Oppenheimer
Gold & Special Minerals Fund
Prospectus dated November 1, 1995
Oppenheimer Gold & Special Minerals Fund (the "Fund") is a mutual
fund that seeks capital appreciation as its investment objective. The
Fund does not invest to earn current income to distribute to shareholders.
In seeking its objective, the Fund invests mainly in securities of
companies engaged in mining, processing, fabricating or distributing gold
or other metals or minerals in the United States and in foreign countries.
Normally at least 50% of the Fund's investments are expected to be in
foreign securities. The Fund may also invest to a limited extent in gold
or silver bullion, other precious metals, strategic metals, and other
metals naturally occurring with such metals, and gold or silver coins.
The Fund also uses "hedging" instruments, to try to reduce the risks of
market and currency fluctuations that affect the value of the securities
the Fund holds.
Some investment techniques the Fund uses may be considered to be
speculative. These techniques may increase the risks of investing in the
Fund and the Fund's operating costs. You should carefully review the risks
associated with an investment in the Fund. Please refer to "Investment
Objective and Policies" for more information about the types of securities
the Fund invests in and the risks of investing in the Fund.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and keep it
for future reference. You can find more detailed information about the
Fund in the November 1, 1995 Statement of Additional Information. For a
free copy, call Oppenheimer Shareholder Services, the Fund's Transfer
Agent, at 1-800-525-7048, or write to the Transfer Agent at the address
on the back cover. The Statement of Additional Information has been filed
with the Securities and Exchange Commission and is incorporated into this
Prospectus by reference (which means that it is legally part of this
Prospectus).
(OppenheimerFunds logo)
Because of the Fund's investment policies and practices, the Fund's shares
may be considered to be speculative.
Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the F.D.I.C. or any other
agency, and involve investment risks, including the possible loss of the
principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents
Page
ABOUT THE FUND
Expenses
A Brief Overview of the Fund
Financial Highlights
Investment Objective and Policies
How the Fund is Managed
Performance of the Fund
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
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
<PAGE>
ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for management of its
assets, administration, distribution of its shares and other services, and
those expenses are subtracted from the Fund's assets to calculate the
Fund's net asset value per share. All shareholders therefore pay those
expenses indirectly. Shareholders pay other expenses directly, such as
sales charges and account transaction charges. The following tables are
provided to help you understand your direct expenses of investing in the
Fund and your share of the Fund's business operating expenses that you
will bear indirectly. The numbers below are based on the Fund's expenses
during its last fiscal year ended June 30, 1995.
- Shareholder Transaction Expenses are charges you pay when you buy
or sell shares of the Fund. Please refer to "About Your Account," from
pages 22 through 36 for an explanation of how and when these charges
apply.
<TABLE>
<CAPTION>
Class Class Class
A Shares B Shares C Shares
<S> <C> <C> <C>
Maximum Sales Charge
on Purchases
(as a % of
offering price) 5.75% None None
Sales Charge on
Reinvested Dividends None None None
Deferred Sales Charge
(as a % of the
lower of the
original purchase
price or redemption
proceeds) None(1) 5% in the first 1% if
year, declining redeemed
to 1% in the within 12
sixth year months of
and eliminated purchase(2)
thereafter(2)
Exchange Fee None None None
Redemption Fee None(3) None(3) None(3)
</TABLE>
(1) If you invest $1 million or more ($500,000 or more for purchases by
OppenheimerFunds prototype 401(k) plans) in Class A shares, you may
have to pay a sales charge of up to 1% if you sell your shares within
18 calendar months from the end of the calendar month during which
you purchased those shares. See "How to Buy Shares - Class A
Shares," below.
(2) See "How to Buy Shares - Class B Shares" and "How to Buy Shares -
Class C Shares" below.
(3) There is a $10 transaction fee for redemptions paid by Federal funds
wire, but not for redemptions paid by ACH transfer through
AccountLink. See "How to Sell Shares."
- Annual Fund Operating Expenses are paid out of the Fund's assets
and represent the Fund's expenses in operating its business. For example,
the Fund pays management fees to its investment adviser, Oppenheimer
Management Corporation (referred to in this Prospectus as the "Manager").
The rates of the Manager's fees are set forth in "How the Fund is
Managed," below. The Fund has other regular expenses for services, such
as transfer agent fees, custodial fees paid to the bank that holds its
portfolio securities, audit fees and legal expenses. Those expenses are
detailed in the Fund's Financial Statements in the Statement of Additional
Information.
The numbers in the table below are projections of the Fund's business
expenses based on the Fund's expenses in its last fiscal year. These
amounts are shown as a percentage of the average net assets of each class
of the Fund's shares for that year. The 12b-1 Service Plan fees for Class
A shares are service fees (the maximum fee is 0.25% of average annual net
assets of that class). Currently, the Board of Trustees has set the
maximum fee at 0.15% for assets representing shares sold before April 1,
1991, and 0.25% for assets representing shares sold on or after that date.
For Class B and Class C shares, the 12b-1 Distribution Plan fees are the
service fees (the maximum fee is 0.25% of average annual net assets of
those classes) and the annual asset-based sales charges of 0.75%. These
plans are described in greater detail in "How to Buy Shares. "Class B and
Class C shares were not publicly offered during the Fund's fiscal year
ended June 30, 1995. Accordingly, the Annual Fund Operating Expenses
shown for Class B and Class C shares are estimates based on amounts that
would have been payable in that period assuming that Class B and Class C
shares were outstanding during that fiscal year.
The actual expenses for each class of shares in future years may be
more or less than the numbers in the table, depending on a number of
factors, including the actual value of the Fund's assets represented by
each class of shares.
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
<S> <C> <C> <C>
Management Fees 0.75% 0.75% 0.75%
12b-1 Distribution and/or 0.20% 1.00% 1.00%
Service Plan
Other Expenses 0.41% 0.41% 0.41%
Total Fund Operating Expenses 1.36% 2.16% 2.16%
</TABLE>
- Example. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical example shown
below. Assume that you make a $1,000 investment in each class of shares
of the Fund, and that the Fund's annual return is 5%, and that its
operating expenses for each class are the ones shown in the Annual Fund
Operating Expenses table above. If you were to redeem your shares at the
end of each period shown below, your investment would incur the following
expenses by the end of 1, 3, 5 and 10 years:
1 year 3 years 5 years 10 years*
Class A Shares $71 $98 $128 $212
Class B Shares $72 $98 $136 $210
Class C Shares $32 $68 $116 $249
If you did not redeem your investment, it would incur the following
expenses:
1 year 3 years 5 years 10 years*
Class A Shares $71 $98 $128 $212
Class B Shares $22 $68 $116 $210
Class C Shares $22 $68 $116 $249
__________________
* The Class B expenses in years 7 through 10 are based on the Class A
expenses shown above, because the Fund automatically converts your Class
B shares into Class A shares after 6 years. Because of the asset-based
sales charge and the contingent deferred sales charge on Class B and Class
C shares, long term Class B and Class C shareholders could pay the
economic equivalent of more than the maximum front-end sales charge
allowed under applicable regulations. For Class B shareholders, the
automatic conversion of Class B shares to Class A shares is designed to
minimize the likelihood that this will occur. Please refer to "How to Buy
Shares - Class B Shares" for more information.
These examples show the effect of expenses on an investment, but are not
meant to state or predict actual or expected costs or investment returns
of the Fund, all of which will vary.
<PAGE>
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized below, with
references to the section of this Prospectus where more complete
information can be found. You should carefully read the entire Prospectus
before making a decision about investing in the Fund. Keep the Prospectus
for reference after you invest, particularly for information about your
account, such as how to sell or exchange shares.
- What is the Fund's Investment Objective? The Fund's investment
objective is to seek capital appreciation (that is, growth in the value
of its shares). It does not invest to earn current income to pay to
shareholders.
- What Does the Fund Invest in? The Fund primarily invests in common
stocks (these are called "equity securities") or other types of securities
convertible into equity securities. It focuses on companies that mine or
produce gold or other metals and minerals. The Fund may also invest to
a limited extent in gold or silver bullion, certain other precious metals
and gold or silver coins. The Fund may also use hedging instruments and
some derivative investments to try to manage investment risks. These
investments are more fully explained in "Investment Objective and
Policies," starting on page 10.
- Who Manages the Fund? The Fund is managed by the Manager,
Oppenheimer Management Corporation. The Manager (including a subsidiary)
manages investment company portfolios currently having over $38 billion
in assets. The Manager is paid an advisory fee by the Fund, based on its
assets. The Fund has a portfolio manager, James C. Ayer, who is employed
by the Manager. He is primarily responsible for the selection of the
Fund's securities. The Fund's Board of Trustees, elected by shareholders,
oversees the investment adviser and the portfolio manager. Please refer
to "How the Fund is Managed," starting on page 17 for more information
about the Manager and its fees.
- How Risky is the Fund? All investments carry risks to some degree.
It is important to remember that the Fund is designed for long-term
investing. The Fund's investments in stocks are subject to changes in
their value from a number of factors such as changes in general bond and
stock market movements, or the change in value of particular stocks
because of an event affecting the issuer. Because the Fund normally
invests heavily in foreign securities, it is subject to additional risks
associated with investing abroad, such as the effect of currency rate
changes on stock values. By focusing on investments in the gold and
metals industries, the Fund is sensitive to events that affect those
industries and its share price will be more volatile than funds that don't
concentrate investments in a limited group of industries. These changes
affect the value of the Fund's investments and its price per share. In
the Oppenheimer funds spectrum, the Fund is generally more volatile than
other stock funds, as well as income and growth funds and more
conservative income funds. While the Manager tries to reduce risks by
diversifying investments, by carefully researching securities before they
are purchased for the portfolio, and in some cases by using hedging
techniques, there is no guarantee of success in achieving the Fund's
objective and your shares may be worth more or less than their original
cost when you redeem them. Please refer to "Investment Objective and
Policies" starting on page 10 for a more complete discussion of the Fund's
investment risks.
- How Can I Buy Shares? You can buy shares through your dealer or
financial institution, or you can purchase shares directly through the
Fund's Distributor by completing an Application or by using an Automatic
Investment Plan under AccountLink. Please refer to "How To Buy Shares"
on page 22 for more details.
- Will I Pay a Sales Charge to Buy Shares? The Fund has three classes
of shares. All classes have the same investment portfolio but have
different expenses. Class A shares are offered with a front-end sales
charge, starting at 5.75%, and reduced for larger purchases. Class B and
Class C shares are offered without a front-end sales charge, but may be
subject to a contingent deferred sales charge if redeemed within 6 years
or 12 months, respectively, of buying them. There is also an annual
asset-based sales charge on Class B and Class C shares. Please review
"How To Buy Shares" starting on page 22 for more details, including a
discussion about which class may be appropriate for you.
- How Can I Sell My Shares? Shares can be redeemed by mail or by
telephone call to the Transfer Agent on any business day, or through your
dealer. Please refer to "How To Sell Shares" on page 36. The Fund also
offers exchange privileges to other Oppenheimer funds, described in "How
to Exchange Shares" on page 38.
- How Has the Fund Performed? The Fund measures its performance by
quoting its average annual total return and cumulative total return, which
measure historical performance. Those returns can be compared to the
returns (over similar periods) of other funds. Of course, other funds may
have different objectives, investments, and levels of risk. The Fund's
performance can also be compared to a broad market index, which we have
done on page 21. Please remember that past performance does not guarantee
future results.
Financial Highlights
The table on the following pages presents selected financial information
about the Fund, including per share data, expense ratios and other data
based on the Fund's average net assets. This information has been audited
by KPMG Peat Marwick LLP, the Fund's independent auditors, whose report
on the Fund's financial statements for the fiscal year ended June 30,
1995, is included in the Statement of Additional Information. Class B
shares and Class C shares were not publicly offered during the periods
shown, and consequently, no information on Class B shares and Class C
shares is included in the table on the following pages or in the Fund's
other financial statements.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
-------------------------------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
==========================================================
==========================================================
===============
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<C> <C>
PER SHARE OPERATING DATA:
Net asset value,
beginning of year $13.28 $12.32 $10.68 $10.36 $11.65 $12.58 $12.82 $12.10 $6.43 $6.88
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .06 .06 .06 .16 .17 .14 .23 .26 .15 .15
Net realized and
unrealized gain (loss)
on investments and
foreign currency
transactions .21 .96 1.72 .35 (1.42) .54 .50 3.39 5.66 (.58)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total income (loss) from
investment operations .27 1.02 1.78 .51 (1.25) .68 .73 3.65 5.81 (.43)
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and
distributions
to shareholders:
Dividends from net
investment income (.07) (.06) (.14) (.19) (.04) (.27) (.18) (.36) (.14) (.02)
Distributions from net
realized gain on
investments and foreign
currency transactions -- -- -- -- -- (1.34) (.79) (2.57) -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total dividends and
distributions
to shareholders (.07) (.06) (.14) (.19) (.04) (1.61) (.97) (2.93) (.14) (.02)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of year $13.48 $13.28 $12.32 $10.68 $10.36 $11.65 $12.58 $12.82 $12.10 $6.43
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
==========================================================
==========================================================
===============
TOTAL RETURN, AT
NET ASSET VALUE(1) 2.03% 8.25% 17.15% 5.08% (10.71)% 3.10% 6.43% 33.24%
92.35% (6.23)%
==========================================================
==========================================================
===============
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of year
(in thousands) $171,721 $179,015 $158,982 $133,345 $150,907 $163,118 $120,198 $107,264 $76,532
$29,080
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $178,579 $175,093 $124,869 $137,906 $154,318 $154,079 $110,873 $90,672 $49,947
$32,407
- -----------------------------------------------------------------------------------------------------------------------------------
Number of shares
outstanding at end of
year (in thousands) 12,743 13,478 12,908 12,486 14,564 13,999 9,552 8,365 6,324 4,523
- -----------------------------------------------------------------------------------------------------------------------------------
Average amount of
debt outstanding
throughout each year
(in thousands)(2) $-- $-- $-- $-- $-- $-- $-- $-- $79 $366
----------------------------------------------------------------------------------------------------------------------------------
Average number of
shares outstanding
throughout each year
(in thousands)(3) -- -- -- -- -- -- -- -- 5,253 4,743
- -----------------------------------------------------------------------------------------------------------------------------------
Average amount of
debt per share outstanding
throughout each year $-- $-- $-- $-- $-- $-- $-- $-- $.02 $.08
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net
assets:
Net investment income .45% .50% .61% 1.25% 1.67% 1.17% 1.97% 2.38% 2.10%
2.19%
Expenses 1.36% 1.31% 1.38% 1.38% 1.43% 1.37% 1.22% 1.22% 1.41%
1.61%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover
rate(4) 35.8% 29.5% 23.9% 39.4% 113.3% 82.3% 111.7% 175.8% 191.7%
52.9%
</TABLE>
Investment Objective and Policies
Objective. The Fund invests its assets to seek long-term capital
appreciation for shareholders. The Fund does not invest to seek current
income to pay to shareholders.
Investment Policies and Strategies. The Fund seeks its investment
objective by emphasizing investments in securities of companies involved
directly or indirectly in mining, fabricating, processing or otherwise
dealing in gold or other metals or minerals. This Prospectus refers to
those securities as "Mining Securities." The Manager expects that
ordinarily a substantial portion of the Fund's assets will be invested in
securities of gold mining companies.
The Fund will normally invest in common stocks or other equity
securities, as well as securities that are convertible into common stocks,
such as convertible preferred stock, convertible debentures, and warrants.
These securities may be traded on securities exchanges or in the over-the-
counter markets.
The Fund may also invest in gold or silver bullion, in other precious
metals, strategic metals, and other metals naturally occurring with
precious or strategic metals, in certificates representing an ownership
interest in those metals, and in gold or silver coins. These investments
are referred to as "Metal Investments." While the Fund may hold gold or
silver coins that have an active, quoted trading market, it will not hold
them for their value as "collectibles."
To seek the Fund's objective, the Manager looks for Mining Securities
and Metal Investments that it believes may appreciate in value, by
continuously monitoring the gold and special minerals markets for new
developments and economic trends. When investing the Fund's assets, the
Manager considers many factors, including the financial condition of
particular companies as well as general economic conditions in the U.S.
relative to foreign economies, and the trends in domestic and foreign
stock markets.
The Fund may try to hedge against losses in the value of its portfolio
of securities by using hedging strategies described below. The Fund's
portfolio manager may employ special investment techniques in selecting
securities for the Fund. These are also described below. Additional
information may be found about them under the same headings in the
Statement of Additional Information.
- Can the Fund's Investment Objective and Policies Change? The Fund
has an investment objective, which is described above, as well as
investment policies it follows to try to achieve its objective.
Additionally, the Fund uses certain investment techniques and strategies
in carrying out those investment policies. The Fund's investment policies
and techniques are not "fundamental" unless this Prospectus or the
Statement of Additional Information says that a particular policy is
"fundamental." The Fund's investment objective is a fundamental policy.
Fundamental policies are those that cannot be changed without the
approval of a "majority" of the Fund's outstanding voting shares. The
term "majority" is defined in the Investment Company Act of 1940 (the
federal law that principally regulates the operations of investment
companies like the Fund) to be a particular percentage of outstanding
voting shares (and this term is explained in the Statement of Additional
Information). The Fund's Board of Trustees may change non-fundamental
policies without shareholder approval, although significant changes will
be described in amendments to this Prospectus.
- Investment Risks. Because the Fund invests a substantial portion of
its assets in stocks, the value of the Fund's portfolio will be affected
by changes in the stock markets. At times, the stock markets can be
volatile, and stock prices can change substantially. This market risk
will affect the Fund's net asset value per share, which will fluctuate as
the values of the Fund's portfolio securities change. Not all stock
prices change uniformly or at the same time, and other factors can affect
a particular stock's prices, such as poor earnings reports by an issuer,
loss of major customers, major litigation against an issuer, or changes
in government regulations affecting an industry. Not all of these factors
can be predicted.
As discussed below, the Fund attempts to limit market risks by
diversifying its investments, that is, by not holding a substantial amount
of stock of any one company and by not investing too great a percentage
of the Fund's assets in any one company. However, the Fund does
"concentrate" its investments in a group of related industries, and faces
certain special risks, discussed below, by doing so.
Because of the types of securities the Fund invests in and the
investment techniques the Fund uses, some of which may be speculative, the
Fund is designed for investors who are investing for the long-term and who
are willing to accept greater risks of loss of their investment in the
hope of achieving capital appreciation. It is not intended for investors
seeking assured income and preservation of capital. Investing for capital
appreciation entails the risk of loss of all or part of your investment.
Because changes in securities market prices can occur at any time, there
is no assurance that the Fund will achieve its investment objective, and
when you redeem your shares, they may be worth more or less than what you
paid for them.
- The Fund "Concentrates" in Mining Securities and Metal Investments.
Under the Investment Company Act, "concentrating" investments means that
a fund invests at least 25% of its assets in a particular industry or
group of industries. As a fundamental policy, the Fund will concentrate
its investments in Mining Securities and Metal Investments. Under normal
conditions (when the Manager believes that the markets for Mining
Securities and Metal Investments are not in a volatile or unstable
period), at least 80% and up to 100% of the Fund's assets will be invested
in Mining Securities and Metal Investments. However, the Fund may not
acquire additional Metal Investments if acquiring them would result in
more than 10% of the Fund's total assets being invested in Metal
Investments.
When market conditions are unstable, or there are adverse economic,
political or market conditions affecting Mining Securities and Metal
Investments, the Fund may invest substantial amounts of its assets in debt
securities, such as money market instruments or U.S. government
securities, as described in "Temporary Defensive Investments" below.
- Special Risks of Concentrating Investments in Mining Securities and
Metal Investments. Investments in Mining Securities and Metal Investments
are considered speculative and involve substantial risks and special
considerations. Investing in one segment of the stock market rather than
in a broad spectrum of types of companies makes the Fund's share price
particularly sensitive to market and economic events that affect the
mining and metal industries. These risks include: (i) the risk that
prices of gold and precious metals may fluctuate substantially; (ii) the
principal sources of the supply of gold are basically concentrated in only
five countries or territories: South Africa, Australia, the Commonwealth
of Independent States (which includes Russia and certain other countries
that were part of the former Soviet Union), Canada and the United States;
(iii) changes in international monetary policies, economic and political
conditions, all of which affect the supply of gold and precious metals as
well as the value of Metal Investments and Mining Securities; (iv)
possible regulation of Metal Investments by the U.S. or foreign
governments; and (v) possible adverse tax consequences for the Fund in
making Metal Investments, if holding those investments should cause it to
fail to qualify as a "regulated investment company" under the Internal
Revenue Code. The Statement of Additional Information contains more
details about those risks, which can affect the Fund's net asset value per
share and cause the value of an investment in the Fund to fluctuate.
- Foreign Securities. Because over 90% of the world's gold production
currently is in foreign countries, it is anticipated that the Fund will
normally invest a substantial amount of its assets in securities of
foreign issuers. The Fund may purchase equity (and debt) securities
issued or guaranteed by foreign companies or foreign governments,
including foreign government agencies. The Fund may buy securities of
companies or governments in any country, developed or underdeveloped. The
Fund can invest up to 100% of its assets in foreign securities. The Fund
will hold foreign currency only in connection with the purchase or sale
of foreign securities.
Foreign securities have special risks. For example, foreign issuers are
not subject to the same accounting and disclosure requirements that U.S.
companies are subject to. The value of foreign investments may be affected
by changes in foreign currency rates, exchange control regulations,
expropriation or nationalization of a company's assets, foreign taxes,
delays in settlement of transactions, changes in governmental economic or
monetary policy in the U.S. or abroad, or other political and economic
factors. More information about the risks and potential rewards of
investing in foreign securities is contained in the Statement of
Additional Information.
- Warrants. Warrants basically are options to purchase stock at set
prices that are valid for a limited period of time. The Fund may invest
up to 5% of its total assets in warrants. That 5% does not apply to
warrants the Fund acquired as part of units with other securities or that
were attached to other securities. No more than 2% of the Fund's assets
may be invested in warrants that are not listed on the New York or
American Stock Exchanges. These percentage limitations are fundamental
policies. For further details about these investments, see "Warrants" in
the Statement of Additional Information.
- Special Risks - Borrowing for Leverage. The Fund may borrow money
from banks to buy securities. The Fund will borrow only if it can do so
without putting up assets as security for a loan. This is a speculative
investment method known as "leverage." This investing technique may
subject the Fund to greater risks and costs than funds that do not borrow.
These risks may include the possibility that the Fund's net asset value
per share will fluctuate more than funds that don't borrow, since the Fund
pays interest on borrowings and interest expense affects the Fund's share
price. Borrowing for leverage is subject to limits under the Investment
Company Act, described in more detail in "Borrowing for Leverage" in the
Statement of Additional Information.
- Portfolio Turnover. A change in the securities held by the Fund is
known as "portfolio turnover." The Fund may engage frequently in short-
term trading to try to achieve its objective. As a result, the Fund's
portfolio turnover may be higher than other mutual funds, although it is
not expected to be more than 100% each year. The "Financial Highlights"
table above, shows the Fund's portfolio turnover rate during past fiscal
years.
High turnover and short-term trading may cause the Fund to have
relatively larger brokerage costs than funds that do not engage in short-
term trading. Additionally, high portfolio turnover may affect the ability
of the Fund to qualify as a "regulated investment company" under the
Internal Revenue Code to enable the Fund to obtain tax deductions for any
dividends and capital gains distributions it pays to shareholders. The
Fund qualified in its last fiscal year and intends to do so in the coming
year, although it reserves the right not to qualify.
- Derivative Investments. In general, a "derivative investment" is a
specially designed investment. Its performance is linked to the
performance of another investment or security, such as an option, future,
index, currency or commodity. The Fund can invest in a number of
different kinds of "derivative investments." They are used in some cases
for hedging purposes and in other cases to enhance total return. In the
broadest sense, exchange-traded options and futures contracts (discussed
in "Hedging," below) may be considered "derivative investments."
There are special risks in investing in derivative investments. The
company issuing the instrument may fail to pay the amount due on the
maturity of the instrument. Also, the underlying investment or security
on which the derivative is based might not perform the way the Manager
expected it to perform. The performance of derivative investments may
also be influenced by 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
Fund may trade in the over-the-counter market and may be illiquid. Please
refer to "Illiquid and Restricted Securities" for an explanation.
Other Investment Techniques and Strategies. The Fund may also use the
investment techniques and strategies described below. These techniques
involve certain risks. The Statement of Additional Information contains
more information about these practices, including limitations on their use
that may help to reduce some of the risks.
- Investing in Small, Unseasoned Companies. The Fund may invest in
securities of small, unseasoned companies. These are companies that have
been in operation for less than three years, counting the operations of
any predecessors. Securities of these companies may have limited
liquidity (which means that the Fund may have difficulty selling them at
an acceptable price when it wants to) and the prices of these securities
may be volatile. The Fund will not invest more than 5% of its net assets
in securities of small, unseasoned issuers.
- Hedging. As described below, the Fund may purchase and sell certain
kinds of futures contracts, put and call options, forward contracts, and
options on futures, broadly-based stock indices and foreign currencies.
These are all referred to as "hedging instruments." The Fund does not use
hedging instruments for speculative purposes, and has limits on the use
of them, described below. The hedging instruments the Fund may use are
described below and in greater detail in "Other Investment Techniques and
Strategies" in the Statement of Additional Information.
The Fund may buy and sell options, futures and forward contracts for a
number of purposes. It may do so to try to manage its exposure to the
possibility that the prices of its portfolio securities may decline, or
to establish a position in the equity securities market as a temporary
substitute for purchasing individual securities. Some of these
strategies, such as selling futures, buying puts and writing covered
calls, hedge the Fund's portfolio against price fluctuations.
Other hedging strategies, such as buying futures and call options, tend
to increase the Fund's exposure to the securities market as a temporary
substitute for purchasing securities. Forward contracts are used to try
to manage foreign currency risks on the Fund's foreign investments.
Foreign currency options are used to try to protect against declines in
the dollar value of foreign securities the Fund owns, or to protect
against an increase in the dollar cost of buying foreign securities.
Writing covered call options may also provide income to the Fund for
liquidity purposes or for defensive reasons.
- Futures. The Fund may buy and sell futures contracts only if they
relate to broadly based stock indices (these are referred to as "Stock
Index Futures"). This limitation is a fundamental policy.
- Put and Call Options. The Fund may buy and sell certain kinds of
put options (puts) and call options (calls). A call or put option may not
be purchased if as a result of that purchase the value of all of the
Fund's put and call options would exceed 10% of the Fund's total assets.
The Fund can buy only those puts that relate to (1) securities or Stock
Index Futures (whether or not the Fund owns the particular security or
Stock Index Future in its portfolio), (2) broadly-based stock indices, or
(3) foreign currencies. The Fund may not sell a put other than a put that
it previously purchased.
The Fund may purchase calls only on securities, broadly-based stock
indices, foreign currencies, or Stock Index Futures, or to terminate its
obligation on a call the Fund previously wrote. The Fund may write (that
is, sell) call options. Each call the Fund writes must be "covered" while
it is outstanding. That means the Fund must own the investment on which
the call was written or it must own other securities that are acceptable
for the escrow arrangements required for calls. After the Fund writes a
call, not more than 25% of the Fund's total assets may be subject to
calls. The Fund will not write or purchase any call that will cause the
value of the Fund's calls on a particular security to exceed 3% of the
Fund's total assets. That restriction applies to warrants on a security
but not to calls purchased in closing transactions. Covered call options
sold by the Fund must be listed on a domestic securities exchange or
quoted on the Automated Quotation System of the National Association of
Securities Dealer, Inc. (NASDAQ).
The Fund may buy or sell foreign currency puts and calls only if they
are traded on a securities or commodities exchange or over-the-counter
market, or are quoted by recognized dealers in those options. Foreign
currency options are used to protect against declines in the dollar value
of foreign securities the Fund owns, or to protect against an increase in
the dollar cost of buying foreign securities.
