Registration No. 2-82590
File No. 811-3694
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. ___ / /
POST-EFFECTIVE AMENDMENT NO. 25 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 24 /X/
OPPENHEIMER GOLD & SPECIAL MINERALS FUND
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(Exact Name of Registrant as Specified in Charter)
Two World Trade Center New York, New York 10048-0203
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(Address of Principal Executive Offices)
(212) 323-0200
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(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check
appropriate box):
/ / immediately upon filing pursuant to paragraph (b)
/X/ on October 18, 1996, pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(i)
/ / on _______, pursuant to paragraph (a)(i)
/ / 75 days after filing pursuant to paragraph (a)(ii)
/ / on ---------- pursuant to paragraph (a)(ii)
of Rule (485)
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The Registrant has registered an indefinite number of shares under
the Securities Act of 1933 pursuant to Rule 24f-2 promulgated under
the Investment Company Act of 1940. A Rule 24f-2 Notice for the
Registrant's fiscal year ended June 30, 1996, was filed on August
23, 1996. <PAGE>
<PAGE>
FORM N-1A
OPPENHEIMER GOLD & SPECIAL MINERALS FUND
Cross Reference Sheet
Part A of
Form N-1A
Item No. Prospectus Heading
1 Front Cover Page
2 Expenses; Overview of the Fund
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; Investment Objective and Policies;
Investment Restrictions; How the Fund is Managed--
Organization and History
5 How the Fund is Managed; Expenses; Back Cover
5A Performance of the Fund
6 How the Fund is Managed--Organization and History; The
Transfer Agent; Dividends, Capital Gains and Taxes
7 How to Buy Shares; How to Exchange Shares; Special
Investor Services; Service Plan for Class A Shares;
Distribution and Service Plan for Class B Shares;
Distribution and Service Plan for Class C Shares; How
to Sell Shares; Shareholder Account Rules and Policies
8 How to Sell Shares; Special Investor Services
9 *
Part B of
Form N-1A
Item No. Heading in Statement of Additional Information
10 Cover Page
11 Cover Page
12 *
13 Investment Objective and Policies; Other Investment
Techniques and Strategies; Additional Investment
Restrictions
14 How the Fund is Managed - Trustees and Officers of the
Fund;
15 How the Fund is Managed - Major Shareholders
16 How the Fund is Managed; Distribution and Service
Plans
17 Brokerage Policies of the Fund
18 Additional Information - About the Fund
19 Your Investment Account-How to Buy Shares; How to Sell
Shares; How to Exchange Shares
20 Dividends, Capital Gains and Taxes
21 How the Fund is Managed; Brokerage Policies of the
Fund
22 Performance of the Fund
23 Financial Statements
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* Not applicable or negative answer.
<PAGE>
OPPENHEIMER GOLD & SPECIAL MINERALS FUND
Supplement Dated October 18, 1996
To the Prospectus dated October 18, 1996
The Prospectus is amended as follows:
1. The parenthetical in footnote 2 following the table in the
section captioned "Shareholder Transaction Expenses" on page 4 is
revised to read as follows: "($500,000 or more for purchases by
"Retirement Plans," as defined in "Class A Contingent Deferred
Sales Charge" on page 27)."
2. The first and second sentences in the sub-section captioned
"Class A Shares" in "How to Buy Shares-Classes of Shares" on page
23 are revised to read as follows:
If you buy Class A shares, you may pay an initial sales charge
on investments up to $1 million (up to $500,000 for purchases by
"Retirement Plans," as defined in "Class A Contingent Deferred
Sales Charge" on page 26). If you purchase Class A shares as
part of an investment of at least $1 million ($500,000 for
Retirement Plans) in shares of one or more Oppenheimer funds,
you will not pay an initial sales charge, but if you sell any of
those shares within 18 months of buying them, you may pay a
contingent deferred sales charge.
4. The first and second paragraphs in the section captioned
"Class A Contingent Deferred Sales Charge" on page 27 are revised
to read as follows:
There is no initial sales charge on purchases of Class A
shares of any one or more of the Oppenheimer funds in the
following cases:
Purchases aggregating $1 million or more.
