------------------------------------------
Net asset value, end of period $13.53 $12.74
-----------------------
-----------------------
- --------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(5) 12.05% 3.04%
- --------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $1,209 $141
- --------------------------------------------------------------------
Average net assets (in thousands) $722 $54
- --------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.11% 1.32%(6)
Expenses 2.29%(7) 2.43%(6)
- --------------------------------------------------------------------
Portfolio turnover rate(8) 66.0% 64.2%
Average brokerage commission rate(9) $0.0069 $0.0059
</TABLE>
1. For the period from May 1, 1996 (inception of offering) to October 31, 1996.
2. For the period from October 2, 1995 (inception of offering) to December 31,
1995.
3. For the ten months ended October 31, 1996. The Fund changed its fiscal year
end from December 31 to October 31. On March 18, 1996, OppenheimerFunds, Inc.
became the investment advisor to the Fund.
4. For the period from May 1, 1995 (commencement of operations) to December 31,
1995.
5. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
6. Annualized.
7. The expense ratio reflects the effect of expenses paid indirectly by the
Fund.
8. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases
and sales of investment securities (excluding short-term securities) for the
period ended October 31, 1997 were $39,384,627 and $31,934,908, respectively.
9. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold. Generally, non-U.S. commissions are lower than U.S.
commissions when expressed as cents per share but higher when expressed as a
percentage of transactions because of the lower per-share prices of many
non-U.S. securities.
See accompanying Notes to Financial Statements.
52 Oppenheimer LifeSpan Funds
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer LifeSpan Income Fund, Oppenheimer LifeSpan Balanced Fund and
Oppenheimer LifeSpan Growth Fund (the Funds), are separate series of
Oppenheimer Series Fund, Inc. (the Company), a diversified, open-end
management investment company registered under the Investment Company Act of
1940, as amended. The Fund's investment advisor is OppenheimerFunds, Inc.
(the Manager). The Funds' investment objectives are as follows:
OPPENHEIMER LIFESPAN INCOME FUND seeks a high level of current income, with
opportunities for capital appreciation. It invests in a strategically
allocated portfolio consisting primarily of bond instruments.
OPPENHEIMER LIFESPAN BALANCED FUND seeks a blend of capital appreciation and
income. It invests in a strategically allocated portfolio of stocks and
bonds with a slightly stronger emphasis on stocks.
OPPENHEIMER LIFESPAN GROWTH FUND seeks long-term capital appreciation. It
invests in a strategically allocated portfolio consisting primarily of
stocks.
The Funds offer Class A, Class B and Class C shares. Class A shares are
sold with a front-end sales charge. Class B and Class C shares may be
subject to a contingent deferred sales charge. All classes of shares have
identical rights to earnings, assets and voting privileges, except that each
class has its own distribution and/or service plan, expenses directly
attributable to a particular class and exclusive voting rights with respect
to matters affecting a single class. Class B shares will automatically
convert to Class A shares six years after the date of purchase. The
following is a summary of significant accounting policies consistently
followed by the Funds.
INVESTMENT VALUATION. Portfolio securities are valued at the close of the
New York Stock Exchange on each trading day. Listed and unlisted securities
for which such information is regularly reported are valued at the last sale
price of the day or, in the absence of sales, at values based on the closing
bid or the last sale price on the prior trading day. Long-term and
short-term "non-money market" debt securities are valued by a portfolio
pricing service approved by the Board of Directors. Such securities which
cannot be valued by the approved portfolio pricing service are valued using
dealer-supplied valuations provided the Manager is satisfied that the firm
rendering the quotes is reliable and that the quotes reflect current market
value, or are valued under consistently applied procedures established by
the Board of Directors to determine fair value in good faith. Short-term
"money market type" debt securities having a remaining maturity of 60 days
or less are valued at cost (or last determined market value) adjusted for
amortization to maturity of any premium or discount.
FOREIGN CURRENCY TRANSLATION. The accounting records of the Funds are
maintained in U.S. dollars. Prices of securities denominated in foreign
currencies are translated into U.S. dollars at the closing rates of
exchange. Amounts related to the purchase and sale of securities and
investment income are translated at the rates of exchange prevailing on the
respective dates of such transactions.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains
and losses in the Funds' Statements of Operations.
REPURCHASE AGREEMENTS. The Funds require the custodian to take possession,
to have legally segregated in the Federal Reserve Book Entry System or to
have segregated within the custodian's vault, all securities held as
collateral for repurchase agreements. The market value of the underlying
securities is required to be at least 102% of the resale price at the time
of purchase. If the seller of the agreement defaults and the value of the
collateral declines, or if the seller enters an insolvency proceeding,
realization of the value of the collateral by the Funds may be delayed or
limited.
ALLOCATION OF INCOME, EXPENSES, AND GAINS AND LOSSES. Income, expenses
(other than those attributable to a specific class) and gains and losses are
allocated daily to each class of shares based upon the relative proportion
of net assets represented by such class. Operating expenses directly
attributable to a specific class are charged against the operations of that
class.
53 Oppenheimer LifeSpan Funds
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
DIRECTORS' FEES AND EXPENSES. The Funds have adopted a nonfunded retirement
plan for the Funds' independent directors. Benefits are based on years of
service and fees paid to each director during the years of service. During
the year ended October 31, 1997, the provision for projected benefit
obligations, payments to retired directors and the accumulated liability for
each of the Funds is as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------
LifeSpan Income Fund LifeSpan Balanced Fund LifeSpan Growth Fund
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Provision for projected benefit
obligations $34,321 $28,138 $28,147
- ------------------------------------------------------------------------------------------------------------
Payments to retired directors 1,509 1,509 1,509
- ------------------------------------------------------------------------------------------------------------
Accumulated liability as of
October 31, 1997 32,882 27,628 26,878
- ------------------------------------------------------------------------------------------------------------
</TABLE>
FEDERAL TAXES. Each Fund intends to continue to comply with provisions of
the Internal Revenue Code applicable to regulated investment companies and
to distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders
are recorded on the ex-dividend date.
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income
(loss) and net realized gain (loss) may differ for financial statement and
tax purposes. The character of the distributions made during the year from
net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gain was recorded by the
Funds.
The Funds adjusted the classification of net investment income and capital
gain (loss) to reflect other differences between financial statement amounts
and distributions determined in accordance with income tax regulations.
Changes in classification during the year ended October 31, 1997 are shown
below:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Adjustments for the Year Ended October 31, 1997
- --------------------------------------------------------------------------------------------------------------
Undistributed Net Investment Income Accumulated Net Realized Gain on Investments
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LifeSpan Income Fund $ 2,079 $(2,079)
- --------------------------------------------------------------------------------------------------------------
LifeSpan Balanced Fund (8,461) 8,461
- --------------------------------------------------------------------------------------------------------------
LifeSpan Growth Fund (14,946) 14,946
- --------------------------------------------------------------------------------------------------------------
</TABLE>
OTHER. Investment transactions are accounted for on the date the
investments are purchased or sold (trade date) and dividend income is
recorded on the ex-dividend date. Discount on securities purchased is
amortized over the life of the respective securities, in accordance with
federal income tax requirements. Realized gains and losses on investments
and unrealized appreciation and depreciation are determined on an identified
cost basis, which is the same basis used for federal income tax purposes.
Interest on payment-in-kind debt instruments is accrued as income at the
coupon rate and a market adjustment is made periodically.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the
reporting period. Actual results could differ from those estimates.
54 Oppenheimer LifeSpan Funds
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SHARES OF CAPITAL STOCK
Each Fund has authorized 450 million shares of $0.001 par value capital
stock. Transactions in shares of capital stock were as follows:
<TABLE>
<CAPTION>
OPPENHEIMER LIFESPAN INCOME FUND
YEAR ENDED OCTOBER 31, 1997 PERIOD ENDED OCTOBER 31, 1996(1)
----------------------------------- -----------------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Class A:
Sold 76,799 $ 839,632 146,543 $ 1,546,169
Dividends and distributions reinvested 169,781 1,828,122 112,062 1,180,611
Redeemed (78,072) (851,624) (88,357) (923,292)
-------------- -------------- -------------- --------------
Net increase 168,508 $ 1,816,130 170,248 $ 1,803,488
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Class B:
Sold 35,037 $ 380,109 23,725 $ 253,904
Dividends and distributions reinvested 3,360 36,336 1,286 13,606
Redeemed (7,512) (81,877) (271) (2,879)
-------------- -------------- -------------- --------------
Net increase 30,885 334,568 24,740 $ 264,631
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Class C:
Sold 2,712 $ 28,892 95 $ 1,000
Dividends and distributions reinvested 86 933 -- --
Redeemed -- -- -- --
-------------- -------------- -------------- --------------
Net increase 2,798 $ 29,825 95 $ 1,000
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
OPPENHEIMER LIFESPAN BALANCED FUND
SHARES AMOUNT SHARES AMOUNT
Class A:
Sold 672,918 $ 8,115,315 591,611 $ 6,806,310
Dividends and distributions reinvested 263,094 3,160,977 90,394 1,056,157
Redeemed (393,016) (4,760,002) (92,638) (1,069,175)
-------------- -------------- -------------- --------------
Net increase 542,996 $ 6,516,290 589,367 $ 6,793,292
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Class B:
Sold 253,560 $ 3,096,696 118,679 $ 1,371,576
Dividends and distributions reinvested 12,325 149,308 2,108 24,736
Redeemed (49,667) (588,812) (2,244) (26,090)
-------------- -------------- -------------- --------------
Net increase 216,218 $ 2,657,192 118,543 $ 1,370,222
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Class C:
Sold 47,180 $ 560,673 68,739 $ 810,364
Dividends and distributions reinvested 3,637 43,355 1,054 12,284
Redeemed (66,431) (794,830) (85) (978)
-------------- -------------- -------------- --------------
Net increase (decrease) (15,614) $ (190,802) 69,708 $ 821,670
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
OPPENHEIMER LIFESPAN GROWTH FUND
SHARES AMOUNT SHARES AMOUNT
Class A:
Sold 590,543 $ 7,650,233 424,020 $ 5,146,023
Dividends and distributions reinvested 195,679 2,440,118 33,590 418,507
Redeemed (327,056) (4,334,310) (35,427) (424,785)
-------------- -------------- -------------- --------------
Net increase 459,166 $ 5,756,041 422,183 $ 5,139,745
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Class B:
Sold 227,007 $ 2,916,327 154,309 $ 1,879,045
Dividends and distributions reinvested 11,173 139,662 1,098 13,603
Redeemed (30,185) (390,053) (16,551) (195,256)
-------------- -------------- -------------- --------------
Net increase 207,995 $ 2,665,936 138,856 $ 1,697,392
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Class C:
Sold 86,490 $ 1,086,489 11,124 $ 138,640
Dividends and distributions reinvested 846 10,506 16 198
Redeemed (8,994) (118,988) (80) (978)
-------------- -------------- -------------- --------------
Net increase 78,342 $ 978,007 11,060 $ 137,860
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
1. For the ten months ended October 31, 1996 for Class A and Class B shares and
for the period from May 1, 1996 (inception of offering) to October 31, 1996 for
Class C shares. The Funds changed their fiscal year end from December 31 to
October 31.
55 Oppenheimer LifeSpan Funds
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At October 31, 1997, net unrealized appreciation on investments consisted of
the following:
<TABLE>
<CAPTION>
--------------------------------------------------------------------
LifeSpan Income Fund LifeSpan Balanced Fund LifeSpan Growth Fund
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross appreciation $2,305,354 $8,991,592 $9,439,956
- ------------------------------------------------------------------------------------------------------------
Gross depreciation 234,660 1,399,741 1,510,732
- ------------------------------------------------------------------------------------------------------------
Net unrealized appreciation $2,070,694 $7,591,851 $7,929,224
- ------------------------------------------------------------------------------------------------------------
</TABLE>
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreements with the Funds. For Oppenheimer LifeSpan Income Fund,
the agreement provides for a fee of 0.75% on the first $250 million of the
Fund's average annual net assets and 0.65% on average annual net assets over
$250 million. For Oppenheimer LifeSpan Balanced Fund and Oppenheimer
LifeSpan Growth Fund, the fees are 0.85% on the first $250 million of
average annual net assets and 0.75% on average annual net assets in excess
of $250 million. The Manager acts as the accounting agent for the Funds at
an annual fee of $15,000 per Fund, plus out-of-pocket costs and expenses
reasonably incurred.
For Oppenheimer LifeSpan Income Fund, the Manager has entered into a
sub-advisory agreement with BEA Associates to assist in the selection of
portfolio investments for the components of the Fund. For these services,
the Manager pays BEA Associates negotiated fees. For Oppenheimer LifeSpan
Balanced Fund and Oppenheimer LifeSpan Growth Fund, the Manager has entered
into sub-advisory agreements with three sub-advisors to assist in the
selection of portfolio investments for the components of the Funds. For
these services, the Manager pays Babson-Stewart Ivory International, BEA
Associates and Pilgrim Baxter & Associates negotiated fees.
OppenheimerFunds Services (OFS), a division of the Manager, is the transfer
and shareholder servicing agent for the Funds, and for other registered
investment companies. OFS's total costs of providing such services are
allocated ratably to these companies.
For the year ended October 31, 1997, (1) commissions (sales charges paid by
investors) on sales of Class A shares, (2) commission amounts retained by
OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the Manager, as
general distributor, and by affiliated broker/dealers, (3) sales charges
advanced to broker/dealers by OFDI on sales of the Funds' Class B and Class
C shares, (4) sales charges advanced to affiliated broker/dealers and (5)
contingent deferred sales charges retained by OFDI were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
(1) Commissions (2) Commissions (3) Sales Charges (4) Paid to Affiliates (5) Contingent
Retained Advanced Deferred Sales
Charges
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LifeSpan Income Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Class A $19,537 $13,796 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Class B -- -- $14,373 $11,515 $5,923
- ----------------------------------------------------------------------------------------------------------------------------------
Class C -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
LifeSpan Balanced Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Class A $100,461 $67,205 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Class B -- -- $114,889 $67,463 --
- ----------------------------------------------------------------------------------------------------------------------------------
Class C -- -- $5,414 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
LifeSpan Growth Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Class A $137,511 $111,486 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Class B -- -- $102,107 $64,131 $2,500
- ----------------------------------------------------------------------------------------------------------------------------------
Class C -- -- $9,869 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
56 Oppenheimer LifeSpan Funds
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (continued)
The Funds have adopted Service Plans for Class A shares to reimburse OFDI
for a portion of its costs incurred in connection with the personal service
and maintenance of shareholder accounts that hold Class A shares.
Reimbursement is made quarterly at an annual rate that may not exceed 0.25%
of the average annual net assets of Class A shares of the Funds. OFDI uses
the service fee to reimburse brokers, dealers, banks and other financial
institutions quarterly for providing personal service and maintenance of
accounts of their customers that hold Class A shares. During the year ended
October 31, 1997, OFDI made payments to an affiliated broker/dealer as
reimbursement for Class A personal service and maintenance expenses as
follows:
LifeSpan Income Fund. . . . . . . .$ 68,271
LifeSpan Balanced Fund. . . . . . .$ 141,239
LifeSpan Growth Fund. . . . . . . .$ 117,788
The Funds have adopted Distribution and Service Plans for Class B and Class
C shares to compensate OFDI for its costs in distributing Class B and Class
C shares and servicing accounts. Under the Plans, the Funds pay OFDI an
annual asset-based sales charge of 0.75% per year on Class B and Class C
shares for its services rendered in distributing Class B and Class C shares.
OFDI also receives a service fee of 0.25% per year to compensate dealers for
providing services for accounts that hold Class B and C shares. Each fee is
computed on the average annual net assets of Class B and Class C shares,
determined as of the close of each regular business day. If the Plans are
terminated by the Funds, the Board of Directors may allow the Funds to
continue payments of the asset-based sales charge to OFDI for certain
expenses they incurred before the Plans were terminated. During the year
ended October 31, 1997, OFDI retained certain amounts as compensation for
Class B and Class C personal service and maintenance expenses. These
amounts, as well as unreimbursed expenses incurred by OFDI at October 31,
1997 are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Amount Retained by OFDI Unreimbursed Expenses
- ------------------------------------------------------------------------------------------
<S> <C> <C>
LifeSpan Income Fund, Class B $ 5,749 $ 8,787
- ------------------------------------------------------------------------------------------
LifeSpan Balanced Fund, Class B 25,286 135,290
- ------------------------------------------------------------------------------------------
LifeSpan Balanced Fund, Class C 5,576 14,197
- ------------------------------------------------------------------------------------------
LifeSpan Growth Fund, Class B 34,240 131,807
- ------------------------------------------------------------------------------------------
LifeSpan Growth Fund, Class C 6,064 12,680
- ------------------------------------------------------------------------------------------
</TABLE>
5. ILLIQUID AND RESTRICTED SECURITIES
At October 31, 1997, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in
private placement transactions, are not registered under the Securities Act
of 1933, may have contractual restrictions on resale, and are valued under
methods approved by the Board of Directors as reflecting fair value. A
security may be considered illiquid if it lacks a readily-available market
or if its valuation has not changed for a certain period of time. The Funds
intend to invest no more than 10% of their net assets (determined at the
time of purchase and reviewed periodically) in illiquid or restricted
securities. Certain restricted securities, eligible for resale to qualified
institutional investors, are not subject to that limit. The aggregate value
of illiquid or restricted securities subject to this limitation at October
31, 1997 are as follows:
- --------------------------------------------------------------------------------
Amount Percentage to Net Assets as of
October 31, 1997
- --------------------------------------------------------------------------------
LifeSpan Income Fund $1,108,880 3.69%
- --------------------------------------------------------------------------------
LifeSpan Balanced Fund 1,605,278 2.37
- --------------------------------------------------------------------------------
LifeSpan Growth Fund 715,076 1.19
- --------------------------------------------------------------------------------
57 Oppenheimer LifeSpan Funds
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
6. BORROWINGS
The Funds may borrow from a bank for temporary or emergency purposes
including, without limitation, funding of shareholder redemptions provided
asset coverage for borrowings exceeds 300%. The Funds have entered into an
agreement which enables them to participate with other Oppenheimer funds in
an unsecured line of credit with a bank, which permits borrowings up to $400
million, collectively. Interest is charged to each fund, based on its
borrowings, at a rate equal to the Federal Funds Rate plus 0.35%.
Borrowings are payable 30 days after such loan is executed. Each fund also
pays a commitment fee equal to its pro rata share of the average unutilized
amount of the credit facility at a rate of 0.0575% per annum.
The Funds had no borrowings outstanding during the year ended October 31,
1997.
7. SUBSEQUENT EVENT
On December 11, 1997, the Board of Directors approved the reorganization of
Oppenheimer LifeSpan Income Fund with and into Oppenheimer Bond Fund,
Oppenheimer LifeSpan Balanced Fund with and into Oppenheimer Disciplined
Allocation Fund and Oppenheimer LifeSpan Growth Fund with and into
Oppenheimer Disciplined Value Fund. Shareholders of each of the Oppenheimer
LifeSpan Funds will be asked to approve a reorganization whereby
shareholders would receive shares of Oppenheimer Bond Fund, Oppenheimer
Disciplined Allocation Fund and Oppenheimer Disciplined Value Fund, as
applicable, and the Oppenheimer LifeSpan Funds would be liquidated. If
shareholder approval is received, it is expected that the reorganization
will occur during the second quarter of calendar 1998.