- - Forward Contracts. Forward contracts are foreign currency exchange
contracts. They are used to buy or sell foreign currency for future
delivery at a fixed price. The Fund uses them to try to "lock in" the
U.S. dollar price of a security denominated in a foreign currency that the
Fund has bought or sold, or to protect against possible losses from
changes in the relative values of the U.S. dollar and foreign currency.
Hedging instruments can be volatile investments and may involve special
risks. The use of hedging instruments requires special skills and
knowledge of investment techniques that are different than what is
required for normal portfolio management. If the Manager uses a hedging
instrument at the wrong time or judges market conditions incorrectly,
hedging strategies may reduce the Fund's return. The Fund could also
experience losses if the prices of its futures and options positions were
not correlated with its other investments or if it could not close out a
position because of an illiquid market for the future or option.
Options trading involves the payment of premiums and has special tax
effects on the Fund. There are also special risks in particular hedging
strategies. 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 profits to
the extent that the security has increased in value above the call price
plus the premium received by the Fund. The use of forward contracts may
reduce the gain that would otherwise result from a change in the
relationship between the U.S. dollar and a foreign currency. To limit its
exposure in foreign currency exchange contracts, the Fund limits its
exposure to the amount of its assets denominated in the foreign currency.
These risks and the hedging strategies the Fund may use are described in
greater detail in the Statement of Additional Information.
- Illiquid and Restricted Securities. Under the policies and
procedures established by the Fund's Board of Trustees, the Manager
determines the liquidity of certain of the Fund's investments. Investments
may be illiquid because of the absence of an active trading market, making
it difficult to value them or dispose of them promptly at an acceptable
price. A restricted security is one that has a contractual restriction on
its resale or which cannot be sold publicly until it is registered under
the Securities Act of 1933.
The Fund will not invest more than 10% of its net assets in illiquid or
restricted securities (that limit may increase to 15% if certain state
laws are changed or the Fund's shares are no longer sold in those states).
The Fund's percentage limitation on these investments does not apply to
certain restricted securities that are eligible for resale to qualified
institutional purchasers.
- Loans of Portfolio Investments. To raise cash for liquidity
purposes, the Fund may lend its portfolio investments to brokers, dealers
and other financial institutions approved by the Board of Trustees. The
Fund must receive collateral for a loan. As a fundamental policy, these
loans are limited to not more than 25% of the value of the Fund's total
assets. There are some risks in connection with securities lending. The
Fund might experience a delay in receiving additional collateral to secure
a loan, or a delay in recovering loaned securities if the borrower
defaults. The Fund presently does not intend to make loans of investments
that will exceed 5% of the value of the Fund's total assets in the coming
year.
- Repurchase Agreements. The Fund may enter into repurchase
agreements. In a repurchase transaction, the Fund buys a security and
simultaneously sells it to the vendor for delivery at a future date.
These are used primarily for cash liquidity purposes. 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.
Repurchase agreements must be fully collateralized. However, if the
vendor fails to pay the resale price on the delivery date, the Fund may
incur costs in disposing of the collateral and may experience losses if
there is any delay in its ability to do so. The Fund will not enter into
a repurchase agreement that causes more than 10% of its net assets to be
subject to repurchase agreements having a maturity beyond seven days.
- Short Sales "Against-the-Box". In a short sale, the seller does not
own the security that is sold, but normally borrows the security to
fulfill its delivery obligation. The seller later buys the security to
repay the loan, in the expectation that the price of the security will be
lower when the purchase is made, resulting in a gain. The Fund may not
sell securities short except in collateralized transactions referred to
as short sales "against-the-box," where the Fund owns an equivalent amount
of the securities sold short. This technique is primarily used for tax
purposes. No more than 15% of the Fund's net assets will be held as
collateral for short sales at any one time.
- Temporary Defensive Investments. Under unusual economic, political
or business circumstances adversely affecting Mining Securities or Metal
Investments, the Fund may depart from its usual policy of concentrating
at least 80% of its assets in those investments. Instead, the Fund may
invest a portion of its assets in other types of securities for "defensive
purposes." Securities selected for defensive purposes will usually be
short-term securities and may include debt securities. These may be rated
or unrated bonds and debentures, preferred stocks, cash or cash
equivalents, such as U.S. Treasury Bills and other short-term obligations
of the U.S. Government, its agencies or instrumentalities, or commercial
paper rated "A-1" or better by Standard & Poor's Corporation or "P-1" or
better by Moody's Investors Service, Inc. For defensive purposes, the
Fund may also invest for capital appreciation in equity securities other
than Mining Securities.
Other Investment Restrictions. The Fund has certain investment
restrictions that are fundamental policies. Under these restrictions, the
Fund cannot do any of the following:
- invest in Metal Investments if, as a result, more than 10% of the
Fund's total assets would be invested in Metal Investments.
- invest either more than 10% of its total assets in the securities of
any one issuer, or, with respect to 75% of its total assets, invest more
than 5% of its total assets in securities of any one issuer (for this
purpose, an "issuer" is one other than the U.S. Government or its
agencies or instrumentalities).
- acquire more than 10% of the outstanding voting securities of any one
issuer.
- invest in other open-end investment companies, or invest more than 10%
of its net assets in closed-end investment companies, including small
business investment companies (and investments in closed-end investment
companies may be made only in open-market purchases and only at
commission rates that are not in excess of normal brokerage
commissions).
- lend money (this does not prohibit the Fund from acquiring publicly-
distributed debt securities that the Fund's other investment policies
and restrictions permit it to purchase, and the Fund may also make loans
of portfolio securities and Metal Investments (as described above)).
- deviate from the percentage limitations on investments set forth in
the sections of "Other Investment Techniques and Strategies" above
(other than those under "Illiquid and Restricted Securities").
All of the percentage restrictions described above and elsewhere in this
Prospectus (other than the percentage limits that apply to borrowing,
described in the Statement of Additional Information) apply only at the
time the Fund purchases a security. The Fund need not dispose of a
security merely because the size of the Fund's assets has changed or the
security has increased in value relative to the size of the Fund. There
are other fundamental policies discussed in the Statement of Additional
Information.
How the Fund is Managed
Organization and History. The Fund was originally incorporated in
Maryland in 1983 but was reorganized in 1985 as a Massachusetts business
trust. The Fund is an open-end, diversified management investment company,
with an unlimited number of authorized shares of beneficial interest.
The Fund is governed by a Board of Trustees, which is responsible for
protecting the interests of shareholders under Massachusetts law. The
Trustees periodically meet throughout the year to oversee the Fund's
activities, review its performance, and review the actions of the Manager.
"Trustees and Officers of the Fund" in the Statement of Additional
Information names the Trustees and officers of the Fund and provides more
information about them. Although the Fund is not required by law to hold
annual meetings, it may hold shareholder meetings from time to time on
important matters, and shareholders have the right to call a meeting to
remove a Trustee or to take other action described in the Fund's
Declaration of Trust.
The Board of Trustees has the power, without shareholder approval, to
divide unissued shares of the Fund into two or more classes. The Board
has done so, and the Fund currently has three classes of shares, Class
A, Class B and Class C. All three classes invest in the same investment
portfolio. Each class has its own dividends and distributions and pays
certain expenses, which may be different for the different classes. Each
class may have a different net asset value. Each share has one vote at
shareholder meetings, with fractional shares voting proportionally. Only
shares of a particular class vote as a class on matters that affect that
class alone. Shares are freely transferrable.
The Manager and Its Affiliates. The Fund is managed by the Manager,
Oppenheimer Management Corporation, which is responsible for selecting the
Fund's investments and handles its day-to-day business. The Manager
carries out its duties, subject to the policies established by the Board
of Trustees, under an Investment Advisory Agreement which states the
Manager's responsibilities. The Agreement sets forth the fees paid by the
Fund to the Manager, and describes the expenses that the Fund is
responsible to pay to conduct its business.
The Manager has operated as an investment adviser since 1959. The
Manager (including a subsidiary) currently manages investment companies,
including other Oppenheimer funds, with assets of more than $38 billion
as of September 30, 1995, and with more than 2.8 million shareholder
accounts. The Manager is owned by Oppenheimer Acquisition Corp., a
holding company that is owned in part by senior officers of the Manager
and controlled by Massachusetts Mutual Life Insurance Company.
- Portfolio Manager. The Portfolio Manager of the Fund is James C.
Ayer. He is an Assistant Vice President of the Manager. He has been the
person principally responsible for the day-to-day management of the Fund's
portfolio since July 16, 1994. Prior to joining the Manager in 1992, Mr.
Ayer was an international equities investment officer with Brown Brothers
Harriman & Co.
- Fees and Expenses. Under the Investment Advisory Agreement, the Fund
pays the Manager the following annual fees, which decline on additional
assets as the Fund grows: 0.75% of the first $200 million of aggregate
net assets, 0.72% of the next $200 million, 0.69% of the next $200
million, 0.66% of the next $200 million and 0.60% of average net assets
over $800 million. The Fund's management fee for its last fiscal year was
0.75% of average annual net assets of the Fund's Class A shares.
The Fund pays expenses related to its daily operations, such as
custodian fees, Trustees' fees, transfer agency fees, legal fees and
auditing costs. Those expenses are paid out of the Fund's assets and are
not paid directly by shareholders. However, those expenses reduce the net
asset value of shares, and therefore are indirectly borne by shareholders
through their investment. More information about the Investment Advisory
Agreement and the other expenses paid by the Fund is contained in the
Statement of Additional Information.
There is also information about the Fund's brokerage policies and
practices in "Brokerage Policies of the Fund" in the Statement of
Additional Information. That section discusses how brokers and dealers are
selected for the Fund's portfolio transactions. When deciding which
brokers to use, the Manager is permitted by the Investment Advisory
Agreement to consider whether brokers have sold shares of the Fund or any
other funds for which the Manager serves as investment adviser.
- The Distributor. The Fund's shares are sold through dealers and
brokers that have a sales agreement with Oppenheimer Funds Distributor,
Inc., a subsidiary of the Manager that acts as the Fund's Distributor.
The Distributor also distributes the shares of the other Oppenheimer funds
and is sub-distributor for funds managed by a subsidiary of the Manager.
- The Transfer Agent. The Fund's transfer agent is Oppenheimer
Shareholder Services, a division of the Manager, which acts as the
shareholder servicing agent for the Fund on an "at-cost" basis. It also
acts as the shareholder servicing agent for the other Oppenheimer funds.
Shareholders should direct inquiries about their account to the Transfer
Agent at the address and toll-free numbers shown below in this Prospectus
and on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms "total
return" and "average annual total return" to illustrate its performance.
The performance of each class of shares is shown separately, because the
performance of each class will usually be different as a result of the
different kinds of expenses each class bears. These returns measure the
performance of a hypothetical account in the Fund over various periods,
and do not show the performance of each shareholder's account (which will
vary if dividends are received in cash, or shares are sold or purchased).
The Fund's performance information may help you see how well your Fund has
done over time and to compare it to other funds or market indices.
It is important to understand that the Fund's total returns represent
past performance and should not be considered to be predictions of future
returns or performance. This performance data is described below, but
more detailed information about how total returns are calculated is
contained in the Statement of Additional Information, which also contains
information about other ways to measure and compare the Fund's
performance. The Fund's investment performance will vary over time,
depending on market conditions, the composition of the portfolio, expenses
and which class of shares you purchase.
- Total Returns. There are different types of total returns used to
measure the Fund's performance. Total return is the change in value of
a hypothetical investment in the Fund over a given period, assuming that
all dividends and capital gains distributions are reinvested in additional
shares. The cumulative total return measures the change in value over the
entire period (for example, ten years). An average annual total return
shows the average rate of return for each year in a period that would
produce the cumulative total return over the entire period. However,
average annual total returns do not show the Fund's actual year-by-year
performance.
When total returns are quoted for Class A shares, normally they include
the payment of the current maximum initial sales charge. Total returns
may also be quoted "at net asset value," without including the sales
charge, and those returns would be reduced if sales charges were deducted.
When total returns are shown for Class B shares, they include the effect
of the contingent deferred sales charge that applies to the period for
which total return is shown. When total returns are shown for a one-year
period or less for Class C shares, they include the effect of the
contingent deferred sales charge. Total returns for Class B and Class C
shares may also be shown based on the change in net asset value, without
including the contingent deferred sales charge.
How Has the Fund Performed? Below is a discussion by the Manager of the
Fund's performance during its last fiscal year ended June 30, 1995,
followed by a graphical comparison of the Fund's performance to an
appropriate broad-based market index.
- Management's Discussion of Performance. During the Fund's past
fiscal year, gold prices remained relatively stable, supported by a
slowdown in the U.S. economy, the retention of gold reserves by central
banks due to uncertainty of the U.S. dollar, reduced production from South
Africa and continued strong demand for gold jewelry. The Fund's portfolio
manager reduced the Fund's exposure to gold producers in South Africa due
to labor and productivity problems in this region and instead favored low-
cost gold producers with strong growth prospects in regions outside of
North America.
- Comparing the Fund's Performance to the Market. The graph below
shows the performance of a hypothetical $10,000 investment in Class A
shares of the Fund held until June 30, 1995, over a ten-year period, with
all dividends and capital gains distributions reinvested in additional
shares. The graph reflects the deduction of the 5.75% current maximum
initial sales charge on Class A shares of the Fund. Class B and Class C
shares were not publicly offered during the fiscal year ended June 30,
1995, and consequently, no information on Class B and Class C shares is
included in the graph.
The Fund's performance is compared to the performance of the Morgan
Stanley World Index, an unmanaged index of issuers listed on the stock
exchanges of 20 foreign countries and the U.S. That index is widely
recognized as a measure of global stock market performance. Index
performance reflects the reinvestment of dividends but does not consider
the effect of expenses or taxes. Also, the Fund's performance reflects
the effect of Fund business and operating expenses. While index
comparisons may be useful to provide a benchmark for the Fund's
performance, it must be noted that the Fund's investments are not limited
to the securities in the Morgan Stanley World Index, as the Fund's
investments are concentrated in one group of industries while the Index
includes companies from different industries with different degrees of
volatility and returns. Moreover, the index data does not reflect any
assessment of the risk of the investments included in the index.
Oppenheimer Gold & Special Minerals Fund
Comparison of Change in Value
of $10,000 Hypothetical Investments in
Oppenheimer Gold & Special Minerals Fund
and Morgan Stanley World Index
(Graph)
Past performance is not predictive of future performance.
Average Annual Total Returns of the Fund at 6/30/95
1-Year 5-Year 10-Year(1)
-3.84% 2.73% 11.68%
_____________________
(1) The average annual total returns and the ending account value in the
graph reflect reinvestment of all dividends and capital gains
distributions and are shown net of the applicable 5.75% maximum initial
sales charge.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors three different classes of
shares. The different classes of shares represent investments in the same
portfolio of securities but are subject to different expenses and will
likely have different share prices.
- Class A Shares. If you buy Class A shares, you may pay an initial
sales charge on investments up to $1 million (up to $500,000 for purchases
by OppenheimerFunds prototype 401(k) plans). If you purchase Class A
shares as part of an investment of at least $1 million ($500,000 for
OppenheimerFunds prototype 401(k) plans) in shares of one or more
Oppenheimer funds, you will not pay an initial sales charge, but if you
sell any of those shares within 18 months of buying them, you may pay a
contingent deferred sales charge. The amount of that sales charge will
vary depending on the amount you invested. Sales charges are described in
"Buying Class A Shares" below.
- Class B Shares. If you buy Class B shares, you pay no sales charge
at the time of purchase, but if you sell your shares within six years of
buying them, you will normally pay a contingent deferred sales charge.
That sales charge varies depending on how long you own your shares. Sales
charges are described in "Buying Class B Shares" below.
- Class C Shares. If you buy Class C shares, you pay no sales charge
at the time of purchase, but if you sell your shares within 12 months of
buying them, you will normally pay a contingent deferred sales charge of
1%. Sales charges are described in "Class C Shares" below.
- Which Class of Shares Should You Choose? Once you decide that the
Fund is an appropriate investment for you, the decision as to which class
of shares is better suited to your needs depends on a number of factors
which you should discuss with your financial advisor. The Fund's
operating costs that apply to a class of shares and the effect of the
different types of sales charges on your investment will vary your
investment results over time. The most important factors are how much you
plan to invest and how long you plan to hold your investment. If your
goals and objectives change over time and you plan to purchase additional
shares, you should re-evaluate those factors to see if you should consider
another class of shares.
In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund. We used the
sales charge rates that apply to each class, considering the effect of the
annual asset-based sales charge on Class B and Class C expenses (which,
like all expenses, will affect your investment return). For the sake of
comparison, we have assumed that there is a 10% rate of appreciation in
the investment each year. Of course, the actual performance of your
investment cannot be predicted and will vary, based on the Fund's actual
investment returns and the operating expenses borne by each class of
shares, and which class you invest in. The factors discussed below are
not intended to be investment advice or recommendations, because each
investor's financial considerations are different. The discussion below
of the factors to consider in purchasing a particular class of shares
assumes that you will purchase only one class of shares and not a
combination of shares of different classes.
- How Long Do You Expect to Hold Your Investment? While future
financial needs cannot be predicted with certainty, knowing how long you
expect to hold your investment will assist you in selecting the
appropriate class of shares. Because of the effect of class-based
expenses, your choice will also depend on how much you plan to invest. For
example, the reduced sales charges available for larger purchases of Class
A shares may, over time, offset the effect of paying an initial sales
charge on your investment (which reduces the amount of your investment
dollars used to buy shares for your account), compared to the effect over
time of higher class-based expenses on Class B or Class C shares for which
no initial sales charge is paid.
Investing for the Short Term. If you have a short-term investment
horizon (that is, you plan to hold your shares for not more than six
years), you should probably consider purchasing Class A or Class C shares
rather than Class B shares, because of the effect of the Class B
contingent deferred sales charge if you redeem in less than 7 years, as
well as the effect of the Class B asset-based sales charge on the
investment return for that class in the short-term. Class C shares might
be the appropriate choice (especially for investments of less than
$100,000), because there is no initial sales charge on Class C shares, and
the contingent deferred sales charge does not apply to amounts you sell
after holding them one year.
However, if you plan to invest more than $100,000 for the shorter term,
then the more you invest and the more your investment horizon increases
toward six years, Class C shares might not be as advantageous as Class A
shares. That is because the annual asset-based sales charge on Class C
shares will have a greater impact on your account over the longer term
than the reduced front-end sales charge available for larger purchases of
Class A shares. For example, Class A might be more advantageous than Class
C (as well as Class B) for investments of more than $100,000 expected to
be held for 5 or 6 years (or more). For investments over $250,000 expected
to be held 4 to 6 years (or more), Class A shares may become more
advantageous than Class C (and B). If investing $500,000 or more, Class
A may be more advantageous as your investment horizon approaches 3 years
or more.
And for most investors who invest $1 million or more, in most cases
Class A shares will be the most advantageous choice, no matter how long
you intend to hold your shares. For that reason, the Distributor normally
will not accept purchase orders of $500,000 or $1 million or more of Class
B or C shares, respectively, from a single investor.
Investing for the Longer Term. If you are investing for the longer
term, for example, for retirement, and do not expect to need access to
your money for seven years or more, Class B shares may be an appropriate
consideration, if you plan to invest less than $100,000. If you plan to
invest more than $100,000 over the long term, Class A shares will likely
be more advantageous than Class B shares or C shares, as discussed above,
because of the effect of the expected lower expenses for Class A shares
and the reduced initial sales charges available for larger investments in
Class A shares under the Fund's Right of Accumulation.
Of course, these examples are based on approximations of the effect of
current sales charges and expenses on a hypothetical investment over time,
using the assumptions stated above. Therefore, these examples should not
be relied on as rigid guidelines.
- Are There Differences in Account Features That Matter to You?
Because some account features may not be available to Class B or Class C
shareholders, or other features (such as Automatic Withdrawal Plans) might
not be advisable (because of the effect of the contingent deferred sales
charge) for Class B or Class C shareholders, you should carefully review
how you plan to use your investment account before deciding which class
of shares to buy. Share certificates are not available for Class B or
Class C shares, and if you are considering using your shares as collateral
for a loan, that may be a factor to consider.
- 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 charge is the same as the purpose of
the front-end sales charge on sales of Class A shares, that is, to
compensate the Distributor for commissions it pays to dealers and
financial institutions for selling shares.
How Much Must You Invest? You can open a Fund account with a minimum
initial investment of $1,000 and make additional investments at any time
with as little as $25. There are reduced minimum investments under special
investment plans.
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7) custodial
plans and military allotment plans, you can make initial and subsequent
investments of as little as $25; and subsequent purchases of at least $25
can be made by telephone through AccountLink.
Under pension and profit-sharing plans and Individual Retirement
Accounts (IRAs), you can make an initial investment of as little as $250
(if your IRA is established under an Asset Builder Plan, the $25 minimum
applies), and subsequent investments may be as little as $25.
There is no minimum investment requirement if you are buying shares by
reinvesting dividends from the Fund or other Oppenheimer funds (a list of
them appears in the Statement of Additional Information, or you can ask
your dealer or call the Transfer Agent), or by reinvesting distributions
from unit investment trusts that have made arrangements with the
Distributor.
- How Are Shares Purchased? You can buy shares several ways -- through
any dealer, broker or financial institution that has a sales agreement
with the Distributor, directly through the Distributor, or automatically
from your bank account through an Asset Builder Plan under the
OppenheimerFunds AccountLink service. When you buy shares, be sure to
specify Class A, Class B, or Class C shares. If you do not choose, your
investment will be made in Class A shares.
- Buying Shares Through Your Dealer. Your dealer will place your order
with the Distributor on your behalf.
- Buying Shares Through the Distributor. Complete an OppenheimerFunds
New Account Application and return it with a check payable to "Oppenheimer
Funds Distributor, Inc." Mail it to P.O. Box 5270, Denver, Colorado
80217. If you don't list a dealer on the application, the Distributor
will act as your agent in buying the shares. However, it is recommended
that you discuss your investment first with a financial advisor, to be
sure that it is appropriate for you.
- Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or
other financial institution that is an Automated Clearing House (ACH)
member. You can then transmit funds electronically to purchase shares,
to have the Transfer Agent send redemption proceeds, or to transmit
dividends and distributions.
Shares are purchased for your account on the regular business day the
Distributor is instructed by you to initiate the ACH transfer to buy
shares. You can provide those instructions automatically, under an Asset
Builder Plan, described below, or by telephone instructions using
OppenheimerFunds PhoneLink, also described below. You should request
AccountLink privileges on the application or dealer settlement
instructions used to establish your account. Please refer to "AccountLink"
below for more details.
- Asset Builder Plans. You may purchase shares of the Fund (and up to
four other Oppenheimer funds) automatically each month from your account
at a bank or other financial institution under an Asset Builder Plan with
AccountLink. Details are on the Application and in the Statement of
Additional Information.
- At What Price Are Shares Sold? Shares are sold at the public
offering price based on the net asset value (and any initial sales charge
that applies) that is next determined after the Distributor receives the
purchase order in Denver, Colorado. In most cases, to enable you to
receive that day's offering price, the Distributor must receive your order
by the time of day The New York Stock Exchange closes, which is normally
4:00 P.M., New York time, but may be earlier on some days (all references
to time in this Prospectus mean "New York time"). The net asset value of
each class of shares is determined as of that time on each day The New
York Stock Exchange is open (which is a "regular business day").
If you buy shares through a dealer, the dealer must receive your order
by the close of The New York Stock Exchange, on a regular business day and
transmit it to the Distributor so that it is received before the
Distributor's close of business that day, which is normally 5:00 P.M. The
Distributor may reject any purchase order for the Fund's shares, in its
sole discretion.
Buying Class A Shares. Class A shares are sold at their offering price,
which is normally net asset value plus an initial sales charge. However,
in some cases, described below, purchases are not subject to an initial
sales charge, and the offering price will be the net asset value. In some
cases, reduced sales charges may be available, as described below. Out
of the amount you invest, the Fund receives the net asset value to invest
for your account. The sales charge varies depending on the amount of your
purchase. A portion of the sales charge may be retained by the
Distributor and allocated to your dealer. The current sales charge rates
and commissions paid to dealers and brokers
are as follows:
Front-End Front-End
Sales Charge Sales Charge Commission
as Percentage as Percentage as Percentage
Amount of of Offering of Amount of Offering
Purchase Price Invested 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 re-allow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter"
under Federal securities laws.
- Class A Contingent Deferred Sales Charge. There is no initial sales
charge on purchases of Class A shares of any one or more of the
Oppenheimer funds in the following cases:
- Purchases aggregating $1 million or more; or
- Purchases by an OppenheimerFunds prototype 401(k) plan that: (1) buys
shares costing $500,000 or more, or (2) has, at the time of purchase, 100
or more eligible participants, or (3) certifies that it projects to have
annual plan purchases of $200,000 or more.
Shares of any of the Oppenheimer funds that offers only one class of
shares that has no designation are considered "Class A" shares for this
purpose. The Distributor pays dealers of record commissions on those
purchases in an amount equal to the sum of 1.0% of the first $2.5 million,
plus 0.50% of the next $2.5 million, plus 0.25% of purchases over $5
million. That commission will be paid only on the amount of those
purchases in excess of $1 million ($500,000, for purchases by
OppenheimerFunds prototype 401(k) plans) that were not previously subject
to a front-end sales charge and dealer commission.
If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge
(called the "Class A contingent deferred sales charge") may be deducted
from the redemption proceeds. That sales charge will be equal to 1.0% of
either (1) the aggregate net asset value of the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original cost of the shares, whichever is less.
However, the Class A contingent deferred sales charge will not exceed the
aggregate amount of the commissions the Distributor paid to your dealer
on all Class A shares of all Oppenheimer funds you purchased subject to
the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is payable,
the Fund will first redeem shares that are not subject to the sales
charge, including shares purchased by reinvestment of dividends and
capital gains, and then will redeem other shares in the order that you
purchased them. The Class A contingent deferred sales charge is waived
in certain cases described in "Waivers of Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges of
shares under the Fund's exchange privilege (described below). However,
if the shares acquired by exchange are redeemed within 18 months of the
end of the calendar month of the purchase of the exchanged shares, the
sales charge will apply.
- Special Arrangements With Dealers. The Distributor may advance up
to 13 months' commissions to dealers that have established special
arrangements with the Distributor for Asset Builder Plans for their
clients. Dealers whose sales of Class A shares of Oppenheimer funds
(other than money market funds) under OppenheimerFunds-sponsored 403(b)(7)
custodial plans exceed $5 million per year (calculated per quarter), will
receive monthly one-half of the Distributor's retained commissions on
those sales, and if those sales exceed $10 million per year, those dealers
will receive the Distributor's entire retained commission on those sales.
Reduced Sales Charges for Class A Share Purchases. You may be eligible
to buy Class A shares at reduced sales charge rates in one or more of the
following ways:
- Right of Accumulation. To qualify for the lower sales charge rates
that apply to larger purchases of Class A shares, you and your spouse can
add together Class A and Class B shares you purchase for your individual
accounts, or jointly, or for trust or custodial accounts on behalf of your
children who are minors. A fiduciary can count all shares purchased for
a trust, estate or other fiduciary account (including one or more employee
benefit plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class A and
Class B shares of the Fund and other Oppenheimer funds to reduce the sales
charge rate that applies to current purchases of Class A shares. You can
also include Class A and Class B shares of Oppenheimer funds you
previously purchased subject to an initial or contingent deferred sales
charge to reduce the sales charge rate for current purchases of Class A
shares, provided that you still hold your investment in one of the
Oppenheimer funds. The value of those shares will be based on the greater
of the amount you paid for the shares or their current value (at offering
price). The Oppenheimer funds are listed in "Reduced Sales Charges" in
the Statement of Additional Information, or a list can be obtained from
the Distributor. The reduced sales charge will apply only to current
purchases and must be requested when you buy your shares.
- Letter of Intent. Under a Letter of Intent, if you purchase Class
A shares or Class A shares and Class B shares of the Fund and other
Oppenheimer funds during a 13-month period, you can reduce the sales
charge rate that applies to your purchases of Class A shares. The total
amount of your intended purchases of both Class A and Class B shares will
determine the reduced sales charge rate for the Class A shares purchased
during that period. This can include purchases made up to 90 days before
the date of the Letter. More information is contained in the Application
and in "Reduced Sales Charges" in the Statement of Additional Information.