Purchases by a retirement plan qualified under sections
401(a) or 401(k) of the Internal Revenue Code, by a non-
qualified deferred compensation plan (not including Section 457
plans), employee benefit plan, group retirement plan (see "How
to Buy Shares - Retirement Plans" in the Statement of Additional
Information for further details), an employee's 403(b)(7)
custodial plan account, SEP IRA, SARSEP, or SIMPLE plan (all of
these plans are collectively referred to as "Retirement Plans");
that: (1) buys shares costing $500,000 or more or (2) has, at
the time of purchase, 100 or more eligible participants, or (3)
certifies that it projects to have annual plan purchases of
$200,000 or more.
Purchases by an OppenheimerFunds Rollover IRA if the
purchases are made (1) through a broker, dealer, bank or
registered investment adviser that has made special arrangements
with the Distributor for these purchases, or (2) by a direct
rollover of a distribution from a qualified retirement plan if
the administrator of that plan has made special arrangements
with the Distributor for those purchases.
The Distributor pays dealers of record commissions on those
purchases in an amount equal to (i) 1.0% for non-Retirement Plan
accounts, and (ii) for Retirement Plan accounts, 1.0% of the
first $2.5 million, plus 0.50% of the next $2.5 million, plus
0.25% of purchases over $5 million. That commission will be
paid only on those purchases that were not previously subject to
a front-end sales charge and dealer commission. No sales
commission will be paid to the dealer, broker or financial
institution on sales of Class A shares purchased with the
redemption proceeds of shares of a mutual fund offered as an
investment option in a Retirement Plan in which Oppenheimer
funds are also offered as investment options under a special
arrangement with the Distributor if the purchase occurs more
than 30 days after the addition of the Oppenheimer funds as an
investment option to the Retirement Plan.
4. Effective January 1, 1997, the second sentence in the section
captioned "Special Arrangements with Dealers" on page 28 is
deleted.
5. The seventh subparagraph under the section captioned "Waivers
of Class A Sales Charges - Waivers of Initial and Contingent
Deferred Sales Charges for Certain Purchasers" on page 29 is
deleted and replaced with the following subparagraph:
(1) investment advisors and financial planners who charge an
advisory, consulting or other fee for their services and buy
shares for their own accounts or the accounts of their clients,
(2) Retirement Plans and deferred compensation plans and trusts
used to fund those Plans (including, for example, plans
qualified or created under sections 401(a), 403(b) or 457 of the
Internal Revenue Code), and "rabbi trusts" that buy shares for
their own accounts, in each case if those purchases are made
through a broker or agent or other financial intermediary that
has made special arrangements with the Distributor for those
purchases; and (3) clients of such investment advisors or
financial planners who buy shares for their own accounts may
also purchase shares without sales charge but only if their
accounts are linked to a master account of their investment
advisor or financial planner on the books and records of the
broker, agent or financial intermediary with which the
Distributor has made such special arrangements (each of these
investors may be charged a fee by the broker, agent or financial
intermediary for purchasing shares).
6. The section captioned "Waivers of Class A Sales Charges -
Waivers of the Class A Contingent Deferred Sales Charge for Certain
Redemptions" on page 30 is revised to read as follows:
The Class A contingent deferred sales charge is also waived if
shares that would otherwise be subject to the contingent
deferred sales charge are redeemed in the following cases:
to make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the original account value;
involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see "Shareholder
Account Rules and Policies," below);
if, at the time a purchase order is placed for Class A
shares that would otherwise be subject to the Class A contingent
deferred sales charge, the dealer agrees in writing to accept
the dealer's portion of the commission payable on the sale in
installments of 1/18th of the commission per month ( and no
further commission will be payable if the shares are redeemed
within 18 months of purchase);
for distributions from a TRAC-2000 401(k) plan sponsored by
the Distributor due to the termination of the TRAC-2000 program.