58 Oppenheimer LifeSpan Funds
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of Oppenheimer Series Fund, Inc.:
We have audited the accompanying statements of investments and assets and
liabilities of LifeSpan Income, LifeSpan Balanced and LifeSpan Growth Funds
(collectively Oppenheimer Series Fund, Inc.) as of October 31, 1997, the related
statement of operations for the year then ended, the statements of changes in
net assets for the year then ended and the ten-month period ended October 31,
1996, and the financial highlights for the year ended October 31, 1997 and the
ten-month period ended October 31, 1996. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights for the
period from May 1, 1995 (commencement of operations) to December 31, 1995 were
audited by other auditors whose report dated February 15, 1996 expressed an
unqualified opinion on this information.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997 by correspondence with the custodian and brokers; and where
confirmations were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial positions of
LifeSpan Income, LifeSpan Balanced and LifeSpan Growth Funds as of October 31,
1997, the results of their operations for the year then ended, the changes in
their net assets for the year then ended and the ten-month period ended October
31, 1996, and the financial highlights for the year ended October 31, 1997 and
the ten-month period ended October 31, 1996, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Denver, Colorado
November 21, 1997
59 Oppenheimer LifeSpan Funds
<PAGE>
FEDERAL INCOME TAX INFORMATION (Unaudited)
In early 1998 shareholders will receive information regarding all dividends
and distributions paid to them by the Funds during calendar year 1997.
Regulations of the U.S. Treasury Department require the Funds to report this
information to the Internal Revenue Service.
OPPENHEIMER LIFESPAN INCOME FUND
Distributions of $0.2037, $0.2011 and $0.1962 per share were paid to Class
A, Class B and Class C shareholders, respectively, on December 2, 1996, of
which, for each class of shares, $0.0714 was designated as a "capital gain
distribution" for federal income tax purposes. Whether received in stock or
in cash, the capital gain distribution should be treated by shareholders as
a gain from the sale of capital assets held for more than one year
(long-term capital gain).
OPPENHEIMER LIFESPAN BALANCED FUND
Distributions of $0.4163, $0.3995 and $0.3950 per share were paid to Class
A, Class B and Class C shareholders, respectively, on December 31, 1996, of
which, for each class of shares, $0.1613 was designated as a "capital gain
distribution" for federal income tax purposes. Whether received in stock or
in cash, the capital gain distribution should be treated by shareholders as
a gain from the sale of capital assets held for more than one year
(long-term capital gain).
OPPENHEIMER LIFESPAN GROWTH FUND
Distributions of $0.6986, $0.6753 and $0.6840 per share were paid to Class
A, Class B and Class C shareholders, respectively, on December 31, 1996, of
which $0.2243 was designated as a "capital gain distribution" for federal
income tax purposes. Whether received in stock or in cash, the capital gain
distribution should be treated by shareholders as a gain from the sale
of capital assets held for more than one year (long-term capital gains).
Dividends paid by the Funds during the year ended October 31, 1997 which are
not designated as capital gain distributions should be multiplied by the
percentages listed below to arrive at the net amount eligible for the
corporate dividend-received deduction.
---------------------------------------
Corporate Dividend-Received Deduction
--------------------------------------------------------------------
LifeSpan Income Fund 14.93%
--------------------------------------------------------------------
LifeSpan Balanced Fund 20.37
--------------------------------------------------------------------
LifeSpan Growth Fund 33.91
--------------------------------------------------------------------
The foregoing information is presented to assist shareholders in reporting
distributions received from the Funds to the Internal Revenue Service.
Because of the complexity of the federal regulations which may affect your
individual tax return and the many variations in state and local tax
regulations, we recommend that you consult your tax adviser for specific
guidance.
60 Oppenheimer LifeSpan Funds
<PAGE>
OPPENHEIMER LIFESPAN FUNDS
A Series of Oppenheimer Series Fund, Inc.
OFFICERS AND DIRECTORS Leon Levy, Chairman of the Board of Directors
Donald W. Spiro, Vice Chairman of the Board of
Directors
Bridget A. Macaskill, Director and President
Robert G. Galli, Director
Benjamin Lipstein, Director
Elizabeth B. Moynihan, Director
Kenneth A. Randall, Director
Edward V. Regan, Director
Russell S. Reynolds, Jr., Director
Pauline Trigere, Director
Clayton K. Yeutter, Director
Robert C. Doll, Jr., Vice President
Peter M. Antos, Vice President
Stephen F. Libera, Vice President
Michael C. Strathearn, Vice President
Kenneth B. White, Vice President
Arthur J. Zimmer, Vice President
George C. Bowen, Treasurer
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
Andrew J. Donohue, Secretary
Robert G. Zack, Assistant Secretary
INVESTMENT ADVISOR OppenheimerFunds, Inc.
SUB-ADVISORS Babson-Stewart Ivory International
BEA Associates
Pilgrim Baxter & Associates
DISTRIBUTOR OppenheimerFunds Distributor, Inc.
TRANSFER AND OppenheimerFunds Services
SHAREHOLDER SERVICING
AGENT
CUSTODIAN OF The Bank of New York
PORTFOLIO SECURITIES
INDEPENDENT AUDITORS KPMG Peat Marwick LLP
LEGAL COUNSEL Gordon Altman Butowsky Weitzen Shalov & Wein
This is a copy of a report to shareholders of Oppenheimer LifeSpan Funds.
This report must be preceded by a Prospectus of Oppenheimer LifeSpan Funds.
For material information concerning the Funds, see the Prospectus.
Shares of Oppenheimer funds are not deposits or obligations of any bank, are
not guaranteed by any bank, and are not insured by the FDIC or any other
agency, and involve investment risks, including possible loss of the
principal amount invested.
<PAGE>
<PAGE>
PRO FORMA COMBINING STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 1997
(UNAUDITED)
OPPENHEIMER BOND FUND AND OPPENHEIMER LIFESPAN INCOME FUND
<TABLE>
<CAPTION>
PRO FORMA
OPPENHEIMER OPPENHEIMER COMBINED
BOND LIFESPAN INCOME PROFORMA OPPENHEIMER
FUND FUND (1) ADJUSTMENTS BOND FUND
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value (cost * ) $286,563,209 $30,236,608 $316,799,817
Cash 390,159 225,097 $615,256
Unrealized appreciation on forward foreign
currency exchange contracts 20,641 - $20,641
Receivables:
Interest, dividends and principal paydowns 3,656,399 367,101 $4,023,500
Shares of beneficial interest or capital
stock sold 301,417 20,066 $321,483
Investments sold 16,365,960 80,321 $16,446,281
Daily variation on futures contracts 82,564 - $82,564
Other 5,691 4,242 $9,933
--------------------------------------------------------------------------
Total assets $307,386,040 $30,933,435 - 338,319,475
--------------------------------------------------------------------------
LIABILITIES: .
Payables and other liabilities:
Investments purchased 58,014,647 - 58,014,647
Dividends 631,775 554,797 1,186,572
Shares of beneficial interest or capital
stock redeemed 258,531 19,705 278,236
Custodian fees - 17,006 17,006
Trustees' and Directors' fees - 34,957 34,957
Distributions and service plan fees 150,358 19,218 169,576
Shareholder reports - 23,742 23,742
Transfer and shareholder servicing
agent fees 47,292 - 47,292
Other 134,795 18,160 152,955
--------------------------------------------------------------------------
Total liabilities 59,237,398 687,585 - 59,924,983
--------------------------------------------------------------------------
NET ASSETS $248,148,642 $30,245,850 - $278,394,492
--------------------------------------------------------------------------
--------------------------------------------------------------------------
COMPOSITION OF NET ASSETS:
Paid-in capital 241,988,295 - 27,674,470 (2) 269,662,765
Par value of shares of capital stock 2,725 (2,725)(2) -
Additional paid-in capital 27,671,745 (27,671,745)(2) -
Undistributed net investment income 6,579 2,079 8,658
Accumulated net realized gain from
investments and foreign currency
transactions (2,819,276) 16,087 (2,803,189)
Net unrealized appreciation on investments
and translation of assets and liabilities
denominated in foreign currencies 8,973,044 2,553,214 11,526,258
--------------------------------------------------------------------------
NET ASSETS $248,148,642 $30,245,850 - $278,394,492
--------------------------------------------------------------------------
--------------------------------------------------------------------------
</TABLE>
<PAGE>
PRO FORMA COMBINING STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 1997
(UNAUDITED)
OPPENHEIMER BOND FUND AND OPPENHEIMER LIFESPAN INCOME FUND
<TABLE>
<CAPTION>
PRO FORMA
OPPENHEIMER OPPENHEIMER COMBINED
BOND LIFESPAN INCOME PROFORMA OPPENHEIMER
FUND FUND (1) ADJUSTMENTS BOND FUND
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per
share (based on net assets of $190,705,711,
$29,330,773, and $220,036,484 and 17,383,073,
2,642,551 and 20,056,799 shares of beneficial
interest or capital shares outstanding for
Oppenheimer Bond Fund, Oppenheimer LifeSpan
Income Fund and Combined Oppenheimer Bond
Fund, respectively) $10.97 $11.10 $10.97
Maximum offering price per share (net asset
value plus sales charge of 4.75%, 5.75 and
4.75, respectively, of offering price) $11.52 $11.78 $11.52
Class B Shares:
Net asset value and redemption price per
share (based on net assets of $48,254,895,
$880,281, and $49,135,176 and 4,399,924,
79,058 and 4,480,168 shares of beneficial
interest or capital shares outstanding for
Oppenheimer Bond Fund, Oppenheimer LifeSpan
Income Fund and Combined Oppenheimer Bond
Fund, respectively) $10.97 $11.13 $10.97
Class C Shares:
Net asset value and redemption price per
share (based on net assets of $9,188,036,
$34,796, and $9,222,832 and 837,017, 3,127
and 840,186 shares of beneficial interest
or capital shares outstanding for Oppenheimer
Bond Fund, Oppenheimer LifeSpan Income Fund
and Combined Oppenheimer Bond Fund,
respectively) $10.98 $11.13 $10.98
*Cost $277,840,513 $27,683,395 $305,523,908
</TABLE>
(1) Oppenheimer LifeSpan Income Fund Class A shares will be exchanged for
Oppenheimer Bond Fund Class A shares.
Oppenheimer LifeSpan Income Fund Class B shares will be exchanged for
Oppenheimer Bond Fund Class B shares.
Oppenheimer LifeSpan Income Fund Class C shares will be exchanged for
Oppenheimer Bond Fund Class C shares.
(2) Represents the conversion from par value shares to no par value shares.
<PAGE>
PRO FORMA COMBINING STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31,
1997 (UNAUDITED)
OPPENHEIMER BOND FUND AND OPPENHEIMER LIFESPAN INCOME FUND
<TABLE>
<CAPTION>
PRO FORMA
OPPENHEIMER OPPENHEIMER COMBINED
BOND LIFESPAN INCOME PROFORMA OPPENHEIMER
FUND FUND ADJUSTMENTS BOND FUND
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $19,692,749 $1,731,312 $21,424,061
Dividends (net of foreign withholding
of $0, $724 and $724) 196,995 233,031 430,026
--------------------------------------------------------------------------
Total income 19,889,744 1,964,343 - 21,854,087
--------------------------------------------------------------------------
EXPENSES:
Management fees 1,751,986 216,633 (8,361)(1) 1,960,258
Distribution and service plan fees:
Class A 461,146 70,511 531,657
Class B 414,137 7,364 421,501
Class C 61,208 253 61,461
Transfer and shareholder servicing agent fees 412,037 4,970 417,007
Custodian fees and expenses 49,736 - 49,736
Legal and auditing fees 18,708 29,406 (16,000)(2) 32,114
Insurance expenses - 3,368 3,368
Shareholder reports 154,722 17,838 172,560
Trustees' or Directors' fees and expenses 6,839 36,245 (35,000)(3) 8,084
Registration and filing fees:
Class A - 555 555
Class B - 98 98
Class C - 9 9
Other 15,848 546 16,394
--------------------------------------------------------------------------
Total expenses 3,346,367 387,796 (59,361) 3,674,802
--------------------------------------------------------------------------
NET INVESTMENT INCOME 16,543,377 1,576,547 59,361 18,179,285
--------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) from:
Investments 2,873,379 26,078 2,899,457
Closing of futures contracts (688,832) (688,832)
Closing and expiration of options written (29,905) (29,905)
Foreign currency transactions 42,729 - 42,729
--------------------------------------------------------------------------
Net realized gain 2,197,371 26,078 - 2,223,449
--------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation on:
investments 3,870,507 1,535,479 5,405,986
Translation of assets and liabilities
denominated in foreign currencies (205,493) - (205,493)
--------------------------------------------------------------------------
Net change 3,665,014 1,535,479 5,200,493
--------------------------------------------------------------------------
Net realized and unrealized gain 5,862,385 1,561,557 - 7,423,942
--------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $22,405,762 $3,138,104 $59,361 $25,603,227
--------------------------------------------------------------------------
--------------------------------------------------------------------------
</TABLE>
PRO FORMA COMBINING STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31,
1997 (UNAUDITED)
OPPENHEIMER BOND FUND AND OPPENHEIMER LIFESPAN INCOME FUND
(1) Calculated in accordance with the investment advisory agreement of
Oppenheimer Bond Fund (0.75% on the first $200 million of average annual
net assets, 0.72% of the next $200 million, 0.69% of the next $200 million,
0.66% of the next $200 million, 0.60% of the next $200 million, and 0.50%
of the average annual net assets over $1 billion). This assumes that the
management fee structure had been in place for the entire period.
(2) Elimination of duplicate expense.
(3) Reduction in expenses related to the transition from the New York Board to
the Denver Board.
<PAGE>
<PAGE>
PRO FORMA COMBINING STATEMENTS OF INVESTMENTS December 31, 1997 (Unaudited)
Oppenheimer Bond Fund and Oppenheimer LifeSpan Income Fund
<TABLE>
<CAPTION>
FACE AMOUNT(1) MARKET VALUE
-------------------------------------- --------------------------------------
Oppenheimer Oppenheimer
Oppenheimer LifeSpan Pro Forma Oppenheimer LifeSpan Pro Forma
Bond Fund Income Fund Combined Bond Fund Income Fund Combined
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSET-BACKED SECURITIES - 0.2%
- ----------------------------------------------------------------------------------------------------------------------------------
Dayton Hudson Credit Card Master Trust,
Asset-Backed Certificates,
Series 1997-1, Cl. A, 6.25%, 8/25/05 $ - $ 125,000 $ 125,000 $ - $ 125,325 $ 125,325
- ----------------------------------------------------------------------------------------------------------------------------------
IROQUOIS Trust, Asset-Backed Amortizing
Nts., Series 1997-2, Cl. A,
6.752%, 6/25/07 (5) - 175,000 175,000 - 175,622 175,622
- ----------------------------------------------------------------------------------------------------------------------------------
Olympic Automobile Receivables Trust,
Receivables-Backed Nts., Series 1997-A,
Cl. A5, 6.80%, 2/15/05 - 150,000 150,000 - 152,034 152,034
- ----------------------------------------------------------------------------------------------------------------------------------
Olympic Automobile Receivables Trust,
Series 1996-A, Cl. A4, 5.85%, 7/15/01 - 145,000 145,000 - 144,683 144,683
----------------------------------
Total Asset-Backed Securities ($593,643) - 597,664 597,664
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS - 50.6%
- ----------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY - 33.5%
- ----------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED - 24.6%
- ----------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
Certificates of Participation:
9%, 3/1/17 445,202 - 445,202 476,977 - 476,977
Series 17-039, 13.50%, 11/1/10 48,485 - 48,485 57,732 - 57,732
Series 17-094, 12.50%, 4/1/14 27,295 - 27,295 31,974 - 31,974
Collateralized Mtg. Obligations, Gtd.
Multiclass Mtg. Participation
Certificates:
5.50%, 5/1/98 - 4,185 4,185 - 4,145 4,145
Series 1343, Cl. LA, 8%, 8/15/22 1,600,000 - 1,600,000 1,751,426 - 1,751,426
Series 151, Cl. F, 9%, 5/15/21 1,000,000 - 1,000,000 1,085,287 - 1,085,287
Series 1711, Cl. EA, 7%, 3/15/24 200,000 200,000 - 203,250 203,250
Series 1712, Cl. B, 6%, 3/15/09 1,000,000 - 1,000,000 975,000 - 975,000
Series 1714, Cl. M, 7%, 8/15/23 1,000,000 - 1,000,000 1,005,000 - 1,005,000
Gtd. Multiclass Mtg. Participation
Certificates:
6%, 3/1/09 - 301,381 301,381 - 299,209 299,209
Series 1460, Cl. H, 7%, 5/15/07 1,500,000 - 1,500,000 1,538,430 - 1,538,430
Series 1574, Cl. PD, 5.55%, 3/15/13 - 66,469 66,469 - 66,282 66,282
Series 1843, Cl. VB, 7%, 4/15/03 - 85,000 85,000 - 87,204 87,204
Series 1849, Cl. VA, 6%, 12/15/10 - 237,887 237,887 - 236,698 236,698
<PAGE>
Series G056, Cl. H, 9%, 7/20/24 2,493,000 - 2,493,000 2,717,370 - 2,717,370
Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates,
Series 1914, Cl. G, 6.50%, 2/15/24 3,000,000 - 3,000,000 2,951,250 - 2,951,250
Interest-Only Stripped Mtg.-Backed
Security: -
Series 177, Cl. B, 9.335%--10.914%,
7/1/26 (2) 16,225,514 - 16,225,514 4,743,428 - 4,743,428
Series 1583, Cl. IC, 6.65%, 1/15/20 (2) - 500,000 500,000 - 75,195 75,195
Series 1661, Cl. PK, 5.775%, 11/15/06 (2) - 801,135 801,135 - 66,062 66,062
Principal-Only Stripped Mtg.-Backed
Security, Series 1690, Cl. B,
3.748%, 11/15/23 (3) 1,892,161 - 1,892,161 1,052,515 - 1,052,515
- ----------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
11%, 7/1/16 4,322,515 - 4,322,515 4,926,317 - 4,926,317
7%, 1/1/09--11/1/25 956,476 - 956,476 972,909 - 972,909
7%, 1/1/13--1/25/28 (4) 22,060,000 - 22,060,000 22,240,811 - 22,240,811
7.50%, 2/1/08--3/1/08 621,862 - 621,862 639,256 - 639,256
6%, 12/1/03 - 221,735 221,735 - 220,445 220,445
6.50%, 4/1/26 - 185,523 185,523 - 183,579 183,579
7%, 4/1/00 - 110,456 110,456 - 111,230 111,230
Collateralized Mtg. Obligations, Gtd.
Real Estate Mtg. Investment Conduit
Pass-Through Certificates:
Trust 1992-34, Cl. G, 8%, 3/25/22 540,000 - 540,000 584,717 - 584,717
Trust 1993-181, Cl. C, 5.40%, 10/25/02 - 193,935 193,935 - 192,843 192,843
Trust 1993-190, Cl. Z, 5.85%, 7/25/08 - 191,290 191,290 - 189,945 189,945
Gtd. Mtg. Pass-Through Certificates,
8%, 8/1/17 484,158 - 484,158 498,369 - 498,369
Gtd. Real Estate Mtg. Investment Conduit
Pass-Through Certificates:
Medium-Term Nts., 6.56%, 11/13/01 - 125,000 125,000 - 125,118 125,118
Trust 1991-170, Cl. E, 8%, 12/25/06 2,500,000 - 2,500,000 2,616,991 - 2,616,991
Trust 1992-162, Cl. C, 7%, 10/25/21 8,400,000 - 8,400,000 8,486,604 - 8,486,604
Trust 1994-13, Cl. B, 6.50%, 2/25/09 - 200,000 200,000 - 199,374 199,374
Trust 1995-4, Cl. PC, 8%, 5/25/25 869,210 - 869,210 952,053 - 952,053
Trust 1997-25, Cl. B, 7%, 12/18/22 510,000 - 510,000 516,345 - 516,345
Trust 1997-27, Cl. J, 7.50%, 4/18/27 844,594 - 844,594 898,896 - 898,896
Interest-Only Stripped Mtg.-Backed
Security, Trust 249, Cl. 2, 9.958%,
10/25/23 (2) 11,029,757 - 11,029,757 3,367,523 - 3,367,523
Principal-Only Stripped Mtg.-Backed
Security, Trust 277-C1, 8.142%, 4/1/27 (3) 1,508,371 - 1,508,371 1,180,301 - 1,180,301
--------------------------------------
66,267,481 2,260,579 68,528,060
- ----------------------------------------------------------------------------------------------------------------------------------
GNMA/GUARANTEED - 8.9%
- ----------------------------------------------------------------------------------------------------------------------------------
Government National Mortgage Assn.:
7%, 1/1/28 (4) 9,950,000 - 9,950,000 10,021,540 - 10,021,540
10%, 11/15/09 244,986 - 244,986 271,774 - 271,774
10.50%, 12/15/17--5/15/21 249,447 - 249,447 280,187 - 280,187
<PAGE>
11%, 10/20/19 928,361 - 928,361 1,064,710 - 1,064,710
12%, 1/15/99--5/15/14 9,380 - 9,380 9,701 - 9,701
13%, 12/15/14 27,374 - 27,374 32,789 - 32,789
6%, 7/20/27 248,188 - 248,188 251,718 - 251,718
7%, 1/1/28 (4) 2,200,000 - 2,200,000 2,217,886 - 2,217,886
7%, 7/15/09--7/20/25 1,617,774 - 1,617,774 1,657,314 - 1,657,314
7.50%, 12/1/27 (4) 6,900,000 - 6,900,000 7,068,222 - 7,068,222
8%, 6/15/05--10/15/06 1,413,602 - 1,413,602 1,468,716 - 1,468,716
9%, 2/15/09--6/15/09 422,630 - 422,630 456,835 - 456,835
--------------------------------------
24,801,392 - 24,801,392
- ----------------------------------------------------------------------------------------------------------------------------------
PRIVATE - 17.1%
- ----------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL - 13.6%
- ----------------------------------------------------------------------------------------------------------------------------------
Amresco Commercial Mortgage
Funding I Corp., Multiclass Mtg.