- Waivers of Class A Sales Charges. The Class A sales charges are not
imposed in the circumstances described below. There is an explanation of
this policy in "Reduced Sales Charges" in the Statement of Additional
Information.
Waivers of Initial and Contingent Deferred Sales Charges for Certain
Purchasers. Class A shares purchased by the following investors are not
subject to any Class A sales charges:
- the Manager or its affiliates;
- present or former officers, directors, trustees and employees (and
their "immediate families" as defined in "Reduced Sales Charges" in the
Statement of Additional Information) of the Fund, the Manager and its
affiliates, and retirement plans established by them for their employees;
- registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the
Distributor for that purpose;
- dealers or brokers that have a sales agreement with the Distributor,
if they purchase shares for their own accounts or for retirement plans for
their employees;
- employees and registered representatives (and their spouses) of
dealers or brokers described above or financial institutions that have
entered into sales arrangements with such dealers or brokers (and are
identified to the Distributor) or with the Distributor; the purchaser must
certify to the Distributor at the time of purchase that the purchase is
for the purchaser's own account (or for the benefit of such employee's
spouse or minor children);
- dealers, brokers or registered investment advisers that have entered
into an agreement with the Distributor providing specifically for the use
of shares of the Fund in particular investment products made available to
their clients (those clients may be charged a transaction fee by their
dealer, broker or adviser for the purchase or sale of fund shares); or
- dealers, brokers or registered investment advisers that have entered
into an agreement with the Distributor to sell shares to defined
contribution employee retirement plans for which the dealer, broker or
investment adviser provides administration services.
Waivers of Initial and Contingent Deferred Sales Charges in Certain
Transactions. Class A shares issued or purchased in the following
transactions are not subject to Class A sales charges:
- shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party;
- shares purchased by the reinvestment of loan repayments by a
participant in a retirement plan for which the Manager or its affiliates
acts as sponsor;
- shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds (other
than Oppenheimer Cash Reserves) or unit investment trusts for which
reinvestment arrangements have been made with the Distributor; or
- shares purchased and paid for with the proceeds of shares redeemed
in the past 12 months from a mutual fund (other than a fund managed by the
Manager or any of its subsidiaries) on which an initial sales charge or
contingent sales charge was paid (this waiver also applies to shares
purchased by exchange of shares of Oppenheimer Money Market Fund, Inc.
that were purchased and paid for in this manner); this waiver must be
requested when the purchase order is placed for your shares of the Fund,
and the Distributor may require evidence of your qualification for this
waiver.
Waivers of the Class A Contingent Deferred Sales Charge for Certain
Redemptions . The Class A contingent deferred sales charge does not apply
to purchases of Class A shares at net asset value without sales charge as
described in the two sections above. It is also waived if shares that
would otherwise be subject to the contingent deferred sales charge are
redeemed in the following cases:
- for retirement distributions or loans to participants or
beneficiaries from qualified retirement plans, deferred compensation plans
or other employee benefit plans, including OppenheimerFunds prototype
401(k) plans (these are all referred to as "Retirement Plans");
- to return excess contributions made to Retirement Plans;
- to make Automatic Withdrawal Plan payments that are limited annually
to no more than 12% of the original account value;
- involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (see "Shareholder Account Rules and
Policies," below); or
- if, at the time a purchase order is placed for Class A shares that
would otherwise be subject to the Class A contingent deferred sales
charge, the dealer agrees in writing to accept the dealer's portion of the
commission payable on the sale in installments of 1/18th of the commission
per month (and no further commission will be payable if the shares are
redeemed within 18 months of purchase); or
- for distributions from OppenheimerFunds prototype 401(k) plans for
any of the following cases or purposes: (1) following death or disability
(as defined in the Internal Revenue Code) of the participant or
beneficiary (the death or disability must occur after the participant's
account was established); (2) hardship withdrawals, as defined in the
plan; (3) under a Qualified Domestic Relations Order, as defined in the
Internal Revenue Code; (4) to meet the minimum distribution requirements
of the Internal Revenue Code; (5) to establish "substantially equal
periodic payments" as described in Section 72(t) of the Internal Revenue
Code; or (6) separation from service.
- Service Plan for Class A Shares. The Fund has adopted a Service
Plan to reimburse the Distributor for a portion of its costs incurred in
connection with the personal service and maintenance of shareholder
accounts that hold Class A shares. Reimbursement is made quarterly at an
annual rate that may not exceed 0.25% of the average annual net assets of
the Fund. The Fund's Board of Trustees has set the annual rate for assets
representing shares of the Fund sold on or after April 1, 1991 at 0.25%,
and has set the annual rate for assets representing shares sold before
April 1, 1991, at 0.15% (the Board has the authority to increase that rate
to no more than 0.25%). The Distributor uses all of those fees to
compensate dealers, brokers, banks and other financial institutions
quarterly for providing personal service and maintenance of accounts of
their customers that hold Class A shares and to reimburse itself (if the
Fund's Board of Trustees authorizes such reimbursements, which it has not
yet done) for its other expenditures under the Plan.
Services to be provided include, among others, answering customer
inquiries about the Fund, assisting in establishing and maintaining
accounts in the Fund, making the Fund's investment plans available and
providing other services at the request of the Fund or the Distributor.
Payments are made by the Distributor quarterly at an annual rate not to
exceed 0.25% of the average annual net assets of Class A shares held in
accounts of the dealer 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 6 years of their purchase, a contingent deferred sales
charge will be deducted from the redemption proceeds. That sales charge
will not apply to shares purchased by the reinvestment of dividends or
capital gains distributions. The charge will be assessed on the lesser of
the net asset value of the shares at the time of redemption or the
original purchase price. The contingent deferred sales charge is not
imposed on the amount of your account value represented by an increase in
net asset value over the initial purchase price (including increases due
to the reinvestment of dividends and capital gains distributions). The
Class B contingent deferred sales charge is paid to the Distributor to
reimburse its expenses of providing distribution-related services to the
Fund in connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over 6 years, and (3) shares held the longest during the
6-year period.
The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule:
Contingent Deferred Sales Charge
Years Since Beginning of Month In on Redemptions in that Year
Which Purchase Order Was Accepted (As % of Amount Subject to Charge)
- --------------------------------- ----------------------------------
0 - 1 5.0%
1 - 2 4.0%
2 - 3 3.0%
3 - 4 3.0%
4 - 5 2.0%
5 - 6 1.0%
6 and following None
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of the
month in which the purchase was made.
- Automatic Conversion of Class B Shares. 72 months after you purchase
Class B shares, those shares will automatically convert to Class A shares.
This conversion feature relieves Class B shareholders of the asset-based
sales charge that applies to Class B shares under the Class B Distribution
and Service Plan, described below. The conversion is based on the relative
net asset value of the two classes, and no sales load or other charge is
imposed. When Class B shares convert, any other Class B shares that were
acquired by the reinvestment of dividends and distributions on the
converted shares will also convert to Class A shares. The conversion
feature is subject to the continued availability of a tax ruling described
in "Alternative Sales Arrangements - Class A, Class B and Class C shares"
in the Statement of Additional Information.
- Distribution and Service Plan for Class B Shares. The Fund has
adopted a Distribution and Service Plan for Class B shares to compensate
the Distributor for its services and costs in distributing Class B shares
and servicing accounts. Under the Plan, the Fund pays the Distributor an
annual "asset-based sales charge" of 0.75% per year on Class B shares that
are outstanding for 6 years or less. The Distributor also receives a
service fee of 0.25% per year. Both fees are computed on the average
annual net assets of Class B shares, determined as of the close of each
regular business day. The asset-based sales charge allows investors to buy
Class B shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell Class B shares.
The Distributor uses the service fee to compensate dealers for providing
personal services for accounts that hold Class B shares. Those services
are similar to those provided under the Class A Service Plan, described
above. The asset-based sales charge and service fee increase Class B
expenses by 1.00% of average net assets per year.
The Distributor pays the 0.25% service fee to dealers in advance for the
first year after Class B shares have been sold by the dealer. After the
shares have been held for a year, the Distributor pays the fee on a
quarterly basis. The Distributor pays sales commissions of 3.75% of the
purchase price to dealers from its own resources at the time of sale. The
Distributor retains the asset-based sales charge to recoup the sales
commissions it pays, the advances of service fee payments it makes, and
its financing costs.
The Fund pays the asset-based sales charge to the Distributor for its
services rendered in connection with the distribution of Class B shares.
Those payments, retained by the Distributor, are at a fixed rate which 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 shares.
If the Plan is terminated by the Fund, the Board of Trustees may allow the
Fund to continue payments of the asset-based sales charge to the
Distributor for distributing Class B shares before the Plan was
terminated.
- Waivers of Class B and Class C Sales Charges. The Class B and Class
C contingent deferred sales charges will not be applied to shares
purchased in certain types of transactions nor will it apply to Class B
or Class C shares redeemed in certain circumstances as described below.
The reasons for this policy are described in "Reduced Sales Charges" in
the Statement of Additional Information.
Waivers for Redemptions of Shares in Certain Cases. The Class B and
Class C contingent deferred sales charges will be waived for redemptions
of shares in the following cases:
- distributions to participants or beneficiaries from Retirement Plans,
if the distributions are made (a) under an Automatic Withdrawal Plan after
the participant reaches age 59-1/2, as long as the payments are no more
than 10% of the account value annually (measured from the date the
Transfer Agent receives the request), or (b) following the death or
disability (as defined in the Internal Revenue Code) of the participant
or beneficiary (the death or disability must have occurred after the
account was established);
- redemptions from accounts other than Retirement Plans following the
death or disability of the last surviving shareholder (the death or
disability must have occurred after the account was established, and for
disability you must provide evidence of a determination of disability by
the Social Security Administration);
- returns of excess contributions to Retirement Plans;
- distributions from IRAs (including SEP-IRAs and SAR/SEP accounts)
before the participant is age 59-1/2, and distributions from 403(b)(7)
custodial plans or pension or profit sharing plans before the participant
is age 59-1/2 but only after the participant has separated from service,
if the distributions are made in substantially equal periodic payments
over the life (or life expectancy) of the participant or the joint lives
(or joint life and last survivor expectancy) of the participant and the
participant's designated beneficiary (and the distributions must comply
with other requirements for such distributions under the Internal Revenue
Code and may not exceed 10% of the account value annually, measured from
the date the Transfer Agent receives the request);
- shares redeemed involuntarily, as described in "Shareholder Account
Rules and Policies," below; or
- distributions from OppenheimerFunds prototype 401(k) plans (1) for
hardship withdrawals; (2) under a Qualified Domestic Relations Order, as
defined in the Internal Revenue Code; (3) to meet minimum distribution
requirements as defined in the Internal Revenue Code; (4) to make
"substantially equal periodic payments" as described in Section 72(t) of
the Internal Revenue Code; or (5) for separation from service.
Waivers for Shares Sold or Issued in Certain Transactions. The
contingent deferred sales charge is also waived on Class B and Class C
shares sold or issued in the following cases:
- shares sold to the Manager or its affiliates;
- shares sold to registered management investment companies or separate
accounts of insurance companies having an agreement with the Manager or
the Distributor for that purpose; or
- shares issued in plans of reorganization to which the Fund is a party.
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 charge will be assessed on the lesser
of the net asset value of the shares at the time of redemption or the
original purchase price. The contingent deferred sales charge is not
imposed on the amount of your account value represented by the increase
in net asset value over the initial purchase price (including increases
due to the reinvestment of dividends and capital gains distributions). The
Class C contingent deferred sales charge is paid to the Distributor to
reimburse its expenses of providing distribution-related services to the
Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over 12 months, and (3) shares held the longest during the
12-month period.
- Waivers of Class C Sales Charges. The Class C contingent deferred
sales charge will be waived if the shareholder requests it for any of the
redemptions or circumstances described above under "Waivers of Class B and
Class C Contingent Deferred Sales Charges."
- Distribution and Service Plan for Class C Shares. The Fund has
adopted a Distribution and Service Plan for Class C shares to compensate
the Distributor for distributing Class C shares and servicing accounts.
Under the Plan, the Fund pays the Distributor an annual "asset-based sales
charge" of 0.75% per year on Class C shares. The Distributor also
receives a service fee of 0.25% per year. Both fees are computed on the
average annual net assets of Class C shares, determined as of the close
of each regular business day. The asset-based sales charge allows
investors to buy Class C shares without a front-end sales charge while
allowing the Distributor to compensate dealers that sell Class C shares.
The Distributor uses the service fee to compensate dealers for providing
personal services for accounts that hold Class C shares. Those services
are similar to the services provided under the Class A Service Plan,
described above. The asset-based sales charge and service fees increase
Class C expenses by up to 1.00% of average net assets per year.
The Distributor pays the 0.25% service fee to dealers in advance for the
first year, after Class C shares have been sold by the dealer. After the
shares have been held for a year, the Distributor pays the fee on a
quarterly basis. The Distributor pays sales commissions of 0.75% of the
purchase price to dealers from its own resources at the time of sale. The
total up-front commission paid by the Distributor to the dealer at the
time of sale of Class C shares is 1.00% of the purchase price. The
Distributor plans to pay the asset-based sales charge as an ongoing
commission to the dealer on Class C shares that have been outstanding for
a year or more.
The Fund pays the asset-based sales charge to the Distributor for its
services rendered in connection with the distribution of Class C shares.
Those payments are at a fixed rate which is not related to the
Distributor's expense. 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 C shares, including
compensating personnel of the Distributor who support distribution of
Class C shares. If the Plan is terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of the asset-based sales
charge to the Distributor for distributing Class C shares before the Plan
was terminated.
<PAGE>
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account to your
account at your bank or other financial institution to enable you to send
money electronically between those accounts to perform a number of types
of account transactions. These include purchases of shares by telephone
(either through a service representative or by PhoneLink, described
below), automatic investments under Asset Builder Plans, and sending
dividends and distributions or Automatic Withdrawal Plan payments directly
to your bank account. Please refer to the Application for details or call
the Transfer Agent for more information.
AccountLink privileges must be requested on the Application you use to
buy shares, or on your dealer's settlement instructions if you buy your
shares through your dealer. After your account is established, you can
request AccountLink privileges by sending signature-guaranteed
instructions to the Transfer Agent. AccountLink privileges will apply to
each shareholder listed in the registration on your account as well as to
your dealer representative of record unless and until the Transfer Agent
receives written instructions terminating or changing those privileges.
After you establish AccountLink for your account, any change of bank
account information must be made by signature-guaranteed instructions to
the Transfer Agent signed by all shareholders who own the account.
- Using AccountLink to Buy Shares. Purchases may be made by telephone
only after your account has been established. To purchase shares in
amounts up to $250,000 through a telephone representative, call the
Distributor at 1-800-852-8457. The purchase payment will be debited from
your bank account.
- PhoneLink. PhoneLink is the OppenheimerFunds automated telephone
system that enables shareholders to perform a number of account
transactions automatically using a touch-tone phone. PhoneLink may be used
on already-established Fund accounts after you obtain a Personal
Identification Number (PIN), by calling the special PhoneLink number: 1-
800-533-3310.
- Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have established
AccountLink privileges to link your bank account with the Fund, to pay for
these purchases.
- Exchanging Shares. With the OppenheimerFunds Exchange Privilege,
described below, you can exchange shares automatically by phone from your
Fund account to another Oppenheimer funds account you have already
established by calling the special PhoneLink number. Please refer to "How
to Exchange Shares," below, for details.
- Selling Shares. You can redeem shares by telephone automatically by
calling the PhoneLink number and the Fund will send the proceeds directly
to your AccountLink bank account. Please refer to "How to Sell Shares,"
below, for details.
Automatic Withdrawal and Exchange Plans. The Fund has several plans that
enable you to sell shares automatically or exchange them to another
Oppenheimer funds account on a regular basis:
- Automatic Withdrawal Plans. If your Fund account is worth $5,000 or
more, you can establish an Automatic Withdrawal Plan to receive payments
of at least $50 on a monthly, quarterly, semi-annual or annual basis. The
checks may be sent to you or sent automatically to your bank account on
AccountLink. You may even set up certain types of withdrawals of up to
$1,500 per month by telephone. You should consult the Application and
Statement of Additional Information for more details.
- Automatic Exchange Plans. You can authorize the Transfer Agent
automatically to exchange an amount you establish in advance for shares
of up to five other Oppenheimer funds on a monthly, quarterly, semi-annual
or annual basis under an Automatic Exchange Plan. The minimum purchase
for each Oppenheimer funds account is $25. These exchanges are subject
to the terms of the Exchange Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class A or
Class B shares of the Fund, you have up to 6 months to reinvest all or
part of the redemption proceeds in Class A shares of the Fund or Class A
shares of other Oppenheimer funds without paying a sales charge. This
privilege applies to Class A shares that you purchased with an initial
sales charge and to Class A or B shares on which you paid a contingent
deferred sales charge when you redeemed them. This privilege does not
apply to Class C shares. You must be sure to ask the Distributor for this
privilege when you send your payment. Please consult the Statement of
Additional Information for more details.
Retirement Plans. Fund shares are available as an investment for your
retirement plans. If you participate in a plan sponsored by your employer,
the plan trustee or administrator must make the purchase of shares for
your retirement plan account. The Distributor offers a number of different
retirement plans that can be used by individuals and employers:
- Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
- 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
- SEP-IRAs (Simplified Employee Pension Plans) for small business
owners or people with income from self-employment, including SARSEP-IRAs
- Pension and Profit-Sharing Plans for self-employed persons and other
employers
- 401(k) prototype retirement plans for businesses
Please call the Distributor for the OppenheimerFunds plan documents,
which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account on any regular
business day by selling (redeeming) some or all of your shares. Your
shares will be sold at the next net asset value calculated after your
order is received and accepted by the Transfer Agent. The Fund offers you
a number of ways to sell your shares: in writing or by telephone. You can
also set up Automatic Withdrawal Plans to redeem shares on a regular
basis, as described above. If you have questions about any of these
procedures, and especially if you are redeeming shares in a special
situation, such as due to the death of the owner, or from a retirement
plan, please call the Transfer Agent first, at 1-800-525-7048, for
assistance.
- Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must submit
a withholding form with your request to avoid delay. If your retirement
plan account is held for you by your employer, you must arrange for the
distribution request to be sent by the plan administrator or trustee.
There are additional details in the Statement of Additional Information.
- Certain Requests Require a Signature Guarantee. To protect you and
the Fund from fraud, certain redemption requests must be in writing and
must include a signature guarantee in the following situations (there may
be other situations also requiring a signature guarantee):
- You wish to redeem more than $50,000 worth of shares and receive a
check
- A redemption check is not payable to all shareholders listed on the
account statement
- A redemption check is not sent to the address of record on your
statement
- Shares are being transferred to a Fund account with a different
owner or name
- Shares are redeemed by someone other than the owners (such as an
Executor)
- Where Can I Have My Signature Guaranteed? The Transfer Agent will
accept a guarantee of your signature by a number of financial
institutions, including: a U.S. bank, trust company, credit union or
savings association, or by a foreign bank that has a U.S. correspondent
bank, or by a U.S. registered dealer or broker in securities, municipal
securities or government securities, or by a U.S. national securities
exchange, a registered securities association or a clearing agency. If you
are signing on behalf of a corporation, partnership or other business, or
as a fiduciary, you must also include your title in the signature.
<PAGE>
Selling Shares by Mail. Write a "letter of instructions" that includes:
- Your name,
- The Fund's name,
- Your Fund account number (from your account statement),
- The dollar amount or number of shares to be redeemed,
- Any special payment instructions,
- Any share certificates for the shares you are selling,
- The signatures of all registered owners exactly as the account is
registered, and
- Any special requirements or documents requested by the Transfer
Agent to assure proper authorization of the person asking to sell shares.
Use the following address for requests by mail:
Oppenheimer Shareholder Services
P.O. Box 5270, Denver, Colorado 80217
Send courier or Express Mail requests to:
Oppenheimer Shareholder 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.
- To redeem shares through a service representative, call 1-800-
852-8457
- To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address on
the account statement, or, if you have linked your Fund account to your
bank account on AccountLink, you may have the proceeds wired to that bank
account.
- Telephone Redemptions Paid by Check. Up to $50,000 may be redeemed
by telephone, once in any 7-day period. The check must be payable to all
owners of record of the shares and must be sent to the address on the
account statement. This service is not available within 30 days of
changing the address on an account.
- Telephone Redemptions Through AccountLink. There are no dollar
limits on telephone redemption proceeds sent to a bank account designated
when you establish AccountLink. Normally the ACH wire to your bank is
initiated on the business day after the redemption. You do not receive
dividends on the proceeds of the shares you redeemed while they are
waiting to be wired.
Selling Shares Through Your Dealer. The Distributor has made arrangements
to repurchase Fund shares from dealers and brokers on behalf of their
customers. Brokers or dealers may charge for that service. Please refer
to "Special Arrangements for Repurchase of Shares from Dealers and
Brokers" in the Statement of Additional Information for more details.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain Oppenheimer
funds at net asset value per share at the time of exchange, without sales
charge. To exchange shares, you must meet several conditions:
- Shares of the fund selected for exchange must be available for sale
in your state of residence
- The prospectuses of this Fund and the fund whose shares you want to
buy must offer the exchange privilege
- You must hold the shares you buy when you establish your account for
at least 7 days before you can exchange them; after the account is open
7 days, you can exchange shares every regular business day
- You must meet the minimum purchase requirements for the fund you
purchase by exchange
- Before exchanging into a fund, you should obtain and read its
prospectus
Shares of a particular class may be exchanged only for shares of the
same class in the other Oppenheimer funds. For example, you can exchange
Class A shares of this Fund only for Class A shares of another fund. At
present, Oppenheimer Money Market Fund, Inc. offers only one class of
shares, which are considered to be Class A shares for this purpose. In
some cases, sales charges may be imposed on exchange transactions. Please
refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.
Exchanges may be requested in writing or by telephone:
- Written Exchange Requests. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the
Transfer Agent at the addresses listed in "How to Sell Shares."
- Telephone Exchange Requests. Telephone exchange requests may be made
either by calling a service representative at 1-800-852-8457 or by using
PhoneLink for automated exchanges, by calling 1-800-533-3310. Telephone
exchanges may be made only between accounts that are registered with the
same name(s) and address. Shares held under certificates may not be
exchanged by telephone.
You can find a list of Oppenheimer funds currently available for
exchanges in the Statement of Additional Information or obtain one by
calling a service representative at 1-800-525-7048. That list can change
from time to time.
There are certain exchange policies you should be aware of:
- Shares are normally redeemed from one fund and purchased from the
other fund in the exchange transaction on the same regular business day
on which the Transfer Agent receives an exchange request that is in proper
form by the close of The New York Stock Exchange that day, which is
normally 4:00 P.M., but may be earlier on some days. However, either fund
may delay the purchase of shares of the fund you are exchanging into up
to seven days if it determines it would be disadvantaged by a same-day
transfer of the proceeds to buy shares. For example, the receipt of
multiple exchange requests from a dealer in a "market-timing" strategy
might require the sale of portfolio securities at a time or price
disadvantageous to the Fund.
- Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange request
that will disadvantage it, or to refuse multiple exchange requests
submitted by a shareholder or dealer.
- The Fund may amend, suspend or terminate the exchange privilege at
any time. Although the Fund will attempt to provide you notice whenever
it is reasonably able to do so, it may impose these changes at any time.
- For tax purposes, exchanges of shares involve a redemption of the
shares of the fund you own and a purchase of shares of the other fund,
which may result in a capital gain or loss. For more information about
taxes affecting exchanges, please refer to "How to Exchange Shares" in the
Statement of Additional Information.
- If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for
exchange will be exchanged.
Shareholder Account Rules and Policies
- Net Asset Value Per Share is determined for each class of shares as
of the close of The New York Stock Exchange, which is normally 4:00 P.M.
but may be earlier on some days, on each day the Exchange is open by
dividing the value of the Fund's net assets attributable to a class by the
number of shares of that class that are outstanding. The Fund's Board of
Trustees has established procedures to value the Fund's securities to
determine net asset value. In general, securities values are based on
market value. There are special procedures for valuing illiquid and
restricted securities and obligations for which market values cannot be
readily obtained. These procedures are described more completely in the
Statement of Additional Information.
- The offering of shares may be suspended during any period in which
the determination of net asset value is suspended, and the offering may
be suspended by the Board of Trustees at any time the Board believes it
is in the Fund's best interest to do so.
- Telephone Transaction Privileges for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Fund at any
time. If an account has more than one owner, the Fund and the Transfer
Agent may rely on the instructions of any one owner. Telephone privileges
apply to each owner of the account and the dealer representative of record
for the account unless and until the Transfer Agent receives cancellation
instructions from an owner of the account.
- The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not
use reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise neither the Transfer Agent nor the Fund will
be liable for losses or expenses arising out of telephone instructions
reasonably believed to be genuine. If you are unable to reach the
Transfer Agent during periods of unusual market activity, you may not be
able to complete a telephone transaction and should consider placing your
order by mail.
- Redemption or transfer requests will not be honored until the
Transfer Agent receives all required documents in proper form. From time
to time, the Transfer Agent in its discretion may waive certain of the
requirements for redemptions stated in this Prospectus.
- Dealers that can perform account transactions for their clients by
participating in NETWORKING through the National Securities Clearing
Corporation are responsible for obtaining their clients' permission to
perform those transactions and are responsible to their clients who are
shareholders of the Fund if the dealer performs any transaction
erroneously or improperly.
- The redemption price for shares will vary from day to day because the
values of the securities in the Fund's portfolio fluctuate, and the
redemption price, which is the net asset value per share, will normally
be different for Class A, Class B and Class C shares. Therefore, the
redemption value of your shares may be more or less than their original
cost.
- Payment for redeemed shares is made ordinarily in cash and forwarded
by check or through AccountLink (as elected by the shareholder under the
redemption procedures described above) within 7 days after the Transfer
Agent receives redemption instructions in proper form, except under
unusual circumstances determined by the Securities and Exchange Commission
delaying or suspending such payments. For accounts registered in the name
of a broker/dealer, payment will be forwarded within 3 business days. The
Transfer Agent may delay forwarding a check or processing a payment via
AccountLink for recently purchased shares, but only until the purchase
payment has cleared. That delay may be as much as 10 days from the date
the shares were purchased. That delay may be avoided if you purchase
shares by certified check or arrange with your bank to provide telephone
or written assurance to the Transfer Agent that your purchase payment has
cleared.
- Involuntary redemptions of small accounts may be made by the Fund if
the account value has fallen below $500 for reasons other than the fact
that the market value of shares has dropped, and in some cases involuntary
redemptions may be made to repay the Distributor for losses from the
cancellation of share purchase orders.
- Under unusual circumstances, shares of the Fund may be redeemed "in
kind", which means that the redemption proceeds will be paid with
securities from the Fund's portfolio. Please refer to "How to Sell
Shares" in the Statement of Additional Information for more details.
- "Backup Withholding" of Federal income tax may be applied at the rate
of 31% from dividends, distributions and redemption proceeds (including
exchanges) if you fail to furnish the Fund a certified Social Security or
Employer Identification Number when you sign your application, or if you
violate Internal Revenue Service regulations on tax reporting of income.
- The Fund does not charge a redemption fee, but if your dealer or
broker handles your redemption, they may charge a fee. That fee can be
avoided by redeeming your Fund shares directly through the Transfer Agent.
Under the circumstances described in "How To Buy Shares," you may be
subject to a contingent deferred sales charge when redeeming certain Class
A, Class B and Class C shares.
- To avoid sending duplicate copies of materials to households, the
Fund will mail only one copy of each annual and semi-annual report to
shareholders having the same last name and address on the Fund's records.