for distributions from Retirement Plans, deferred
compensation plans or other employee benefit plans for any of
the following purposes: (1) following the death or disability
(as defined in the Internal Revenue Code) of the participant or
beneficiary (the death or disability must occur after the
participant's account was established); (2) to return excess
contributions; (3) to return contributions made due to a mistake
of fact; (4) hardship withdrawals, as defined in the plan; (5)
under a Qualified Domestic Relations Order, as defined in the
Internal Revenue Code; (6) to meet the minimum distribution
requirements of the Internal Revenue Code; (7) to establish
"substantially equal periodic payments" as described in Section
72(t) of the Internal Revenue Code; (8) for retirement
distributions or loans to participants or beneficiaries; (9)
separation from service; (10) participant-directed redemptions
to purchase shares of a mutual fund (other than a fund managed
by the Manager or its subsidiary) offered as an investment
option in a Retirement Plan in which Oppenheimer funds are also
offered as investment options under a special arrangement with
the Distributor; or (11) plan termination or "in-service
distributions", if the redemption proceeds are rolled over
directly to an OppenheimerFunds IRA.
October 18, 1996 PS0410.006
<PAGE>
OPPENHEIMER
Gold & Special Minerals Fund
Prospectus dated October 18, 1996
Oppenheimer Gold & Special Minerals 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 October 18, 1996 Statement of
Additional Information. For a free copy, call OppenheimerFunds
Services, the Fund's Transfer Agent, at 1-800-525-7048, or write to
the Transfer Agent at the address on the back cover. The Statement
of Additional Information has been filed with the Securities and
Exchange Commission and is incorporated into this Prospectus by
reference (which means that it is legally part of this Prospectus).
[OppenheimerFunds logo]
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>
<PAGE>
Contents
ABOUT THE FUND
Expenses
A Brief Overview of the Fund
Financial Highlights
Investment Objective and Policies
Investment Risks
Investment Techniques and Strategies
How the Fund is Managed
Performance of the Fund
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Appendix A: Special Sales Charge Arrangements
<PAGE>
<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 values 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, 1996.
Shareholder Transaction Expenses are charges you pay when
you buy or sell shares of the Fund. Please refer to "About Your
Account" starting on page __ for an explanation of how and when
these charges apply.
Class A Class B Class C
Shares Shares Shares
- ----------------------------------------------------------------
Maximum Sales Charge on
Purchases(as a % of
offering price) 5.75% None None
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Sales Charge on
Reinvested Dividends None None None
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Deferred Sales Charge None(1) 5% in the first 1% if shares
(as a % of the lower of year, declining are redeemed
of the original purchase to 1% in the within 12
price or redemption sixth year months of
proceeds) and eliminated purchase(2)
thereafter(2)
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Exchange Fee None None None
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Redemption Fee None(3) None(3) None(3)
(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 - Buying Class A Shares," below.
(2) See "How to Buy Shares - Buying Class B Shares" and "How to Buy
Shares - Buying Class C Shares" below, for more information on the
contingent deferred sales charge.
(3) There is a $10 transaction fee for redemptions paid by Federal
Funds wire, but not for redemptions paid by 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, OppenheimerFunds, Inc. (which is referred to in this
Prospectus as the "Manager"). The rates of the Manager's fees are
set forth in "How the Fund is Managed," below. The Fund has other
regular expenses for services, such as transfer agent fees,
custodial fees paid to the bank that holds its portfolio
securities, audit fees and legal expenses. Those expenses are
detailed in the Fund's Financial Statements in the Statement of
Additional Information.