Pass-Through Certificates,
Series 1997-C1, Cl. E, 7%, 6/17/29 (5) 150,000 - 150,000 138,656 - 138,656
- ----------------------------------------------------------------------------------------------------------------------------------
Asset Securitization Corp.:
Commercial Mtg. Pass-Through
Certificates:
Series 1996-D3, Cl. A5, 8.33%,
10/13/26 (5)(6) 800,000 - 800,000 859,250 - 859,250
Series 1996-MD6, Cl. A5, 6.957%,
11/13/26 (6) 2,000,000 - 2,000,000 2,080,000 - 2,080,000
Series 1997-D4, Cl. B1, 7.525%, 4/14/29 (6) 333,000 - 333,000 329,878 - 329,878
Series 1997-D4, Cl. B2, 7.525%, 4/14/29 (6) 333,000 - 333,000 321,709 - 321,709
Series 1997-D4, Cl. B3, 7.525%, 4/14/29 (6) 334,000 - 334,000 309,524 - 309,524
Series 1997-D5, Cl. A6, 7.184%, 2/14/41 1,500,000 - 1,500,000 1,503,750 - 1,503,750
Series 1997-D5, Cl. B1, 6.93%, 2/14/41 2,000,000 - 2,000,000 1,826,562 - 1,826,562
Series 1997-MD7, Cl. A6, 8.11%, 1/13/30 (6) 200,000 - 200,000 211,219 - 211,219
Interest-Only Stripped Mtg.-Backed
Security, Series 1997-D5, Cl. PS1,
1.367%, 2/14/41 (2) 6,250,000 - 6,250,000 678,711 - 678,711
- ----------------------------------------------------------------------------------------------------------------------------------
Capital Lease Funding Securitization
LP, Interest-Only Corporate-Backed
Pass-Through Certificates, Series
1997-CTL1, 9.55%, 6/22/24 (2)(5) 13,750,315 - 13,750,315 657,265 - 657,265
- ----------------------------------------------------------------------------------------------------------------------------------
CBA Mortgage Corp., Mtg. Pass-Through
Certificates, Series 1993-C1, Cl. E,
7.76%, 12/25/03 (6) 250,000 - 250,000 252,675 - 252,675
- ----------------------------------------------------------------------------------------------------------------------------------
CMC Securities Corp. I, Collateralized
Mtg. Obligation, Series 1993-D,
Cl. D-3, 10%, 7/25/23 (5) 536,614 - 536,614 565,753 - 565,753
- ----------------------------------------------------------------------------------------------------------------------------------
Commercial Mortgage Acceptance Corp.,
Interest-Only Stripped Mtg.-Backed
Security, Series 1996-C1, Cl. X-2,
0.981%, 12/25/20 (2)(5) 18,624,900 - 18,624,900 529,646 - 529,646
- ----------------------------------------------------------------------------------------------------------------------------------
FDIC Trust, Gtd. Real Estate Mtg.
Investment Conduit Pass-Through
Certificates, Series 1994-C1:
Cl. 2-D, 8.70%, 9/25/25 (5) 1,000,000 - 1,000,000 1,037,500 - 1,037,500
Cl. 2-E, 8.70%, 9/25/25 (5) 1,000,000 - 1,000,000 1,038,700 - 1,038,700
- ----------------------------------------------------------------------------------------------------------------------------------
First Chicago/Lennar Trust 1,
Commercial Mtg. Pass-Through
Certificates, Series 1997-CHL1:
8.116%, 2/25/11 (5)(6) 750,000 - 750,000 638,475 - 638,475
8.116%, 5/25/08 (5)(6) 750,000 - 750,000 760,725 - 760,725
<PAGE>
- ----------------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp.,
Collateralized Mtg. Obligations:
Series 1995-C2, Cl. D, 7.192%, 1/15/08 1,500,000 - 1,500,000 1,503,750 - 1,503,750
Series 1997-C2, Cl. F, 6.75%, 4/16/29 1,000,000 - 1,000,000 857,187 - 857,187
- ----------------------------------------------------------------------------------------------------------------------------------
GS Mortgage Securities Corp. II,
Commercial Mtg. Pass-Through
Certificates, Series 1997-CL1, Cl. F:
7.353%, 7/13/30 1,000,000 - 1,000,000 1,018,125 - 1,018,125
7.823%, 7/13/30 1,000,000 - 1,000,000 1,035,937 - 1,035,937
- ----------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Mortgage Investors, Inc.,
Mtg. Pass-Through Certificates:
Series 1996-C1, Cl. D, 7.42%, 4/25/28 1,500,000 - 1,500,000 1,529,648 - 1,529,648
Series 1997-C2, Cl. D, 7.075%, 12/10/29 1,000,000 - 1,000,000 997,188 - 997,188
- ----------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc.,
Commercial Mtg. Pass-Through
Certificates, Series 1996-C1:
Cl. D-1, 7.51%, 2/15/28 (5)(6) 1,000,000 - 1,000,000 1,016,563 - 1,016,563
Cl. E, 7.51%, 2/15/28 (5)(6) 1,100,000 - 1,100,000 1,051,359 - 1,051,359
- ----------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital I, Inc.,
Commercial Mtg. Pass-Through
Certificates, Series 1997-HF1,
Cl. F, 6.86%, 2/15/10 (5) 225,000 - 225,000 205,031 - 205,031
- ----------------------------------------------------------------------------------------------------------------------------------
NationsCommercial Corp., NB
Commercial Mtg. Pass-Through
Certificates, Series-DMC,
Cl. B, 8.562%, 8/12/11 (5) 3,000,000 - 3,000,000 3,181,875 - 3,181,875
- ----------------------------------------------------------------------------------------------------------------------------------
PNC Mortgage Securities Corp.,
Commercial Mtg. Pass-Through
Certificates, Series 1995-2,
Cl. A3, 6.50%, 2/25/12 - 74,000 74,000 - 74,142 74,142
- ----------------------------------------------------------------------------------------------------------------------------------
Potomac Gurnee Financial Corp.,
Commercial Mtg. Pass-Through
Certificates, Series 1, Cl. D,
7.683%, 12/21/26 (5) 1,500,000 - 1,500,000 1,547,400 - 1,547,400
- ----------------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg.
Pass-Through Certificates:
Series 1993-C1, Cl. B, 8.75%, 5/25/24 322,008 - 322,008 321,127 - 321,127
Series 1994-C1, Cl. C, 8%, 6/25/26 1,500,000 - 1,500,000 1,530,900 - 1,530,900
Series 1995-C1, Cl. D, 6.90%, 2/25/27 2,500,000 - 2,500,000 2,489,266 - 2,489,266
- ----------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities
VII, Series 1996-C1, Cl. E,
9.187%, 1/20/06 700,000 - 700,000 736,094 - 736,094
- ----------------------------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp.:
Commercial Mtg. Pass-Through
Certificates, Series 1997-LLI, Cl. D,
7.15%, 4/12/12 2,500,000 - 2,500,000 2,538,281 - 2,538,281
Multiclass Pass-Through Certificates,
Series 1996-C3, Cl. D, 8%, 6/25/30 (5) 2,500,000 - 2,500,000 2,531,641 - 2,531,641
--------------------------------------
37,831,370 74,142 37,905,512
- ----------------------------------------------------------------------------------------------------------------------------------
MANUFACTURED HOUSING - 0.1%
- ----------------------------------------------------------------------------------------------------------------------------------
Green Tree Financial Corp.,
Series 1994-6, Cl. A3, 7.70%, 1/15/20 151,555 - 151,555 152,123 - 152,123
- ----------------------------------------------------------------------------------------------------------------------------------
MULTI-FAMILY - 1.1%
- ----------------------------------------------------------------------------------------------------------------------------------
Mortgage Capital Funding, Inc.:
Commercial Mtg. Pass-Through
Certificates, Series 1997-MC1, Cl. F,
7.452%, 5/20/07 (5) 254,890 - 254,890 242,783 - 242,783
Multifamily Mtg. Pass-Through
Certificates, Series 1996-MC1, Cl. G,
7.15%, 6/15/06 (7) 2,250,000 - 2,250,000 2,138,203 - 2,138,203
- ----------------------------------------------------------------------------------------------------------------------------------
<PAGE>
- ----------------------------------------------------------------------------------------------------------------------------------
Countrywide Funding Corp., Mtg.
Pass-Through Certificates,
Series 1994-10, Cl. A3, 6%, 5/25/09 - 250,000 250,000 - 247,520 247,520
- ----------------------------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg.
Pass-Through Certificates,
Series 1991-M5, Cl. A, 9%, 3/25/17 391,747 - 391,747 396,419 - 396,419
-------------------------------------
2,777,405 247,520 3,024,925
- ----------------------------------------------------------------------------------------------------------------------------------
OTHER - 0.7%
- ----------------------------------------------------------------------------------------------------------------------------------
GE Capital Mortgage Services, Inc.,
Series 1994-14, Cl. A1, 6.50%, 4/25/24 47,944 - 47,944 47,780 - 47,780
- ----------------------------------------------------------------------------------------------------------------------------------
JHM Mtg. Acceptance Corp.,
Collateralized Mtg. Obligation Bonds,
Series E, Cl. 5, 8.96%, 4/1/19 1,548,082 - 1,548,082 1,619,682 - 1,619,682
- ----------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VI:
Interest-Only Stripped Mtg.-Backed
Security, Series 1987-3, Cl. B,
12.50%, 10/23/17 (2) 105,837 - 105,837 30,180 - 30,180
Principal-Only Stripped Mtg.-Backed
Security, Series 1987-3, Cl. A, Zero
Coupon, 10/23/17 (3) 154,135 - 154,135 131,255 - 131,255
-------------------------------------
1,828,897 - 1,828,897
- ----------------------------------------------------------------------------------------------------------------------------------
RESIDENTIAL - 1.6%
- ----------------------------------------------------------------------------------------------------------------------------------
CS First Boston Mortgage Securities
Corp., Mtg. Pass-Through
Certificates, Series 1997-C1:
Cl. E, 7.50%, 3/1/11 (5) 1,000,000 - 1,000,000 1,035,300 - 1,035,300
Cl. F, 7.50%, 6/20/13 (5) 150,000 - 150,000 145,500 - 145,500
Cl. G, 7.50%, 6/20/14 (5) 150,000 - 150,000 138,705 - 138,705
Cl. H, 7.50%, 8/20/14 (5) 105,000 - 105,000 82,908 - 82,908
- ----------------------------------------------------------------------------------------------------------------------------------
GE Capital Mortgage Services, Inc.,
Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates,
Series 1994-7, Cl. A18, 6%, 2/25/09 - 198,885 198,885 - 187,511 187,511
- ----------------------------------------------------------------------------------------------------------------------------------
NationsBank Trust, Lease Pass-Through
Certificates, Series 1997A-1,
7.442%, 1/10/11 (6) 500,000 - 500,000 520,938 - 520,938
- ----------------------------------------------------------------------------------------------------------------------------------
Residential Funding Corp., Mtg.
Pass-Through Certificates,
Series 1993-S10, Cl. A9, 8.50%, 2/25/23 490,776 - 490,776 507,340 - 507,340
- ----------------------------------------------------------------------------------------------------------------------------------
Residential Accredit Loans, Inc.,
Mortgage Asset-Backed Pass-Through
Certificates, Series 1997-QS9,
Cl. A2, 6.75%, 9/25/27 - 175,000 175,000 - 174,754 174,754
- ----------------------------------------------------------------------------------------------------------------------------------
Ryland Mortgage Securities Corp. III,
Sub. Bonds, Series 1992-A,
Cl. 1A, 8.268%, 3/29/30 (6) 343,559 - 343,559 349,357 - 349,357
- ----------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage
Securities VII, Series 1996-B,
Cl. 1, 7.136%, 4/25/26 1,965,016 - 1,965,016 1,387,793 - 1,387,793
-------------------------------------
4,167,841 362,265 4,530,106
-------------------------------------
Total Mortgage-Backed Obligations
(Cost $135,028,453, Cost $2,901,201,
Combined $137,929,654) 137,826,509 2,944,506 140,771,015
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS - 12.9%
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
10.375%, 11/15/09 5,500,000 - 5,500,000 6,876,721 - 6,876,721
<PAGE>
11.625%, 11/15/04 2,375,000 - 2,375,000 3,151,331 - 3,151,331
12.75%, 11/15/10 1,000,000 - 1,000,000 1,427,501 - 1,427,501
8.875%, 8/15/17 (8) 6,000,000 - 6,000,000 7,963,128 - 7,963,128
6%, 2/15/26 - 100,000 100,000 - 99,906 99,906
7.50%, 11/15/16 - 2,095,000 2,095,000 - 2,444,605 2,444,605
STRIPS, Zero Coupon, 6.374%, 2/15/07 (9) 725,000 - 725,000 427,004 - 427,004
STRIPS, Zero Coupon, 6.52%, 8/15/22 (9) 2,000,000 - 2,000,000 456,670 - 456,670
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
6%, 8/15/00 1,000,000 - 1,000,000 1,007,501 - 1,007,501
6.125%, 8/15/07 6,000,000 - 6,000,000 6,168,756 - 6,168,756
7.50%, 10/31/99 3,430,000 - 3,430,000 3,537,191 - 3,537,191
6.50%, 8/15/05 - 650,000 650,000 - 678,438 678,438
6.75%, 6/30/99 - 380,000 380,000 - 386,057 386,057
7.50%, 11/15/01 - 1,100,000 1,100,000 - 1,167,032 1,167,032
--------------------------------------
Total U.S. Government Obligations
(Cost $29,886,433, Cost $4,566,663,
Combined $34,453,096) 31,015,803 4,776,038 35,791,841
- ----------------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES - 43.0%
- ----------------------------------------------------------------------------------------------------------------------------------
BASIC INDUSTRY - 2.3%
- ----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 1.4%
- ----------------------------------------------------------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co., 8.50%
Debs., 2/15/03 - 150,000 150,000 - 159,416 159,416
- ----------------------------------------------------------------------------------------------------------------------------------
FMC Corp., 8.75% Sr. Nts., 4/1/99 250,000 - 250,000 257,366 - 257,366
- ----------------------------------------------------------------------------------------------------------------------------------
Harris Chemical North America, Inc.:
10.25% Gtd. Sr. Sec. Disc. Nts., 7/15/01 - 50,000 50,000 - 53,000 53,000
10.75% Gtd. Sr. Sub. Nts., 10/15/03 100,000 - 100,000 107,250 - 107,250
- ----------------------------------------------------------------------------------------------------------------------------------
Laroche Industries, Inc., 9.50% Sr.
Sub. Nts., 9/15/07 (7) 150,000 50,000 200,000 148,500 49,500 198,000
- ----------------------------------------------------------------------------------------------------------------------------------
Morton International, Inc., 9.25%
Credit Sensitive Nts., 6/1/20 - 85,000 85,000 - 110,702 110,702
- ----------------------------------------------------------------------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr.
Sec. Nts., 10/15/03 492,000 - 492,000 547,350 - 547,350
- ----------------------------------------------------------------------------------------------------------------------------------
Pioneer Americas Acquisition Corp.,
9.25% Sr. Nts., 6/15/07 200,000 - 200,000 202,500 - 202,500
- ----------------------------------------------------------------------------------------------------------------------------------
PPG Industries, Inc., 9% Debs., 5/1/21 - 85,000 85,000 - 106,140 106,140
- ----------------------------------------------------------------------------------------------------------------------------------
Quantum Chemical Corp., 10.375% First
Mtg. Nts., 6/1/03 900,000 - 900,000 944,395 - 944,395
- ----------------------------------------------------------------------------------------------------------------------------------
Rohm & Haas Co., 9.50% Debs., 4/1/21 500,000 - 500,000 572,630 - 572,630
- ----------------------------------------------------------------------------------------------------------------------------------
Sovereign Specialty Chemicals, Inc.,
9.50% Sr. Sub. Nts., 8/1/07 (7) 175,000 - 175,000 180,250 - 180,250
- ----------------------------------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc., 11.75% Sr.
Unsec. Sub. Nts., 8/15/06 470,000 - 470,000 481,750 - 481,750
- ----------------------------------------------------------------------------------------------------------------------------------
Texas Petrochemical Corp., 11.125% Sr.
Sub. Nts., Series B, 7/1/06 - 50,000 50,000 - 54,000 54,000
-------------------------------------
3,441,991 532,758 3,974,749
- ----------------------------------------------------------------------------------------------------------------------------------
CONTAINERS - 0.1%
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. Can Corp., 10.125% Sr. Sub. Nts.,
Series B, 10/15/06 250,000 - 250,000 266,250 - 266,250
- ----------------------------------------------------------------------------------------------------------------------------------
METALS/MINING - 0.1%
<PAGE>
- ----------------------------------------------------------------------------------------------------------------------------------
Alcan Aluminum Ltd., 9.625% Debs.,
7/15/19 - 165,000 165,000 - 178,608 178,608
- ----------------------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp.,
12.75% Sr. Sub. Nts., 2/1/03 - 50,000 50,000 - 53,625 53,625
-----------------------------------
232,233 232,233
- ----------------------------------------------------------------------------------------------------------------------------------
PAPER - 0.4%
- ----------------------------------------------------------------------------------------------------------------------------------
Celulosa Arauco y Constitucion SA,
7.25% Debs., 6/11/98 (5) - 145,000 145,000 - 144,094 144,094
- ----------------------------------------------------------------------------------------------------------------------------------
Gaylord Container Corp., 12.75% Sr.
Sub. Disc. Debs., 5/15/05 - 50,000 50,000 - 53,750 53,750
- ----------------------------------------------------------------------------------------------------------------------------------
Malette, Inc., 12.25% Sr. Sec.
Nts., 7/15/04 (5) - 50,000 50,000 - 56,687 56,687
- ----------------------------------------------------------------------------------------------------------------------------------
Repap New Brunswick, Inc., 9.063%
First Priority Sr. Sec. Nts., 7/15/00 (6) 100,000 - 100,000 99,000 - 99,000
- ----------------------------------------------------------------------------------------------------------------------------------
Riverwood International Corp., 10.625%
Sr. Unsec. Nts., 8/1/07 200,000 - 200,000 204,000 - 204,000
- ----------------------------------------------------------------------------------------------------------------------------------
Scotia Pacific Holding Co., 7.95%
Timber Collateralized Nts., 7/20/15 415,538 - 415,538 431,251 - 431,251
- ----------------------------------------------------------------------------------------------------------------------------------
Stone Container Corp., 9.875% Sr.