However, each shareholder may call the Transfer Agent at 1-800-525-7048
to ask that copies of those materials be sent personally to that
shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A, Class B
and Class C shares from net investment income, if any, on an annual basis
and normally pays those dividends to shareholders in December, but the
Board of Trustees can change that date. The Board may also cause the Fund
to declare dividends after the close of the Fund's fiscal year (which ends
June 30th). Because the Fund does not have an objective of seeking
current income, the amounts of dividends it pays, if any, will likely be
small. Dividends paid on Class A shares will generally be higher than for
Class B or Class C shares because expenses allocable to Class B and Class
C shares will generally be higher than for Class A shares. There is no
fixed dividend rate and there can be no assurance that the Fund will pay
any dividends.
Capital Gains. The Fund may make distributions annually in December out
of any net short-term or long-term capital gains, and the Fund may make
supplemental distributions of capital gains following the end of its
fiscal year. Long-term capital gains will be separately identified in the
tax information the Fund sends you after the end of the year. Short-term
capital gains are treated as dividends for tax purposes. There can be no
assurance that the Fund will pay any capital gains distributions in a
particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are reinvested.
For other accounts, you have four options:
- Reinvest All Distributions in the Fund. You can elect to reinvest
all dividends and long-term capital gains distributions in additional
shares of the Fund.
- Reinvest Long-Term Capital Gains Only. You can elect to reinvest
long-term capital gains in the Fund while receiving dividends by check or
sent to your bank account on AccountLink.
- Receive All Distributions in Cash. You can elect to receive a check
for all dividends and long-term capital gains distributions or have them
sent to your bank on AccountLink.
- Reinvest Your Distributions in Another Oppenheimer Funds Account.
You can reinvest all distributions in another Oppenheimer funds account
you have established.
Taxes. If your account is not a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the
Fund. Long-term capital gains are taxable as long-term capital gains when
distributed to shareholders. It does not matter how long you held your
shares. Dividends paid from short-term capital gains and net investment
income are taxable as ordinary income. Distributions are subject to
federal income tax and may be subject to state or local taxes. Your
distributions are taxable when paid, whether you reinvest them in
additional shares or take them in cash. Every year the Fund will send you
and the IRS a statement showing the amount of all taxable distributions
you received in the previous year.
When more than 50% of its assets are invested in foreign securities at
the end of any fiscal year, the Fund may elect that Section 853 of the
Internal Revenue Code will apply to it to permit shareholders to take a
credit (or a deduction) on their own federal income tax returns for
foreign taxes paid by the Fund. "Dividends, Capital Gains and Taxes" in
the Statement of Additional Information contains further information about
this tax provision.
- "Buying a Dividend": When a fund goes ex-dividend, its share price
is reduced by the amount of the distribution. If you buy shares on or
just before the ex-dividend date, or just before the Fund declares a
capital gains distribution, you will pay the full price for the shares and
then receive a portion of the price back as a taxable dividend or capital
gain.
- Taxes on Transactions: Share redemptions, including redemptions for
exchanges, are subject to capital gains tax. Generally speaking, a
capital gain or loss is the difference between the price you paid for the
shares and the price you received when you sold them.
- Returns of Capital: In certain cases distributions made by the Fund
may be considered a non-taxable return of capital to shareholders. If
that occurs, it will be identified in notices to shareholders. A non-
taxable return of capital may reduce your tax basis in your Fund shares.
This information is only a summary of certain federal tax information
about your investment. More information is contained in the Statement of
Additional Information, and in addition you should consult with your tax
adviser about the effect of an investment in the Fund on your particular
tax situation.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER GOLD & SPECIAL MINERALS FUND
Graphic material included in Prospectus of Oppenheimer Gold & Special
Minerals Fund: "Comparison of Total Return of Oppenheimer Gold & Special
Minerals Fund with the Morgan Stanley World Index- Change in Value of a
$10,000 Hypothetical Investment"
A linear graph will be included in the Prospectus of Oppenheimer Gold
& Special Minerals Fund (the "Fund") depicting the initial account value
and subsequent account value of a hypothetical $10,000 investment in the
Fund. The graph will cover each of the Fund's last ten fiscal years from
6/30/85 through 6/30/95. The graph will compare such values with
hypothetical $10,000 investments over the same time periods in the Morgan
Stanley World 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 Morgan Stanley World Index,
is set forth in the Prospectus under "Performance of the Fund - Comparing
the Fund's Performance to the Market."
Fiscal Year Oppenheimer Gold & Morgan Stanley
(Period) Ended Special Minerals Fund A World Index
06/30/85 $ 9,425 $10,000
06/30/86 $ 8,839 $15,600
06/30/87 $17,000 $22,200
06/30/88 $22,650 $22,000
06/30/89 $24,108 $24,700
06/30/90 $24,855 $26,500
06/30/91 $22,193 $25,200
06/30/92 $23,321 $26,200
06/30/93 $27,319 $30,600
06/30/94 $$29,573 $33,800
06/30/95 $30,173 $37,400
- ----------------------
<PAGE>
Oppenheimer Gold & Special Minerals Fund
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, broker, salesperson or any other person has been authorized to
give any information or to make any representations other than those
contained in this Prospectus or the Statement of Additional Information,
and, if given or made, such information and representations must not be
relied upon as having been authorized by the Fund, Oppenheimer Management
Corporation, Oppenheimer Funds Distributor, Inc. or any affiliate thereof.
This Prospectus does not constitute an offer to sell or a solicitation of
an offer to buy any of the securities offered hereby in any state to any
person to whom it is unlawful to make such an offer in such state.
<PAGE>
Oppenheimer Gold & Special Minerals Fund
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Statement of Additional Information dated November 1, 1995
This Statement of Additional Information of Oppenheimer Gold &
Special Minerals Fund is not a Prospectus. This document contains
additional information about the Fund and supplements information in the
Prospectus dated November 1, 1995. It should be read together with the
Prospectus, which may be obtained by writing to the Fund's Transfer Agent,
Oppenheimer Shareholder 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 4
Other Investment Restrictions 16
How the Fund is Managed 17
Organization and History 17
Trustees and Officers of the Fund 18
The Manager and Its Affiliates 23
Brokerage Policies of the Fund 24
Performance of the Fund 26
Distribution and Service Plans 29
About Your Account
How To Buy Shares 31
How To Sell Shares 37
How To Exchange Shares 41
Dividends, Capital Gains and Taxes 43
Additional Information About the Fund 44
Financial Information About the Fund
Independent Auditors' Report 45
Financial Statements 46
Appendix A: Industry Classifications A-1
<PAGE>
ABOUT THE FUND
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and policies
of the Fund are described in the Prospectus. Set forth below is
supplemental information about those policies and the types of securities
in which the Fund may invest, as well as the strategies the Fund may use
to try to achieve its objective. Capitalized terms used in this Statement
of Additional Information have the same meanings as those terms have in
the Prospectus.
In selecting securities for the Fund's portfolio, the Fund's investment
advisor, Oppenheimer Management Corporation (the "Manager"), evaluates the
merits of securities primarily through the exercise of its own investment
analysis. This may include, among other things, evaluation of the history
of the issuer's operations, prospects for the industry of which the issuer
is part, the issuer's financial condition, the issuer's pending product
developments and developments by competitors, the effect of general market
and economic conditions on the issuer's business, and legislative
proposals or new laws that might affect the issuer. Current income is not
a consideration in the selection of portfolio securities for the Fund,
whether for appreciation, defensive or liquidity purposes. The fact that
a security has a low yield or does not pay current income will not be an
adverse factor in selecting securities to try to achieve the Fund's
investment objective of capital appreciation unless the Manager believes
that the lack of yield might adversely affect appreciation possibilities.
The portion of the Fund's assets allocated to securities selected for
capital appreciation and the investment techniques used will depend upon
the judgment of the Fund's Manager as to the future movement of the equity
securities markets. If the Manager believes that economic conditions
favor a rising market, the Fund will emphasize securities and investment
methods selected for high capital growth. If the Manager believes that
a market decline is likely, defensive securities and investment methods
may be emphasized (See "Temporary Defensive Investments," below).
- Investing in Mining Securities and Metal Investments. The type of
securities that will be emphasized in the Fund's portfolio are Mining
Securities and Metal Investments. Mining Securities are securities of
companies engaged in mining, processing, or distributing gold and other
metals or minerals. Metal Investments consist of gold or silver bullion,
other precious metals, strategic metals, other metals naturally occurring
with such metals, certificates representing an ownership interest in such
metals, and gold or silver coins.
- Special Risks of Concentrating Investments in Mining Securities and
Metal Investments. Investments in Mining Securities and Metal Investments
involve additional risks and considerations not typically associated with
other types of investments: (i) the risk of substantial price
fluctuations of gold and precious metals; (ii) the concentration of gold
supply is mainly in five territories (South Africa, Australia, the
Commonwealth of Independent States (the former Soviet Union), Canada and
the United States), and the prevailing economic and political conditions
of these countries may have a direct effect on the production and
marketing of gold and sales of central bank gold holdings; (iii)
unpredictable international monetary policies, economic and political
conditions; (iv) possible U.S. governmental regulation of Metal
Investments, as well as foreign regulation of such investments; and (v)
possible adverse tax consequences for the Fund in making Metal
Investments, if it fails to qualify as a "regulated investment company"
under the Internal Revenue Code.
Because the Fund concentrates its investments in Mining Securities and
Metal Investments, an adverse change with respect to any of these risk
factors could have a significant negative effect on the Fund's net asset
value per share. These risks are discussed in greater detail below.
- Risk of Price Fluctuations. The prices of precious and strategic
metals are affected by various factors such as economic conditions,
political events, governmental monetary and regulatory policies and market
events. The prices of Mining Securities and Metal Investments held by the
Fund may fluctuate sharply, which will affect the value of the Fund's
shares.
- Concentration of Source of Gold Supply and Control of Gold Sales.
Currently, the four largest producers of gold are the Republic of South
Africa, the Commonwealth of Independent States (which includes Russia and
certain other countries that were part of the former Soviet Union), Canada
and the United States. Economic and political conditions in those
countries may have a direct effect on the production and marketing of gold
and on sales of central bank gold holdings. In South Africa, the
activities of companies engaged in gold mining are subject to the policies
adopted by the Ministry of Mines. The Reserve Bank of South Africa, as
the sole authorized sales agent for South African gold, has an influence
on the price and timing of sales of South African gold. Political and
social conditions in South Africa are still somewhat unsettled and may
pose certain risks to the Fund (in addition to the risks described below
under the caption "Foreign Securities"), because the Fund may hold a
portion of its assets in securities of South African issuers.
- Unpredictable International Monetary Policies, Economic and
Political Conditions. There is the possibility that unusual international
monetary or political conditions may make the Fund's portfolio assets less
liquid, or that the value of the Fund's assets might be more volatile,
than would be the case with other investments. In particular, the price
of gold is affected by its direct and indirect use to settle net balance
of payments deficits and surpluses between nations. Because the prices
of precious or strategic metals may be affected by unpredictable
international monetary policies and economic conditions, there may be
greater likelihood of a more dramatic fluctuation of the market prices of
the Fund's investments than of other investments.
- Commodities Regulations. The trading of Metal Investments in the
United States could become subject to the rules that govern the trading
of agricultural and certain other commodities and commodity futures. In
the opinion of the Fund's counsel, at present the Fund's permitted Metal
Investments are either not subject to regulation by the Commodity Futures
Trading Commission ("CFTC") or an exemption from regulation is available.
The absence of CFTC regulation may adversely affect the continued
development of an orderly market in Metal Investments trading in the
United States. The development of a regulated futures market in Metal
Investments trading may affect the development of a market in, and the
price of, Metal Investments in the United States.
- Effect on the Fund's Tax Status. By making Metal Investments, the
Fund risks failing to qualify as a regulated investment company under the
Internal Revenue Code. If the Fund should fail to qualify, it would lose
the beneficial tax treatment accorded to qualifying investment companies
under Subchapter M of the Code. Failure to qualify would occur if in any
fiscal year the Fund either (a) derived 10% or more of its gross income
(as defined in the Internal Revenue Code, which disregards losses for this
purpose) from sales or other dispositions of Metal Investments, or (b)
held more than 50% of its net assets in the form of Metal Investments or
in securities not meeting certain tests under the Internal Revenue Code
(see "Dividends, Capital Gains and Taxes"). Accordingly, the Fund will
endeavor to manage its portfolio within the limitations described above,
and the Fund has adopted an investment restriction limiting the amount of
its total assets that can be invested in Metal Investments. There can be
no assurance that the Fund will qualify in every fiscal year.
Furthermore, to comply with the limitations described above, the Fund may
be required to make investment decisions the Manager would otherwise not
make, foregoing the opportunity to realize gains, if necessary, to permit
the Fund to qualify. See "Investment Restrictions."
- Warrants. Warrants basically are options to purchase equity
securities at set prices valid for a specified period of time. The prices
of warrants do not necessarily move in a manner parallel to the prices of
the underlying securities. The price the Fund pays for a warrant will be
lost unless the warrant is exercised prior to its expiration. Warrants
have no voting rights, receive no dividends and have no rights with
respect to the assets of the issuer.
Other Investment Techniques and Strategies
- Hedging. The Fund may use hedging instruments for the purposes
described in the Prospectus. When hedging to attempt to protect against
declines in the market value of the Fund's portfolio, or to permit the
Fund to retain unrealized gains in the value of portfolio securities which
have appreciated, or to facilitate selling securities for investment
reasons, the Fund may: (i) sell Stock Index Futures, (ii) buy puts, or
(iii) write covered calls on securities held by it or on Stock Index
Futures (as described in the Prospectus). When hedging to establish a
position in the equity securities markets as a temporary substitute for
the purchase of individual equity securities the Fund may: (i) buy Stock
Index Futures, or (ii) buy calls on Stock Index Futures or securities held
by it. Normally, the Fund would then purchase the equity securities and
terminate the hedging portion.
The Fund's strategy of hedging with Futures and options on Futures will
be incidental to the Fund's investment activities in the underlying cash
market. In the future, the Fund may employ hedging instruments and
strategies that are not presently contemplated but which may be
subsequently developed, to the extent such investment methods are
consistent with the Fund's investment objective, and are legally
permissible and disclosed in the Prospectus. Additional information about
the hedging instruments the Fund may use is provided below.
- Stock Index Futures. As described in the Prospectus, the Fund may
invest in Stock Index Futures only if they relate to broadly-based stock
indices. A stock index is considered to be broadly-based if it includes
stocks that are not limited to issuers in any particular industry or group
of industries. A stock index assigns relative values to the common stocks
included in the index and fluctuates with the changes in the market value
of those stocks. Stock indices cannot be purchased or sold directly.
Stock index futures are contracts based on the future value of the
basket of securities that comprise the underlying stock index. The
contracts obligate the seller to deliver, and the purchaser to take, cash
to settle the futures transaction or to enter into an offsetting contract.
No physical delivery of the securities underlying the index is made on
settling the futures obligation. No monetary amount is paid or received
by the Fund on the purchase or sale of a Stock Index Future. Upon
entering into a Futures transaction, the Fund will be required to deposit
an initial margin payment, in cash or U.S. Treasury bills, with the
futures commission merchant (the "futures broker"). Initial margin
payments will be deposited with the Fund's Custodian in an account
registered in the futures broker's name; however, the futures broker can
gain access to that account only under certain specified conditions. As
the Future is marked to market (that is, its value on the Fund's books is
changed) to reflect changes in its market value, subsequent margin
payments, called variation margin, will be paid to or by the futures
broker on a daily basis.
At any time prior to the expiration of the Future, the Fund may elect
to close out its position by taking an opposite position, at which time
a final determination of variation margin is made and additional cash is
required to be paid by or released to the Fund. Any gain or loss is then
realized by the Fund on the Future for tax purposes. Although Stock Index
Futures by their terms call for settlement by the delivery of cash, in
most cases the settlement obligation is fulfilled without such delivery
by entering into an offsetting transaction. All futures transactions are
effected through a clearing house associated with the exchange on which
the contracts are traded.
- Purchasing Puts and Calls. The Fund may purchase calls to protect
against the possibility that the Fund's portfolio will not participate in
an anticipated rise in the securities market. When the Fund purchases a
call, it pays a premium (other than in a closing purchase transaction),
and, except as to calls on stock indices, has the right to buy the
underlying investment from a seller of a corresponding call on the same
investment during the call period at a fixed exercise price. In
purchasing a call, the Fund benefits only if the call is sold at a profit
or if, during the call period, the market price of the underlying
investment is above the sum of the call price, transaction costs, and the
premium paid, and the call is exercised. If the call is not exercised or
sold (whether or not at a profit), it will become worthless at its
expiration date and the Fund will lose its premium payment and the right
to purchase the underlying investment. When the Fund purchases a call on
a stock index, it pays a premium, but settlement is in cash rather than
by delivery of the underlying investment to the Fund.
The Fund may write covered calls. When the Fund writes a call on an
investment, it receives a premium and agrees to sell the callable
investment to a purchaser of a corresponding call during the call period
(usually not more than 9 months) at a fixed exercise price (which may
differ from the market price of the underlying investment) regardless of
market price changes during the call period. To terminate its obligation
on a call it has written, the Fund may purchase a corresponding call in
a "closing purchase transaction." A profit or loss will be realized,
depending upon whether the net of the amount of option transaction costs
and the premium received on the call the Fund has written is more or less
than the price of the call the Fund subsequently purchased. A profit may
also be realized if the call lapses unexercised, because the Fund retains
the underlying investment and the premium received. Those profits are
considered short-term capital gains for Federal income tax purposes, as
are premiums on lapsed calls, and when distributed by the Fund are taxable
as ordinary income. If the Fund could not effect a closing purchase
transaction due to the lack of a market, it would have to hold the
callable investment until the call lapsed or was exercised. The Fund may
also write calls on Futures without owning a futures contract or
deliverable securities, provided that at the time the call is written, the
Fund covers the call by segregating in escrow an equivalent dollar value
of deliverable securities or liquid assets. The Fund will segregate
additional liquid assets if the value of the escrowed assets drops below
100% of the current value of the Future. In no circumstances would an
exercise notice as to a Future put the Fund in a short futures position.
The Fund's Custodian, or a securities depository acting for the
Custodian, will act as the Fund's escrow agent, through the facilities of
the Options Clearing Corporation ("OCC"), as to the investments on which
the Fund has written options that are traded on exchanges, or as to other
acceptable escrow securities, so that no margin will be required from the
Fund for such option transactions. OCC will release the securities
covering a call on the expiration of the call or when the Fund enters into
a closing purchase transaction. Call writing affects the Fund's turnover
rate and the brokerage commissions it pays. Commissions, normally higher
than on general securities transactions, are payable on writing or
purchasing a call.
When the Fund purchases a put, it pays a premium and, except as to puts
on stock indices, has the right to sell the underlying investment to a
seller of a corresponding put on the same investment during the put period
at a fixed exercise price. Buying a put on an investment the Fund owns
(a "protective put") enables the Fund to attempt to protect itself during
the put period against a decline in the value of the underlying investment
below the exercise price by selling the underlying investment at the
exercise price to a seller of a corresponding put. If the market price
of the underlying investment is equal to or above the exercise price and
as a result the put is not exercised or resold, the put will become
worthless at its expiration and the Fund will lose the premium payment and
the right to sell the underlying investment. However, the put may be sold
prior to expiration (whether or not at a profit).
Puts and calls on broadly-based stock indices or Stock Index Futures
are similar to puts and calls on securities or futures contracts except
that all settlements are in cash and gain or loss depends on changes in
the index in question (and thus on price movements in the stock market
generally) rather than on price movements of individual securities or
futures contracts. When the Fund buys a call on a stock index or Stock
Index Future, it pays a premium. If the Fund exercises the call during
the call period, a seller of a corresponding call on the same investment
will pay the Fund an amount of cash to settle the call if the closing
level of the stock index or Future upon which the call is based is greater
than the exercise price of the call. That cash payment is equal to the
difference between the closing price of the call and the exercise price
of the call times a specified multiple (the "multiplier") which determines
the total dollar value for each point of difference. When the Fund buys
a put on a stock index or Stock Index Future, it pays a premium and has
the right during the put period to require a seller of a corresponding
put, upon the Fund's exercise of its put, to deliver cash to the Fund to
settle the put if the closing level of the stock index or Stock Index
Future upon which the put is based is less than the exercise price of the
put. That cash payment is determined by the multiplier, in the same
manner as described above as to calls.
When the Fund purchases a put on a stock index, or on a Stock Index
Future not owned by it, the put protects the Fund to the extent that the
index moves in a similar pattern to the securities the Fund holds. The
Fund can either resell the put or, in the case of a put on a Stock Index
Future, buy the underlying investment and sell it at the exercise price.
The resale price of the put will vary inversely with the price of the
underlying investment. If the market price of the underlying investment
is above the exercise price, and as a result the put is not exercised, the
put will become worthless on the expiration date. In the event of a
decline in price of the underlying investment, the Fund could exercise or
sell the put at a profit to attempt to offset some or all of its loss on
its portfolio securities.
The Fund's option activities may affect its portfolio turnover rate and
brokerage commissions. The exercise of calls written by the Fund may
cause the Fund to sell related portfolio securities, thus increasing its
turnover rate. The exercise by the Fund of puts on securities will cause
the sale of underlying investments, increasing portfolio turnover.
Although the decision whether to exercise a put it holds is within the
Fund's control, holding a put might cause the Fund to sell the related
investments for reasons that would not exist in the absence of the put.
The Fund will pay a brokerage commission each time it buys or sells a
call, put or an underlying investment in connection with the exercise of
a put or call. Those commissions may be higher than the commissions for
direct purchases or sales of the underlying investments.
Premiums paid for options are small in relation to the market value of
the underlying investments and, consequently, put and call options offer
large amounts of leverage. The leverage offered by trading in options
could result in the Fund's net asset value being more sensitive to changes
in the value of the underlying investments.
- Options on Foreign Currency. The Fund may write and purchase puts
and calls on foreign currencies that are traded on a securities or
commodities exchange or over-the-counter markets or are quoted by major
recognized dealers in such options. It does so to protect against
declines in the dollar value of foreign securities and against increases
in the dollar cost of foreign securities to be acquired. If the Manager
anticipates a rise in the dollar value of a foreign currency in which
securities to be acquired are denominated, the increased cost of such
securities may be partially offset by purchasing calls or writing puts on
that foreign currency. If a decline in the dollar value of a foreign
currency is anticipated, the decline in value of portfolio securities
denominated in that currency may be partially offset by writing calls or
purchasing puts on that foreign currency. However, in the event of
currency rate fluctuations adverse to the Fund's position, it would lose
the premium it paid and transactions costs.
A call written on a foreign currency by the Fund is covered if the Fund
owns the underlying foreign currency covered by the call or has an
absolute and immediate right to acquire that foreign currency without
additional cash consideration (or for additional cash consideration held
in a segregated account by its custodian) upon conversion or exchange of
other foreign currency held in its portfolio. A call may be written by
the Fund on a foreign currency to provide a hedge against a decline due
to an expected adverse change in the exchange rate in the U.S. dollar
value of a security which the Fund owns or has the right to acquire and
which is denominated in the currency underlying the option. This is a
cross-hedging strategy. In such circumstances, the Fund collateralizes
the option by maintaining in a segregated account with the Fund's
custodian, cash or U.S. Government Securities in an amount not less than
the value of the underlying foreign currency in U.S. dollars marked-to-
market daily.
- Forward Contracts. The Fund may enter into foreign currency
exchange contract ("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
generally traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers.
Some forward contracts are standardized foreign currency futures contracts
that are traded on exchanges and are subject to procedures and regulations
that apply to other Futures.
The Fund may use Forward Contracts to protect against uncertainty in
the level of future exchange rates. The use of Forward Contracts does not
eliminate fluctuations in the prices of the underlying securities the Fund
owns or intends to acquire, but it does fix a rate of exchange in advance.
In addition, although Forward Contracts limit the risk of loss due to a
decline in the value of the hedged currencies, at the same time they limit
any potential gain that might result should the value of the currencies
increase. The Fund will not speculate with Forward Contracts or foreign
currency exchange rates.
The Fund may enter into Forward Contracts with respect to specific
transactions. For example, when the Fund enters into a contract for the
purchase or sale of a security denominated in a foreign currency, or when
the Fund anticipates receipt of dividend payments in a foreign currency,
the Fund may desire to "lock-in" the U.S. dollar price of the security or
the U.S. dollar equivalent of such payment by entering into a Forward
Contract, for a fixed amount of U.S. dollars per unit of foreign currency,
for the purchase or sale of the amount of foreign currency involved in the
underlying transaction (this is called a "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 (this is called a "position hedge"). In a
position hedge, for example, when the Fund believes that a 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 that 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. The Fund may also enter into
a forward contract to sell a different foreign currency for a fixed U.S.
dollar amount if 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 (this is referred to as
a "cross-hedge"). The Fund will not 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. The success of cross
hedging depends 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 hedge.
The Fund will not enter into 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 portfolio securities denominated in that currency. However, to
avoid excess transaction costs, the Fund may maintain a net exposure to
Forward Contracts in excess of the value of the Fund's portfolio
securities denominated in that currency provided the excess amount is
"covered" by liquid, high grade debt securities, denominated in either
that foreign currency or U.S. dollars, at least equal at all times to the
amount of the excess. The Fund's Custodian will place cash or U.S.
Government securities or other liquid high-quality debt securities in a
separate account having a value equal to the total amount of the Fund's
commitments under Forward Contracts entered into for position hedges and
cross hedges. If the value of the securities placed in the separate
account declines, additional cash or securities will be placed in the
account on a daily basis so that the account value will equal the Fund's
commitments. 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 incur
transactions costs.
At or before the maturity of a Forward Contract requiring the Fund to
sell a currency, the Fund may either sell a portfolio security and use the
sale proceeds to make delivery of the currency or retain the security and
offset its contractual obligation to deliver the currency by purchasing
a second contract pursuant to which the Fund will obtain, on the same
maturity date, the same amount of the currency that it is obligated to
deliver. Similarly, the Fund may close out a Forward Contract requiring
it to purchase a specified currency by entering into a second contract
entitling it to sell the same amount of the same currency on the maturity
date of the first contract. The Fund would realize a gain or loss as a
result of entering into such an offsetting Forward Contract under either
circumstance to the extent the exchange rate or rates between the
currencies involved moved between the execution dates of the first
contract and offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with
factors such as the currencies involved, the length of the contract period
and the market conditions then prevailing. Because Forward Contracts are
usually entered into on a principal basis, no fees or commissions are
involved. Because such contracts are not traded on an exchange, the Fund
must evaluate the credit and performance risk of each particular
counterparty under a Forward Contract.
Although the Fund values its assets daily in terms of U.S. dollars, it
does not intend to convert all of its holdings of foreign currency
deposits into U.S. dollars on a daily basis. The Fund may convert foreign
currency from time to time, and there are costs to the Fund of currency
conversion. Foreign exchange dealers do not charge a fee for conversion,
by 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.
- Regulatory Aspects of Hedging Instruments. The Fund is required to
operate within certain restrictions and guidelines 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 limits its aggregate initial
Futures margin and related options premiums to no more than 5% of the
Fund's net assets for hedging purposes 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 Commodities Exchange Act.
Transactions in options by the Fund are subject to limitations
established by option exchanges governing the maximum number of options
that may be written or held by a single investor or group of investors
acting in concert, regardless of whether the options were written or
purchased on the same or different exchanges or are held in one or more
accounts or through one or more different exchanges or through one or more
brokers. Thus the number of options which the Fund may write or hold may
be affected by options written or held by other entities, including other
investment companies having the same adviser as the Fund (or an adviser
that is an affiliate of the Fund's adviser). The exchanges also impose
position limits on Futures transactions. An exchange may order the
liquidation of positions found to be in violation of those limits and may
impose certain other sanctions.
Due to requirements under the Investment Company Act, when the Fund
purchases a Stock Index Future, the Fund will maintain, in a segregated
account or accounts with its Custodian, cash or readily-marketable, short-
term (maturing in one year or less) debt instruments in an amount equal
to the market value of the securities underlying such Future, less the
margin deposit applicable to it.