Annual Fund Operating Expenses (as a Percentage of Average Net
Assets):
Class A Class B Class C
Shares Shares Shares
- --------------------------------------------------------------
Management Fees 0.75% 0.75% 0.75%
- --------------------------------------------------------------
12b-1 Plan Fees 0.20% 1.00% 1.00%
- --------------------------------------------------------------
Other Expenses 0.43% 0.47% 0.44%
- --------------------------------------------------------------
Total Fund Operating Expenses 1.38% 2.22% 2.19%
The numbers for Class A shares in the chart above are based
upon the Fund's expenses in its last fiscal year ended June 30,
1996. Class B and Class C shares were not publicly offered prior
to November 1, 1995. Therefore, Annual Fund Operating Expenses
shown for Class B and Class C shares are based on the period from
November 1, 1995 until June 30, 1996. All amounts are shown above
as a percentage of the average net assets of each class of the
Fund's shares for the year ended June 30, 1996, and have been
annualized for Class B and Class C shares. The actual expenses for
each class of shares in future years may be more or less than the
numbers in the chart, depending on a number of factors, including
the actual amount of the Fund's assets represented by each class of
shares. The "12b-1 Plan Fees" for Class A shares are the 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 Class A shares sold before April
1, 1991, and 0.25% for assets representing Class A shares sold on
or after that date. For Class B and Class C shares, the 12b-1 Plan
fees are the service fees (the maximum service fee is 0.25% of
average annual net assets of that class) and the asset-based sales
charge of 0.75%.
Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples
shown below. Assume that you make a $1,000 investment in each class
of shares of the Fund, and that the Fund's annual return is 5%, and
that its operating expenses for each class are the ones shown in
the Annual Fund Operating Expenses table above. If you were to
redeem your shares at the end of each period shown below, your
investment would incur the following expenses by the end of 1, 3,
5 and 10 years:
1 year 3 years 5 years 10 years*
- ------------------------------------------------------------
Class A Shares $71 $99 $129 $214
- ------------------------------------------------------------
Class B Shares $73 $99 $139 $215
- ------------------------------------------------------------
Class C Shares $32 $69 $117 $252
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 $99 $129 $214
- ------------------------------------------------------------
Class B Shares $23 $69 $119 $215
- ------------------------------------------------------------
Class C Shares $22 $69 $117 $252
*The Class B expenses in years 7 through 10 are based on the
Class A expenses shown above, because the Fund automatically
converts your Class B shares into Class A shares after 6 years.
Because of the effect of the asset-based sales charge and the
contingent deferred sales charge imposed on Class B and Class C
shares, long-term holders of Class B and Class C shares could pay
the economic equivalent of more than the maximum front-end sales
charge allowed under applicable regulations. For Class B
shareholders, the automatic conversion of Class B shares to Class
A shares is designed to minimize the likelihood that this will
occur. Please refer to "How to Buy Shares - Buying Class B Shares"
for more information.
These examples show the effect of expenses on an investment,
but are not meant to state or predict actual or expected costs or
investment returns of the Fund, all of which may be more or less
than those shown.
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized
below, with references to the section of this Prospectus where more
complete information can be found. You should carefully read the
entire Prospectus before making a decision about investing in the
Fund. Keep the Prospectus for reference after you invest,
particularly for information about your account, such as how to
sell or exchange shares.
What 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 __.
Who Manages the Fund? The Fund's investment adviser (the
"Manager") is OppenheimerFunds, Inc. Prior to January 6, 1996, the
Manager was known as Oppenheimer Management Corporation. The
Manager (including a subsidiary) manages investment company
portfolios having over $50 billion in assets at June 30, 1996. The
Manager is paid an advisory fee by the Fund, based on its net
assets. The Fund has a portfolio manager, Diane Sobin, who is
employed by the Manager and is primarily responsible for the
selection of the Fund's securities. The Fund's Board of Trustees,
elected by shareholders, oversees the investment adviser and the
portfolio manager. Please refer to "How the Fund is Managed,"
starting on page __ 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 investors. The Fund's investments in stocks are subject
to changes in their value from a number of factors such as changes
in general stock and bond market movements. A change in value of
particular stocks may result from 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 Risks" starting on page __ for a more complete
discussion of the Fund's investment risks.
How Can I Buy Shares? You can buy shares through your
dealer or financial institution, or you can purchase shares
directly through the Distributor by completing an Application or by
using an Automatic Investment Plan under AccountLink. Please refer
to "How to Buy Shares" on page __ for more details.