Nts., 2/1/01 - 100,000 100,000 - 100,375 100,375
-----------------------------------
734,251 354,906 1,089,157
- ----------------------------------------------------------------------------------------------------------------------------------
STEEL - 0.3%
- ----------------------------------------------------------------------------------------------------------------------------------
AK Steel Corp., 9.125% Sr. Nts.,
12/15/06 350,000 - 350,000 360,500 - 360,500
- ----------------------------------------------------------------------------------------------------------------------------------
Gulf States Steel, Inc. (Alabama),
13.50% First Mtg. Nts., Series B,
4/15/03 - 50,000 50,000 - 49,750 49,750
- ----------------------------------------------------------------------------------------------------------------------------------
Keystone Consolidated Industries,
Inc., 9.625% Sr. Nts., 8/1/07 (7) 200,000 - 200,000 201,750 - 201,750
- ----------------------------------------------------------------------------------------------------------------------------------
NS Group, Inc., 13.50% Gtd. Sr. Sec.
Nts., 7/15/03 - 45,000 45,000 - 52,312 52,312
- ----------------------------------------------------------------------------------------------------------------------------------
Republic Engineered Steels, Inc.,
9.875% First Mtg. Nts., 12/15/01 - 25,000 25,000 - 24,125 24,125
- ----------------------------------------------------------------------------------------------------------------------------------
WCI Steel, Inc., 10% Sr. Nts.,
Series B, 12/1/04 - 50,000 50,000 - 51,250 51,250
- ----------------------------------------------------------------------------------------------------------------------------------
Weirton Steel Corp., 10.75% Sr.
Nts., 6/1/05 - 50,000 50,000 - 51,375 51,375
-----------------------------------
562,250 228,812 791,062
- ----------------------------------------------------------------------------------------------------------------------------------
CONSUMER RELATED - 9.7%
- ----------------------------------------------------------------------------------------------------------------------------------
CONSUMER PRODUCTS - 0.5%
- ----------------------------------------------------------------------------------------------------------------------------------
Black & Decker Corp., 6.625% Nts.,
11/15/00 - 145,000 145,000 - 146,417 146,417
- ----------------------------------------------------------------------------------------------------------------------------------
Dyersburg Corp., 9.75% Sr. Unsec.
Sub. Nts., 9/1/07 (7) - 50,000 50,000 - 52,500 52,500
- ----------------------------------------------------------------------------------------------------------------------------------
Icon Health & Fitness, Inc., 13% Sr.
Sub. Nts., Series B, 7/15/02 400,000 - 400,000 449,000 - 449,000
- ----------------------------------------------------------------------------------------------------------------------------------
IHF Holdings, Inc., 0%/15% Sr. Sub.
Disc. Nts., Series B, 11/15/04 (11) - 50,000 50,000 - 43,750 43,750
- ----------------------------------------------------------------------------------------------------------------------------------
Kimberly-Clark Corp., 7.875% Debs.,
2/1/23 - 85,000 85,000 - 92,712 92,712
- ----------------------------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp.,
9.375% Sr. Nts., Series B, 4/1/01 - 50,000 50,000 - 51,500 51,500
- ----------------------------------------------------------------------------------------------------------------------------------
Shop Vac Corp., 10.625% Sr. Nts.,
9/1/03 - 75,000 75,000 - 82,031 82,031
- ----------------------------------------------------------------------------------------------------------------------------------
Signature Brands, Inc., 13% Sr.
Sub. Nts., 8/15/02 - 50,000 50,000 - 54,250 54,250
- ----------------------------------------------------------------------------------------------------------------------------------
TAG Heuer International SA, 12%
Sr. Sub. Nts., 12/15/05 (5) 370,000 - 370,000 445,850 - 445,850
-----------------------------------
894,850 523,160 1,418,010
- ----------------------------------------------------------------------------------------------------------------------------------
FOOD/BEVERAGES/TOBACCO - 0.9%
- ----------------------------------------------------------------------------------------------------------------------------------
AmeriServe Food Distribution, Inc.,
8.875% Sr. Nts., 10/15/06 (7) - 50,000 50,000 - 50,500 50,500
- ----------------------------------------------------------------------------------------------------------------------------------
B.A.T. Capital Corp., 6.66% Medium-Term
Nts., 3/22/00 (7) 250,000 - 250,000 251,975 - 251,975
- ----------------------------------------------------------------------------------------------------------------------------------
Coca-Cola Enterprises, Inc., 6.95%
Debs., 11/15/26 2,000,000 - 2,000,000 2,030,054 - 2,030,054
- ----------------------------------------------------------------------------------------------------------------------------------
Dole Food Distributing, Inc., 6.75% Nts.,
7/15/00 - 150,000 150,000 - 151,855 151,855
-------------------------------------
2,282,029 202,355 2,484,384
<PAGE>
- ----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 0.6%
- ----------------------------------------------------------------------------------------------------------------------------------
Columbia/HCA Healthcare Corp.,
6.875% Nts., 7/15/01 - 160,000 160,000 - 160,373 160,373
- ----------------------------------------------------------------------------------------------------------------------------------
HEALTHSOUTH Corp., 9.50% Sr. Sub.
Nts., 4/1/01 500,000 - 500,000 525,000 - 525,000
- ----------------------------------------------------------------------------------------------------------------------------------
Imcera Group, Inc., 6% Nts., 10/15/03 500,000 - 500,000 492,542 - 492,542
- ----------------------------------------------------------------------------------------------------------------------------------
Integrated Health Services, Inc.,
9.50% Sr. Sub. Nts., 9/15/07 (7) 30,000 50,000 80,000 30,900 51,500 82,400
- ----------------------------------------------------------------------------------------------------------------------------------
Mariner Health Group, Inc., 9.50% Sr.
Sub. Nts., Series B, 4/1/06 (5) - 50,000 50,000 - 52,000 52,000
- ----------------------------------------------------------------------------------------------------------------------------------
Paracelsus Healthcare Corp., 10% Sr.
Unsec. Sub. Nts., 8/15/06 - 50,000 50,000 - 51,250 51,250
- ----------------------------------------------------------------------------------------------------------------------------------
Sun Healthcare Group, Inc., 9.50% Sr.
Sub. Nts., 7/1/07 (7) 220,000 - 220,000 226,600 - 226,600
-------------------------------------
1,275,042 315,123 1,590,165
- ----------------------------------------------------------------------------------------------------------------------------------
HOTEL/GAMING - 1.7%
- ----------------------------------------------------------------------------------------------------------------------------------
Capstar Hotel Co., 8.75% Sr. Sub. Nts.,
8/15/07 150,000 - 150,000 155,250 - 155,250
- ----------------------------------------------------------------------------------------------------------------------------------
Casino America, Inc., 12.50% Sr.
Nts., 8/1/03 - 50,000 50,000 - 54,562 54,562
- ----------------------------------------------------------------------------------------------------------------------------------
Casino Magic of Louisiana Corp.,
13% First Mtg. Nts., Series B, 8/15/03 300,000 100,000 400,000 289,500 96,500 386,000
- ----------------------------------------------------------------------------------------------------------------------------------
GB Property Funding Corp., 10.875%
First Mtg. Nts., 1/15/04 - 50,000 50,000 - 42,625 42,625
- ----------------------------------------------------------------------------------------------------------------------------------
Grand Casinos, Inc., 10.125% Gtd.
First Mtg. Nts., 12/1/03 300,000 - 300,000 324,000 - 324,000
- ----------------------------------------------------------------------------------------------------------------------------------
Hilton Hotels Corp., 7.375% Nts.,
6/1/02 - 75,000 75,000 - 76,927 76,927
- ----------------------------------------------------------------------------------------------------------------------------------
Hilton Hotels Corp., 7.95% Sr.
Nts., 4/15/07 1,000,000 - 1,000,000 1,076,652 - 1,076,652
- ----------------------------------------------------------------------------------------------------------------------------------
HMC Acquisition Properties, Inc.,
9% Sr. Nts., Series B, 12/15/07 800,000 - 800,000 834,000 - 834,000
- ----------------------------------------------------------------------------------------------------------------------------------
HMH Properties, Inc., 8.875%
Sr. Nts., 7/15/07 500,000 50,000 550,000 528,750 52,875 581,625
- ----------------------------------------------------------------------------------------------------------------------------------
Horseshoe Gaming LLC, 9.375% Sr.
Sub. Nts., 6/15/07 100,000 50,000 150,000 105,250 52,625 157,875
- ----------------------------------------------------------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority
(Connecticut), 13.50% Sr. Sec. Nts.,
Series B, 11/15/02 310,000 25,000 335,000 398,350 32,125 430,475
- ----------------------------------------------------------------------------------------------------------------------------------
Players International, Inc.,
10.875% Sr. Nts., 4/15/05 - 50,000 50,000 - 54,000 54,000
- ----------------------------------------------------------------------------------------------------------------------------------
Prime Hospitality Corp., 9.25% First
Mtg. Bonds, 1/15/06 - 50,000 50,000 - 52,750 52,750
- ----------------------------------------------------------------------------------------------------------------------------------
Rio Hotel & Casino, Inc., 10.625% Sr.
Sub. Nts., 7/15/05 100,000 100,000 200,000 108,500 108,500 217,000
- ----------------------------------------------------------------------------------------------------------------------------------
Santa Fe Hotel, Inc., 11% Gtd. First
Mtg. Nts., 12/15/00 - 45,000 45,000 - 40,725 40,725
- ----------------------------------------------------------------------------------------------------------------------------------
Signature Resorts, Inc., 9.75% Sr.
Sub. Nts., 10/1/07 (7) 150,000 - 150,000 150,750 - 150,750
-------------------------------------
3,971,002 664,214 4,635,216
- ----------------------------------------------------------------------------------------------------------------------------------
LEISURE - 0.0%
- ----------------------------------------------------------------------------------------------------------------------------------
Ameristar Casinos, Inc., 10.50% Sr.
Sub. Nts., Series B, 8/1/04 - 50,000 50,000 - 51,250 51,250
- ----------------------------------------------------------------------------------------------------------------------------------
Bally Total Fitness Holdings, 9.875%
Sr. Sub. Nts., 10/15/07 (7) - 50,000 50,000 - 50,625 50,625
------------------------------------
- 101,875 101,875
- ----------------------------------------------------------------------------------------------------------------------------------
RESTAURANTS - 0.6%
- ----------------------------------------------------------------------------------------------------------------------------------
Ameriking, Inc., 10.75% Sr. Nts.,
12/1/06 160,000 - 160,000 168,800 - 168,800
- ----------------------------------------------------------------------------------------------------------------------------------
Foodmaker, Inc.:
9.25% Sr. Nts., 3/1/99 689,000 - 689,000 704,502 - 704,502
9.75% Sr. Sub. Nts., 6/1/02 750,000 - 750,000 774,375 - 774,375
-------------------------------------
1,647,677 - 1,647,677
- ----------------------------------------------------------------------------------------------------------------------------------
TEXTILE/APPAREL - 0.3%
<PAGE>
- ----------------------------------------------------------------------------------------------------------------------------------
Dan River, Inc., 10.125% Sr. Sub.
Nts., 12/15/03 100,000 - 100,000 107,375 - 107,375
- ----------------------------------------------------------------------------------------------------------------------------------
Fruit of the Loom, Inc., 7%
Debs., 3/15/11 500,000 - 500,000 492,877 - 492,877
- ----------------------------------------------------------------------------------------------------------------------------------
William Carter Co., 10.375% Sr. Sub.
Nts., Series A, 12/1/06 200,000 - 200,000 211,000 - 211,000
-----------------------------------
811,252 - 811,252
- ----------------------------------------------------------------------------------------------------------------------------------
ENERGY - 5.1%
- ----------------------------------------------------------------------------------------------------------------------------------
Belden & Blake Corp., 9.875% Sr. Sub.
Nts., 6/15/07 400,000 - 400,000 406,000 - 406,000
- ----------------------------------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp., 12% Gtd.
Sr. Exchangeable Nts., 3/1/01 675,000 - 675,000 710,437 - 710,437
- ----------------------------------------------------------------------------------------------------------------------------------
Clark R&M, Inc., 8.375% Sr.
Nts., 11/15/07 (7) 200,000 - 200,000 201,750 - 201,750
- ----------------------------------------------------------------------------------------------------------------------------------
Cliffs Drilling Co., 10.25% Sr.
Nts., 5/15/03 50,000 - 50,000 54,687 - 54,687
- ----------------------------------------------------------------------------------------------------------------------------------
Coastal Corp.:
8.125% Sr. Nts., 9/15/02 - 85,000 85,000 - 91,119 91,119
8.75% Sr. Nts., 5/15/99 325,000 55,000 380,000 335,998 56,861 392,859
- ----------------------------------------------------------------------------------------------------------------------------------
Eastern Energy Ltd., 6.75% Sr. Nts.,
12/1/06 (7) 2,000,000 - 2,000,000 2,013,104 - 2,013,104
- ----------------------------------------------------------------------------------------------------------------------------------
Enterprise Oil plc, 6.70% Sr. Nts.,
9/15/07 1,000,000 - 1,000,000 1,027,105 - 1,027,105
- ----------------------------------------------------------------------------------------------------------------------------------
Falcon Drilling Co., Inc., 9.75% Sr.
Nts., Series B, 1/15/01 - 70,000 70,000 - 73,412 73,412
- ----------------------------------------------------------------------------------------------------------------------------------
Forcenergy, Inc., 8.50% Sr. Sub. Nts.,
Series B, 2/15/07 - 50,000 50,000 - 50,875 50,875
- ----------------------------------------------------------------------------------------------------------------------------------
Global Marine, Inc., 7.125% Nts.,
9/1/07 (5) 2,000,000 - 2,000,000 2,020,000 - 2,020,000
- ----------------------------------------------------------------------------------------------------------------------------------
Gothic Energy Corp., 12.25% Sr. Nts.,
9/1/04 (5) 200,000 - 200,000 210,000 - 210,000
- ----------------------------------------------------------------------------------------------------------------------------------
Gulf Canada Resources Ltd.:
8.25% Sr. Nts., 3/15/17 - 75,000 75,000 - 82,756 82,756
9% Debs., 8/15/99 - 75,000 75,000 - 78,498 78,498
- ----------------------------------------------------------------------------------------------------------------------------------
HS Resources, Inc., 9.25% Sr. Sub.
Nts., 11/15/06 - 50,000 50,000 - 51,437 51,437
- ----------------------------------------------------------------------------------------------------------------------------------
J. Ray McDermott SA, 9.375% Sr. Sub.
Bonds, 7/15/06 600,000 - 600,000 645,750 - 645,750
- ----------------------------------------------------------------------------------------------------------------------------------
Louisiana Land & Exploration Co., 7.65%
Debs., 12/1/23 - 100,000 100,000 - 109,329 109,329
- ----------------------------------------------------------------------------------------------------------------------------------
McDermott, Inc., 9.375% Nts., 3/15/02 100,000 - 100,000 106,485 - 106,485
- ----------------------------------------------------------------------------------------------------------------------------------
Occidental Petroleum Corp., 11.125%
Sr. Debs., 6/1/19 2,000,000 - 2,000,000 2,236,314 - 2,236,314
- ----------------------------------------------------------------------------------------------------------------------------------
Petroleum Geo-Services ASA, 7.50% Nts.,
3/31/07 - 75,000 75,000 - 80,028 80,028
- ----------------------------------------------------------------------------------------------------------------------------------
Petroleum Heat & Power Co., Inc.,
9.375% Sub. Debs., 2/1/06 750,000 - 750,000 678,750 - 678,750
- ----------------------------------------------------------------------------------------------------------------------------------
Phillips Petroleum Co., 7.53%
Pass-Through Certificates, Series
1994-A1, 9/27/98 198,646 - 198,646 200,689 - 200,689
- ----------------------------------------------------------------------------------------------------------------------------------
Standard Oil/British Petroleum Co.
plc, 9% Debs., 6/1/19 - 85,000 85,000 - 87,877 87,877
- ----------------------------------------------------------------------------------------------------------------------------------
Stone Energy Corp., 8.75% Sr. Sub.
Nts., 9/15/07 400,000 - 400,000 409,000 - 409,000
- ----------------------------------------------------------------------------------------------------------------------------------
Transamerican Energy Corp., 11.50%
Sr. Nts., 6/15/02 (7) - 25,000 25,000 - 24,625 24,625
- ----------------------------------------------------------------------------------------------------------------------------------
TransCanada PipeLines Ltd., 9.875%
Debs., 1/1/21 1,500,000 - 1,500,000 1,995,000 - 1,995,000
- ----------------------------------------------------------------------------------------------------------------------------------
Williams Holdings of Delaware, Inc.,
6.25% Sr. Unsec. Debs., 2/1/06 - 100,000 100,000 - 98,163 98,163
- ----------------------------------------------------------------------------------------------------------------------------------
Wiser Oil Co., 9.50% Sr. Sub. Nts.,
5/15/07 65,000 - 65,000 64,025 - 64,025
--------------------------------------
13,315,094 884,980 14,200,074
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES - 10.3%
- ----------------------------------------------------------------------------------------------------------------------------------
BANKS & THRIFTS - 1.5%
- ----------------------------------------------------------------------------------------------------------------------------------
Banque Nationale de Paris, 9.875%
Debs., 5/25/98 205,000 - 205,000 207,945 - 207,945
<PAGE>
- ----------------------------------------------------------------------------------------------------------------------------------
Barnett Banks, Inc., 8.50% Sub.
Exchangeable Nts., 3/1/99 - 60,000 60,000 - 61,646 61,646
- ----------------------------------------------------------------------------------------------------------------------------------
Chase Manhattan Corp. (New), 6.625%
Sr. Nts., 1/15/98 25,000 55,000 80,000 25,004 55,009 80,013
- ----------------------------------------------------------------------------------------------------------------------------------
Citicorp Capital I, 7.933% Gtd.
Bonds, 2/15/27 1,000,000 - 1,000,000 1,069,495 - 1,069,495
- ----------------------------------------------------------------------------------------------------------------------------------
Citicorp, 5.625% Sr. Nts., 2/15/01 - 90,000 90,000 - 88,311 88,311
- ----------------------------------------------------------------------------------------------------------------------------------
First Fidelity Bancorp, 8.50% Sub.
Capital Nts., 4/1/98 325,000 55,000 380,000 326,728 55,292 382,020
- ----------------------------------------------------------------------------------------------------------------------------------
First Nationwide Holdings, Inc.:
10.625% Sr. Sub. Nts., 10/1/03 150,000 - 150,000 168,750 - 168,750
9.125% Sr. Sub. Nts., 1/15/03 500,000 - 500,000 527,500 - 527,500
- ----------------------------------------------------------------------------------------------------------------------------------
First Union Corp., 6.75% Sr. Nts.,
1/15/98 - 55,000 55,000 - 55,011 55,011
- ----------------------------------------------------------------------------------------------------------------------------------
Fleet Mtg./Norstar Group, Inc., 9.90%
Sub. Nts., 6/15/01 - 145,000 145,000 - 161,275 161,275
- ----------------------------------------------------------------------------------------------------------------------------------
Integra Financial Corp., 6.50% Sub.
Nts., 4/15/00 - 145,000 145,000 - 146,350 146,350
- ----------------------------------------------------------------------------------------------------------------------------------
National Westminster Bank plc, 9.375%
Gtd. Capital Nts., 11/15/03 70,000 - 70,000 80,557 - 80,557
- ----------------------------------------------------------------------------------------------------------------------------------
Royal Bank of Scotland Group (The)
plc, 10.125% Gtd. Sub. Capital Nts.,
3/1/04 500,000 - 500,000 591,194 - 591,194
- ----------------------------------------------------------------------------------------------------------------------------------
Suntrust Banks, Inc., 8.875% Debs.,
2/1/98 500,000 - 500,000 501,029 - 501,029
-------------------------------------
3,498,202 622,894 4,121,096
- ----------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 7.0%
- ----------------------------------------------------------------------------------------------------------------------------------
American General Finance Corp.,
8.50% Sr. Nts., 8/15/98 - 60,000 60,000 - 60,927 60,927
- ----------------------------------------------------------------------------------------------------------------------------------
American General Institutional
Capital B, 8.125% Bonds, Series B,
3/15/46 (7) - 75,000 75,000 - 83,195 83,195
- ----------------------------------------------------------------------------------------------------------------------------------
Associates Corp. of North America, 7.40%
Medium-Term Nts., 7/7/99 300,000 - 300,000 305,592 - 305,592
- ----------------------------------------------------------------------------------------------------------------------------------
Beneficial Corp.:
12.875% Debs., 8/1/13 20,000 - 20,000 21,734 - 21,734
9.125% Debs., 2/15/98 - 145,000 145,000 - 145,485 145,485
- ----------------------------------------------------------------------------------------------------------------------------------
BHP Finance (USA) Ltd., 8.50% Gtd.