- Tax Aspects of Covered Calls and Hedging Instruments. The Fund
intends to qualify as a "regulated investment company" under the Internal
Revenue Code (although it reserves the right not to qualify). That
qualification enables the Fund to "pass through" its income and realized
capital gains to shareholders without having to pay tax on them. This
avoids a "double tax" on that income and capital gains, since shareholders
normally will be taxed on the dividends and capital gains they receive
from the Fund (unless the Fund's shares are held in a retirement account
or the shareholder is otherwise exempt from tax). One of the tests for
the Fund's qualification as a regulated investment company is that less
than 30% of its gross income must be derived from gains realized on the
sale of securities held for less than three months. To comply with this
30% cap, the Fund will limit the extent to which it engages in the
following activities, but will not be precluded from them: (i) selling
investments, including Stock Index Futures, held for less than three
months, whether or not they were purchased on the exercise of a call held
by the Fund; (ii) purchasing options which expire in less than three
months; (iii) effecting closing transactions with respect to calls or puts
written or purchased less than three months previously; (iv) exercising
puts or calls held by the Fund for less than three months; or (v) writing
calls on investments held less than three months.
Certain foreign currency exchange contracts (Forward Contracts) in
which the Fund may invest are treated as "section 1256 contracts." Gains
or losses relating to section 1256 contracts generally are characterized
under the Internal Revenue Code as 60% long-term and 40% short-term
capital gains or losses. However, foreign currency gains or losses
arising from certain section 1256 contracts (including Forward Contracts)
generally are treated as ordinary income or loss. In addition, section
1256 contracts held by the Fund at the end of each taxable year are
"marked-to-market" with the result that unrealized gains or losses are
treated as thought they were realized. These contracts also may be
marked-to-market for purposes of the excise tax applicable to investment
company distributions and for other purposes under rules prescribed
pursuant to the Internal Revenue Code. An election can be made by the
Fund to exempt these transactions from this marked-to-market treatment.
Certain Forward Contracts entered into by the Fund may result in
"straddles" for federal income tax purposes. The straddle rules may
affect the character of gains (or losses) realized by the Fund on straddle
positions. Generally, a loss sustained on the disposition of a
position(s) making up a straddle is allowed only to the extent such loss
exceeds any unrecognized gain in the offsetting positions making up the
straddle. Disallowed loss is generally allowed at the point where there
is no unrecognized gain in the offsetting positions making up the
straddle, or the offsetting position is disposed of.
Under the Internal Revenue Code, gains or losses attributable to
fluctuations in exchange rates which occur between the time the Fund
accrues interest or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the Fund
actually collects such receivables or pays such liabilities generally are
treated as ordinary income or ordinary loss. Similarly, on disposition
of debt securities denominated in a foreign currency and on disposition
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 the disposition
also are treated as an ordinary gain or loss. Currency gains and losses
are offset against market gains and losses before determining a net
"section 988" gain or loss under the Internal Revenue Code, which may
increase or decrease the amount of the Fund's investment company income
available for distribution to its shareholders.
- Risks of Hedging With Options and Futures. An option position may
be closed out only on a market that provides secondary trading for options
of the same series, and there is no assurance that a liquid secondary
market will exist for any particular option. In addition to the risks
associated with hedging that are discussed in the Prospectus and above,
there is a risk in using short hedging by (i) selling Stock Index Futures
or (ii) purchasing puts on stock indices or Stock Index Futures to attempt
to protect against declines in the value of the Fund's equity securities.
The risk is that the prices of Stock Index Futures will correlate
imperfectly with the behavior of the cash (i.e., market value) prices of
the Fund's equity securities. The ordinary spreads between prices in the
cash and futures markets are subject to distortions, due to differences
in the natures of those markets. First, all participants in the futures
markets are subject to margin deposit and maintenance requirements.
Rather than meeting additional margin deposit requirements, investors may
close out futures contracts through offsetting transactions which could
distort the normal relationship between the cash and futures markets.
Second, the liquidity of the futures markets depends on participants
entering into offsetting transactions rather than making or taking
delivery. To the extent participants decide to make or take delivery,
liquidity in the futures markets could be reduced, thus producing
distortion. Third, from the point of view of speculators, the deposit
requirements in the futures markets are less onerous than margin
requirements in the securities markets. Therefore, increased
participation by speculators in the futures markets may cause temporary
price distortions.
The risk of imperfect correlation increases as the composition of the
Fund's portfolio diverges from the securities included in the applicable
index. To compensate for the imperfect correlation of movements in the
price of the equity securities being hedged and movements in the price of
the hedging instruments, the Fund may use hedging instruments in a greater
dollar amount than the dollar amount of equity securities being hedged if
the historical volatility of the prices of the equity securities being
hedged is more than the historical volatility of the applicable index.
It is also possible that if the Fund has used hedging instruments in a
short hedge, the market may advance and the value of equity securities
held in the Fund's portfolio may decline. If that occurred, the Fund would
lose money on the hedging instruments and also experience a decline in
value in its portfolio securities. However, while this could occur for
a very brief period or to a very small degree, over time the value of a
diversified portfolio of equity securities will tend to move in the same
direction as the indices upon which the hedging instruments are based.
If the Fund uses hedging instruments to establish a position in the
equities markets as a temporary substitute for the purchase of individual
equity securities (long hedging) by buying Stock Index Futures and/or
calls on such Futures, on securities or on stock indices, it is possible
that the market may decline. If the Fund then concludes not to invest in
equity securities at that time because of concerns as to a possible
further market decline or for other reasons, the Fund will realize a loss
on the hedging instruments that is not offset by a reduction in the price
of the equity securities purchased.
- Borrowing for Leverage. From time to time, the Fund may increase
its ownership of securities by borrowing from banks on an unsecured basis
to invest the borrowed funds in portfolio securities. Borrowing is
subject to the restrictions stated in the Prospectus. Pursuant to the
requirements of the Investment Company Act of 1940 (the "Investment
Company Act"), any borrowing for this purpose will only be made if the
value of the Fund's assets, less its liabilities other than borrowings,
is equal to at least 300% of all borrowings including the proposed
borrowing. If the value of the Fund's assets, when computed in that
manner, should fail to meet the 300% asset coverage requirement, the Fund
is required to reduce its bank debt within three days to the extent
necessary to meet that coverage requirement. To do so, the Fund may have
to sell a portion of its investments at a time when it would otherwise not
want to sell the securities. Interest on money the Fund borrows is an
expense the Fund would not otherwise incur, so that during periods of
substantial borrowings, its expenses may increase more than the expenses
of funds that do not borrow.
- Investing in Small, Unseasoned Companies. The securities of small,
unseasoned companies may have a limited trading market, which may
adversely affect the Fund's ability to sell them and can reduce the price
the Fund might be able to obtain for them. If other investors holding the
same securities as the Fund sell them when the Fund attempts to dispose
of its holdings, the Fund may receive lower prices than might otherwise
be obtained, because of the thinner market for such securities.
- Foreign Securities. "Foreign securities" include equity and debt
securities of companies organized under the laws of countries other than
the United States and debt securities of foreign governments, that are
traded on foreign securities exchanges or in the foreign over-the-counter
markets. Securities of foreign issuers that are represented by American
Depository Receipts or that are listed on a U.S. securities exchange or
traded in the U.S. over-the-counter markets are not considered "foreign
securities" for the purpose of the Fund's investment allocations, because
they are not subject to many of the special considerations and risks,
discussed below, that apply to foreign securities traded and held abroad.
Investing in foreign securities offers potential benefits not available
from investing solely in securities of domestic issuers, including the
opportunity to invest in foreign issuers that appear to offer growth
potential, or in foreign countries with economic policies or business
cycles different from those of the U.S., or to reduce fluctuations in
portfolio value by taking advantage of foreign stock markets that do not
move in a manner parallel to U.S. markets. If the Fund's portfolio
securities are held abroad, the countries in which they may be held and
the sub-custodians holding them must be approved by the Fund's Board of
Trustees where required under applicable rules of the Securities and
Exchange Commission. In buying foreign securities, the Fund may convert
U.S. dollars into foreign currency, but only to effect securities
transactions on foreign securities exchanges and not to hold such currency
as an investment.
- Risks of Foreign Investing. Investments in foreign securities
present special additional risks and considerations not typically
associated with investments in domestic securities: reduction of income
by foreign taxes; fluctuation in value of foreign portfolio investments
due to changes in currency rates and control regulations (e.g., currency
blockage); transaction charges for currency exchange; lack of public
information about foreign issuers; lack of uniform accounting, auditing
and financial reporting standards comparable to those applicable to
domestic issuers; less volume on foreign exchanges than on U.S. exchanges;
greater volatility and less liquidity on foreign markets than in the U.S.;
less regulation of foreign issuers, stock exchanges and brokers than in
the U.S.; greater difficulties in commencing lawsuits; higher brokerage
commission rates than in the U.S.; increased risks of delays in settlement
of portfolio transactions or loss of certificates for portfolio
securities; possibilities in some countries of expropriation, confiscatory
taxation, political, financial or social instability or adverse diplomatic
developments; and unfavorable differences between the U.S. economy and
foreign economies. In the past, U.S. Government policies have
discouraged certain investments abroad by U.S. investors, through
taxation or other restrictions, and it is possible that such restrictions
could be re-imposed.
- Restricted and Illiquid Securities. To enable the Fund to sell
restricted securities not registered under the Securities Act of 1933, the
Fund may have to cause those securities to be registered. The expenses
of registration of restricted securities may be negotiated by the Fund
with the issuer at the time such securities are purchased by the Fund,
if such registration is required before such securities may be sold
publicly. When registration must be arranged because the Fund wishes to
sell the security, a considerable period may elapse between the time the
decision is made to sell the securities and the time the Fund would be
permitted to sell them. The Fund would bear the risks of any downward
price fluctuation during that period. The Fund may also acquire, through
private placements, securities having contractual restrictions on their
resale, which might limit the Fund's ability to dispose of such securities
and might lower the amount realizable upon the sale of such securities.
The Fund has percentage limitations that apply to purchases of
restricted securities, as stated in the Prospectus. Those percentage
restrictions do not limit purchases of restricted securities that are
eligible for sale to qualified institutional purchasers pursuant to Rule
144A under the Securities Act of 1933, provided that those securities have
been determined to be liquid by the Board of Trustees of the Fund or by
the Manager under Board-approved guidelines. Those guidelines take into
account the trading activity for such securities and the availability of
reliable pricing information, among other factors. If there is a lack of
trading interest in a particular Rule 144A security, the Fund's holding
of that security may be deemed to be illiquid.
- Loans of Portfolio Investments. The Fund may lend its portfolio
investments subject to the restrictions stated in the Prospectus.
Repurchase transactions are not considered "loans" for the purpose of the
Fund's limit on the percentage of its assets that can be loaned. 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.
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.
- Repurchase Agreements. The Fund may acquire securities subject to
repurchase agreements for liquidity purposes to meet anticipated
redemptions, or pending the investment of the proceeds from sales of Fund
shares, or pending the settlement of purchases of portfolio securities.
In a repurchase transaction, the Fund acquires a security from, and
simultaneously resells it to, an approved vendor. An "approved vendor"
is a U.S. commercial bank or the U.S. branch of a foreign bank or a
broker-dealer which has been designated a primary dealer in government
securities, which must meet credit requirements set by the Fund's Board
of Trustees from time to time. The resale price exceeds the purchase
price by an amount that reflects an agreed-upon interest rate effective
for the period during which the repurchase agreement is in effect. The
majority of these transactions run from day to day, and delivery pursuant
to the resale typically will occur within one to five days of the
purchase. Repurchase agreements are considered "loans" under the
Investment Company Act, collateralized by the underlying security. The
Fund's repurchase agreements require that at all times while the
repurchase agreement is in effect, the value of the collateral must equal
or exceed the repurchase price to fully collateralize the repayment
obligation. Additionally, the Manager will impose creditworthiness
requirements to confirm that the vendor is financially sound and will
continuously monitor the collateral's value.
- Short Sales Against-the-Box. In this type of short sale, while the
short position is open, the Fund must own an equal amount of the
securities sold short, or by virtue of ownership of other securities have
the right, without payment of further consideration, to obtain an equal
amount of the securities sold short. Short sales against-the-box may be
made to defer, for Federal income tax purposes, recognition of gain or
loss on the sale of securities "in the box" until the short position is
closed out. They may also be used to protect a gain on the security "in-
the-box" when the Fund does not want to sell it and recognize a capital
gain. No more than 15% of the Fund's net assets may be held as collateral
for these short sales.
- Temporary Defensive Investments. If economic, political or
financial conditions adversely affect Mining Securities or Metal
Investments, the Fund may depart from its usual concentration policy and
may commit an increasing portion of its assets to defensive securities.
These may include the types of securities described in the Prospectus.
When investing for defensive purposes, the Fund will normally emphasize
investment in short-term debt securities (that is, securities maturing in
one year or less from the date of purchase), since those types of
securities are generally more liquid and usually may be disposed of
quickly without significant gains or losses so that the Manager may have
liquid assets when it wishes to make investments in securities for
appreciation possibilities.
Other Investment Restrictions
The Fund's most significant investment restrictions are described in
the Prospectus. The following are also fundamental policies, and together
with the Fund's fundamental policies described in the Prospectus, cannot
be changed without the approval of a "majority" of the Fund's outstanding
voting securities. Such a "majority" vote is defined in the Investment
Company Act as the vote of the holders of the lesser of (1) 67% or more
of the shares present or represented by proxy at a shareholders meeting,
if the holders of more than 50% of the outstanding shares are present or
represented by proxy; or (2) more than 50% of the outstanding shares.
Under these additional restrictions, the Fund cannot:
(1) invest in commodities or commodities contracts; Metal Investments
shall not be deemed an investment in a commodity for the purpose of the
Fund's investment restrictions; however, the Fund may buy and sell any of
the hedging instruments permitted by any of its other non-fundamental or
fundamental policies, whether or not any such hedging instrument is
considered to be a commodity;
(2) invest in real estate or in interests in real estate, but may
purchase readily marketable securities of companies holding real estate
or interests therein;
(3) purchase securities on margin; however, the Fund may make margin
deposits in connection with any of the hedging instruments permitted by
any of its other fundamental or non-fundamental policies;
(4) mortgage, hypothecate or pledge any of its assets; however, this
does not prohibit the escrow arrangements contemplated by the option
activities of the Fund or other collateral or margin arrangements in
connection with any of the hedging instruments permitted by any of its
other fundamental or non-fundamental policies;
(5) underwrite securities of other companies, except insofar as the
Fund might be deemed to be an underwriter in the resale of any securities
held in its portfolio;
(6) invest in or hold securities of any issuer if those officers and
trustees or directors of the Fund or its adviser owning individually more
than .5% of the securities of such issuer together own more than 5% of the
securities of such issuer;
(7) invest in interests in oil or gas exploration or development
programs; or
(8) invest in companies for the purpose of acquiring control or
management thereof.
For purposes of the Fund's policy not to concentrate its assets as
described under the second investment restriction in "Other Investment
Restrictions" in the Prospectus, the Fund has adopted the industry
classifications set forth in Appendix A to this Statement of Additional
Information. This is not a fundamental policy.
In connection with the registration of its shares in certain states,
the Fund has made the following undertakings. These undertakings, which
are non-fundamental policies of the Fund, shall terminate if the Fund
ceases to qualify its shares for sale in that state or if the state's
applicable rules or regulations are amended. The Fund has undertaken
that: (i) it will not invest in oil, gas or other mineral leases; and (ii)
it will not invest in real property, including limited partnership
interests.
How the Fund Is Managed
Organization and History. As a Massachusetts business trust, the Fund is
not required to hold, and does not plan to hold, regular annual meetings
of shareholders. The Fund will hold meetings when required to do so by the
Investment Company Act or other applicable law, or when a shareholder
meeting is called by the Trustees or upon proper request of the
shareholders. Shareholders have the right, upon the declaration in
writing or vote of two-thirds of the outstanding shares of the Fund, to
remove a Trustee. The Trustees will call a meeting of shareholders to
vote on the removal of a Trustee upon the written request of the record
holders of 10% of its outstanding shares. In addition, if the Trustees
receive a request from at least 10 shareholders (who have been
shareholders for at least six months) holding shares of the Fund valued
at $25,000 or more or holding at least 1% of the Fund's outstanding
shares, whichever is less, stating that they wish to communicate with
other shareholders to request a meeting to remove a Trustee, the Trustees
will then either make the Fund's shareholder list available to the
applicants or mail their communication to all other shareholders at the
applicants' expense, or the Trustees may take such other action as set
forth under Section 16(c) of the Investment Company Act.
The Fund's Declaration of Trust contains an express disclaimer of
shareholder or Trustee liability for the Fund's obligations, and provides
for indemnification and reimbursement of expenses out of its property for
any shareholder held personally liable for its obligations. The
Declaration of Trust also provides that the Fund shall, upon request,
assume the defense of any claim made against any shareholder for any act
or obligation of the Fund and satisfy any judgment thereon. Thus, while
Massachusetts law permits a shareholder of a business trust (such as the
Fund) to be held personally liable as a "partner" under certain
circumstances, the risk of a Fund shareholder incurring financial loss on
account of shareholder liability is limited to the relatively remote
circumstances in which the Fund would be unable to meet its obligations
described above. Any person doing business with the Trust, and any
shareholder of the Trust, agrees under the Trust's Declaration of Trust
to look solely to the assets of the Trust for satisfaction of any claim
or demand which may arise out of any dealings with the Trust, and the
Trustees shall have no personal liability to any such person, to the
extent permitted by law.
Trustees and Officers of the Fund. The Fund's Trustees and officers and
their principal occupations and business affiliations during the past five
years are listed below. The address of each Trustee and officer is Two
World Trade Center, New York, New York 10048-0203, unless another address
is listed below. All of the Trustees are also trustees of Oppenheimer
Fund, Oppenheimer Global Fund, Oppenheimer Growth Fund, Oppenheimer Target
Fund, Oppenheimer Discovery Fund, Oppenheimer Global Growth & Income Fund,
Oppenheimer Global Emerging Growth Fund, Oppenheimer Tax-Free Bond Fund,
Oppenheimer New York Tax-Exempt Fund, Oppenheimer California Tax-Exempt
Fund, Oppenheimer Multi-State Tax-Exempt Trust, Oppenheimer Asset
Allocation Fund, Oppenheimer U.S. Government Trust, Oppenheimer Multi-
Sector Income Trust and Oppenheimer Multi-Government Trust (the "New York-
based Oppenheimer funds"). Messrs. Spiro, Bishop, Bowen, Donohue, Farrar
and Zack, respectively, hold the same offices with the other New York-
based Oppenheimer funds as with the Fund. As of October 2, 1995, the
Trustees and officers of the Fund as a group owned less than 1% of the
outstanding Class A shares of the Fund. The foregoing statement does not
reflect ownership of shares held of record by an employee benefit plan for
employees of the Manager (for which plan a Trustee and an officer listed
below, Ms. Macaskill and Mr. Donohue, respectively, are trustees) other
than the shares beneficially owned under that plan by the officers of the
Fund listed above.
Leon Levy, Chairman of the Board of Trustees; Age: 69
31 West 52nd Street, New York, New York 10019
General Partner of Odyssey Partners, L.P. (investment partnership) and
Chairman of Avatar Holdings, Inc. (real estate development).
Leo Cherne, Trustee; Age: 82
122 East 42nd Street, New York, New York 10168
Chairman Emeritus of the International Rescue Committee (philanthropic
organization); formerly Executive Director of The Research Institute
of America.
Robert G. Galli, Trustee*; Age: 62
Vice Chairman of the Manager and Vice President and Counsel of
Oppenheimer Acquisition Corp., the Manager's parent holding company;
formerly he held the following positions: a director of the Manager
and Oppenheimer Funds Distributor, Inc. (the "Distributor"), Vice
President and a director of HarbourView Asset Management Corporation
("HarbourView") and Centennial Asset Management Corporation
("Centennial"), investment advisory subsidiaries of the Manager, a
director of Shareholder Financial Services, Inc. ("SFSI") and
Shareholder Services, Inc. ("SSI"), transfer agent subsidiaries of the
Manager, an officer of other Oppenheimer funds and Executive Vice
President and General Counsel of the Manager and the Distributor.
Benjamin Lipstein, Trustee; Age: 72
591 Breezy Hill Road, Hillsdale, New York 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 Spy
Magazine, L.P.
Bridget A. Macaskill, Trustee*; Age: 47
President, CEO and a Director of the Manager; Chairman and a Director
of SSI, Vice President and a Director of OAC, a Director of HarbourView
and Oppenheimer Partnership Holdings, Inc., a holding company
subsidiary of the Manager; formerly Executive Vice President of the
Manager.
Elizabeth B. Moynihan, Trustee; Age: 65
801 Pennsylvania Avenue, N.W., Washington, DC 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 the Indo-U.S. Sub-
Commission on Education and Culture.
Kenneth A. Randall, Trustee; Age: 68
6 Whittaker's Mill, Williamsburg, Virginia 23185
Director of Dominion Resources, Inc. (electric utility holding
company), Dominion Energy, Inc. (electric power and oil & gas
producer), Enron-Dominion Cogen Corp. (cogeneration company) Kemper
Corporation (insurance and financial services company) and Fidelity
Life Association (mutual life insurance company), formerly Chairman of
the Board of ICL, Inc. (information systems), and President and Chief
Executive Officer of The Conference Board, Inc. (international
economic and business research).
Edward V. Regan, Trustee; Age: 65
40 Park Avenue, New York, New York 10016
Chairman of Municipal Assistance Corporation for the City of New York;
President of Jerome Levy Economics Institute; a member of the U.S.
Competitiveness Policy Council; a director of GranCare, Inc.
(healthcare provider); formerly New York State Comptroller and a
trustee, New York State and Local Retirement Fund.
Russell S. Reynolds, Jr., Trustee; Age: 63
200 Park Avenue, New York, New York 10166
Founder Chairman of Russell Reynolds Associates, Inc. (executive
recruiting); Chairman of Directors Publication, Inc. (consulting and
publishing); a trustee of Mystic Seaport Museum, International House,
Greenwich Hospital and the Greenwich Historical Society.
Sidney M. Robbins, Trustee; Age: 83
50 Overlook Road, Ossining, New York 10562
Chase Manhattan Professor Emeritus of Financial Institutions, Graduate
School of Business, Columbia University; Visiting Professor of
Finance, University of Hawaii; a director of The Korea Fund, Inc. (a
closed-end investment company); a member of the Board of Advisors,
Olympus Private Placement Fund, L.P.; Professor Emeritus of Finance,
Adelphi University.
Donald W. Spiro, President and Trustee*; Age: 69
Chairman Emeritus and a director of the Manager; formerly Chairman of
the Manager and the Distributor.
Pauline Trigere, Trustee; Age: 82
498 Seventh Avenue, New York, New York 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and sale
of women's fashions).
Clayton K. Yeutter, Trustee; Age: 64
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel to 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),
Lindsay Manufacturing Co. (irrigation equipment), Texas Instruments,
Inc. (electronics) and The Vigoro Corporation (fertilizer
manufacturer); formerly (in descending chronological order) 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.
James C. Ayer, Jr., Vice President and Portfolio Manager; Age: 32
Assistant Vice President of the Manager; formerly an international
equities investment officer with Brown Brothers Harriman & Co., a
bank.
Andrew J. Donohue, Secretary; Age: 45
Executive Vice President and General Counsel of the Manager and the
Distributor; an officer of other Oppenheimer funds; formerly Senior
Vice President and Associate General Counsel of the Manager and the
Distributor, prior to which he was a partner in Kraft & McManimon (a
law firm), an officer of First Investors Corporation (a broker-dealer)
and First Investors Management Company, Inc. (broker-dealer and
investment adviser), and a director and an officer of First Investors
Family of Funds and First Investors Life Insurance Company.
George C. Bowen, Treasurer; Age: 58
3410 South Galena Street, Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President and
Treasurer of the Distributor and HarbourView; Senior Vice President,
Treasurer, Assistant Secretary and a director of Centennial; Vice
President, Treasurer and Secretary of SSI and SFSI; an officer of
other Oppenheimer funds.
Robert G. Zack, Assistant Secretary; Age: 47
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; an officer of other Oppenheimer
funds.
Robert Bishop, Assistant Treasurer; Age: 36
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other Oppenheimer funds; previously a Fund Controller for
the Manager, prior to which he was an Accountant for Yale & Seffinger,
P.C., an accounting firm, and previously an Accountant and Commissions
Supervisor for Stuart James Company Inc., a broker-dealer.
Scott Farrar, Assistant Treasurer; Age: 30
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other Oppenheimer funds; previously a Fund Controller for
the Manager, prior to which he was an International Mutual Fund
Supervisor for Brown Brothers Harriman & Co., a bank, and previously
a Senior Fund Accountant for State Street Bank & Trust Company.
_____________________________________
* A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
- Remuneration of Trustees. The officers of the Fund are affiliated
with the Manager; they and the Trustees of the Fund who are affiliated
with the Manager (Ms. Macaskill and Messrs. Galli and Spiro; Mr. Spiro is
also an officer) receive no salary or fee from the Fund. The Trustees of
the Fund (including Mr. Delaney, a former Trustee, but excluding Ms.
Macaskill and Messrs. Galli and Spiro) received the total amounts shown
below (i) from the Fund, during its fiscal year ended June 30, 1995 and
(ii) from all 17 of the New York-based Oppenheimer funds (including the
Fund) listed in the first paragraph of this section (and from Oppenheimer
Global Environment Fund, Oppenheimer Time Fund and Oppenheimer Mortgage
Income Fund, which ceased operations following the acquisition of their
assets by certain other Oppenheimer funds) for services in the positions
shown:
<TABLE>
<CAPTION>
Retirement
Benefits Total Compensation
Aggregate Accrued From All
Compensation as Part of New York-based
Name and Position From Fund Fund Expenses Oppenheimer Funds1
<S> <C> <C> <C>
Leon Levy, Chairman $11,011 $9,601 $141,000.00
and Trustee
Leo Cherne, Audit $ 5,375 $4,687 $ 68,000.00
Committee Member
and Trustee
Edmund T. Delaney,
Study Committee
Member2 and Trustee $ 6,732 $5,820 $ 86,200.00
Benjamin Lipstein, $ 6,732 $5,820 $ 86,200.00
Study Committee
Member and Trustee
Elizabeth B. Moynihan,$ 4,733 $4,127 $ 60,625.00
Study Committee
Member3 and Trustee
Kenneth A. Randall, $ 6,124 $5,339 $ 78,400.00
Audit Committee Member
and Trustee
Edward V. Regan, $ 4,392 $3,830 $ 56,275.00
Audit Committee
Member3 and Trustee
Russell S. Reynolds, Jr.,$ 4,071 $3,550 $ 52,100.00
Trustee
Sidney M. Robbins, $ 9,540 $8,318 $122,100.00
Study Committee Chairman,
Audit Committee Vice-
Chairman and Trustee
Pauline Trigere, $ 4,071 $3,550 $ 52,100.00
Trustee
Clayton K. Yeutter, $ 4,071 $3,550 $ 52,100.00
Trustee
</TABLE>
______________________
1For the 1995 calendar year.
2Board and Committee positions held during a portion of the period shown.
3Committee position held during a portion of the period shown.
The Fund has adopted a retirement plan that provides for payment to
a retired Trustee of up to 80% of the average compensation paid during
that Trustee's five years of service in which the highest compensation was
received. A Trustee 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 Trustee's retirement benefits will depend
on the amount of the Trustee'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. No sums were accrued during the fiscal
year ended June 30, 1995 for the Fund's projected retirement obligations.
- Major Shareholders. As of October 2, 1995, no person owned of
record or was known by the Fund to own beneficially 5% or more of the
Fund's outstanding Class A shares except Merrill Lynch Pierce Fenner &
Smith, Inc., 97007, 4800 Deer Lake Drive East, Fl.3, Jacksonville, Florida
32246-6486, who owned of record 621,990.290 Class A shares (approximately
5.12% of the Fund's outstanding Class A shares). No Class B or Class C
shares were outstanding as of that date.