Will I Pay a Sales Charge to Buy Shares? The Fund has
three classes of shares. Each class of shares has the same
investment portfolio, but different expenses. Class A shares are
offered with a front-end sales charge, starting at 5.75%, and
reduced for larger purchases. Class B shares and Class C shares
are offered without a front-end sales charge, but may be subject to
a contingent deferred sales charge if redeemed within 6 years or 12
months, respectively, of purchase. There is also an annual asset-
based sales charge on Class B and Class C shares. Please review
"How to Buy Shares" starting on page __ for more details, including
a discussion about factors you and your financial advisor should
consider in determining which class may be appropriate for you.
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
__. The Fund also offers exchange privileges to other Oppenheimer
funds, described in "How to Exchange Shares" on page __.
How Has the Fund Performed? The Fund measures its
performance by quoting its average annual total returns and
cumulative total returns, which measure historical performance.
Those returns can be compared to the returns (over similar periods)
of other funds. Of course, other funds may have different
objectives, investments, and levels of risk. The Fund's
performance can also be compared to a broad market index, which we
have done on page __. Please remember that past performance does
not guarantee future results.
Financial Highlights
The table on the following pages presents selected financial
information about the Fund, including per share data and expense
ratios and other data based on the Fund's average net assets. This
information has been audited by KPMG Peat Marwick LLP, the Fund's
independent auditors, whose report on the Fund's financial
statements for the fiscal year ended June 30, 1996, is included in
the Statement of Additional Information. Class B shares and Class
C shares were only offered during a portion of the fiscal year
ended June 30, 1996, commencing on November 1, 1995.
<PAGE>
<TABLE>
<CAPTION>
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Financial Highlights
Class A
--------------------------------------------------------------------------
Year Ended June 30,
1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $13.48 $13.28 $12.32 $10.68
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .04 .06 .06 .06
Net realized and unrealized gain
(loss) .69 .21 .96 1.72
- -----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations .73 .27 1.02 1.78
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.06) (.07) (.06) (.14)
Distributions from net realized gain on
investments -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.06) (.07) (.06) (.14)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.15 $13.48 $13.28 $12.32
============================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value(2) 5.44% 2.03% 8.25% 17.15%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $161,769 $171,721 $179,015 $158,982
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $171,427 $178,579 $175,093 $124,869
- ------------------------------------------------------------------------------------------------------------------------------------
Average amount of debt outstanding
throughout each period (in thousands)(3) $-- $-- $-- $--
- ------------------------------------------------------------------------------------------------------------------------------------
Average number of shares outstanding
throughout each period (in thousands)(4) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Average amount of debt per share
outstanding throughout each period $-- $-- $-- $--
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 0.25% 0.45% 0.50% 0.61%
Expenses 1.38% 1.36% 1.31% 1.38%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 37.6% 35.8% 29.5% 23.9%
Average brokerage commission rate(7) $0.0211 $0.0204 -- --
<PAGE>
[Table Restubbed]
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
1992 1991 1990 1989
- -----------------------------------------------------------------------------------------------------------------------------------
Per Share Operating Data:
Net asset value, beginning of period $10.36 $11.65 $12.58 $12.82
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .16 .17 .14 .23
Net realized and unrealized gain
(loss) .35 (1.42) .54 .50
- -----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations .51 (1.25) .68 .73
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.19) (.04) (.27) (.18)
Distributions from net realized gain on
investments -- -- (1.34) (.79)
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.19) (.04) (1.61) (.97)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.68 $10.36 $11.65 $12.58
==============================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value(2) 5.08% (10.71)% 3.10% 6.43%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $133,345 $150,907 $163,118 $120,198
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $137,906 $154,318 $154,079 $110,873
- -----------------------------------------------------------------------------------------------------------------------------------
Average amount of debt outstanding
throughout each period (in thousands)(3) $-- $-- $-- $--
- -----------------------------------------------------------------------------------------------------------------------------------