Debs., 12/1/12 1,500,000 - 1,500,000 1,756,584 - 1,756,584
- ----------------------------------------------------------------------------------------------------------------------------------
Capital One Financial Corp.:
6.83% Sr. Nts., 5/17/99 - 75,000 75,000 - 75,544 75,544
7.25% Nts., 12/1/03 - 50,000 50,000 - 50,528 50,528
- ----------------------------------------------------------------------------------------------------------------------------------
Chelsea GCA Realty Partner, Inc.,
7.75% Gtd. Unsec. Unsub. Nts., 1/26/01 - 60,000 60,000 - 61,562 61,562
- ----------------------------------------------------------------------------------------------------------------------------------
Commercial Credit Co., 5.55% Unsec.
Nts., 2/15/01 - 145,000 145,000 - 142,416 142,416
- ----------------------------------------------------------------------------------------------------------------------------------
Countrywide Home Loans, Inc.:
6.05% Gtd. Medium-Term Nts.,
Series D, 3/1/01 - 90,000 90,000 - 89,616 89,616
6.085% Gtd. Medium-Term Nts.,
Series B, 7/14/99 - 60,000 60,000 - 59,988 59,988
- ----------------------------------------------------------------------------------------------------------------------------------
Enterprise Rent-A-Car USA Finance Co.,
7.875% Nts., 3/15/98 (7) 1,500,000 - 1,500,000 1,505,331 - 1,505,331
- ----------------------------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co.:
6.25% Unsub. Nts., 2/26/98 - 145,000 145,000 - 145,458 145,458
6.75% Nts., 8/15/08 1,000,000 - 1,000,000 1,012,842 - 1,012,842
- ----------------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp.,
5.625% Nts., 2/15/01 - 175,000 175,000 - 172,392 172,392
- ----------------------------------------------------------------------------------------------------------------------------------
Golden West Financial Corp., 8.625%
Sub. Nts., 8/30/98 - 55,000 55,000 - 55,959 55,959
- ----------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc.:
6.50% Nts., 4/1/01 - 150,000 150,000 - 151,447 151,447
<PAGE>
6.875% Nts., 3/1/03 750,000 - 750,000 770,451 - 770,451
- ----------------------------------------------------------------------------------------------------------------------------------
Midland American Capital Corp., 12.75%
Gtd. Nts., 11/15/03 205,000 - 205,000 215,084 - 215,084
- ----------------------------------------------------------------------------------------------------------------------------------
NationsBank Corp., 10.20% Sub. Nts.,
7/15/15 1,300,000 - 1,300,000 1,748,590 - 1,748,590
- ----------------------------------------------------------------------------------------------------------------------------------
Ocwen Capital Trust I, 10.875% Gtd.
Bonds, 8/1/27 300,000 - 300,000 327,000 - 327,000
- ----------------------------------------------------------------------------------------------------------------------------------
Olympic Financial Ltd., Units (each
unit consists of $1,000 principal
amount of 11.50% sr. nts., 3/15/07
and one warrant to purchase 6.84
shares of common stock) (12) - 50,000 50,000 - 49,750 49,750
- ----------------------------------------------------------------------------------------------------------------------------------
Penske Truck Leasing Co. LP, 7.75%
Sr. Nts., 5/15/99 1,825,000 - 1,825,000 1,868,676 - 1,868,676
- ----------------------------------------------------------------------------------------------------------------------------------
Rank Group Finance plc, 6.75% Gtd.
Nts., 11/30/04 1,000,000 - 1,000,000 1,003,500 - 1,003,500
- ----------------------------------------------------------------------------------------------------------------------------------
Ryder System, Inc., 8.75% Debs.,
Series J, 3/15/17 1,600,000 - 1,600,000 1,671,586 - 1,671,586
- ----------------------------------------------------------------------------------------------------------------------------------
Salomon, Inc.:
7.30% Nts., 5/15/02 1,000,000 - 1,000,000 1,035,115 - 1,035,115
8.69% Sr. Medium-Term Nts., Series D,
3/1/99 - 160,000 160,000 - 164,713 164,713
- ----------------------------------------------------------------------------------------------------------------------------------
Saul (B.F.) Real Estate Investment
Trust, 11.625% Sr. Sec. Nts.,
Series B, 4/1/02 1,125,000 - 1,125,000 1,209,375 - 1,209,375
- ----------------------------------------------------------------------------------------------------------------------------------
Source One Mortgage Services Corp.,
9% Debs., 6/1/12 1,250,000 - 1,250,000 1,379,060 - 1,379,060
- ----------------------------------------------------------------------------------------------------------------------------------
Washington Mutual Capital I, 8.375%
Gtd. Bonds, 6/1/27 2,000,000 - 2,000,000 2,180,952 - 2,180,952
--------------------------------------
18,011,472 1,508,980 19,520,452
- ----------------------------------------------------------------------------------------------------------------------------------
INSURANCE - 1.8%
- ----------------------------------------------------------------------------------------------------------------------------------
Aetna Services, Inc., 8% Debs., 1/15/17 849,000 - 849,000 868,270 - 868,270
- ----------------------------------------------------------------------------------------------------------------------------------
Allmerica Capital I, 8.207% Debs.,
2/3/27 2,000,000 - 2,000,000 2,209,596 - 2,209,596
- ----------------------------------------------------------------------------------------------------------------------------------
Cigna Corp., 7.90% Nts., 12/14/98 - 150,000 150,000 - 152,404 152,404
- ----------------------------------------------------------------------------------------------------------------------------------
Conseco Financing Trust III, 8.796%
Bonds, 4/1/27 - 100,000 100,000 - 112,650 112,650
- ----------------------------------------------------------------------------------------------------------------------------------
Liberty Mutual Insurance Co., 7.697%
Nts., 10/15/2097 (5) 1,000,000 - 1,000,000 1,051,292 - 1,051,292
- ----------------------------------------------------------------------------------------------------------------------------------
SunAmerica, Inc., 9% Sr. Nts., 1/15/99 - 120,000 120,000 - 123,197 123,197
- ----------------------------------------------------------------------------------------------------------------------------------
Travelers Property Casualty Corp.,
6.75% Nts., 4/15/01 - 145,000 145,000 - 147,538 147,538
- ----------------------------------------------------------------------------------------------------------------------------------
Veritas Holdings, Inc., 9.625% Sr.
Nts., 12/15/03 200,000 - 200,000 214,000 - 214,000
-------------------------------------
4,343,158 535,789 4,878,947
- ----------------------------------------------------------------------------------------------------------------------------------
HOUSING RELATED - 0.8%
- ----------------------------------------------------------------------------------------------------------------------------------
BUILDING MATERIALS - 0.1%
- ----------------------------------------------------------------------------------------------------------------------------------
American Standard, Inc., 10.875% Sr.
Nts., 5/15/99 (5) - 70,000 70,000 - 73,850 73,850
- ----------------------------------------------------------------------------------------------------------------------------------
Nortek, Inc., 9.25% Sr. Nts., Series B,
3/15/07 250,000 - 250,000 256,250 - 256,250
-----------------------------------
256,250 73,850 330,100
- ----------------------------------------------------------------------------------------------------------------------------------
HOMEBUILDERS/REAL ESTATE - 0.7%
- ----------------------------------------------------------------------------------------------------------------------------------
Continental Homes Holding Corp.,
10% Gtd. Unsec. Bonds, 4/15/06 50,000 - 50,000 54,750 - 54,750
- ----------------------------------------------------------------------------------------------------------------------------------
First Industrial LP, 7.15% Bonds,
5/15/27 - 75,000 75,000 - 77,073 77,073
- ----------------------------------------------------------------------------------------------------------------------------------
Greystone Homes, Inc., 10.75% Sr.
Gtd. Nts., 3/1/04 (5) 50,000 - 50,000 54,750 - 54,750
- ----------------------------------------------------------------------------------------------------------------------------------
Nortek, Inc., 9.125% Sr. Nts.,
Series B, 9/1/07 250,000 - 250,000 255,000 - 255,000
- ----------------------------------------------------------------------------------------------------------------------------------
Trizec Hahn Corp., 7.95% Sr. Unsec.
Debs., 6/1/07 CAD 2,000,000 - 2,000,000 1,450,435 - 1,450,435
<PAGE>
-------------------------------------
1,814,935 77,073 1,892,008
- ----------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 6.4%
- ----------------------------------------------------------------------------------------------------------------------------------
AEROSPACE - 2.0%
- ----------------------------------------------------------------------------------------------------------------------------------
Amtran, Inc., 10.50% Sr. Nts., 8/1/04 (7) 100,000 - 100,000 104,500 - 104,500
- ----------------------------------------------------------------------------------------------------------------------------------
Atlas Air, Inc.:
10.75% Sr. Nts., 8/1/05 125,000 - 125,000 132,500 - 132,500
12.25% Pass-Through Certificates,
12/1/02 1,000,000 - 1,000,000 1,115,000 - 1,115,000
- ----------------------------------------------------------------------------------------------------------------------------------
Boeing Co., 7.50% Debs., 8/15/42 2,000,000 - 2,000,000 2,254,914 - 2,254,914
- ----------------------------------------------------------------------------------------------------------------------------------
GPA Delaware, Inc., 8.75% Gtd. Nts.,
12/15/98 - 25,000 25,000 - 25,500 25,500
- ----------------------------------------------------------------------------------------------------------------------------------
Rolls-Royce Capital, Inc., 7.125% Gtd.
Nts., 7/29/03 1,000,000 - 1,000,000 1,028,125 - 1,028,125
- ----------------------------------------------------------------------------------------------------------------------------------
SC International Services, Inc., 9.25%
Sr. Sub. Nts., 9/1/07 (7) 250,000 - 250,000 260,000 - 260,000
- ----------------------------------------------------------------------------------------------------------------------------------
Southwest Airlines Co., 9.25% Debs.,
2/15/98 500,000 - 500,000 501,700 - 501,700
- ----------------------------------------------------------------------------------------------------------------------------------
Trans World Airlines, Inc., 11.50% Sr.
Sec. Nts., 12/15/04 (7) 250,000 - 250,000 252,500 - 252,500
--------------------------------------
5,649,239 25,500 5,674,739
- ----------------------------------------------------------------------------------------------------------------------------------
AUTOMOTIVE - 2.4%
- ----------------------------------------------------------------------------------------------------------------------------------
Cambridge Industries, Inc., 10.25%
Sr. Sub. Nts., 7/15/07 (7) 100,000 - 100,000 105,000 - 105,000
- ----------------------------------------------------------------------------------------------------------------------------------
Chrysler Corp., 7.40% Debs., 8/1/2097 3,000,000 - 3,000,000 3,212,247 - 3,212,247
- ----------------------------------------------------------------------------------------------------------------------------------
Ford Motor Co., 8.875% Debs., 11/15/22 2,000,000 - 2,000,000 2,267,818 - 2,267,818
- ----------------------------------------------------------------------------------------------------------------------------------
Hayes Wheels International, Inc., 11%
Sr. Sub. Nts., 7/15/06 200,000 - 200,000 224,000 - 224,000
- ----------------------------------------------------------------------------------------------------------------------------------
Johnson Controls, Inc., 7.70% Debs.,
3/1/15 500,000 - 500,000 564,073 - 564,073
- ----------------------------------------------------------------------------------------------------------------------------------
Key Plastics, Inc., 10.25% Sr. Sub.
Nts., Series B, 3/15/07 200,000 - 200,000 213,500 - 213,500
- ----------------------------------------------------------------------------------------------------------------------------------
MCII Holdings (USA), Inc., 0%/15% Sec.
Nts., 11/15/02 - 50,000 50,000 - 46,375 46,375
-------------------------------------
6,586,638 46,375 6,633,013
- ----------------------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS - 2.0%
- ----------------------------------------------------------------------------------------------------------------------------------
Caterpillar, Inc., 9.75% Debs.,
6/1/19 1,750,000 - 1,750,000 1,895,626 - 1,895,626
- ----------------------------------------------------------------------------------------------------------------------------------
Clark-Schwebel, Inc.:
10.50% Sr. Nts., 4/15/06 650,000 - 650,000 711,750 - 711,750
12.50% Debs., 7/15/07 (7)(10) 137,982 - 137,982 148,331 - 148,331
- ----------------------------------------------------------------------------------------------------------------------------------
Communications & Power Industries,
Inc., 12% Sr. Sub. Nts.,
Series B, 8/1/05 500,000 - 500,000 560,000 - 560,000
- ----------------------------------------------------------------------------------------------------------------------------------
Day International Group, Inc.,
11.125% Sr. Sub. Nts.,
Series B, 6/1/05 (5) - 50,000 50,000 - 54,250 54,250
- ----------------------------------------------------------------------------------------------------------------------------------
Hydrochem Industrial Services, Inc.,
10.375% Sr. Sub. Nts., 8/1/07 325,000 - 325,000 337,187 - 337,187
- ----------------------------------------------------------------------------------------------------------------------------------
Interlake Corp., 12.125% Sr. Sub.
Debs., 3/1/02 - 50,000 50,000 - 52,000 52,000
- ----------------------------------------------------------------------------------------------------------------------------------
International Wire Group, Inc.,
11.75% Sr. Sub. Nts., Series B, 6/1/05 - 50,000 50,000 - 55,000 55,000
- ----------------------------------------------------------------------------------------------------------------------------------
Jordan Industries, Inc., 10.375% Sr.
Nts., Series B, 8/1/07 - 50,000 50,000 - 50,750 50,750
- ----------------------------------------------------------------------------------------------------------------------------------
Mark IV Industries, Inc., 8.75% Sub.
Nts., 4/1/03 (5) - 40,000 40,000 - 42,400 42,400
- ----------------------------------------------------------------------------------------------------------------------------------
Polymer Group, Inc., 9% Sr. Sub. Nts.,
7/1/07 150,000 - 150,000 150,375 - 150,375
- ----------------------------------------------------------------------------------------------------------------------------------
Roller Bearing Co. of America, Inc.,
9.625% Gtd. Sr. Sub. Nts., 6/15/07 (5) 200,000 - 200,000 202,500 - 202,500
- ----------------------------------------------------------------------------------------------------------------------------------
Specialty Equipment Co., 11.375% Sr.
Sub. Nts., 12/1/03 - 50,000 50,000 - 54,375 54,375
<PAGE>
- ----------------------------------------------------------------------------------------------------------------------------------
Titan Wheel International, Inc., 8.75%
Sr. Sub. Nts., 4/1/07 250,000 - 250,000 263,125 - 263,125
- ----------------------------------------------------------------------------------------------------------------------------------
Westinghouse Electric Corp., 8.375%
Nts., 6/15/02 1,000,000 - 1,000,000 1,050,813 - 1,050,813
--------------------------------------
5,319,707 308,775 5,628,482
- ----------------------------------------------------------------------------------------------------------------------------------
MEDIA - 3.1%
- ----------------------------------------------------------------------------------------------------------------------------------
BROADCASTING - 0.9%
- ----------------------------------------------------------------------------------------------------------------------------------
Allbritton Communications Co.:
11.50% Sr. Sub. Debs., 8/15/04 675,000 - 675,000 710,437 - 710,437
9.75% Sr. Sub. Debs., Series B,
11/30/07 - 50,000 50,000 - 51,500 51,500
- ----------------------------------------------------------------------------------------------------------------------------------
Capstar Broadcasting Partners, Inc.,
9.25% Sr. Sub. Nts., 7/1/07 175,000 - 175,000 179,812 - 179,812
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications Corp., 11.625%
Sr. Sub. Nts., 10/1/02 520,000 - 520,000 559,000 - 559,000
- ----------------------------------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc., 10%
Sr. Sub. Nts., 9/30/05 200,000 50,000 250,000 211,500 52,875 264,375
- ----------------------------------------------------------------------------------------------------------------------------------
Young Broadcasting, Inc.:
8.75% Sr. Sub. Debs., 6/15/07 300,000 - 300,000 298,500 - 298,500
9% Sr. Sub. Nts., Series B, 1/15/06 400,000 - 400,000 402,000 - 402,000
--------------------------------------
2,361,249 104,375 2,465,624
- ----------------------------------------------------------------------------------------------------------------------------------
CABLE TELEVISION - 1.3%
- ----------------------------------------------------------------------------------------------------------------------------------
Adelphia Communications Corp.:
9.25% Sr. Nts., 10/1/02 150,000 - 150,000 153,750 - 153,750
9.875% Sr. Nts., Series B, 3/1/07 200,000 - 200,000 212,500 - 212,500
10.50% Sr. Unsec. Nts., Series B,
7/15/04 (7) - 50,000 50,000 - 54,125 54,125
- ----------------------------------------------------------------------------------------------------------------------------------
Australis Media Ltd., 1.75%/15.75%
Gtd. Sr. Sec. Disc. Nts., 5/15/03 (14) - 75,664 75,664 - 33,292 33,292
- ----------------------------------------------------------------------------------------------------------------------------------
Cablevision Systems Corp., 9.875% Sr.
Sub. Debs., 2/15/13 - 50,000 50,000 - 55,375 55,375
- ----------------------------------------------------------------------------------------------------------------------------------
Comcast Corp., 9.375% Sr. Sub. Debs.,
5/15/05 - 50,000 50,000 - 53,312 53,312
- ----------------------------------------------------------------------------------------------------------------------------------
EchoStar Communications Corp.,
0%/12.875% Sr. Disc. Nts., 6/1/04 (11) 250,000 50,000 300,000 230,000 46,000 276,000
- ----------------------------------------------------------------------------------------------------------------------------------
EchoStar DBS Corp., 12.50% Gtd. Nts.,
7/1/02 525,000 - 525,000 569,625 - 569,625
- ----------------------------------------------------------------------------------------------------------------------------------
Falcon Holdings Group LP, 11% Sr. Sub.
Nts., 9/15/03 (10) - 65,347 65,347 - 68,286 68,286
- ----------------------------------------------------------------------------------------------------------------------------------
James Cable Partners LP, 10.75% Sr.
Nts., Series B, 8/15/04 (7) - 50,000 50,000 - 53,000 53,000
- ----------------------------------------------------------------------------------------------------------------------------------
Knology Holdings, Inc., Units (each
unit consists of $1,000 principal
amount of 0%/11.875% sr. disc. nts.,
10/15/07 and one warrant to purchase
.003734 shares of preferred stock) (5)(11)(12) 200,000 - 200,000 110,000 - 110,000
- ----------------------------------------------------------------------------------------------------------------------------------
Optel, Inc., 13% Sr. Nts., Series B,
2/15/05 100,000 - 100,000 106,500 - 106,500
- ----------------------------------------------------------------------------------------------------------------------------------
Rogers Communications, Inc.:
8.75% Sr. Nts., 7/15/07 CAD 600,000 - 600,000 409,445 - 409,445
8.875% Sr. Nts., 7/15/07 - 50,000 50,000 - 50,250 50,250
- ----------------------------------------------------------------------------------------------------------------------------------
TCI Satellite Entertainment, Inc.,
10.875% Sr. Sub. Nts., 2/15/07 (7) - 50,000 50,000 - 52,625 52,625
- ----------------------------------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs.,
10/30/07 1,000,000 125,000 1,125,000 1,111,644 138,956 1,250,600
- ----------------------------------------------------------------------------------------------------------------------------------
United International Holdings, Inc.,
Zero Coupon Sr. Sec. Disc. Nts.,
Series B, 14%, 11/15/99 (9) - 100,000 100,000 - 83,500 83,500
-------------------------------------
2,903,464 688,721 3,592,185
- ----------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED MEDIA - 0.6%
<PAGE>
- ----------------------------------------------------------------------------------------------------------------------------------
Fox/Liberty Networks LLC, 8.875% Sr.