The Manager and Its Affiliates.The Manager is wholly-owned by Oppenheimer
Acquisition Corp. ("OAC"), a holding company controlled by Massachusetts
Mutual Life Insurance Company. OAC is also owned in part by certain of
the Manager's directors and officers, some of whom also serve as officers
of the Fund, and two of whom (Messrs. Galli and Spiro) serve as Trustees
of the Fund.
The Manager and the Fund have a Code of Ethics. It is designed to
detect and prevent improper personal trading by certain employees,
including portfolio managers, that would compete with or take advantage
of the Fund's portfolio transactions. Compliance with the Code of Ethics
is carefully monitored and strictly enforced by the Manager.
- The Investment Advisory Agreement. A management fee is payable
monthly to the Manager under the terms of the investment advisory
agreement between the Manager and the Fund and is computed on the
aggregate net assets of the Fund as of the close of business each day.
The investment advisory agreement requires the Manager, at its expense,
to provide the Fund with adequate office space, facilities and equipment,
and to provide and supervise the activities of all administrative and
clerical personnel required to provide effective corporate administration
for the Fund, including the compilation and maintenance of records with
respect to its operations, the preparation and filing of specified
reports, and composition of proxy materials and registration statements
for continuous public sale of shares of the Fund.
Expenses not expressly assumed by the Manager under the advisory
agreement or by the Distributor under the General 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. For the Fund's fiscal years ended June 30, 1993, 1994,
and 1995, the management fees paid by the Fund to the Manager were
$1,061,114, $1,414,294 and $1,339,091, respectively.
The advisory agreement contains no provision limiting the Fund's
expenses. However, independently of the advisory agreement, the Manager
has undertaken that the total expenses of the Fund in any fiscal year
(including the management fee but excluding taxes, interest, brokerage
commissions, distribution assistance payments and extraordinary expenses
such as litigation costs) shall not exceed the most stringent expense
limitation imposed under state law applicable to the Fund. Pursuant to the
undertaking, the Manager's fee will be reduced at the end of a month so
that there will not be any accrued but unpaid liability under this
undertaking. Currently, the most stringent state expense limitation is
imposed by California, and limits the Fund's expenses (with specified
exclusions) to 2.5% of the first $30 million of average annual net assets,
2% of the next $70 million of average annual net assets, and 1.5% of
average annual net assets in excess of $100 million. The Manager reserves
the right to terminate or amend the undertaking at any time. Any
assumption of the Fund's expenses under this limitation would lower the
Fund's overall expense ratio and increase its total return during any
period in which expenses are limited.
The advisory agreement provides that so long as it has acted with due
care and in good faith, the Manager shall not be liable for any loss
sustained by reason of any investment, the adoption of any investment
policy, or the purchase, sale or retention of securities, irrespective of
whether the determinations of the Manager relative thereto shall have been
based, wholly or partly, upon the investigation or research of any other
individual, firm or corporation believed by it to be reliable. However,
the Agreement does not protect the Manager against liability by reason of
its willful misfeasance, bad faith or gross negligence in the performance
of its duties or its reckless disregard of its obligations and duties
under the Agreement. The Agreement permits the Manager to act as
investment adviser for any other person, firm or corporation and to use
the name "Oppenheimer" in connection with other investment companies for
which it may act as investment adviser or general distributor. If the
Manager shall no longer act as investment adviser to the Fund, the right
of the Fund to use the name "Oppenheimer" as part of its name may be
withdrawn.
- The Distributor. Under its General Distributor's Agreement with
the Fund, the Distributor acts as the Fund's principal underwriter in the
continuous public offering of the Fund's Class A, Class B and Class C
shares but is not obligated to sell a specific number of shares. Expenses
normally attributable to sales, (other than those expenses paid under the
Distribution and Service Plans, but including advertising and the cost of
printing and mailing prospectuses, other than those furnished to existing
shareholders), are borne by the Distributor. During the Fund's fiscal
years ended June 30, 1993, 1994, and 1995, the aggregate sales charges on
sales of the Fund's shares were $760,498, $1,175,491, and $842,093,
respectively, of which the Distributor and an affiliated broker-dealer
retained in the aggregate $202,086, $277,123 and $202,059 in those
respective years. For additional information about distribution of the
Fund's shares and the payments made by the Fund to the Distributor in
connection with such activities, please refer to "Distribution and Service
Plans," below.
- The Transfer Agent. Oppenheimer Shareholder Services, the Fund's
Transfer Agent, is responsible for maintaining the Fund's shareholder
registry and shareholder accounting records, and for shareholder servicing
and administrative functions.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of the
duties of the Manager under the advisory agreement is to arrange the
portfolio transactions for the Fund. The advisory agreement contains
provisions relating to the employment of broker-dealers ("brokers") to
effect the Fund's portfolio transactions. In doing so, the Manager is
authorized by the advisory agreement to employ broker-dealers, including
"affiliated" brokers, as that term is defined in the Investment Company
Act, as may, in its best judgment based on all relevant factors,
implement the policy of the Fund to obtain, at reasonable expense, the
"best execution" (prompt and reliable execution at the most favorable
price obtainable) of such transactions. The Manager need not seek
competitive commission bidding but is expected to be aware of the current
rates of eligible brokers and to minimize the commissions paid to the
extent consistent with the interest and policies of the Fund as
established by its Board of Trustees. Purchases of securities from
underwriters include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers include a spread between the bid
and asked price.
Under the advisory agreement, the Manager is authorized to select
brokers that provide brokerage and/or research services for the Fund
and/or the other accounts over which the Manager or its affiliates have
investment discretion. The commissions paid to such brokers may be higher
than another qualified broker would have charged if a good faith
determination is made by the Manager that the commission is fair and
reasonable in relation to the services provided. Subject to the foregoing
considerations, the Manager may also consider sales of shares of the Fund
and other investment companies managed by the Manager or its affiliates
as a factor in the selection of brokers for the Fund's portfolio
transactions.
Description of Brokerage Practices Followed by the Manager. Subject to
the provisions of the advisory agreement, and the procedures and rules
described above, allocations of brokerage are generally made by the
Manager's portfolio traders based upon recommendations from the Manager's
portfolio managers. In certain instances, portfolio managers may directly
place trades and allocate brokerage, also subject to the provisions of the
investment advisory agreement and the procedures and rules described
above. In either case, brokerage is allocated under the supervision of
the Manager's executive officers. Transactions in securities other than
those for which an exchange is the primary market are generally done with
principals or market makers. Transactions in Metal Investments will be
made through recognized dealers in such investments or, in the case of
certificates representing such investments, directly with the issuers of
such certificates. In connection with transactions on foreign exchanges,
the Fund may be required to pay fixed brokerage commissions and thereby
forego the benefit of negotiated commissions available in U.S. markets.
Brokerage commissions are paid primarily for effecting transactions in
listed securities or for certain fixed-income agency transactions in the
secondary market, and are otherwise paid only if it appears likely that
a better price or execution can be obtained. When the Fund engages in an
option transaction, ordinarily the same broker will be used for the
purchase or sale of the option and any transaction in the securities to
which the option relates. When possible, concurrent orders to purchase
or sell the same security by more than one of the accounts managed by the
Manager or its affiliates are combined. The transactions effected
pursuant to such combined orders are averaged as to price and allocated
in accordance with the purchase or sale orders actually placed for each
account. Option commissions may be relatively higher than those which
would apply to direct purchases and sales of portfolio securities.
The research services provided by a particular broker may be useful
only to one or more of the advisory accounts of the Manager and its
affiliates, and investment research received for the commissions of those
other accounts may be useful both to the Fund and one or more of such
other accounts. Such research, which may be supplied by a third party at
the instance of a broker, includes information and analyses on particular
companies and industries as well as market or economic trends and
portfolio strategy, receipt of market quotations for portfolio
evaluations, information systems, computer hardware and similar products
and services. If a research service also assists the Manager in a non-
research capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to the
Manager in the investment decision-making process may be paid for in
commission dollars. The Board of Trustees has permitted the Manager to
use concessions on fixed price offerings to obtain research, in the same
manner as is permitted for agency transactions. The Board has also
permitted the Manager to use stated commissions on secondary fixed-income
agency trades to obtain research where the broker has represented to the
Manager that: (i) the trade is not from or for the broker's own
inventory, (ii) the trade was executed by the broker on an agency basis
at the stated commission, and (iii) the trade is not a riskless principal
transaction.
The research services provided by brokers broaden the scope and
supplement the research activities of the Manager, by making available
additional views for consideration and comparisons, and by enabling the
Manager to obtain market information for the valuation of securities held
in the Fund's portfolio or being considered for purchase. The Board of
Trustees, including the "independent" Trustees of the Fund (those Trustees
of the Fund who are not "interested persons" as defined in the Investment
Company Act, and who have no direct or indirect financial interest in the
operation of the advisory agreement or the Distribution and Service Plans
described below) annually reviews information furnished by the Manager as
to the commissions paid to brokers furnishing such services so that the
Board may ascertain whether the amount of such commissions was reasonably
related to the value or benefit of such services.
During the Fund's fiscal years ended June 30, 1993, 1994, and 1995,
total brokerage commissions paid by the Fund (not including spreads or
concessions on principal transactions on a net trade basis) were $140,807,
$568,856, and $780,211, respectively. During the fiscal year ended June
30, 1995, $346,911 was paid to brokers as commissions in return for
research services; the aggregate dollar amount of those transactions was
$71,642,719. The transactions giving rise to those commissions were
allocated in accordance with the Manager's internal allocation procedures.
Performance of the Fund
Total Return Information. As described in the Prospectus, from time to
time the "average annual total return," "cumulative total return,"
"average annual total return at net asset value" and "total return at net
asset value" of an investment in a class of shares of the Fund may be
advertised. An explanation of how these total returns are calculated for
each class and the components of those calculations is set forth below.
No total return calculations are presented below for Class B and Class C
shares because no shares of those classes were publicly issued during the
fiscal year ended June 30, 1995.
The Fund's advertisements of its performance data must, under
applicable rules of the Securities and Exchange Commission, include the
average annual total returns for shares of the Fund for the 1, 5, and 10-
year periods (or the life of the class, if less) ending as of the most
recently-ended calendar quarter prior to the publication of the
advertisement. This enables an investor to compare the Fund's performance
to the performance of other funds for the same periods. However, a number
of factors should be considered before using such information as a basis
for comparison with other investments. An investment in the Fund is not
insured; its returns and share prices are not guaranteed and normally will
fluctuate on a daily basis. When redeemed, an investor's shares may be
worth more or less than their original cost. Returns for any given past
period are not a prediction or representation by the Fund of future
returns. The returns of each class of shares of the Fund are affected by
portfolio quality, the type of investments the Fund holds and its
operating expenses allocated to the particular class.
- Average Annual Total Returns. The Fund's "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:
a-b 6
Standardized Yield = 2 ((------ + 1) - 1)
cd
- 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 shares of the Fund, the current
maximum sales charge of 5.75% (as a percentage of the offering price) is
deducted from the initial investment ("P")(unless the return is shown at
net asset value, as described below). For Class B shares, the payment of
the applicable contingent deferred sales charge (5.0% for the first year,
4.0% for the second year, 3.0% for the third and fourth years, 2.0% in the
fifth year, 1.0% in the sixth year and none thereafter) is applied to the
investment result for the period shown (unless the total return is shown
at net asset value, as described below). For Class C shares, the payment
of the 1.0% contingent deferred sales charge is applied to the investment
result for the one-year period (or less). Total returns also assume that
all dividends and capital gains distributions during the period are
reinvested to buy additional shares at net asset value per share, and that
the investment is redeemed at the end of the period. The "average annual
total returns" on an investment in Class A shares of the Fund for the one,
five and ten year periods ended June 30, 1995 were (3.84)%, 2.73% and
11.68%, respectively. The cumulative "total return" on Class A shares of
the Fund for the ten year period ended June 30, 1995 was 201.74%.
- 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 return
at net asset value of the Fund's Class A shares for the ten-year period
ended June 30, 1995 was 220.14%. The average annual total returns at net
asset value for the one, five and ten-year periods ended June 30, 1995,
for Class A shares of the Fund were 2.03%, 3.95% and 12.34% 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 shares of the Fund with
that of other alternatives, investors should understand that as the Fund
is an aggressive equity fund seeking capital appreciation, its shares are
subject to greater market risks than shares of funds having other
investment objectives and that the Fund is designed for investors who are
willing to accept greater risk of loss in the hopes of realizing greater
gains.
Other Performance Comparisons. From time to time the Fund may publish the
ranking of its Class A, Class B and 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 of shares is ranked against (i) all
other funds and (ii) all other gold-oriented funds. The Lipper
performance rankings are based on total returns that include the
reinvestment of capital gain distributions and income dividends but do not
take sales charges or taxes into consideration.
From time to time the Fund may publish the ranking of the performance
of its Class A, Class B and Class C shares by Morningstar, Inc., an
independent mutual fund monitoring service that ranks mutual funds,
including the Fund, monthly in broad investment categories (equity,
taxable bond, municipal bond and hybrid) based on risk-adjusted investment
return. Investment return measures a fund's three, five and ten-year
average annual total returns (when available) in excess of 90-day U.S.
Treasury bill returns after considering sales charges and expenses. Risk
measures fund performance below 90-day U.S. Treasury bill monthly returns.
Risk and investment return are combined to produce star rankings
reflecting performance relative to the average fund in a fund's category.
Five stars is the "highest" ranking (top 10%), four stars is "above
average" (next 22.5%), three stars is "average" (next 35%), two stars is
"below average" (next 22.5%) and one star is "lowest" (bottom 10%).
Morningstar ranks the Fund's Class A, Class B and Class C shares in
relation to other equity funds. Rankings are subject to change.
The total return on an investment in the Fund's Class A, Class B or
Class C shares may be compared with performance for the same period of the
Morgan Stanley World Index, an unmanaged index of issuers on the stock
exchanges of 20 foreign countries and the United States and widely
recognized as a measure of global stock market performance. The
performance of such Index includes a factor for the reinvestment of
dividends but does not reflect expenses or taxes. The performance of the
Fund's Class A, Class B or Class C shares may also be compared in
publications to (i) the performance of various market indices or to other
investments for which reliable performance data is available, and (ii) to
averages, performance rankings or other benchmarks prepared by recognized
mutual fund statistical services.
From time to time, the Fund's Manager may publish rankings or ratings
of the Manager (or Transfer Agent) or the investor services provided by
them to shareholders of the Oppenheimer funds, other than performance
rankings of the Oppenheimer funds themselves. Those ratings or rankings
of shareholder/investor services by third parties may compare the
Oppenheimer funds services to those of other mutual fund families selected
by the rating or ranking services, and may be based upon the opinions of
the rating or ranking service itself, using its own research or judgment,
or based upon surveys of investors, brokers, shareholders or others.
Distribution and Service Plans
The Fund has adopted a Service Plan for Class A shares and
Distribution and Service Plans for Class B and Class C shares of the Fund
under Rule 12b-1 of the Investment Company Act pursuant to which the Fund
makes payments to the Distributor in connection with the distribution
and/or servicing of the shares of that class, as described in the
Prospectus. Each Plan has been approved by a vote of (i) the Board of
Trustees of the Fund, including a majority of the Independent Trustees,
cast in person at a meeting called for the purpose of voting on that Plan,
and (ii) the holders of a "majority" (as defined in the Investment Company
Act) of the shares of each class. For the Distribution and Service Plans
for Class B and Class C shares, that vote was cast by the Manager as the
sole initial holder of Class B and Class C shares of the Fund.
In addition, under the Plans, the Manager and the Distributor, in
their sole discretion, from time to time, may use their own resources
(which, in the case of the Manager, may include profits from the advisory
fee it receives from the Fund), to make payments to brokers, dealers or
other financial institutions (each is referred to as a "Recipient" under
the Plans) for distribution and administrative services they perform, at
no cost to the Fund. The Distributor and the Manager may, in their sole
discretion, increase or decrease the amount of payments they make from
their own resources to Recipients.
Unless terminated as described below, each Plan continues in effect
from year to year but only as long as its continuance is specifically
approved at least annually by the Fund's Board of Trustees and its
Independent Trustees by a vote cast in person at a meeting called for the
purpose of voting on such continuance. Any 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. No Plan may be amended to
increase materially the amount of payments to be made unless such
amendment is approved by shareholders of the class affected by the
amendment. In addition, because Class B shares of the Fund automatically
convert into Class A shares after six years, the Fund is required to
obtain the approval of Class B as well as Class A shareholders for a
proposed amendment to the Class A Plan that would materially increase the
amount to be paid by Class A shareholders under the Class A Plan. Such
amendment must be by a "majority" of the Class A and Class B shares (as
defined in the Investment Company Act), voting separately by class. All
material amendments must be approved by the Independent Trustees.
While the Plans are in effect, the Treasurer of the Fund shall
provide separate written reports to the Fund's Board of Trustees at least
quarterly on the amount of all payments made pursuant to each Plan, the
purpose for which each payment was made and the services rendered in
connection with the distribution of shares. 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 Fund who are not
"interested persons" of the Fund is committed to the discretion of the
Independent Trustees. This does not prevent the involvement of others in
such selection and nomination if the final decision on selection or
nomination is approved by a majority of the Independent Trustees.
Under the Plans, no payment will be made to any Recipient in any
quarter if the aggregate net asset value of all Fund shares held by the
Recipient for itself and its customers did not exceed a minimum amount,
if any, that may be determined from time to time by a majority of the
Fund's Independent Trustees. Currently, the Board of Trustees has set the
fees at the maximum rate and set no minimum amount. However, while the
maximum fee rate under the Class A Plan is 0.25% of average annual net
assets of the Fund, the Board of Trustees has set the maximum rate for
assets representing shares of the Fund acquired before April 1, 1991, at
0.15%, and for assets representing Class A shares acquired on or after
April 1, 1991, at 0.25%.
For the fiscal year ended June 30, 1995, payments under the Plan for
Class A shares totaled $356,654, all of which was paid by the Distributor
to Recipients including $7,038 that was paid to an affiliate of the
Distributor. Any unreimbursed expenses incurred by the Distributor with
respect to Class A shares for any fiscal year may not be recovered in
subsequent fiscal years. Payments received by the Distributor under the
Plan for Class A shares will not be used to pay any interest expense,
carrying charges, or other financial costs, or allocation of overhead by
the Distributor.
The Class B and Class C Plans allows the service fee payment to be
paid by the Distributor to Recipients in advance for the first year such
shares are outstanding, and thereafter on a quarterly basis, as described
in the Prospectus. The advance payment is based on the net asset value
of shares sold. An exchange of shares does not entitle the Recipient to
an advance service fee payment. In the event shares are redeemed during
the first year such shares are outstanding, the Recipient will be
obligated to repay a pro rata portion of such advance payment to the
Distributor. Since no Class B or Class C shares were outstanding during
the Fund's fiscal year ended June 30, 1995, no payments were made under
the Class B and the Class C Plan.
Although the Class B and the Class C Plans permit the Distributor to
retain both the asset-based sales charges and the service fees on such
shares, or to pay Recipients the service fee on a quarterly basis without
payment in advance, the Distributor presently intends to pay the service
fee to Recipients in the manner described above. A minimum holding period
may be established from time to time under the Class B and the Class C
Plan by the Board. Initially, the Board has set no minimum holding
period.
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), state "blue sky" registration fees and certain other
distribution expenses. All payments under the Class B and the Class C
Plan are subject to the limitations imposed by the Rules of Fair Practice
of the National Association of Securities Dealers, Inc. on payments of
asset-based sales charges and service fees.
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 any order for $500,000 or more of Class B shares or $1 million or
more of Class C shares on behalf of a single investor (not including
dealer "street name" or omnibus accounts) because generally it will be
more advantageous for that investor to purchase Class A shares of the Fund
instead.
The three classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different
shareholder privileges and features. The net income attributable to Class
B and Class C shares and the dividends payable on such shares will be
reduced by incremental expenses borne solely by those classes, including
the asset-based sales charge to which both classes of shares are subject.
The conversion of Class B shares to Class A shares after six years
is subject to the continuing availability of a private letter ruling from
the Internal Revenue Service, or an opinion of counsel or tax adviser, to
the effect that the conversion of B shares does not constitute a taxable
event for the holder under Federal income tax law. If such a revenue
ruling or opinion is no longer available, the automatic conversion feature
may be suspended, in which event no further conversions of Class B shares
would occur while such suspension remained in effect. Although Class B
shares could then be exchanged for Class A shares on the basis of relative
net asset value of the two classes, without the imposition of a sales
charge or fee, such exchange could constitute a taxable event for the
holder, and absent such exchange, Class B shares might continue to be
subject to the asset-based sales charge for longer than six years.
The methodology for calculating the net asset value, dividends and
distributions of the Fund's Class A, Class B and Class C shares recognizes
two types of expenses. General expenses that do not pertain specifically
to any class are allocated pro rata to the shares of each class, based on
the percentage of the net assets of such class to the Fund's total assets,
and then equally to each outstanding share within a given class. Such
general expenses include (i) management fees, (ii) legal, bookkeeping and
audit fees, (iii) printing and mailing costs of shareholder reports,
Prospectuses, Statements of Additional Information and other materials for
current shareholders, (iv) fees to Independent Trustees, (v) custodian
expenses, (vi) share issuance costs, (vii) organization and start-up
costs, (viii) interest, taxes and brokerage commissions, and (ix) non-
recurring expenses, such as litigation costs. Other expenses that are
directly attributable to a class are allocated equally to each outstanding
share within that class. Such expenses include (i) Distribution and/or
Service Plan fees, (ii) incremental transfer and shareholder servicing
agent fees and expenses, (iii) registration fees and (iv) shareholder
meeting expenses, to the extent that such expenses pertain to a specific
class rather than to the Fund as a whole.
Determination of Net Asset Values Per Share. The net asset values per
share of Class A, Class B and Class C shares of the Fund are determined
as of the close of business of The New York Stock Exchange (the "NYSE")
on each day that the NYSE 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 NYSE 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 NYSE's most recent
annual announcement (which is subject to change) states that it will close
on New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. It may
also close on other days. The Fund may invest a substantial portion of
its assets in foreign securities primarily listed on foreign exchanges
which may trade on Saturdays or customary U.S. business holidays on which
the NYSE is closed. Because the Fund's net asset value will not be
calculated on those days, the Fund's net asset values per share of Class
A, Class B and Class C shares of the Fund may be significantly affected
at times when shareholders cannot purchase or redeem shares.
The Fund's Board of Trustees has established procedures for the
valuation of the Fund's securities, generally as follows: (i) equity
securities traded on a securities exchange or on the NASDAQ National
Market System ("NASDAQ") are valued at the last reported sale prices 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 and asked prices); (ii) securities actively traded on
a foreign securities exchange are valued at the last sales price available
to the pricing service approved by the Fund's Board of Trustees or to the
Manager as reported by the principal exchange on which the security is
traded; (iii) unlisted foreign securities or listed foreign securities not
actively traded are valued as in (i) above, if available, or at the mean
between "bid" and "asked" prices obtained from active market makers in the
security on the basis of reasonable inquiry; (iv) long-term debt
securities having a remaining maturity in excess of 60 days are valued at
the mean between the "bid" and "asked" prices determined by a portfolio
pricing service approved by the Fund's Board of Trustees or obtained from
active market makers in the security on the basis of reasonable inquiry;
(v) debt instruments having a maturity of more than one year when issued,
and non-money market type instruments having a maturity of one year or
less when issued, which have a remaining maturity of 60 days or less are
valued at the mean between "bid" and "asked" prices determined by a
pricing service approved by the Fund's Board of Trustees or obtained from
active market makers in the security on the basis of reasonable inquiry;
(vi) money market-type debt securities having a maturity of less than one
year when issued that having a remaining maturity of 60 days or less are
valued at cost, adjusted for amortization of premiums and accretion of
discounts; (vii) securities (including restricted securities) not having
readily-available market quotations are valued at fair value under the
Board's procedures; and (vi) Metal Investments are valued at their
respective fair market values determined on the basis of the mean between
the last current bid and asked prices on exchanges or obtained from dealer
quotations.
In the case of U.S. Government Securities, mortgage-backed
securities, foreign securities and corporate bonds, when last sale
information is not generally available, such pricing procedures may
include "matrix" comparisons to the prices for comparable instruments on
the basis of quality, yield, maturity and other special factors involved.
The Fund's Board of Trustees has authorized the Management to employ a
pricing service to price U.S. Government Securities, mortgage-backed
securities, foreign government securities and corporate bonds. The
Trustees will monitor the accuracy of such pricing services by 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 NYSE.
Events affecting the values of foreign securities traded in stock markets
that occur between the time their prices are determined and the close of
the NYSE will not be reflected in the Fund's calculation of net asset
value unless the Board of Trustees or the Manager, under procedures
established by the Board of Trustees, determines that the particular event
would materially affect the Fund's net asset value, in which case an
adjustment would be made. Foreign currency will be valued as close to the
time fixed for the valuation date as is reasonably practicable. The
values of securities denominated in foreign currency will be converted to
U.S. dollars at the prevailing rates of exchange at the time of valuation.
Puts, calls and Futures held by the Fund are valued at the last sales
price on the principal exchange on which they are traded, or on NASDAQ,
as applicable, or, if there are no sales that day, in accordance with (i),
above. Forward currency contracts are valued at the closing price on the
London foreign exchange market. When the Fund writes an option, an amount
equal to the premium received by the Fund is included in the Fund's
Statement of Assets and Liabilities as an asset, and an equivalent
deferred credit is included in the liability section. The deferred credit
is "marked-to-market" to reflect the current market value of the option.
In determining the Fund's gain on investments, if a call written by the
Fund is exercised, the proceeds are increased by the premium received.
If a call or put written by the Fund expires, the Fund has a gain in the
amount of the premium; if the Fund enters into a closing purchase
transaction, it will have a gain or loss depending on whether the premium
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 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 three days after the transfers are initiated. The Distributor and
the Fund are not responsible for any delays in purchasing shares resulting
from delays in ACH transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced sales
charge rate may be obtained for Class A shares under Right of Accumulation
and Letters of Intent because of the economies of sales efforts and
reduction in expenses realized by the Distributor, dealers and brokers
making such sales. No sales charge is imposed in certain other
circumstances described in the Prospectus because the Distributor incurs
little or no selling expenses. The term "immediate family" refers to
one's spouse, children, grandchildren, grandparents, parents, parents-in-
law, brothers and sisters, sons- and daughters-in-law, a sibling's spouse
and a spouse's siblings.
- The Oppenheimer Funds. The Oppenheimer funds are those mutual
funds for which the Distributor acts as the distributor or the sub-
distributor and include the following:
Oppenheimer Tax-Free Bond Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Fund
Oppenheimer Insured Tax-Exempt Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
<PAGE>
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 International Bond Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
<PAGE>
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
<PAGE>
There is an initial sales charge on the purchase of Class A shares
of each of the Oppenheimer funds except Money Market Funds (under certain
circumstances described herein, redemption proceeds of Money Market Fund
shares may be subject to a contingent deferred sales charge).
- Letters of Intent. A Letter of Intent (referred to as a "Letter")
is an investor's statement in writing to the Distributor of the intention
to purchase Class A shares or Class A and Class B shares of the Fund (and
other Oppenheimer funds) during a 13-month period (the "Letter of Intend
period"), which may, at the investor's request, include purchases made up
to 90 days prior to the date of the Letter. The Letter states the
investor's intention to make the aggregate amount of purchases of shares
which, when added to the investor's holdings of shares of those funds,
will equal or exceed the amount specified in the Letter. Purchases made
by reinvestment of dividends or distributions of capital gains and
purchases made at net asset value without sales charge do not count toward
satisfying the amount of the Letter. A Letter enables an investor to
count the Class A and Class B shares purchased under the Letter to obtain
the reduced sales charge rate on purchases of Class A shares of the Fund
(and other Oppenheimer funds) that applies under the Right of Accumulation
to current purchases of Class A shares. Each purchase of Class A shares
under the Letter will be made at the public offering price (including the
sales charge) that applies to a single lump-sum purchase of shares in the
amount intended to be purchased under the Letter.