Nts., 8/15/07 (7) - 25,000 25,000 - 25,125 25,125
- ----------------------------------------------------------------------------------------------------------------------------------
Heritage Media Corp., 8.75% Sr. Sub.
Nts., 2/15/06 500,000 - 500,000 530,000 - 530,000
- ----------------------------------------------------------------------------------------------------------------------------------
Hollywood Theaters, Inc., 10.625% Sr.
Sub. Nts., 8/1/07 (7) 100,000 - 100,000 106,750 - 106,750
- ----------------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co.:
8.625% Sr. Sub. Nts., 9/15/07 400,000 50,000 450,000 413,000 51,625 464,625
9.625% Sr. Sub. Nts., 12/1/06 150,000 - 150,000 162,188 - 162,188
- ----------------------------------------------------------------------------------------------------------------------------------
Outdoor Systems, Inc., 8.875% Sr. Sub.
Nts., 6/15/07 200,000 - 200,000 209,000 - 209,000
- ----------------------------------------------------------------------------------------------------------------------------------
Time Warner, Inc., 7.45% Nts., 2/1/98 - 145,000 145,000 - 145,126 145,126
-------------------------------------
1,420,938 221,876 1,642,814
- ----------------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT/FILM - 0.2%
- ----------------------------------------------------------------------------------------------------------------------------------
American Skiing Corp., 12% Sr. Sub.
Nts., Series B, 7/15/06 (5) - 75,000 75,000 - 83,625 83,625
- ----------------------------------------------------------------------------------------------------------------------------------
Ascent Entertainment Group, Inc.,
0%/11.875% Sr. Sec. Disc. Nts.,
12/15/04 - 50,000 50,000 - 28,875 28,875
- ----------------------------------------------------------------------------------------------------------------------------------
Blockbuster Entertainment Corp.,
6.625% Sr. Nts., 2/15/98 250,000 145,000 395,000 250,090 145,052 395,142
-----------------------------------
250,090 257,552 507,642
- ----------------------------------------------------------------------------------------------------------------------------------
PUBLISHING/PRINTING - 0.1%
- ----------------------------------------------------------------------------------------------------------------------------------
American Lawyer Media Holdings,
Inc., 9.75% Sr. Nts., 12/15/07 (7) 250,000 - 250,000 255,000 - 255,000
- ----------------------------------------------------------------------------------------------------------------------------------
OTHER - 1.2%
- ----------------------------------------------------------------------------------------------------------------------------------
Conglomerates - 0.0%
- ----------------------------------------------------------------------------------------------------------------------------------
Maxxam Group, Inc., 0%/12.25% Sr.
Sec. Disc. Nts., 8/1/03 (11) 100,000 - 100,000 99,500 - 99,500
- ----------------------------------------------------------------------------------------------------------------------------------
SERVICES - 1.2%
- ----------------------------------------------------------------------------------------------------------------------------------
Archer Daniels Midland Co.,
7.125% Debs., 3/1/13 750,000 - 750,000 800,963 - 800,963
- ----------------------------------------------------------------------------------------------------------------------------------
Employee Solutions, Inc., 10% Sr.
Nts., 10/15/04 (5) - 50,000 50,000 - 48,250 48,250
- ----------------------------------------------------------------------------------------------------------------------------------
ENSCO International, Inc.:
6.75% Nts., 11/15/07 1,000,000 - 1,000,000 1,007,035 - 1,007,035
7.20% Nts., 11/15/27 1,000,000 - 1,000,000 1,018,462 - 1,018,462
- ----------------------------------------------------------------------------------------------------------------------------------
Maxim Group, Inc. (The), 9.25% Sr.
Sub. Nts., 10/15/07 (7) - 50,000 50,000 - 49,875 49,875
- ----------------------------------------------------------------------------------------------------------------------------------
Oxford Automotive, Inc., 10.125% Sr.
Unsec. Sub. Nts., 6/15/07 200,000 - 200,000 211,250 - 211,250
- ----------------------------------------------------------------------------------------------------------------------------------
Sun Co., Inc., 7.95% Debs., 12/15/01 - 75,000 75,000 - 79,198 79,198
- ----------------------------------------------------------------------------------------------------------------------------------
USI American Holdings, Inc., 7.25% Gtd.
Sr. Nts., Series B, 12/1/06 - 80,000 80,000 - 81,852 81,852
-------------------------------------
3,037,710 259,175 3,296,885
- ----------------------------------------------------------------------------------------------------------------------------------
RETAIL - 1.7%
- ----------------------------------------------------------------------------------------------------------------------------------
Department Stores - 0.4%
- ----------------------------------------------------------------------------------------------------------------------------------
Federated Department Stores, Inc.,
10% Sr. Nts., 2/15/01 - 60,000 60,000 - 66,187 66,187
- ----------------------------------------------------------------------------------------------------------------------------------
Parisian, Inc., 9.875% Sr. Sub.
Nts., 7/15/03 (5) - 50,000 50,000 - 53,125 53,125
- ----------------------------------------------------------------------------------------------------------------------------------
Price/Costco Cos., Inc., 7.125% Sr.
Nts., 6/15/05 - 120,000 120,000 - 122,938 122,938
- ----------------------------------------------------------------------------------------------------------------------------------
Sears Canada, Inc., 11.70% Debs.,
7/10/00 CAD 500,000 - 500,000 397,807 - 397,807
- ----------------------------------------------------------------------------------------------------------------------------------
Sears Roebuck & Co., 8.39% Medium-Term
Nts., 3/23/99 300,000 290,000 590,000 308,082 297,813 605,895
-----------------------------------
705,889 540,063 1,245,952
- ----------------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAILING - 0.3%
- ----------------------------------------------------------------------------------------------------------------------------------
K Mart Corp., 7.75% Debs., 10/1/12 - 50,000 50,000 - 48,250 48,250
<PAGE>
- ----------------------------------------------------------------------------------------------------------------------------------
May Department Stores Cos., 10.625%
Debs., 11/1/10 405,000 - 405,000 545,305 - 545,305
- ----------------------------------------------------------------------------------------------------------------------------------
Specialty Retailers, Inc., 9% Gtd.
Unsec. Sr. Sub. Nts., 7/15/07 100,000 - 100,000 102,500 - 102,500
-----------------------------------
647,805 48,250 696,055
- ----------------------------------------------------------------------------------------------------------------------------------
SUPERMARKETS - 1.0%
- ----------------------------------------------------------------------------------------------------------------------------------
Dairy Mart Convenience Stores, Inc.,
10.25% Sr. Sub. Nts., 3/15/04 - 50,000 50,000 - 49,875 49,875
- ----------------------------------------------------------------------------------------------------------------------------------
Fleming Cos., Inc., 10.625% Sr. Sub.
Nts., 7/31/07 (7) 550,000 - 550,000 583,000 - 583,000
- ----------------------------------------------------------------------------------------------------------------------------------
Great Atlantic & Pacific Tea Co.,
Inc., (The) 9.125% Debs., 1/15/98 - 145,000 145,000 - 145,102 145,102
- ----------------------------------------------------------------------------------------------------------------------------------
Jitney-Jungle Stores of America,
Inc., 12% Gtd. Sr. Nts., 3/1/06 - 50,000 50,000 - 57,000 57,000
- ----------------------------------------------------------------------------------------------------------------------------------
Kroger Co., 8.50% Sr. Sec. Debs.,
6/15/03 1,000,000 - 1,000,000 1,050,837 - 1,050,837
- ----------------------------------------------------------------------------------------------------------------------------------
Ralph's Grocery Co., 10.45% Sr.
Nts., 6/15/04 300,000 - 300,000 337,500 - 337,500
- ----------------------------------------------------------------------------------------------------------------------------------
Randall's Food Markets, Inc., 9.375%
Sr. Sub. Nts., 7/1/07 (7) 500,000 - 500,000 520,000 - 520,000
- ----------------------------------------------------------------------------------------------------------------------------------
Stater Brothers Holdings, Inc., 9%
Unsec. Sr. Sub. Nts., 7/1/04 150,000 - 150,000 157,500 - 157,500
-------------------------------------
2,648,837 251,977 2,900,814
- ----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 3.2%
- ----------------------------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY - 2.6%
- ----------------------------------------------------------------------------------------------------------------------------------
Cellular Communications International,
Inc., Zero Coupon Sr. Disc. Nts.,
11.198%, 8/15/00 (9) 1,450,000 - 1,450,000 1,167,250 - 1,167,250
- ----------------------------------------------------------------------------------------------------------------------------------
Concentic Network Corp., Units (each
unit consists of $1,000 principal
amount of 12.75% sr. nts., 12/15/07
and one warrant to purchase 6.34
shares of common stock) - 50,000 50,000 - 51,438 51,438
- ----------------------------------------------------------------------------------------------------------------------------------
DecisionOne Corp., 9.75% Sr. Sub.
Nts., 8/1/07 - 50,000 50,000 - 51,625 51,625
- ----------------------------------------------------------------------------------------------------------------------------------
Dial Call Communications, Inc.,
0%/12.25% Sr. Disc. Nts., 4/15/04 (11) 300,000 - 300,000 287,250 - 287,250
- ----------------------------------------------------------------------------------------------------------------------------------
DII Group, Inc., 8.50% Sr. Sub. Nts.,
9/15/07 (7) - 50,000 50,000 - 49,250 49,250
- ----------------------------------------------------------------------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts.,
3/1/07 250,000 - 250,000 255,000 - 255,000
- ----------------------------------------------------------------------------------------------------------------------------------
General Electric Capital Corp.,
8.75% Debs., 5/21/07 1,000,000 - 1,000,000 1,172,150 - 1,172,150
- ----------------------------------------------------------------------------------------------------------------------------------
Geotek Communications, Inc., 12% Cv.
Sr. Sub. Nts., 2/15/01 (5) - 25,000 25,000 - 20,000 20,000
- ----------------------------------------------------------------------------------------------------------------------------------
Metrocall, Inc., 9.75% Sr. Sub. Nts.,
11/1/07 (7) 50,000 - 50,000 49,625 - 49,625
- ----------------------------------------------------------------------------------------------------------------------------------
Microcell Telecommunications, Inc.,
0%/14% Sr. Disc. Nts.,
Series B, 6/1/06 (11) - 50,000 50,000 - 33,750 33,750
- ----------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc.:
0%/10.65% Sr. Disc. Nts., 9/15/07 (7)(11) 50,000 - 50,000 31,750 - 31,750
0%/11.50% Sr. Disc. Nts., 9/1/03 (11) 250,000 - 250,000 250,000 - 250,000
0%/9.75% Sr. Disc. Nts., 8/15/04 (11) - 100,000 100,000 - 89,250 89,250
- ----------------------------------------------------------------------------------------------------------------------------------
Omnipoint Corp., 11.625% Sr.
Nts., 8/15/06 70,000 - 70,000 74,200 - 74,200
- ----------------------------------------------------------------------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital
Corp., 14% Sr. Nts., 8/15/04 65,000 - 65,000 70,850 - 70,850
- ----------------------------------------------------------------------------------------------------------------------------------
Orion Network Systems, Inc., 0%/12.50%
Sr. Disc. Nts., 1/15/07 (11) 200,000 - 200,000 149,500 - 149,500
- ----------------------------------------------------------------------------------------------------------------------------------
Plantronics, Inc., 10% Sr. Nts., 1/15/01 (5) - 75,000 75,000 - 78,000 78,000
- ----------------------------------------------------------------------------------------------------------------------------------
Price Communications Cellular Holdings,
Inc., 0%/13.50% Sr. Disc. Nts.,
Series A, 8/1/07 (5)(11) - 75,000 75,000 - 47,625 47,625
- ----------------------------------------------------------------------------------------------------------------------------------
PriCellular Wireless Corp.:
0%/12.25% Sr. Sub. Disc. Nts., 10/1/03 (11) 200,000 - 200,000 206,000 - 206,000
0%/14% Sr. Sub. Disc. Nts., 11/15/01 (11) 1,050,000 - 1,050,000 1,170,750 - 1,170,750
<PAGE>
10.75% Sr. Nts., 11/1/04 520,000 - 520,000 565,500 - 565,500
- ----------------------------------------------------------------------------------------------------------------------------------
Real Time Data, Inc., Units (each
unit consists of $1,000 principal
amount of 0%/13.50% sub. disc.
nts., 8/15/06 and one warrant to
purchase six ordinary shares) (5)(11)(12) 1,000,000 - 1,000,000 380,000 - 380,000
- ----------------------------------------------------------------------------------------------------------------------------------
Sprint Spectrum LP/Sprint Spectrum
Finance Corp., 11% Sr. Nts., 8/15/06 - 50,000 50,000 - 56,500 56,500
- ----------------------------------------------------------------------------------------------------------------------------------
Star Choice Communications, Inc.,
Units (each unit consists of $1,000
principal amount of 13% sr. sec.
nts., 12/15/05 and one warrant to
buy common stock) (12) 200,000 - 200,000 206,000 - 206,000
- ----------------------------------------------------------------------------------------------------------------------------------
Tracor, Inc., 8.50% Sr. Sub. Nts.,
3/1/07 200,000 - 200,000 206,000 - 206,000
- ----------------------------------------------------------------------------------------------------------------------------------
Unisys Corp.:
11.75% Sr. Nts., 10/15/04 300,000 - 300,000 344,250 - 344,250
12% Sr. Nts., Series B, 4/15/03 - 50,000 50,000 - 56,875 56,875
- ----------------------------------------------------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II,
9.50% Sr. Nts., 2/1/04 100,000 - 100,000 98,000 - 98,000
- ----------------------------------------------------------------------------------------------------------------------------------
Western Wireless Corp., 10.50% Sr.
Sub. Nts., 2/1/07 - 50,000 50,000 - 54,250 54,250
--------------------------------------
6,684,075 588,563 7,272,638
- ----------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS/TECHNOLOGY - 0.6%
- ----------------------------------------------------------------------------------------------------------------------------------
American Communications Services,
Inc., 0%/13% Sr. Disc. Nts., 11/1/05 (11) - 75,000 75,000 - 60,375 60,375
- ----------------------------------------------------------------------------------------------------------------------------------
Brooks Fiber Properties, Inc.,
0%/11.875% Sr. Disc. Nts., 11/1/06 (11) 145,000 75,000 220,000 116,725 60,375 177,100
- ----------------------------------------------------------------------------------------------------------------------------------
Centennial Cellular Corp., 10.125% Sr.
Nts., 5/15/05 - 25,000 25,000 - 27,250 27,250
- ----------------------------------------------------------------------------------------------------------------------------------
COLT Telecom Group plc, Units (each
unit consists of $1,000 principal
amount of 0%/12% sr. disc. nts.,
12/15/06 and one warrant to purchase
7.8 ordinary shares) (11)(12) 350,000 - 350,000 273,000 - 273,000
- ----------------------------------------------------------------------------------------------------------------------------------
Comcast UK Cable Partner Ltd.,
0%/11.20% Sr. Disc. Debs., 11/15/07 (11) - 75,000 75,000 - 61,125 61,125
- ----------------------------------------------------------------------------------------------------------------------------------
Diamond Cable Communications plc,
0%/10.75% Sr. Disc. Nts., 2/15/07 (11) - 50,000 50,000 - 34,250 34,250
- ----------------------------------------------------------------------------------------------------------------------------------
GST Telecommunications, Inc.,
0%/13.875% Cv. Sr. Sub. Disc.
Nts., 12/15/05 (7)(11) 100,000 - 100,000 76,813 - 76,813
- ----------------------------------------------------------------------------------------------------------------------------------
GST USA, Inc., 0%/13.875% Gtd. Sr.
Disc. Nts., 12/15/05 - 50,000 50,000 - 38,500 38,500
- ----------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc.,
0%/11.25% Sr. Disc. Nts., Series B,
7/15/07 (11) - 50,000 50,000 - 35,875 35,875
- ----------------------------------------------------------------------------------------------------------------------------------
International CableTel, Inc.,
0%/11.50% Sr. Deferred Coupon
Nts., Series B, 2/1/06 (11) - 100,000 100,000 - 78,125 78,125
- ----------------------------------------------------------------------------------------------------------------------------------
IXC Communications, Inc., 12.50% Sr.
Nts., Series B, 10/1/05 - 50,000 50,000 - 57,875 57,875
- ----------------------------------------------------------------------------------------------------------------------------------
McLeodUSA, Inc., 0%/10.50% Sr. Disc.
Nts., 3/1/07 (11) 65,000 50,000 115,000 47,125 36,250 83,375
- ----------------------------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc., 9.625%
Sr. Nts., 10/1/07 100,000 - 100,000 104,000 - 104,000
- ----------------------------------------------------------------------------------------------------------------------------------
NTL, Inc., 10% Sr. Nts., 2/15/07 100,000 - 100,000 105,750 - 105,750
- ----------------------------------------------------------------------------------------------------------------------------------
Teleport Communications Group, Inc.:
0%/11.125% Sr. Disc. Nts., 7/1/07 (11) 150,000 25,000 175,000 122,625 20,438 143,063
9.875% Sr. Nts., 7/1/06 - 25,000 25,000 - 28,125 28,125
- ----------------------------------------------------------------------------------------------------------------------------------
Qwest Communications International,
Inc., 0%/9.47% Sr. Disc. Nts.,
10/15/07 (7)(11) 365,000 - 365,000 248,200 - 248,200
--------------------------------------
1,094,238 538,563 1,632,801
- ----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 1.6%
- ----------------------------------------------------------------------------------------------------------------------------------
RAILROADS - 1.2%
- ----------------------------------------------------------------------------------------------------------------------------------
Canadian Pacific Ltd., 9.45% Debs., 8/1/21 1,000,000 - 1,000,000 1,278,950 - 1,278,950
- ----------------------------------------------------------------------------------------------------------------------------------
CSX Corp., 7.05% Debs., 5/1/02 - 85,000 85,000 - 87,027 87,027
<PAGE>
Kansas City Southern Industries,
Inc., 6.625% Nts., 3/1/05 750,000 - 750,000 758,272 - 758,272
- ----------------------------------------------------------------------------------------------------------------------------------
Norfolk Southern Corp., 7.35% Nts.,
5/15/07 - 75,000 75,000 - 79,400 79,400
- ----------------------------------------------------------------------------------------------------------------------------------
Transtar Holdings LP/Transtar
Capital Corp., 0%/13.375% Sr. Disc.
Nts., Series B, 12/15/03 (11) 1,100,000 - 1,100,000 968,000 - 968,000
- ----------------------------------------------------------------------------------------------------------------------------------
Union Pacific Corp.:
7% Nts., 6/15/00 - 150,000 150,000 - 152,494 152,494
9.65% Medium-Term Nts., 4/17/00 100,000 - 100,000 107,286 - 107,286
-------------------------------------
3,112,508 318,921 3,431,429
- ----------------------------------------------------------------------------------------------------------------------------------
SHIPPING - 0.3%
- ----------------------------------------------------------------------------------------------------------------------------------
Federal Express Corp., 6.25%
Nts., 4/15/98 - 240,000 240,000 - 240,102 240,102
- ----------------------------------------------------------------------------------------------------------------------------------
Navigator Gas Transport plc:
10.50% First Priority Ship Mtg.
Nts., 6/30/07 (7) 400,000 - 400,000 426,000 - 426,000
Units (each unit consists of $1,000
principal amount of 12% second
priority ship mtg. nts., 6/30/07
and 7.66 warrants) (7)(12) 100,000 - 100,000 113,000 - 113,000
-----------------------------------
539,000 240,102 779,102
- ----------------------------------------------------------------------------------------------------------------------------------
TRUCKING - 0.1%
- ----------------------------------------------------------------------------------------------------------------------------------
Coach USA, Inc., 9.375% Gtd. Sr.