In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of
Intent period, when added to the value (at offering price) of the
investor's holdings of shares on the last day of that period, do not equal
or exceed the intended purchase amount, the investor agrees to pay the
additional amount of sales charge applicable to such purchases, as set
forth in "Terms of Escrow," below (as those terms may be amended from time
to time). The investor agrees that shares equal in value to 5% of the
intended purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be bound by
the terms of the Prospectus, this Statement of Additional Information and
the Application used for such Letter of Intent, and if such terms are
amended, as they may be from time to time by the Fund, that those
amendments will apply automatically to existing Letters of Intent.
For purchases of shares of the Fund and other Oppenheimer funds by
OppenheimerFunds prototype 401(k) plans under a Letter of Intent, the
Transfer Agent will not hold shares in escrow. If the intended purchase
amount under the Letter entered into by an OppenheimerFunds prototype
401(k) plan is not purchased by the plan by the end of the Letter of
Intent period, there will be no adjustment of commissions paid to the
broker-dealer or financial institution of record for accounts held in the
name of that plan.
If the total eligible purchases made during the Letter of Intent
period do not equal or exceed the intended purchase amount, the
commissions previously paid to the dealer of record for the account and
the amount of sales charge retained by the Distributor will be adjusted
to the rates applicable to actual purchases. If total eligible purchases
during the Letter of Intent period exceed the intended purchase amount and
exceed the amount needed to qualify for the next sales charge rate
reduction set forth in the applicable prospectus, the sales charges paid
will be adjusted to the lower rate, but only if and when the dealer
returns to the Distributor the excess of the amount of commissions allowed
or paid to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the
Distributor will be used to purchase additional shares for the investor's
account at the net asset value per share in effect on the date of such
purchase, promptly after the Distributor's receipt thereof.
In determining the total amount of purchases made under a Letter,
shares redeemed by the investor prior to the termination of the Letter of
Intent period will be deducted. It is the responsibility of the dealer
of record and/or the investor to advise the Distributor about the Letter
in placing any purchase orders for the investor during the Letter of
Intent period. All of such purchases must be made through the
Distributor.
- Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in value
to 5% of the intended purchase amount specified in the Letter shall be
held in escrow by the Transfer Agent. For example, if the intended
purchase amount is $50,000, the escrow shall be shares valued in the
amount of $2,500 (computed at the public offering price adjusted for a
$50,000 purchase). Any dividends and capital gains distributions on the
escrowed shares will be credited to the investor's account.
2. If the intended purchase amount specified under the Letter is
completed within the thirteen-month Letter of Intent period, the escrowed
shares will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period the
total purchases pursuant to the Letter are less than the intended purchase
amount specified in the Letter, the investor must remit to the Distributor
an amount equal to the difference between the dollar amount of sales
charges actually paid and the amount of sales charges which would have
been paid if the total amount purchased had been made at a single time.
Such sales charge adjustment will apply to any shares redeemed prior to
the completion of the Letter. If such difference in sales charges is not
paid within twenty days after a request from the Distributor or the
dealer, the Distributor will, within sixty days of the expiration of the
Letter, redeem the number of escrowed shares necessary to realize such
difference in sales charges. Full and fractional shares remaining after
such redemption will be released from escrow. If a request is received
to redeem escrowed shares prior to the payment of such additional sales
charge, the sales charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes and
appoints the Transfer Agent as attorney-in-fact to surrender for
redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the
holding of which may be counted toward completion of a Letter) include (a)
Class A shares sold with a front-end sales charge or subject to a Class
A contingent deferred sales charge, (b) Class B shares acquired subject
to a contingent deferred sales charge, and (c) Class A or B shares
acquired in exchange for either (i) Class A shares of one of the other
Oppenheimer funds that were acquired subject to a Class A initial or
contingent deferred sales charge or (ii) Class B shares of one of the
other Oppenheimer funds that were acquired subject to a contingent
deferred sales charge.
6. Shares held in escrow hereunder will automatically be exchanged
for shares of another fund to which an exchange is requested, as described
in the section of the Prospectus entitled "Exchange Privilege," and the
escrow will be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a bank
account, a check (minimum $25) for the initial purchase must accompany the
application. Shares purchased by Asset Builder Plan payments from bank
accounts are subject to the redemption restrictions for recent purchases
described in "How To Sell Shares," in the Prospectus. Asset Builder Plans
also enable shareholders of Oppenheimer Cash Reserves to use those
accounts for monthly automatic purchases of shares of up to four other
Oppenheimer funds.
There is a front-end sales charge on the purchase of certain
Oppenheimer funds, or a contingent deferred sales charge may apply to
shares purchased by Asset Builder payments. An application should be
obtained from the Distributor, completed and returned, and a prospectus
of the selected fund(s) should be obtained from the Distributor or your
financial advisor before initiating Asset Builder payments. The amount
of the Asset Builder investment may be changed or the automatic
investments may be terminated at any time by writing to the Transfer
Agent. A reasonable period (approximately 15 days) is required after the
Transfer Agent's receipt of such instructions to implement them. The Fund
reserves the right to amend, suspend, or discontinue offering such plans
at any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders for the
Fund's shares (for example, when a purchase check is returned to the Fund
unpaid) causes a loss to be incurred when the net asset value of the
Fund's shares on the cancellation date is less than on the purchase date.
That loss is equal to the amount of the decline in the net asset value per
share multiplied by the number of shares in the purchase order. The
investor is responsible for that loss. If the investor fails to
compensate the Fund for the loss, the Distributor will do so. The Fund
may reimburse the Distributor for that amount by redeeming shares from any
account registered in that investor's name, or the Fund or the Distributor
may seek other redress.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and conditions for
redemptions set forth in the Prospectus.
- Payments "In Kind". The Prospectus states that payment for
shares tendered for redemption is ordinarily made in cash. However, the
Board of Trustees of the Fund may determine that it would be detrimental
to the best interests of the remaining shareholders of the Fund to make
payment of a redemption order wholly or partly in cash. In that case the
Fund may pay the redemption proceeds in whole or in part by a distribution
"in kind" of securities from the portfolio of the Fund, in lieu of cash,
in conformity with applicable rules of the Securities and Exchange
Commission. The Fund has elected to be governed by Rule 18f-1 under the
Investment Company Act, pursuant to which the Fund is obligated to redeem
shares solely in cash up to the lesser of $250,000 or 1% of the net assets
of the Fund during any 90-day period for any one shareholder. If shares
are redeemed in kind, the redeeming shareholder might incur brokerage or
other costs in selling the securities for cash. The method of valuing
securities used to make redemptions in kind will be the same as the method
the Fund uses to value it portfolio securities described above under
"Determination of Net Asset Values Per Share" and that valuation will be
made as of the time the redemption price is determined.
- Involuntary Redemptions. The Fund's Board of Trustees has the
right to cause the involuntary redemption of the shares held in any
account if the aggregate net asset value of those shares is less than $500
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
purchased subject to an initial sales charge, or (ii) Class B shares on
which the shareholder paid a contingent deferred sales charge when
redeemed. This privilege does not apply to Class C shares. The
reinvestment may be made without sales charge only in Class A shares of
the Fund or any of the other Oppenheimer funds into which shares of the
Fund are exchangeable as described below, at the net asset value next
computed after the Transfer Agent receives the reinvestment order. The
shareholder must ask the Distributor for that privilege at the time of
reinvestment. Any capital gain that was realized when the shares were
redeemed is taxable, and reinvestment will not alter any capital gains tax
payable on that gain. If there has been a capital loss on the redemption,
some or all of the loss may not be tax deductible, depending on the timing
and amount of the reinvestment. Under the Internal Revenue Code, if the
redemption proceeds of Fund shares on which a sales charge was paid are
reinvested in shares of the Fund or another of the Oppenheimer funds
within 90 days of payment of the sales charge, the shareholder's basis in
the shares of the Fund that were redeemed may not include the amount of
the sales charge paid. That would reduce the loss or increase the gain
recognized from the redemption. However, in that case the sales charge
would be added to the basis of the shares acquired by the reinvestment of
the redemption proceeds. The Fund may amend, suspend or cease offering
this reinvestment privilege at any time as to shares redeemed after the
date of such amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge at the time of transfer to the name of
another person or entity (whether the transfer occurs by absolute
assignment, gift or bequest, not involving, directly or indirectly, a
public sale). The transferred shares will remain subject to the
contingent deferred sales charge, calculated as if the transferee
shareholder had acquired the transferred shares in the same manner and at
the same time as the transferring shareholder. If less than all shares
held in an account are transferred, and some but not all shares in the
account would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus under
"How to Buy Shares" for the imposition of the Class B or the Class C
contingent deferred sales charge will be followed in determining the order
in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, 401(k) plans
or pension or profit-sharing plans should be addressed to "Trustee,
OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its address
listed in "How To Sell Shares" in the Prospectus or on the back cover of
this Statement of Additional Information. The request must: (i) state the
reason for the distribution; (ii) state the owner's awareness of tax
penalties if the distribution is premature; and (iii) conform to the
requirements of the plan and the Fund's other redemption requirements.
Participants (other than self-employed persons maintaining a plan in their
own name) in OppenheimerFunds-sponsored pension, profit-sharing or 401(k)
plans may not directly redeem or exchange shares held for their accounts
under those plans. The employer or plan administrator must sign the
request. Distributions from pension and profit sharing plans are subject
to special requirements under the Internal Revenue Code and certain
documents (available from the Transfer Agent) must be completed before the
distribution may be made. Distributions from retirement plans are subject
to withholding requirements under the Internal Revenue Code, and IRS Form
W-4P (available from the Transfer Agent) must be submitted to the Transfer
Agent with the distribution request, or the distribution may be delayed.
Unless the shareholder has provided the Transfer Agent with a certified
tax identification number, the Internal Revenue Code requires that tax be
withheld from any distribution even if the shareholder elects not to have
tax withheld. The Fund, the Manager, the Distributor, the Trustee and the
Transfer Agent assume no responsibility to determine whether a
distribution satisfies the conditions of applicable tax laws and will not
be responsible for any tax penalties assessed in connection with a
distribution.
Special Arrangements for Repurchase of Shares from Dealers and Brokers.
The Distributor is the Fund's agent to repurchase its shares from
authorized dealers or brokers. The repurchase price per share will be the
net asset value next computed after the Distributor receives an 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 NYSE closes (normally, that is
4:00 P.M. but may be earlier on some days) and the order was transmitted
to and received by the Distributor prior to its close of business that day
(normally 5:00 P.M.). Ordinarily, for accounts redeemed by a broker-
dealer under this procedure, payment will be made within three business
days after the shares have been redeemed upon the Distributor's receipt
of the required redemption documents in proper form, with the signature(s)
of the registered owners guaranteed on the redemption document as
described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of the
Fund valued at $5,000 or more can authorize the Transfer Agent to redeem
shares (minimum $50) automatically on a monthly, quarterly, semi-annual
or annual basis under an Automatic Withdrawal Plan. Shares will be
redeemed three business days prior to the date requested by the
shareholder for receipt of the payment. Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are to be made
by check payable to all shareholders of record and sent to the address of
record for the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from OppenheimerFunds-
sponsored retirement plans may not be arranged on this basis. Payments
are normally made by check, but shareholders having AccountLink privileges
(see "How To Buy Shares") may arrange to have Automatic Withdrawal Plan
payments transferred to the bank account designated on the
OppenheimerFunds New Account Application or signature-guaranteed
instructions. The Fund cannot guarantee receipt of a payment on the date
requested and reserves the right to amend, suspend or discontinue offering
such plans at any time without prior notice. Because of the sales charge
assessed on Class A share purchases, shareholders should not make regular
additional Class A share purchases while participating in an Automatic
Withdrawal Plan. Class B and Class C shareholders should not establish
withdrawal plans because of the imposition of the contingent deferred
sales charge on such withdrawals (except where the Class B and Class C
contingent deferred sales charge is waived as described in the Prospectus
under "Waivers of Class B Contingent Deferred Sales Charges" and "Waivers
of Class C Contingent Deferred Sales Charges").
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such plans,
as stated below and in the provisions of the OppenheimerFunds Application
relating to such Plans, as well as the Prospectus. These provisions may
be amended from time to time by the Fund and/or the Distributor. When
adopted, such amendments will automatically apply to existing Plans.
- Automatic Exchange Plans. Shareholders can authorize the
Transfer Agent (on the OppenheimerFunds Application or signature-
guaranteed instructions) to exchange a pre-determined amount of shares of
the Fund for shares (of the same class) of other Oppenheimer funds
automatically on a monthly, quarterly, semi-annual or annual basis under
an Automatic Exchange Plan. The minimum amount that may be exchanged to
each other fund account is $25. Exchanges made under these plans are
subject to the restrictions that apply to exchanges as set forth in "How
to Exchange Shares" in the Prospectus and below in this Statement of
Additional Information.
- Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a sales
charge will be redeemed first and shares acquired with reinvested
dividends and capital gains distributions will be redeemed next, followed
by shares acquired with a sales charge, to the extent necessary to make
withdrawal payments. Depending upon the amount withdrawn, the investor's
principal may be depleted. Payments made under withdrawal plans should
not be considered as a yield or income on your investment.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the "Planholder")
who executed the Plan authorization and application submitted to the
Transfer Agent. Neither the Fund nor the Transfer Agent shall incur any
liability to the Planholder for any action taken or omitted by the
Transfer Agent in good faith to administer the Plan. Certificates will
not be issued for shares of the Fund purchased for and held under the
Plan, but the Transfer Agent will credit all such shares to the account
of the Planholder on the records of the Fund. Any share certificates held
by a Planholder may be surrendered unendorsed to the Transfer Agent with
the Plan application so that the shares represented by the certificate may
be held under the Plan.
For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of the Fund, which will be done
at net asset value without a sales charge. Dividends on shares held in
the account may be paid in cash or reinvested.
Redemptions of shares needed to make withdrawal payments will be made
at the net asset value per share determined on the redemption date.
Checks or AccountLink payments of the proceeds of Plan withdrawals will
normally be transmitted three business days prior to the date selected for
receipt of the payment (receipt of payment on the date selected cannot be
guaranteed), according to the choice specified in writing by the
Planholder.
The amount and the interval of disbursement payments and the address
to which checks are to be mailed or AccountLink payments are to be sent
may be changed at any time by the Planholder by writing to the Transfer
Agent. The Planholder should allow at least two weeks' time in mailing
such notification for the requested change to be put in effect. The
Planholder may, at any time, instruct the Transfer Agent by written notice
(in proper form in accordance with the requirements of the then-current
Prospectus of the Fund) to redeem all, or any part of, the shares held
under the Plan. In that case, the Transfer Agent will redeem the number
of shares requested at the net asset value per share in effect in
accordance with the Fund's usual redemption procedures and will mail a
check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by writing
to the Transfer Agent. A Plan may also be terminated at any time by the
Transfer Agent upon receiving directions to that effect from the Fund.
The Transfer Agent will also terminate a Plan upon receipt of evidence
satisfactory to it of the death or legal incapacity of the Planholder.
Upon termination of a Plan by the Transfer Agent or the Fund, shares that
have not been redeemed from the account will be held in uncertificated
form in the name of the Planholder, and the account will continue as a
dividend-reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder or his or her executor or
guardian, or other authorized person.
To use Class A shares held under the Plan as collateral for a debt,
the Planholder may request issuance of a portion of the Class A shares in
certificated form. Share certificates are not available for Class B or
Class C shares. Upon written request from the Planholder, the Transfer
Agent will determine the number of Class A shares for which a certificate
may be issued without causing the withdrawal checks to stop because of
exhaustion of uncertificated shares needed to continue payments. However,
should such uncertificated shares become exhausted, Plan withdrawals will
terminate.
If the Transfer Agent ceases to act as transfer agent for the Fund,
the Planholder will be deemed to have appointed any successor transfer
agent to act as agent in administering the Plan.
How To Exchange Shares
As stated in the Prospectus, shares of a particular class of
Oppenheimer funds having more than one class of shares may be exchanged
only for shares of the same class of other Oppenheimer funds. Shares of
Oppenheimer funds that have a single class without a class designation are
deemed "Class A" shares for this purpose. All of the Oppenheimer funds
offer Class A, B and C shares except Oppenheimer Money Market Fund, Inc.,
Centennial Money Market Trust, Centennial Tax exempt Trust, Centennial
Government Trust, Centennial New York Tax Exempt Trust, Centennial
California Tax Exempt Trust, Centennial America Fund, L.P., and Daily Cash
Accumulation Fund, Inc., which only offer Class A shares and Oppenheimer
Main Street California 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 list showing which funds offer which class can be obtained by
calling the Distributor at 1-800-525-7048.
Class A shares of the Oppenheimer funds may be exchanged at net asset
value for shares of any Money Market Fund. Shares of any Money Market
Fund purchased without a sales charge may be exchanged for shares of
Oppenheimer funds offered with a sales charge upon payment of the sales
charge (or, if applicable, may be used to purchase shares of Oppenheimer
funds subject to a contingent deferred sales charge). However, shares of
Oppenheimer Money Market Fund, Inc., purchased with the redemption
proceeds of shares of other mutual funds (other than funds managed by the
Manager or its subsidiaries) redeemed within the 12 months prior to that
purchase may subsequently be exchanged for shares of other Oppenheimer
funds without being subject to an initial or contingent deferred sales
charge, whichever is applicable. To qualify for that privilege, the
investor or the investor's dealer must notify the Distributor of
eligibility for this privilege at the time the shares of Oppenheimer Money
Market Fund, Inc., are purchased, and, if requested, must supply proof of
entitlement to this privilege.
Shares of this Fund acquired by reinvestment of dividends or
distributions from any other of the Oppenheimer funds or from any unit
investment trust for which reinvestment arrangements have been made with
the Distributor may be exchanged at net asset value for shares of any of
the Oppenheimer funds. No contingent deferred sales charge is imposed on
exchanges of shares of either class purchased subject to a contingent
deferred sales charge. However, when Class A shares acquired by exchange
of Class A shares of other Oppenheimer funds purchased subject to a Class
A contingent deferred sales charge are redeemed within 18 months of the
end of the calendar month of the initial purchase of the exchanged Class
A shares, the Class A contingent deferred sales charge is imposed on the
redeemed shares (see "Class A Contingent Deferred Sales Charge" in the
Prospectus). The Class B contingent deferred sales charge is imposed on
Class B shares acquired by exchange if they are redeemed within 6 years
of the initial purchase of the exchanged Class B shares. The Class C
contingent deferred sales charge is imposed on Class C shares acquired by
exchange if they are redeemed within 12 months of the initial purchase of
the exchanged Class C shares.
When Class B or Class C shares are redeemed to effect an exchange,
the priorities described in "How To Buy Shares" in the Prospectus for the
imposition of the Class B or the Class C contingent deferred sales charge
will be followed in determining the order in which the shares are
exchanged. Shareholders should take into account the effect of any
exchange on the applicability and rate of any contingent deferred sales
charge that might be imposed in the subsequent redemption of remaining
shares. Shareholders owning shares of more than one class must specify
whether they intend to exchange Class A, Class B or Class C shares.
The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of 10 or more accounts. The
Fund may accept requests for exchanges of up to 50 accounts per day from
representatives of authorized dealers that qualify for this privilege. In
connection with any exchange request, the number of shares exchanged may
be less than the number requested if the exchange or the number requested
would include shares subject to a restriction cited in the Prospectus or
this Statement of Additional Information or would include shares covered
by a share certificate that is not tendered with the request. In those
cases, only the shares available for exchange without restriction will be
exchanged.
When exchanging shares by telephone, a shareholder must either have
an existing account in, or obtain and acknowledge receipt of a prospectus
of, the fund to which the exchange is to be made. For full or partial
exchanges of an account made by telephone, any special account features
such as Asset Builder Plans, Automatic Withdrawal Plans and retirement
plan contributions will be switched to the new account unless the Transfer
Agent is instructed otherwise. If all telephone lines are busy (which
might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by
telephone and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the
"Redemption Date"). Normally, shares of the fund to be acquired are
purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The
Fund reserves the right, in its discretion, to refuse any exchange request
that may disadvantage it (for example, if the receipt of multiple exchange
requests from a dealer might require the disposition of portfolio
securities at a time or at a price that might be disadvantageous to the
Fund).
The different Oppenheimer funds available for exchange have different
investment objectives, policies and risks, and a shareholder should assure
that the Fund selected is appropriate for his or her investment and should
be aware of the tax consequences of an exchange. For federal income tax
purposes, an exchange transaction is treated as a redemption of shares of
one fund and a purchase of shares of another. "Reinvestment Privilege,"
above, discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and the
Transfer Agent are unable to provide investment, tax or legal advice to
a shareholder in connection with an exchange request or any other
investment transaction.
Dividends, Capital Gains and Taxes
Tax Status of the Fund's Dividends and Distributions. The Federal tax
treatment of the Fund's dividends and capital gains distributions is
explained in the Prospectus under the caption "Dividends, Capital Gains
and Taxes." Special provisions of the Internal Revenue Code govern the
eligibility of the Fund's dividends for the dividends-received deduction
for corporate shareholders. Long-term capital gains distributions are not
eligible for the deduction. In addition, the amount of dividends paid by
the Fund which may qualify for the deduction is limited to the aggregate
amount of qualifying dividends that the Fund derives from its portfolio
investments that the Fund has held for a minimum period, usually 46 days.
A corporate shareholder will not be eligible for the deduction on
dividends paid on Fund shares held for 45 days or less. To the extent the
Fund's dividends are derived from gross income from option premiums,
interest income or short-term gains from the sale of securities or
dividends from foreign corporations, those dividends will not qualify for
the deduction.
Under the Internal Revenue Code, by December 31 each year, the Fund
must distribute 98% of its taxable investment income earned from January
1 through December 31 of that year and 98% of its capital gains realized
in the period from November 1 of the prior year through October 31 of the
current year, or else the Fund must pay an excise tax on the amounts not
distributed. While it is presently anticipated that the Fund will meet
those requirements, the Fund's Board of Trustees and the Manager might
determine in a particular year that it would be in the best interest of
shareholders for the Fund not to make such distributions at the required
levels and to pay the excise tax on the undistributed amounts. That would
reduce the amount of income or capital gains available for distribution
to shareholders.
If the Fund has more than 50% of its total assets invested in foreign
securities at the end of its fiscal year, it may elect the application of
Section 853 of the Internal Revenue Code to permit shareholders to take
a credit (or, at their option, a deduction) for foreign taxes paid by the
Fund. Under Section 853, shareholders would be entitled to treat the
foreign taxes withheld from interest and dividends paid to the Fund from
its foreign investments as a credit on their federal income taxes. As an
alternative, shareholders could, if to their advantage, treat the foreign
tax withheld as a deduction from gross income in computing taxable income
rather than as a tax credit. In substance, the Fund's election would
enable shareholders to benefit from the same foreign tax credit or
deduction that would be received if they had been the record owners of the
Fund's foreign securities and had paid foreign taxes on the income
received.
If the Fund qualifies as a "regulated investment company" under the
Internal Revenue Code, it will not be liable for Federal income taxes on
amounts paid by it as dividends and distributions. The Fund qualified
during its last fiscal year, and intends to qualify in current and future
years, but reserves the right not to do so. The Internal Revenue Code
contains a number of complex tests relating to such qualification in which
the Fund derives 30% or more of its gross income from the sale of
securities held less than three months, it may fail to qualify (see "Tax
Aspects of Covered Calls and Hedging Instruments", above). If it did not
so qualify, the Fund would be treated for tax purposes as an ordinary
corporation and receive no tax deduction for payments made to
shareholders.
Dividends, distributions and the proceeds of the redemption of Fund
shares represented by checks returned to the Transfer Agent by the Postal
Service as undeliverable will be invested in shares of Oppenheimer Money
Market Fund, Inc., as promptly as possible after the return of such checks
to the Transfer Agent to enable the investor to earn a return on otherwise
idle funds.
The Fund's investments in Metal Investments could result in the
Fund's failing to meet the Internal Revenue Code's prescribed income or
asset tests to qualify as a "regulated investment company." This would
occur if, during a fiscal year, the Fund either (i) derived 10% or more
of its gross income from Metal Investments, or (ii) held more than 50% of
its net assets, determined at the end of each fiscal quarter, in Metal
Investments and/or securities (other than U.S. Government securities) as
to which securities either (a) the Fund had more than 5% of its total
assets invested; or (b) the Fund held more than 10% of the outstanding
voting securities of the issuer of such securities. Accordingly, the Fund
will endeavor to manage its portfolio within the above limitations, but
there can be no assurance that it will be successful in doing so.
Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect
to reinvest all dividends and/or capital gains distributions in shares of
the same class of any of the other Oppenheimer funds listed in "Reduced
Sales Charges," above, at net asset value without sales charge. To elect
this option, a shareholder must notify the Transfer Agent in writing and
either have an existing account in the fund selected for reinvestment or
must obtain a prospectus for that fund and an application from the
Distributor to establish an account. The investment will be made at the
net asset value per share in effect at the close of business on the
payable date of the dividend or distribution. Dividends and/or
distributions from shares of other Oppenheimer funds may be invested in
shares of this Fund on the same basis.
Additional Information About the Fund
The Custodian. The Bank of New York is the Custodian of the Fund's
assets. The Custodian's responsibilities include safeguarding and
controlling the Fund's portfolio securities, collecting income on the
portfolio securities and handling the delivery of such securities to and
from the Fund. The Manager has represented to the Fund that the banking
relationships between the Manager and the Custodian have been and will
continue to be unrelated to and unaffected by the relationship between the
Fund and the Custodian. It will be the practice of the Fund to deal with
the Custodian in a manner uninfluenced by any banking relationship the
Custodian may have with the Manager and its affiliates.
Independent Auditors. The independent auditors of the Fund audit the
Fund's financial statements and perform other related audit services.
They also act as auditors for certain other funds advised by the Manager
and its affiliates.
<PAGE>
----------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
----------------------------------------------------------
The Board of Trustees and Shareholders of
Oppenheimer Gold & Special Minerals Fund:
We have audited the accompanying statements of
investments and assets and liabilities of Oppenheimer
Gold & Special Minerals Fund as of June 30, 1995, and the
related statement of operations for the year then ended,
the statements of changes in net assets for each of the
years in the two-year period then ended and the financial
highlights for each of the years in the ten-year period
then ended. 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 as of June 30, 1995, by correspondence
with the custodian and brokers; and where confirmations
were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made
by management, as well as evaluating the overall
financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and
financial highlights referred to above present fairly, in
all material respects, the financial position of
Oppenheimer Gold & Special Minerals Fund as of June 30,
1995, the results of its operations for the year then
ended, the changes in its net assets for each of the
years in the two-year period then ended, and the
financial highlights for each of the years in the
ten-year period then ended, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
/s/ KPMG Peat Marwick LLP
Denver, Colorado
July 24, 1995
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS JUNE 30, 1995
-----------------------------------------------------------------------------------------------
FACE MARKET VALUE
AMOUNT SEE NOTE 1
==========================================================
==========================================================
==============
<S> <C> <C> <C>
CONVERTIBLE CORPORATE BONDS AND NOTES--1.4%
- ----------------------------------------------------------------------------------------------------------------------------------
Teck Corp., 3.75% Cv. Sub. Debs., 7/15/06
(Cost $1,979,407) $2,400,000 $ 2,454,000
Shares
==========================================================
==========================================================
==============
COMMON STOCKS--92.7%
- ----------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS--87.7%
- ----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS--5.1% Engelhard Corp. 100,000 4,287,500
-----------------------------------------------------------------------------------------------
Johnson Matthey PLC 300,000 2,739,530
-----------------------------------------------------------------------------------------------
Minerals Technologies, Inc. 50,000 1,800,000
-----------
8,827,030
- ----------------------------------------------------------------------------------------------------------------------------------
GOLD AND SPECIAL MINERALS--63.0%
- ----------------------------------------------------------------------------------------------------------------------------------
DIAMOND MINING & Ashton Mining of Canada, Inc. 139,300 101,392
MARKETING--0.1%
- ----------------------------------------------------------------------------------------------------------------------------------
GOLD--0.7% Manila Mining Corp., Cl. B 300,000,000 1,174,628
- ----------------------------------------------------------------------------------------------------------------------------------
GOLD MINING: AUSTRALIA--7.5% Gold Mines of Kalgoorlie Ltd. 2,597,604 2,319,990
-----------------------------------------------------------------------------------------------
Golden Shamrock Mines Ltd.(1) 2,000,000 1,502,721
-----------------------------------------------------------------------------------------------
Highlands Gold Ltd. 1,500,000 1,116,408
-----------------------------------------------------------------------------------------------
Newcrest Mining Ltd.(1) 1,000,000 4,231,720
-----------------------------------------------------------------------------------------------
Placer Pacific Ltd. 1,000,000 2,218,640
-----------------------------------------------------------------------------------------------
Renison Goldfields Consolidated Ltd. 500,000 1,577,148
-----------
12,966,627
- ----------------------------------------------------------------------------------------------------------------------------------
GOLD MINING: CANADA--20.1% Barrick Gold Corp. 200,000 5,050,000
-----------------------------------------------------------------------------------------------
Cambior, Inc. 225,000 2,784,094
-----------------------------------------------------------------------------------------------
Dayton Mining Corp.(1) 500,000 1,710,489
-----------------------------------------------------------------------------------------------
Dayton Mining Corp.(1) 300,000 1,026,293
-----------------------------------------------------------------------------------------------
Glamis Gold Ltd. 150,000 1,187,334
-----------------------------------------------------------------------------------------------
Golden Star Resources Ltd.(1) 150,000 1,078,154
-----------------------------------------------------------------------------------------------
Guyanor Resources SA(1) 30,000 67,692
-----------------------------------------------------------------------------------------------
Hemlo Gold Mines, Inc. 500,000 5,368,024
-----------------------------------------------------------------------------------------------
Kinross Gold(1) 74,600 556,564
-----------------------------------------------------------------------------------------------
Minera Rayrock, Inc.(1)(2) 340,000 408,334
-----------------------------------------------------------------------------------------------
Monarch Resources(1)(2) 300,000 650,714
-----------------------------------------------------------------------------------------------
Pegasus Gold, Inc.(1) 100,000 1,012,500
-----------------------------------------------------------------------------------------------
Placer Dome, Inc. 250,000 6,531,250
-----------------------------------------------------------------------------------------------
Prime Resource Group, Inc.(1) 175,000 1,210,080
-----------------------------------------------------------------------------------------------
Rayrock Yellowknife Resources, Inc.(1)(2) 103,000 1,124,556
-----------------------------------------------------------------------------------------------
Rayrock Yellowknife Resources, Inc.(1)(2) 30,000 327,540
-----------------------------------------------------------------------------------------------
Teck Corp., Cl. B 100,000 1,974,341
-----------------------------------------------------------------------------------------------
TVX Gold, Inc.(1)(3) 350,000 2,462,612
-----------
34,530,571
</TABLE>
6 Oppenheimer Gold & Special Minerals Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
MARKET VALUE
SHARES SEE NOTE 1
==========================================================
==========================================================
==============
<S> <C> <C> <C>
GOLD MINING: Anglo American Corp. of South Africa Ltd., ADR 50,000 $ 2,681,250
SOUTH AFRICA--10.3% -----------------------------------------------------------------------------------------------
Ashanti Goldfields(2) 100,000 2,262,500
-----------------------------------------------------------------------------------------------
Driefontein Consolidated Ltd., ADR 300,000 4,153,140
-----------------------------------------------------------------------------------------------
Free State Consolidated Gold Mines Ltd., ADR 250,000 3,093,750
-----------------------------------------------------------------------------------------------
Hartebeestfontein Gold Mining Co. 400,000 1,441,000
-----------------------------------------------------------------------------------------------
Southvaal Holdings Ltd., ADR 50,000 1,388,770
-----------------------------------------------------------------------------------------------
Vaal Reefs Exploration & Mining Co. Ltd., ADR 250,000 1,546,875
-----------------------------------------------------------------------------------------------
Western Area Gold Mining, ADR 100,000 1,100,000
-----------
17,667,285
- ----------------------------------------------------------------------------------------------------------------------------------
GOLD MINING: Battle Mountain Gold Co., Cl. A 150,000 1,443,750
UNITED STATES--9.3% -----------------------------------------------------------------------------------------------
Crown Resources Corp.(1) 275,000 1,271,875
-----------------------------------------------------------------------------------------------
Homestake Mining Co. 150,000 2,475,000
-----------------------------------------------------------------------------------------------
Newmont Mining Corp. 147,291 6,167,811
-----------------------------------------------------------------------------------------------
Santa Fe Pacific Gold Corp. 375,000 4,546,875
-----------
15,905,311
- ----------------------------------------------------------------------------------------------------------------------------------
GOLD-RELATED Cambiex Exploration, Inc.(4) 1,500,000 534,983
INVESTMENT--8.3% -----------------------------------------------------------------------------------------------
Canarc Resource Corp.(1) 282,500 431,807
-----------------------------------------------------------------------------------------------
Canarc Resource Corp.(1)(3) 450,000 687,823
-----------------------------------------------------------------------------------------------
Euro-Nevada Mining Corp. 253,300 7,743,494
-----------------------------------------------------------------------------------------------
Franco-Nevada Mining Corp. Ltd. 70,000 3,642,978
-----------------------------------------------------------------------------------------------
Normandy Poseidon Ltd. 1,000,000 1,233,366
-----------
14,274,451
- ----------------------------------------------------------------------------------------------------------------------------------
PLATINUM MINING--6.7% Anglo American Platinum Corp., ADR(1) 150,000
1,072,519
-----------------------------------------------------------------------------------------------
Impala Platinum Holdings Ltd., ADR 50,000 1,265,020
-----------------------------------------------------------------------------------------------
Rustenburg Platinum Holdings Ltd., ADR 175,000 3,609,428
-----------------------------------------------------------------------------------------------
Stillwater Mining Co.(1) 200,000 5,562,500
-----------
11,509,467
-----------
108,129,732
- ----------------------------------------------------------------------------------------------------------------------------------
METALS--19.6%
- ----------------------------------------------------------------------------------------------------------------------------------
ALUMINUM--1.4% Alcan Australia Ltd. 1,350,000 2,430,581
- ----------------------------------------------------------------------------------------------------------------------------------
COPPER--4.8% Aur Resources, Inc.(1) 450,000 1,678,645
-----------------------------------------------------------------------------------------------
Freeport-McMoRan Copper & Gold, Inc., Cl. A 204,455 4,216,884
-----------------------------------------------------------------------------------------------
Magma Copper Co.(1) 75,000 1,218,750
-----------------------------------------------------------------------------------------------
Zambia Consolidated Copper Mines Ltd., Cl. B(1) 500,000 1,129,539
-----------
8,243,818
</TABLE>
7 Oppenheimer Gold & Special Minerals Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (Continued)
-----------------------------------------------------------------------------------------------
MARKET VALUE
SHARES SEE NOTE 1
==========================================================
==========================================================
==============
<S> <C> <C> <C>
METALS: DIVERSIFIED--7.2% Brush Wellman, Inc. 70,000 $1,496,250
-----------------------------------------------------------------------------------------------
Elkem AS 275,000 3,836,171
-----------------------------------------------------------------------------------------------
Falconbridge Ltd. 100,000 1,783,276
-----------------------------------------------------------------------------------------------
Lucky Metal Corp.(1) 70,000 1,218,595
-----------------------------------------------------------------------------------------------
M.I.M. Holdings Ltd. 1,000,000 1,233,366
-----------------------------------------------------------------------------------------------
Trelleborg AB, Series B Free Shares 100,000 1,167,326
-----------------------------------------------------------------------------------------------
Western Mining Corp. Holdings Ltd. 284,988 1,561,524
-----------
12,296,508
- ----------------------------------------------------------------------------------------------------------------------------------
METALS: MISCELLANEOUS--4.1% Asturiana de Zinc SA(1) 150,600 1,436,477
-----------------------------------------------------------------------------------------------
Cameco Corp. 50,000 1,505,776
-----------------------------------------------------------------------------------------------
Korea Zinc Co. 40,000 949,555
-----------------------------------------------------------------------------------------------
Pasminco Ltd.(1) 1,000,000 964,010
-----------------------------------------------------------------------------------------------
Swissreal Schweiz Liegenscha 2,000 2,256,719
-----------
7,112,537
- ----------------------------------------------------------------------------------------------------------------------------------
NICKEL--2.1% Eramet SA 50,000 3,568,844
------------
33,652,288
- ----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL--5.0%
- ----------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING--5.0% Madeco SA, ADR 100,000 2,875,000
-----------------------------------------------------------------------------------------------
Svedala Industri, AB Free 100,000 2,691,715
-----------------------------------------------------------------------------------------------
Tampella AB(1) 1,174,333 2,964,991
-----------
8,531,706
-----------
Total Common Stocks (Cost $133,651,329) 159,140,756
==========================================================
==========================================================
==============
PREFERRED STOCKS--2.1%
- ----------------------------------------------------------------------------------------------------------------------------------
Battle Mountain Gold Co., Cv. 34,500 1,906,125
-----------------------------------------------------------------------------------------------
Cyprus Amax Minerals Co., $4.00 Cv., Series A 26,666 1,666,625
-----------
Total Preferred Stocks (Cost $3,304,603) 3,572,750
</TABLE>
8 Oppenheimer Gold & Special Minerals Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
MARKET VALUE
UNITS SEE NOTE 1
==========================================================
==========================================================
==============
<S> <C> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES--0.2%
- ----------------------------------------------------------------------------------------------------------------------------------
Ashton Mining of Canada, Inc. Wts., Exp. 10/95 78,500 $ 11,428
-----------------------------------------------------------------------------------------------
Cambiex Exploration, Inc. Wts., Exp. 12/95(4) 750,000 32,754
-----------------------------------------------------------------------------------------------
Dayton Mining Corp. Wts., Exp. 11/95 150,000 --
-----------------------------------------------------------------------------------------------
Lynas Gold NL Wts., Exp. 6/99 1,200,000 93,566
-----------------------------------------------------------------------------------------------
Minera Rayrock, Inc. Wts., Exp. 1/96(2) 170,000 --
-----------------------------------------------------------------------------------------------
Renison Goldfields (LCB) Unsec. Ln. 116,000 271,340
----------
Total Rights, Warrants and Certificates (Cost $529,799) 409,088
<CAPTION>
FACE
AMOUNT
==========================================================
==========================================================
==============
<S> <C> <C> <C>
REPURCHASE AGREEMENTS--4.5% Repurchase agreement with First Chicago Capital
Markets, 6.125%, dated 6/30/95, to be repurchased at
$7,703,930 on 7/3/95, collateralized by U.S. Treasury
Bonds, 11.25%, 2/15/15, with a value of $785,534, U.S.
Treasury Nts., 4.75%-7.875%, 3/31/96-8/15/01, with a
value of $5,138,338, and U.S. Treasury Bills maturing
9/28/95-12/14/95, with a value of $1,937,823
(Cost $7,700,000) $7,700,000 7,700,000
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $147,165,138) 100.9%
173,276,594
- ----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.9) (1,555,728)
---------- ------------
NET ASSETS 100.0% $171,720,866
---------- ------------
---------- ------------
<FN>
1. Non-income producing security.
2. Represents a security sold under Rule 144A, which is exempt from registration under the
Securities Act of 1933, as amended. This security has been determined to be liquid under
guidelines established by the Board of Trustees. These securities amount to $4,773,644 or
2.78% of the Fund's net assets, at June 30, 1995.
3. Identifies issues considered to be restricted--See Note 5 of Notes to Financial Statements.
4. Affiliated company. Represents ownership of at least 5% of the voting securities of the
issuer and is or was an affiliate, as defined in the Investment Company Act of 1940, at or
during the period ended June 30, 1995. The aggregate fair value of all securities of affiliated
companies as of June 30, 1995 amounted to $567,737. Transactions during the period in which the
issuer was an affiliate are as follows:
BALANCE BALANCE
JUNE 30, 1994 GROSS ADDITIONS GROSS REDUCTIONS JUNE 30, 1995
---------------- ---------------------- ----------------- ----------------- DIVIDEND
SHARES COST SHARES COST SHARES COST SHARES COST
INCOME
- ----------------------------------------------------------------------------------------------------------------------------------
Cambiex Exploration, Inc. -- $ -- 1,500,000 $756,573 -- $ -- 1,500,000 $756,573 $ --
- ----------------------------------------------------------------------------------------------------------------------------------
Cambiex Exploration, Inc.
Wts., Exp. 12/95 -- -- 750,000 112,921 -- -- 750,000 112,921 --
----- -------- ----- -------- -----
$ -- $869,494 $ -- $869,494 $ --
----- -------- ----- -------- -----
----- -------- ----- -------- -----
</TABLE>
See accompanying Notes to Financial Statements.
9 Oppenheimer Gold & Special Minerals Fund
<PAGE>
<TABLE>
---------------------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1995
---------------------------------------------------------------------------------------------------------
==========================================================
==========================================================
==============
<S> <C> <C>
ASSETS Investments, at value (cost $147,165,138)--see accompanying statement $173,276,594
---------------------------------------------------------------------------------------------------------
Cash 136,558
---------------------------------------------------------------------------------------------------------
Receivables:
Interest 417,607
Investments sold 357,139
Shares of beneficial interest sold 270,563
---------------------------------------------------------------------------------------------------------
Other 16,159
------------
Total assets 174,474,620
==========================================================
==========================================================
==============
LIABILITIES Payables and other liabilities:
Investments purchased 1,285,000
Shares of beneficial interest redeemed 1,190,278
Transfer and shareholder servicing agent fees 23,220
Service plan fees--Note 4 87,124
Trustees' fees 86,355
Other 81,777
------------
Total liabilities 2,753,754
==========================================================
==========================================================
==============
NET ASSETS $171,720,866
------------
------------
==========================================================
==========================================================
==============
COMPOSITION OF Paid-in capital $154,878,258
NET ASSETS ---------------------------------------------------------------------------------------------------------
Undistributed net investment income 636,579
---------------------------------------------------------------------------------------------------------
Accumulated net realized loss from investment and foreign currency transactions (9,905,759)
---------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets
and liabilities denominated in foreign currencies 26,111,788
------------
Net assets--applicable to 12,743,261 shares of beneficial interest outstanding $171,720,866
------------
------------
==========================================================
==========================================================
==============
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
$13.48
==========================================================
==========================================================
==============
MAXIMUM OFFERING PRICE PER SHARE (NET ASSET VALUE PLUS SALES CHARGE OF 5.75% OF OFFERING
PRICE) $14.30
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Gold & Special Minerals Fund
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1995
--------------------------------------------------------------------------------------------------
==========================================================
==========================================================
==============
<S> <C> <C>
INVESTMENT INCOME Interest $ 827,729
--------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $317,561) 2,403,593
-----------
Total income 3,231,322
==========================================================
==========================================================
==============
EXPENSES Management fees--Note 4 1,339,091
--------------------------------------------------------------------------------------------------
Service plan fees--Note 4 356,654
--------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 216,178
--------------------------------------------------------------------------------------------------
Shareholder reports 209,035
--------------------------------------------------------------------------------------------------
Custodian fees and expenses 112,423
--------------------------------------------------------------------------------------------------
Trustees' fees and expenses 54,484
--------------------------------------------------------------------------------------------------
Legal and auditing fees 26,159
--------------------------------------------------------------------------------------------------
Insurance expenses 15,932
--------------------------------------------------------------------------------------------------
Other 106,613
-----------
Total expenses 2,436,569
==========================================================
==========================================================
==============
NET INVESTMENT INCOME 794,753
==========================================================
==========================================================
==============
REALIZED AND UNREALIZED GAIN Net realized gain (loss) on:
(LOSS) ON INVESTMENTS Investments 4,934,803
AND FOREIGN CURRENCY Foreign currency transactions (785,735)
TRANSACTIONS -----------
Net realized gain 4,149,068
--------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments (4,697,023)
Translation of assets and liabilities denominated in foreign currencies 2,374,524
-----------
Net change (2,322,499)
-----------
Net realized and unrealized gain on investments and foreign
currency transactions 1,826,569
==========================================================
==========================================================
==============
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $
2,621,322
-----------
-----------
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer Gold & Special Minerals Fund
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
---------------------------------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
1995 1994
==========================================================
==========================================================
==============
<C> <S> <C> <C>
OPERATIONS Net investment income $ 794,753 $ 865,930
---------------------------------------------------------------------------------------------------------
Net realized gain on investments and foreign currency transactions 4,149,068 15,524,283
---------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments and
translation of assets and liabilities denominated in foreign currencies (2,322,499) (3,609,360)
------------ ------------
Net increase in net assets resulting from operations 2,621,322 12,780,853
==========================================================
==========================================================
==============
DIVIDENDS AND Dividends from net investment income
DISTRIBUTIONS TO ($.067 and $.059 per share, respectively) (878,199) (776,209)
SHAREHOLDERS
==========================================================
==========================================================
==============
BENEFICIAL INTEREST Net increase (decrease) in net assets resulting from
TRANSACTIONS beneficial interest transactions--Note 2 (9,037,115) 8,028,555
==========================================================
==========================================================
==============
NET ASSETS Total increase (decrease) (7,293,992) 20,033,199
---------------------------------------------------------------------------------------------------------
Beginning of period 179,014,858 158,981,659
------------ ------------
End of period (including undistributed net investment income
of $636,579 and $793,753, respectively) $171,720,866 $179,014,858
------------ ------------
------------ ------------
</TABLE>
See accompanying Notes to Financial Statements.
12 Oppenheimer Gold & Special Minerals Fund
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
-------------------------------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
==========================================================
==========================================================
===============
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<C> <C>
PER SHARE OPERATING DATA:
Net asset value,
beginning of year $13.28 $12.32 $10.68 $10.36 $11.65 $12.58 $12.82 $12.10 $6.43 $6.88
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .06 .06 .06 .16 .17 .14 .23 .26 .15 .15
Net realized and
unrealized gain (loss)
on investments and
foreign currency
transactions .21 .96 1.72 .35 (1.42) .54 .50 3.39 5.66 (.58)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total income (loss) from
investment operations .27 1.02 1.78 .51 (1.25) .68 .73 3.65 5.81 (.43)
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and
distributions
to shareholders:
Dividends from net
investment income (.07) (.06) (.14) (.19) (.04) (.27) (.18) (.36) (.14) (.02)
Distributions from net
realized gain on
investments and foreign
currency transactions -- -- -- -- -- (1.34) (.79) (2.57) -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total dividends and
distributions
to shareholders (.07) (.06) (.14) (.19) (.04) (1.61) (.97) (2.93) (.14) (.02)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of year $13.48 $13.28 $12.32 $10.68 $10.36 $11.65 $12.58 $12.82 $12.10 $6.43
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
==========================================================
==========================================================
===============
TOTAL RETURN, AT
NET ASSET VALUE(1) 2.03% 8.25% 17.15% 5.08% (10.71)% 3.10% 6.43% 33.24%
92.35% (6.23)%
==========================================================
==========================================================
===============
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of year
(in thousands) $171,721 $179,015 $158,982 $133,345 $150,907 $163,118 $120,198 $107,264 $76,532
$29,080
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $178,579 $175,093 $124,869 $137,906 $154,318 $154,079 $110,873 $90,672 $49,947
$32,407
- -----------------------------------------------------------------------------------------------------------------------------------
Number of shares
outstanding at end of
year (in thousands) 12,743 13,478 12,908 12,486 14,564 13,999 9,552 8,365 6,324 4,523
- -----------------------------------------------------------------------------------------------------------------------------------
Average amount of
debt outstanding
throughout each year
(in thousands)(2) $-- $-- $-- $-- $-- $-- $-- $-- $79 $366
----------------------------------------------------------------------------------------------------------------------------------
Average number of
shares outstanding
throughout each year
(in thousands)(3) -- -- -- -- -- -- -- -- 5,253 4,743
- -----------------------------------------------------------------------------------------------------------------------------------
Average amount of
debt per share outstanding
throughout each year $-- $-- $-- $-- $-- $-- $-- $-- $.02 $.08
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net
assets:
Net investment income .45% .50% .61% 1.25% 1.67% 1.17% 1.97% 2.38% 2.10%
2.19%
Expenses 1.36% 1.31% 1.38% 1.38% 1.43% 1.37% 1.22% 1.22% 1.41%
1.61%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover
rate(4) 35.8% 29.5% 23.9% 39.4% 113.3% 82.3% 111.7% 175.8% 191.7%
52.9%
<FN>
1. Assumes a hypothetical initial investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day of the fiscal period.
Sales charges are not reflected in the total returns.
2. Based upon daily outstanding borrowing.
3. Based upon month-end balances.
4. 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 June 30, 1995 were $61,761,542 and $63,338,747, respectively.
</TABLE>
See accompanying Notes to Financial Statements.
13 Oppenheimer Gold & Special Minerals Fund
<PAGE>
----------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
----------------------------------------------------------
==========================================================
======================
1. SIGNIFICANT Oppenheimer Gold & Special Minerals Fund (the Fund) is
ACCOUNTING registered under the Investment Company Act of 1940, as
POLICIES amended, as a diversified, open-end management investment
company. The Fund's investment advisor is Oppenheimer
Management Corporation (the Manager). The following is a
summary of significant accounting policies consistently
followed by the Fund.
-------------------------------------------------------
INVESTMENT VALUATION. Portfolio securities are valued
at the close of the New York Stock Exchange on each
trading day. Listed and unlisted securities for
which such information is regularly reported are
valued at the last sale price of the day or, in the
absence of sales, at values based on the closing
bid or asked price or the last sale price on the prior
trading day. Long-term and short-term "non-money
market" debt securities are valued by a portfolio
pricing service approved by the Board of Trustees.
Such securities which cannot be valued by the
approved portfolio pricing service are valued
using dealer-supplied valuations provided the Manager
is satisfied that the firm rendering the quotes is
reliable and that the quotes reflect current market
value, or under consistently applied procedures
established by the Board of Trustees to determine
fair value in good faith. Short-term "money market
type" debt securities having a remaining maturity of
60 days or less are valued at cost (or last determined
market value) adjusted for amortization to maturity of
any premium or discount.
-------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The accounting records of
the Fund are maintained in U.S. dollars. Prices of
securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of
exchange. Amounts related to the purchase and sale of
securities and investment income are translated at the
rates of exchange prevailing on the respective dates of
such transactions.
The effect of changes in foreign currency
exchange rates on investments is separately identified
from the fluctuations arising from changes in market
values of securities held and reported with all other
foreign currency gains and losses in the Fund's results
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.
----------------------------------------------------------
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 June 30, 1995, the
Fund had available for federal income tax purposes an
unused capital loss carryover of approximately
$9,647,000, $6,394,000 of which will expire in
2000, and $3,253,000 in 2001.
----------------------------------------------------------
TRUSTEES' FEES AND EXPENSES. The Fund has adopted a
nonfunded retirement plan for the Fund's independent
trustees. Benefits are based on years of service
and fees paid to each trustee during the years of
service. During the year ended June 30, 1995, the Fund's
projected benefit obligations were reduced by
$11,186, and a payment of $1,182 was made to a retired
trustee, resulting in an accumulated liability of
$58,291 at June 30, 1995.
----------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and
distributions to shareholders are recorded on the
ex-dividend date.
14 Oppenheimer Gold & Special Minerals Fund
<PAGE>
----------------------------------------------------------
----------------------------------------------------------
==========================================================
======================
1. SIGNIFICANT CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net
ACCOUNTING investment income (loss) and net realized gain (loss)
POLICIES may differ for financial statement and tax purposes
(CONTINUED) primarily because of the recognition of certain foreign
currency gains (losses) as ordinary income (loss) for
tax purposes. The character of the distributions made
during the year from net investment income or net
realized gains may differ from their ultimate
characterization for federal income tax purposes. Also,
due to timing of dividend distributions, the fiscal
year in which amounts are distributed may differ from
the year that the income or realized gain (loss) was
recorded by the Fund.
During the year ended June 30, 1995, the
Fund changed the classification of distributions to
shareholders to better disclose the differences
between financial statement amounts and distributions
determined in accordance with income tax regulations.
Accordingly, during the year ended June 30, 1995,
amounts have been reclassified to reflect a decrease
in undistributed net investment income of $73,728,
and a decrease in accumulated net realized loss on
investments of $73,728.
----------------------------------------------------------
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 or upon receipt of ex-dividend
notice in the case of certain foreign dividends. 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.
==========================================================
======================
2. SHARES OF The Fund has authorized an unlimited number of no par
BENEFICIAL value shares of beneficial interest. Transactions in
INTEREST shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1995 YEAR ENDED JUNE 30, 1994
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sold 17,062,570 $227,723,637 16,319,300 $ 218,789,343
Dividends reinvested 60,139 779,406 48,817 596,985
Redeemed (17,857,834) (237,540,158) (15,798,058) (211,357,773)
----------- ------------- ----------- -------------
Net increase (decrease) (735,125) $ (9,037,115) 570,059 $ 8,028,555
----------- ------------- ----------- ------------
----------- ------------- ----------- ------------
</TABLE>
==========================================================
======================
3. UNREALIZED GAINS At June 30, 1995, net unrealized appreciation on
AND LOSSES ON investments of $26,111,456 was composed of gross
INVESTMENTS appreciation of $36,081,332, and gross depreciation
of $9,969,876.
==========================================================
======================
4. MANAGEMENT FEES Management fees paid to the Manager were in accordance
AND OTHER with the investment advisory agreement with the Fund
TRANSACTIONS which provides for a fee of .75% on the first $200
WITH AFFILIATES million of average annual net assets, .72% on the next
$200 million, .69% on the next $200 million, .66% on the
next $200 million and .60% on net assets in excess of
$800 million. The Manager has agreed to reimburse the
Fund if aggregate expenses (with specified exceptions)
exceed the most stringent state regulatory limit on Fund
expenses.
For the year ended June 30, 1995, commissions
(sales charges paid by investors) on sales of Fund
shares totaled $842,093, of which $202,059 was
retained by Oppenheimer Funds Distributor, Inc. (OFDI),
a subsidiary of the Manager, as general distributor,
and by an affiliated broker/dealer.
Oppenheimer Shareholder Services (OSS), a
division of the Manager, is the transfer and shareholder
servicing agent for the Fund, and for other registered
investment companies. OSS's total costs of providing
such services are allocated ratably to these companies.
Under an approved service plan, the Fund
reimburses OFDI for costs incurred in distributing shares
of the Fund, including amounts paid to brokers, dealers,
banks and other financial institutions. Reimbursements
are not to exceed .25% annually of the net asset value of
Fund shares sold subsequent to March 31, 1991. During the
year ended June 30, 1995, OFDI paid $7,038 to an
affiliated broker/dealer as reimbursement for
distribution-related expenses.
15 Oppenheimer Gold & Special Minerals Fund
<PAGE>
----------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
----------------------------------------------------------
==========================================================
======================
5. RESTRICTED At June 30, 1995, investments in securities included
SECURITIES issues that are illiquid or restricted. The securities
are often purchased in private placement transactions,
are not registered under the Securities Act of 1933,
may have contractual restrictions on resale, and are
valued under methods approved by the Board of Trustees
as reflecting fair value. The Fund intends to invest no
more than 10% of its net assets (determined at the
time of purchase) in illiquid and restricted securities.
The aggregate value of these securities subject to this
limitation at June 30, 1995 was $3,150,435 which
represents 1.8% of the Fund's net assets. Information
concerning these securities is as follows:
<TABLE>
<CAPTION>
VALUATION PER
UNIT AS OF
SECURITY ACQUISITION DATE COST PER UNIT JUNE 30, 1995
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Canarc Resources Corp. 6/6/94 $2.15 $1.53
---------------------------------------------------------------------------------------------------------
TVX Gold, Inc. 6/28/93--10/20/93 $4.10 $7.04
</TABLE>
Pursuant to guidelines adopted by the Board of Trustees,
certain unregistered securities are determined to be
liquid and are not included within the 10% limitation
specified above. See note 2 to the Statement of
Investments.
<PAGE>
Appendix
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
<PAGE>
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
<PAGE>
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048
Transfer and Shareholder Servicing Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
<PAGE>