Sub. Nts., Series B, 7/1/07 350,000 - 350,000 362,250 - 362,250
- ----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 2.7%
- ----------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 0.7%
- ----------------------------------------------------------------------------------------------------------------------------------
California Energy, Inc., 10.25% Sr.
Disc. Nts., 1/15/04 300,000 - 300,000 324,000 - 324,000
- ----------------------------------------------------------------------------------------------------------------------------------
Calpine Corp., 8.75% Sr. Nts., 7/15/07 (7) 185,000 - 185,000 189,625 - 189,625
- ----------------------------------------------------------------------------------------------------------------------------------
Consumers Energy Co., 8.75% First Mtg.
Nts., 2/15/98 250,000 145,000 395,000 250,597 145,346 395,943
- ----------------------------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 7.25% First Mtg.
Nts., Series A, 2/1/99 (5) - 75,000 75,000 - 75,750 75,750
- ----------------------------------------------------------------------------------------------------------------------------------
First PV Funding Corp., 10.15% Lease
Obligation Bonds, Series 1986B, 1/15/16 (5) 197,000 - 197,000 209,063 - 209,063
- ----------------------------------------------------------------------------------------------------------------------------------
Public Service Co. of Colorado, 8.75%
First Mtg. Bonds, 3/1/22 250,000 - 250,000 276,115 - 276,115
- ----------------------------------------------------------------------------------------------------------------------------------
South Carolina Electric & Gas Co., 9%
Mtg. Bonds, 7/15/06 500,000 - 500,000 583,366 - 583,366
-------------------------------------
1,832,766 221,096 2,053,862
- ----------------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES - 0.8%
- ----------------------------------------------------------------------------------------------------------------------------------
Laclede Gas Co., 8.50% First Mtg.
Bonds, 11/15/04 500,000 - 500,000 557,739 - 557,739
- ----------------------------------------------------------------------------------------------------------------------------------
National Fuel Gas Co., 7.75% Debs.,
2/1/04 500,000 - 500,000 532,226 - 532,226
- ----------------------------------------------------------------------------------------------------------------------------------
Northern Illinois Gas Co., 6.45%
First Mtg. Bonds, 8/1/01 - 220,000 220,000 - 222,987 222,987
- ----------------------------------------------------------------------------------------------------------------------------------
Tennessee Gas Pipeline Co., 7.50%
Bonds, 4/1/17 - 100,000 100,000 - 107,362 107,362
- ----------------------------------------------------------------------------------------------------------------------------------
Texas Gas Transmission Corp., 8.625%
Nts., 4/1/04 500,000 - 500,000 555,629 - 555,629
- ----------------------------------------------------------------------------------------------------------------------------------
Union Gas Ltd., 13% Debs., 6/30/03 CAD 464,000 - 464,000 338,197 - 338,197
-------------------------------------
1,983,791 330,349 2,314,140
- ----------------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES - 1.2%
- ----------------------------------------------------------------------------------------------------------------------------------
GTE Corp., 8.85% Debs., 3/1/98 300,000 60,000 360,000 301,217 60,243 361,460
- ----------------------------------------------------------------------------------------------------------------------------------
New York Telephone Co., 9.375%
Debs., 7/15/31 2,500,000 - 2,500,000 2,817,648 - 2,817,648
- ----------------------------------------------------------------------------------------------------------------------------------
Peoples Telephone Co., Inc., 12.25%
Sr. Nts., 7/15/02 - 50,000 50,000 - 53,500 53,500
-------------------------------------
3,118,865 113,743 3,232,608
<PAGE>
---------------------------------------
Total Corporate Bonds and Notes (Cost
$103,314,823, Cost $11,685,570 ,
Combined $115,000,393) 107,739,264 11,962,978 119,702,242
<CAPTION>
SHARES
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS - 2.6%
- ----------------------------------------------------------------------------------------------------------------------------------
BASIC INDUSTRY - 0.3%
- ----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 0.2%
- ----------------------------------------------------------------------------------------------------------------------------------
Dexter Corp. - 4,300 4,300 - 185,706 185,706
- ----------------------------------------------------------------------------------------------------------------------------------
Ethyl Corp. - 13,300 13,300 - 102,244 102,244
- ----------------------------------------------------------------------------------------------------------------------------------
IMC Global, Inc. - 3,149 3,149 - 103,130 103,130
--------------------------------------
- 391,080 391,080
- ----------------------------------------------------------------------------------------------------------------------------------
PAPER - 0.0%
- ----------------------------------------------------------------------------------------------------------------------------------
Unisource Worldwide, Inc. - 6,900 6,900 - 98,325 98,325
- ----------------------------------------------------------------------------------------------------------------------------------
STEEL - 0.1%
- ----------------------------------------------------------------------------------------------------------------------------------
Carpenter Technology Corp. - 3,200 3,200 - 153,800 153,800
- ----------------------------------------------------------------------------------------------------------------------------------
ROHN Industries, Inc. - 23,000 23,000 - 118,594 118,594
--------------------------------------
- 272,394 272,394
- ----------------------------------------------------------------------------------------------------------------------------------
CONSUMER RELATED - 0.4%
- ----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE - 0.1%
- ----------------------------------------------------------------------------------------------------------------------------------
Glaxo Wellcome plc, Sponsored ADR - 3,800 3,800 - 181,925 181,925
- ----------------------------------------------------------------------------------------------------------------------------------
RESTAURANTS - 0.0%
- ----------------------------------------------------------------------------------------------------------------------------------
Piccadilly Cafeterias, Inc. - 6,900 6,900 - 90,562 90,562
- ----------------------------------------------------------------------------------------------------------------------------------
ENERGY - 0.3%
- ----------------------------------------------------------------------------------------------------------------------------------
Amoco Corp. - 1,400 1,400 - 119,175 119,175
- ----------------------------------------------------------------------------------------------------------------------------------
Atlantic Richfield Co. - 2,400 2,400 - 192,300 192,300
- ----------------------------------------------------------------------------------------------------------------------------------
Chevron Corp. - 2,300 2,300 - 177,100 177,100
- ----------------------------------------------------------------------------------------------------------------------------------
Exxon Corp. - 3,000 3,000 - 183,562 183,562
- ----------------------------------------------------------------------------------------------------------------------------------
Mobil Corp. - 2,400 2,400 - 173,250 173,250
- ----------------------------------------------------------------------------------------------------------------------------------
Occidental Petroleum Corp. - 4,700 4,700 - 137,769 137,769
--------------------------------------
- 983,156 983,156
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES - 0.5%
- ----------------------------------------------------------------------------------------------------------------------------------
BANKS & THRIFTS - 0.3%
- ----------------------------------------------------------------------------------------------------------------------------------
BankAmerica Corp. - 1,000 1,000 - 73,000 73,000
- ----------------------------------------------------------------------------------------------------------------------------------
BankBoston Corp. - 2,000 2,000 - 187,875 187,875
- ----------------------------------------------------------------------------------------------------------------------------------
First Union Corp. - 2,700 2,700 - 138,375 138,375
- ----------------------------------------------------------------------------------------------------------------------------------
NationsBank Corp. - 1,900 1,900 - 115,544 115,544
- ----------------------------------------------------------------------------------------------------------------------------------
Wells Fargo & Co. - 500 500 - 169,719 169,719
--------------------------------------
- 684,513 684,513
- ----------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 0.2%
- ----------------------------------------------------------------------------------------------------------------------------------
Camden Property Trust - 4,800 4,800 - 148,800 148,800
- ----------------------------------------------------------------------------------------------------------------------------------
Capstone Capital Corp. - 5,900 5,900 - 151,187 151,187
<PAGE>
- ----------------------------------------------------------------------------------------------------------------------------------
Crescent Real Estate Equities, Inc. - 4,200 4,200 - 165,375 165,375
- ----------------------------------------------------------------------------------------------------------------------------------
Health & Retirement Properties Trust - 6,800 6,800 - 136,000 136,000
--------------------------------------
- 601,362 601,362
- ----------------------------------------------------------------------------------------------------------------------------------
INSURANCE - 0.0%
- ----------------------------------------------------------------------------------------------------------------------------------
HSB Group, Inc. - 2,500 2,500 - 137,969 137,969
- ----------------------------------------------------------------------------------------------------------------------------------
HOUSING RELATED - 0.2%
- ----------------------------------------------------------------------------------------------------------------------------------
HOMEBUILDERS/REAL ESTATE - 0.2%
- ----------------------------------------------------------------------------------------------------------------------------------
Cornerstone Properties, Inc. - 8,300 8,300 - 159,256 159,256
- ----------------------------------------------------------------------------------------------------------------------------------
Meditrust Corp., Paired Stock - 3,724 3,724 - 136,391 136,391
- ----------------------------------------------------------------------------------------------------------------------------------
Tower Realty Trust, Inc. (13) - 5,000 5,000 - 123,125 123,125
--------------------------------------
- 418,772 418,772
- ----------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 0.2%
- ----------------------------------------------------------------------------------------------------------------------------------
AEROSPACE - 0.1%
- ----------------------------------------------------------------------------------------------------------------------------------
General Dynamics Corp. - 2,300 2,300 - 198,806 198,806
- ----------------------------------------------------------------------------------------------------------------------------------
Lockheed Martin Corp. - 1,200 1,200 - 118,200 118,200
--------------------------------------
- 317,006 317,006
- ----------------------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS - 0.1%
- ----------------------------------------------------------------------------------------------------------------------------------
PACCAR, Inc. - 5,000 5,000 - 262,500 262,500
- ----------------------------------------------------------------------------------------------------------------------------------
MEDIA - 0.0%
- ----------------------------------------------------------------------------------------------------------------------------------
CABLE TELEVISION - 0.0%
- ----------------------------------------------------------------------------------------------------------------------------------
Optel, Inc. (5)(13) 100 - 100 - - -
- ----------------------------------------------------------------------------------------------------------------------------------
RETAIL - 0.1%
- ----------------------------------------------------------------------------------------------------------------------------------
DEPARTMENT STORES - 0.0%
- ----------------------------------------------------------------------------------------------------------------------------------
Penney (J.C.) Co., Inc. - 2,100 2,100 - 126,656 126,656
- ----------------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAILING - 0.1%
- ----------------------------------------------------------------------------------------------------------------------------------
Brown Group, Inc. - 6,500 6,500 - 86,531 86,531
- ----------------------------------------------------------------------------------------------------------------------------------
New England Business Service, Inc. - 5,000 5,000 - 168,750 168,750
--------------------------------------
- 255,281 255,281
- ----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 0.0%
- ----------------------------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY - 0.0%
- ----------------------------------------------------------------------------------------------------------------------------------
Nextel Communications, Inc., Cl. A (13) - 154 154 - 4,004 4,004
- ----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 0.1%
- ----------------------------------------------------------------------------------------------------------------------------------
RAILROADS - 0.1%
- ----------------------------------------------------------------------------------------------------------------------------------
GATX Corp. - 3,100 3,100 - 224,944 224,944
- ----------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 0.8%
- ----------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 0.3%
- ----------------------------------------------------------------------------------------------------------------------------------
Duke Energy Corp. - 3,704 3,704 - 205,109 205,109
- ----------------------------------------------------------------------------------------------------------------------------------
FPL Group, Inc. - 3,000 3,000 - 177,562 177,562
- ----------------------------------------------------------------------------------------------------------------------------------
Illinova Corp. - 4,000 4,000 - 107,750 107,750
<PAGE>
- ----------------------------------------------------------------------------------------------------------------------------------
Kansas City Power & Light Co. - 5,000 5,000 - 147,813 147,813
- ----------------------------------------------------------------------------------------------------------------------------------
Western Resources, Inc. - 3,900 3,900 - 167,700 167,700
--------------------------------------
- 805,934 805,934
- ----------------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES - 0.3%
- ----------------------------------------------------------------------------------------------------------------------------------
El Paso Natural Gas Co. - 3,800 3,800 - 252,700 252,700
- ----------------------------------------------------------------------------------------------------------------------------------
MCN Energy Group, Inc. - 3,700 3,700 - 149,388 149,388
- ----------------------------------------------------------------------------------------------------------------------------------
National Fuel Gas Co. - 3,700 3,700 - 180,144 180,144
- ----------------------------------------------------------------------------------------------------------------------------------
Questar Corp. - 3,300 3,300 - 147,263 147,263
--------------------------------------
- 729,495 729,495
- ----------------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES - 0.2%
- ----------------------------------------------------------------------------------------------------------------------------------
Ameritech Corp. - 2,100 2,100 - 169,050 169,050
- ----------------------------------------------------------------------------------------------------------------------------------
Bell Atlantic Corp. - 2,473 2,473 - 225,043 225,043
- ----------------------------------------------------------------------------------------------------------------------------------
Frontier Corp. - 5,700 5,700 - 137,156 137,156
- ----------------------------------------------------------------------------------------------------------------------------------
U S West Communications Group - 4,200 4,200 - 189,525 189,525
--------------------------------------
- 720,774 720,774
--------------------------------------
Total Common Stocks (Cost $5,350,847) - 7,306,652 7,306,652
- ----------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS - 1.3%
- ----------------------------------------------------------------------------------------------------------------------------------
Allstate Financing I, 7.95% Gtd.
Quarterly Income Preferred Securities,
Series A 80,000 - 80,000 2,075,000 - 2,075,000
- ----------------------------------------------------------------------------------------------------------------------------------
Case Corp., $4.50 Cum. Cv., Series A,
Non-Vtg. - 1,200 1,200 - 172,350 172,350
- ----------------------------------------------------------------------------------------------------------------------------------
CRIIMI MAE, Inc., 10.875% Cum. Cv.
Preferred Stock, Series B 13,000 - 13,000 444,437 - 444,437
- ----------------------------------------------------------------------------------------------------------------------------------
EchoStar Communications Corp., 12.125%
Sr. Redeemable Exchangeable Preferred
Stock, Series B (7)(10) 100 - 100 104,750 - 104,750
- ----------------------------------------------------------------------------------------------------------------------------------
Fresenius Medical Care Trust, 9%
Preferred Securities 505,000 - 505,000 530,250 - 530,250
- ----------------------------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc., 14% Sr.
Exchangeable Preferred (10) 3,381 - 3,381 210,467 - 210,467
- ----------------------------------------------------------------------------------------------------------------------------------
SFX Broadcasting, Inc., 12.625% Cum.,
Series E, Non-Vtg. (10) 53 - 53 60,554 - 60,554
--------------------------------------
Total Preferred Stocks (Cost
$3,165,304, Cost $115,000,
Combined $3,280,304) 3,425,458 172,350 3,597,808
<CAPTION>
UNITS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES - 0.0%
- ----------------------------------------------------------------------------------------------------------------------------------
American Communications Services,
Inc. Wts., Exp. 11/05 (5) 300 - 300 28,650 - 28,650
- ----------------------------------------------------------------------------------------------------------------------------------
Australis Media Ltd. Wts., Exp. 5/00 (5) - 75 75 - - -
- ----------------------------------------------------------------------------------------------------------------------------------
Cellular Communications International,
Inc. Wts., Exp. 8/03 (5) 500 - 500 8,500 - 8,500
- ----------------------------------------------------------------------------------------------------------------------------------
Dairy Mart Convenience Stores, Inc.
Wts., Exp. 12/01 (5) - 333 333 - 167 167
- ----------------------------------------------------------------------------------------------------------------------------------
Gothic Energy Corp. Wts., Exp. 9/04 2,800 - 2,800 5,600 - 5,600
- ----------------------------------------------------------------------------------------------------------------------------------
ICG Communications, Inc. Wts.,
Exp. 9/05 (5) 1,980 - 1,980 24,750 - 24,750
- ----------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc. Wts.,
Exp. 6/00 (5) - 50 50 - 5,500 5,500
<PAGE>
- ----------------------------------------------------------------------------------------------------------------------------------
NEXTLINK Communications, Inc. Wts.,
Exp. 2/09 (5) 3,050 - 3,050 31 - 31
- ----------------------------------------------------------------------------------------------------------------------------------
Orion Network Systems, Inc. Wts.,
Exp. 1/07 (5) 200 - 200 2,500 - 2,500
- ----------------------------------------------------------------------------------------------------------------------------------
Price Communications Corp. Wts.,
Exp. 8/07 - 258 258 - 3 3
- ----------------------------------------------------------------------------------------------------------------------------------
Signature Brands, Inc. Wts.,
Exp. 12/49 (5) - 50 50 - 750 750
--------------------------------------
Total Rights, Warrants and
Certificates (Cost $3,500, Cost
$471, Combined $3,971) 70,031 6,420 76,451
<CAPTION>
FACE AMOUNT(1)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
STRUCTURED INSTRUMENTS - 0.5%
- ----------------------------------------------------------------------------------------------------------------------------------
Bayerische Landesbank Girozentrale
(New York Branch) Lehman Brothers
High Yield Bond Index Nts., 12.50%,
2/4/98 $ 500,000 $ - $ 500,000 499,200 - 499,200
- ----------------------------------------------------------------------------------------------------------------------------------
Shoshone Partners Loan Trust, 7.50%
Sr. Nts., 5/31/02 (5)(6) 742,000 - 742,000 786,944 - 786,944
--------------------------------------
Total Structured Instruments
(Cost $1,242,000) 1,286,144 - 1,286,144
- ----------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 2.8%
- ----------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First
Chicago Capital Markets, 6.60%, dated
12/31/97, to be repurchased at
$5,201,907 on 1/2/98, collateralized
by U.S. Treasury Bonds, 8%--10.625%,
8/15/15--11/15/21, with a value of
$3,854,252, and U.S. Treasury Nts.,
5.875%--7.50%, 9/30/01--12/31/01, with
a value of $1,452,554 5,200,000 - 5,200,000 5,200,000 - 5,200,000
- ----------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement, 6.60%, dated
12/31/97, to be repurchased
at $2,470,906 on 1/2/98 - 2,470,000 2,470,000 - 2,470,000 2,470,000
--------------------------------------
Total Repurchase Agreements (Cost
$5,200,000, Cost $2,470,000, Combined
$7,670,000) 5,200,000 2,470,000 7,670,000
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$277,840,513, COST $27,683,395,
COMBINED $305,523,908) 115.5% 100.6% 113.9% 286,563,209 30,236,608 316,799,817
- ----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (15.5) (0.6) (13.9) (38,414,567) (182,325) (38,596,892)
------ ------ ------ ------------ ----------- ------------
NET ASSETS 100.0% 100.0% 100.0% $248,148,642 $30,054,283 $278,202,925
------ ------ ------ ------------ ----------- ------------
------ ------ ------ ------------ ----------- ------------
</TABLE>
1. Face amount is reported in U.S. Dollars, except for those denoted in the
following currency: CAD - Canadian Dollar
2. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to
changes in prepayment rates than traditional mortgage-backed securities (for
example, GNMA pass-throughs).
<PAGE>
Interest rates disclosed represent current yields based upon the current cost
basis and estimated timing and amount of future cash flows.
3. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these securities
generally increases as interest rates decline and prepayment rates rise. The
price of these securities is typically more volatile than that of coupon-bearing
bonds of the same maturity. Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing of future cash flows.
4. When-issued security to be delivered and settled after December 31, 1997.
5. Identifies issues considered to be illiquid or restricted.
6. Represents the current interest rate for a variable rate security.
7. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities
have been determined to be liquid under guidelines established by the Board of
Trustees/Directors. These securities amount to $11,270,402 or 4.05% of the
Fund's net assets as of December 31, 1997.
8. Securities with an aggregate market value of $929,032 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts.
9. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
10. Interest or dividend is paid in kind.
11. Denotes a step bond: a zero coupon bond that converts to a fixed or
variable interest rate at a designated future date.
12. Units may be comprised of several components, such as debt and equity
and/or warrants to purchase equity at some point in the future. For units which
represent debt securities, face amount disclosed represents total underlying
principal.
13. Non-income producing security.
14. Represents the current interest rate for an increasing rate security.
OPPENHEIMER INTEGRITY FUNDS
FORM N-14
PART C
OTHER INFORMATION
Item 15. Indemnification
Reference is made to Article IV of Registrant's Amended and
Restated Declaration of Trust
filed with Post-Effective Amendment No. 25.
Item 16. Exhibits
(1) Amended and Restated Declaration of Trust dated June
26, 1995: Filed with
Registrant's Post-Effective Amendment No. 25, 7/10/95, and
incorporated herein by reference.
(2) By-Laws dated 6/25/91: Filed with Registrant's
Post-Effective Amendment No. 16,
5/1/92, and refiled pursuant to Item 102 of Regulation S-T with
Registrant's Post-Effective
Amendment No. 23 dated 4/28/95, and incorporated herein by
reference.
(3) Not applicable.
(4) (i) Agreement and Plan of Reorganization between
Registrant and Oppenheimer
LifeSpan Income Fund: See Exhibit A to Part A of this
Registration Statement.
(5) (i) Specimen Class A Share Certificate of Registrant:
Filed with Registrant's
Post-Effective Amendment No. 30, 4/30/97, and incorporated herein
by reference.
(ii) Specimen Class B Share Certificate: Filed
herewith Registrant's Post-
Effective Amendment No. 30, 4/30/97, and incorporated herein by
reference.
(iii) Specimen Class C Share Certificate of Registrant:
Filed with Registrant's
Post-Effective Amendment No. 30, 4/30/97, and incorporated herein
by reference.
(6) (i) Investment Advisory Agreement dated 7/10/95:
Filed with Registrant's Post-
Effective Amendment No. 25, 7/10/95, and incorporated herein by
reference.
(7) (i) General Distributor's Agreement dated 10/13/92:
Filed with Registrant's
Post-Effective Amendment No. 17, 2/26/93, refiled with
Registrant's Post-Effective Amendment No.
23, 4/28/95, pursuant to Item 102 of Regulation S-T, and
incorporated herein by reference.
C-1
(ii) Form of Oppenheimer Funds Distributor, Inc.
Dealer Agreement: Filed with
Post-Effective Amendment No. 14 of Oppenheimer Main Street Funds,
Inc. (Reg. No. 33-17850),
9/30/94, and incorporated herein by reference.
(iii) Form of Oppenheimer Funds Distributor, Inc.
Broker Agreement: Filed with
Post-Effective Amendment No. 14 of Oppenheimer Main Street Funds,
Inc. (Reg. No. 33-17850),
9/30/94, and incorporated herein by reference.
(iv) Form of Oppenheimer Funds Distributor, Inc.
Agency Agreement: Filed with
Post-Effective Amendment No.14 of Oppenheimer Main Street Funds,
Inc. (Reg. No. 33-17850),
9/30/94, and incorporated herein by reference.
(v) Broker Agreement between Oppenheimer Fund
Management, Inc. and
Newbridge Securities, Inc. dated 10/1/86: Filed with
Post-Effective Amendment No. 25 of
Oppenheimer Growth Fund (Reg. No. 2-45272), 11/1/86, and refiled
with Post-Effective Amendment
No. 45 of Oppenheimer Growth Fund (Reg. No. 2-45272), 8/22/94,
pursuant to Item 102 of
Regulation S-T, and incorporated herein by reference.
(8) Retirement Plan for Non-Interested Trustees or
Directors (dated 6/7/90): Filed with
Post-Effective Amendment No. 97 of Oppenheimer Fund (File No.
2-14586), 8/30/90, refiled with
Post-Effective Amendment No. 45 of Oppenheimer Growth Fund (Reg.
No. 2-45272), 8/22/94,
pursuant to Item 102 of Regulation S-T, and incorporated herein by
reference.
(9) Custody Agreement dated 11/12/92, between the
Registrant and The Bank of New
York: Filed with Registrant's Post-Effective Amendment No. 17,
2/26/93, refiled with Registrant's
Post-Effective Amendment No. 23, 4/28/95, pursuant to Item 102 of
Regulation S-T, and
incorporated herein by reference.
(10) (i) Service Plan and Agreement dated 6/22/93 for
Class A Shares pursuant to
Rule 12b-1: Filed with Registrant's Post-Effective Amendment No.
19, 3/1/94, and incorporated
herein by reference.
(ii) Distribution and Service Plan and Agreement dated
7/10/95 for Class B
Shares pursuant to Rule 12b-1: Filed with Registrant's
Post-Effective Amendment No. 25, 7/10/95,
and incorporated herein by reference.
(iii) Distribution and Service Plan and Agreement dated
7/10/95 for Class C
Shares pursuant to Rule 12b-1: Filed with Registrant's
Post-Effective Amendment No. 25, 7/10/95,
and incorporated herein by reference.
(11) Opinion and Consent of Counsel dated 2/11/91:
Incorporated herein by reference to
Registrant's Rule 24f-2 Notice filed on 2/19/91 and refiled
pursuant to Item 102 of Regulation S-T
with Registrant's Post-Effective Amendment No. 23, 4/28/95, and
incorporated herein by reference.
C-2
(12) (i) Form of Tax Opinion addressed to Oppenheimer
LifeSpan Income Fund relating
to the Reorganization, and Form of Tax Opinion addressed to
Oppenheimer Bond Fund relating to
the Reorganization: To be filed by amendment.
(13) Not applicable.
(14) (i) Consent of Auditors of Registrant and of
Oppenheimer Bond Fund: Filed
herewith.
(ii) Consent of Auditors of Oppenheimer LifeSpan Income
Fund: Filed herewith.
(15) Not applicable.
(16) Powers of Attorney and Certified Board Resolutions:
Previously filed with Registrant's
Post-Effective Amendment No. 19, 3/1/94, and incorporated herein
by reference.
(17) (i) Financial Data Schedules of Class A, Class B and
Class C shares of Registrant:
Filed herewith.
(ii) Financial Data Schedules of Class A, Class B and
Class C shares of
Oppenheimer LifeSpan Income Fund: Filed herewith.
Item 17. Undertakings
(1) Not applicable.
(2) Not applicable.
C-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been
signed on behalf of the Registrant in the City of New York and
State of New York on the 27th day
of February, 1998.
OPPENHEIMER INTEGRITY FUNDS
By: /s/ James C. Swain *
-------------------------------
James C. Swain, Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been
signed below by the following persons in the capacities and on the
dates indicated:
Signatures Title Date
- ------------ ------ ------
/s/ James C. Swain* Chairman of the February 27,
1998
- ---------------------- Board of Trustees
James C. Swain
/s/ George C. Bowen* Treasurer and February 27,
1998
- ---------------------- Chief Financial
George C. Bowen and Accounting
Officer and Trustee
/s/ Robert G. Avis* Trustee February 27,
1998
- ----------------------
Robert G. Avis
/s/ William A. Baker* Trustee February 27,
1998
- ----------------------
William A. Baker
/s/ Charles Conrad Jr.* Trustee February 27,
1998
- ----------------------
Charles Conrad, Jr.
/s/ Sam Freedman * Trustee February 27,
1998
- ------------------
Sam Freedman
/s/ Raymond J. Kalinowski* Trustee February 27,
1998
- -------------------------
Raymond J. Kalinowski
/s/ Howard Kast* Trustee February 27,
1998
- ------------------------
C. Howard Kast
/s/ Robert M. Kirchner* Trustee February 27,
1998
- ------------------------
Robert M. Kirchner
/s/ Ned M. Steel* Trustee February 27,
1998
- ------------------------
Ned M. Steel
*By: /s/ Robert G. Zack
- ---------------------------------------
Robert G. Zack, Attorney-in-Fact
OPPENHEIMER INTEGRITY FUNDS
FORM N-14
INDEX TO EXHIBITS
Exhibit
Number Document
16(14)(i) Consent of Auditors of Oppenheimer Bond Fund
16(14)(ii) Consent of Auditors of Oppenheimer LifeSpan Income
Fund
17(i) Financial Data Schedules of Registrant's Class A,
Class B, Class C Shares
17(ii) Financial Data Schedules of Oppenheimer LifeSpan
Income Fund's Class A,
Class B, Class C Shares
Independent Auditors' Consent
Oppenheimer Bond Fund:
We consent to the incorporation by reference in this registration
statement on Form N-14 of our
report dated January 23, 1998, appearing in the Annual Report of
Oppenheimer Bond Fund, and to
our report dated January 22, 1997, appearing in the Statement of
Additional Information.
/s/ DELOITTE & TOUCHE LLP
- ---------------------------------------
DELOITTE & TOUCHE LLP
Denver, Colorado
February 25, 1998
merge\330con#2
Independent Auditors' Consent
The Board of Directors
Oppenheimer LifeSpan Income Fund:
We consent to the incorporation by reference in this registration
statement on Form N-14 of our
report dated November 21, 1997, appearing in the Annual Report of
Oppenheimer LifeSpan
Income Fund, and to the reference to our Firm under the headings
"Tax Consequences of the
Reorganization" and "Tax Aspects of the Reorganization" in the
registration statement.
/s/ KPMG PEAT MARWICK LLP
- -----------------------------------------
KPMG PEAT MARWICK LLP
Denver, Colorado
February 27, 1998
merge\330.con
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 701265
<NAME> OPPENHEIMER BOND FUND-A
<SERIES>
<NUMBER> 5
<NAME> OPPENHEIMER INTEGRITY FUNDS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 286,563,209
<RECEIVABLES> 20,626,764
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> (133,610)
<TOTAL-ASSETS> 307,056,362
<PAYABLE-FOR-SECURITIES> 57,628,238
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 64,771,785
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 227,583,755
<SHARES-COMMON-STOCK> 17,130,577
<SHARES-COMMON-PRIOR> 18,089,841
<ACCUMULATED-NII-CURRENT> 39,270
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4,074,517)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,358,470
<NET-ASSETS> 183,378,529
<DIVIDEND-INCOME> 100,450
<INTEREST-INCOME> 9,890,862
<OTHER-INCOME> 0
<EXPENSES-NET> 1,629,892
<NET-INVESTMENT-INCOME> 8,361,420
<REALIZED-GAINS-CURRENT> 71,671
<APPREC-INCREASE-CURRENT> 50,440
<NET-CHANGE-FROM-OPS> 8,483,531
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,888,584
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,131,530
<NUMBER-OF-SHARES-REDEEMED> 2,512,838
<SHARES-REINVESTED> 422,044
<NET-CHANGE-IN-ASSETS> (7,754,810)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (4,146,188)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 863,144
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,629,892
<AVERAGE-NET-ASSETS> 189,374,781
<PER-SHARE-NAV-BEGIN> 10.70
<PER-SHARE-NII> 0.39
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.39
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.70
<EXPENSE-RATIO> 1.27
<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> 701265
<NAME> OPPENHEIMER BOND FUND-B
<SERIES>
<NUMBER> 5
<NAME> OPPENHEIMER INTEGRITY FUNDS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 271,321,353
<INVESTMENTS-AT-VALUE> 276,840,642
<RECEIVABLES> 16,834,522
<ASSETS-OTHER> 3,599
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 293,678,763
<PAYABLE-FOR-SECURITIES> 63,125,160
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,646,625
<TOTAL-LIABILITIES> 64,771,785
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 227,583,755
<SHARES-COMMON-STOCK> 3,750,747
<SHARES-COMMON-PRIOR> 3,630,498
<ACCUMULATED-NII-CURRENT> 39,270
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4,074,517)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,358,470
<NET-ASSETS> 40,138,033
<DIVIDEND-INCOME> 100,450
<INTEREST-INCOME> 9,890,862
<OTHER-INCOME> 0
<EXPENSES-NET> 1,629,892
<NET-INVESTMENT-INCOME> 8,361,420
<REALIZED-GAINS-CURRENT> 71,671
<APPREC-INCREASE-CURRENT> 50,440
<NET-CHANGE-FROM-OPS> 8,483,531
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,275,135
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 574,859
<NUMBER-OF-SHARES-REDEEMED> 536,072
<SHARES-REINVESTED> 81,462
<NET-CHANGE-IN-ASSETS> (7,754,810)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (4,146,188)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 863,144
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,629,892
<AVERAGE-NET-ASSETS> 39,138,571
<PER-SHARE-NAV-BEGIN> 10.69
<PER-SHARE-NII> 0.35
<PER-SHARE-GAIN-APPREC> 0.01
<PER-SHARE-DIVIDEND> 0.35
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.70
<EXPENSE-RATIO> 2.02
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 701265
<NAME> OPPENHEIMER BOND FUND-C
<SERIES>
<NUMBER> 5
<NAME> OPPENHEIMER INTEGRITY FUNDS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 271,321,353
<INVESTMENTS-AT-VALUE> 276,840,642
<RECEIVABLES> 16,834,522
<ASSETS-OTHER> 3,599
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 293,678,763
<PAYABLE-FOR-SECURITIES> 63,125,160
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,646,625
<TOTAL-LIABILITIES> 64,771,785
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 227,583,755
<SHARES-COMMON-STOCK> 503,300
<SHARES-COMMON-PRIOR> 403,745
<ACCUMULATED-NII-CURRENT> 39,270
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4,074,517)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,358,470
<NET-ASSETS> 5,390,416
<DIVIDEND-INCOME> 100,450
<INTEREST-INCOME> 9,890,862
<OTHER-INCOME> 0
<EXPENSES-NET> 1,629,892
<NET-INVESTMENT-INCOME> 8,361,420
<REALIZED-GAINS-CURRENT> 71,671
<APPREC-INCREASE-CURRENT> 50,440
<NET-CHANGE-FROM-OPS> 8,483,531
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 158,431
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 155,245
<NUMBER-OF-SHARES-REDEEMED> 66,474
<SHARES-REINVESTED> 10,784
<NET-CHANGE-IN-ASSETS> (7,754,810)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (4,146,188)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 863,144
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,629,892
<AVERAGE-NET-ASSETS> 4,881,114
<PER-SHARE-NAV-BEGIN> 10.70
<PER-SHARE-NII> 0.35
<PER-SHARE-GAIN-APPREC> 0.01
<PER-SHARE-DIVIDEND> 0.35
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.71
<EXPENSE-RATIO> 2.02
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 356865
<NAME> OPPENHEIMER LIFESPAN INCOME FUND-A
<SERIES>
<NUMBER> 11
<NAME> Oppenheimer Series Fund, Inc.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 27,723,982
<INVESTMENTS-AT-VALUE> 29,794,676
<RECEIVABLES> 444,148
<ASSETS-OTHER> 1,639
<OTHER-ITEMS-ASSETS> 353,691
<TOTAL-ASSETS> 30,594,154
<PAYABLE-FOR-SECURITIES> 433,257
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 106,614
<TOTAL-LIABILITIES> 539,871
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27,577,259
<SHARES-COMMON-STOCK> 2,639,654
<SHARES-COMMON-PRIOR> 2,471,146
<ACCUMULATED-NII-CURRENT> 2,079
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 404,251
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,070,694
<NET-ASSETS> 29,205,770
<DIVIDEND-INCOME> 273,552
<INTEREST-INCOME> 1,686,587
<OTHER-INCOME> 0
<EXPENSES-NET> 408,718
<NET-INVESTMENT-INCOME> 1,551,421
<REALIZED-GAINS-CURRENT> 425,024
<APPREC-INCREASE-CURRENT> 1,052,959
<NET-CHANGE-FROM-OPS> 3,029,404
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,519,218
<DISTRIBUTIONS-OF-GAINS> 381,291
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 76,799
<NUMBER-OF-SHARES-REDEEMED> 78,072
<SHARES-REINVESTED> 169,781
<NET-CHANGE-IN-ASSETS> 3,269,668
<ACCUMULATED-NII-PRIOR> 11
<ACCUMULATED-GAINS-PRIOR> 370,133
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 212,649
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 415,679
<AVERAGE-NET-ASSETS> 27,677,821
<PER-SHARE-NAV-BEGIN> 10.65
<PER-SHARE-NII> 0.59
<PER-SHARE-GAIN-APPREC> 0.56
<PER-SHARE-DIVIDEND> 0.59
<PER-SHARE-DISTRIBUTIONS> 0.15
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.06
<EXPENSE-RATIO> 1.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 356865
<NAME> OPPENHEIMER LIFESPAN INCOME FUND-B
<SERIES>
<NUMBER> 11
<NAME> Oppenheimer Series Fund, Inc.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 27,723,982
<INVESTMENTS-AT-VALUE> 29,794,676
<RECEIVABLES> 444,148
<ASSETS-OTHER> 1,639
<OTHER-ITEMS-ASSETS> 353,691
<TOTAL-ASSETS> 30,594,154
<PAYABLE-FOR-SECURITIES> 433,257
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 106,614
<TOTAL-LIABILITIES> 539,871
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27,577,259
<SHARES-COMMON-STOCK> 73,513
<SHARES-COMMON-PRIOR> 42,628
<ACCUMULATED-NII-CURRENT> 2,079
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 404,251
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,070,694
<NET-ASSETS> 816,411
<DIVIDEND-INCOME> 273,552
<INTEREST-INCOME> 1,686,587
<OTHER-INCOME> 0
<EXPENSES-NET> 408,718
<NET-INVESTMENT-INCOME> 1,551,421
<REALIZED-GAINS-CURRENT> 425,024
<APPREC-INCREASE-CURRENT> 1,052,959
<NET-CHANGE-FROM-OPS> 3,029,404
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 31,306
<DISTRIBUTIONS-OF-GAINS> 7,459
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 35,037
<NUMBER-OF-SHARES-REDEEMED> 7,512
<SHARES-REINVESTED> 3,360
<NET-CHANGE-IN-ASSETS> 3,269,668
<ACCUMULATED-NII-PRIOR> 11
<ACCUMULATED-GAINS-PRIOR> 370,133
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 212,649
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 415,679
<AVERAGE-NET-ASSETS> 676,718
<PER-SHARE-NAV-BEGIN> 10.69
<PER-SHARE-NII> 0.51
<PER-SHARE-GAIN-APPREC> 0.57
<PER-SHARE-DIVIDEND> 0.51
<PER-SHARE-DISTRIBUTIONS> 0.15
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.11
<EXPENSE-RATIO> 2.18
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 356865
<NAME> OPPENHEIMER LIFESPAN INCOME FUND-C
<SERIES>
<NUMBER> 11
<NAME> Oppenheimer Series Fund, Inc.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 27,723,982
<INVESTMENTS-AT-VALUE> 29,794,676
<RECEIVABLES> 444,148
<ASSETS-OTHER> 1,639
<OTHER-ITEMS-ASSETS> 353,691
<TOTAL-ASSETS> 30,594,154
<PAYABLE-FOR-SECURITIES> 433,257
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 106,614
<TOTAL-LIABILITIES> 539,871
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27,577,259
<SHARES-COMMON-STOCK> 2,893
<SHARES-COMMON-PRIOR> 95
<ACCUMULATED-NII-CURRENT> 2,079
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 404,251
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,070,694
<NET-ASSETS> 32,102
<DIVIDEND-INCOME> 273,552
<INTEREST-INCOME> 1,686,587
<OTHER-INCOME> 0
<EXPENSES-NET> 408,718
<NET-INVESTMENT-INCOME> 1,551,421
<REALIZED-GAINS-CURRENT> 425,024
<APPREC-INCREASE-CURRENT> 1,052,959
<NET-CHANGE-FROM-OPS> 3,029,404
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 908
<DISTRIBUTIONS-OF-GAINS> 77
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,712
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 86
<NET-CHANGE-IN-ASSETS> 3,269,668
<ACCUMULATED-NII-PRIOR> 11
<ACCUMULATED-GAINS-PRIOR> 370,133
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 212,649
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 415,679
<AVERAGE-NET-ASSETS> 19,989
<PER-SHARE-NAV-BEGIN> 10.66
<PER-SHARE-NII> 0.55
<PER-SHARE-GAIN-APPREC> 0.58
<PER-SHARE-DIVIDEND> 0.54
<PER-SHARE-DISTRIBUTIONS> 0.15
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.10
<EXPENSE-RATIO> 2.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