Average number of shares outstanding
throughout each period (in thousands)(4) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Average amount of debt per share
outstanding throughout each period $-- $-- $-- $--
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 1.25% 1.67% 1.17% 1.97%
Expenses 1.38% 1.43% 1.37% 1.22%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 39.4% 113.3% 82.3% 111.7%
Average brokerage commission rate(7) -- -- -- --
<PAGE>
[Table Restubbed]
--------------------------------------------------------------------------
Class B Class C
--------------------------------------- --------------- ------------
Period Ended Period Ended
June 30, June 30,
1988 1987 1996(1) 1996(1)
- -----------------------------------------------------------------------------------------------------------------------------------
Per Share Operating Data:
Net asset value, beginning of period $12.10 $6.43 $12.33 $12.33
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .26 .15 (.01) (.01)
Net realized and unrealized gain
(loss) 3.39 5.66 1.79 1.81
- -----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations 3.65 5.81 1.78 1.80
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.36) (.14) -- --
Distributions from net realized gain on
investments (2.57) -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (2.93) (.14) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.82 $12.10 $14.11 $14.13
==============================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value(2) 33.24% 92.35% 14.25% 14.41%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $107,264 $76,532 $4,882 $1,390
- -----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $90,672 $49,947 $2,588 $840
- -----------------------------------------------------------------------------------------------------------------------------------
Average amount of debt outstanding
throughout each period (in thousands)(3) $-- $79 $-- $--
- -----------------------------------------------------------------------------------------------------------------------------------
Average number of shares outstanding
throughout each period (in thousands)(4) -- 5,253 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Average amount of debt per share
outstanding throughout each period $-- $.02 $-- $--
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 2.38% 2.10% (0.25)%(5) (0.26)%(5)
Expenses 1.22% 1.41% 2.22%(5) 2.19%(5)
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 175.8% 191.7% 37.6% 37.6%
Average brokerage commission rate(7) -- -- $0.0211 $0.0211
</TABLE>
<TABLE>
<CAPTION>
<S><C>
1. For the period from November 1, 1995 (inception of offering) to June 30, 1996.
2. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period (or inception of
offering), with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods of less than one full year.
3. Based upon daily outstanding borrowing.
4. Based upon month-end balances.
5. Annualized.
6. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of
portfolio securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year
or less are excluded from the calculation. Purchases and sales of investment securities (excluding short-term securities) for the
period ended June 30, 1996 were $60,652,556 and $77,616,914, respectively.
7. Total brokerage commissions paid on applicable purchases and sales of portfolio securities for the period divided by the total
number of related shares purchased and sold.
</TABLE>
Investment Objective and Policies
Objective. The Fund seeks capital appreciation for shareholders.
The Fund does not 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 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 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.
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.
Investment Risks
All investments carry risks to some degree, whether they are
risks that market prices of the investment will fluctuate (this is
known as "market risk") or that the underlying issuer will
experience financial difficulties and may default on its
obligations under a fixed-income investment to pay interest and
repay principal (this is referred to as "credit risk"). These
general investment risks, and the special risks of certain types of
investments that the Fund may hold are described below. They
affect the value of the Fund's investments, its investment
performance, and the prices of its shares. These risks
collectively form the risk profile of the Fund.
Because of the types of securities the Fund invests in and the
investment techniques the Fund uses, the Fund is designed for
investors who are investing for the long term. It is not intended
for investors seeking assured income or preservation of capital.
While the Manager tries to reduce risks by diversifying
investments, by carefully researching securities before they are
purchased, and in some cases by using hedging techniques, changes
in overall market prices can occur at any time, and because the
income earned on securities is subject to change, there is no
assurance that the Fund will achieve its investment objective.
When you redeem your shares, they may be worth more or less than
what you paid for them.
Stock Investment Risks. Because the Fund invests a
substantial portion of its assets in stocks, the value of the
Fund's portfolio will be affected by changes in the stock markets.
At times, the stock markets can be volatile, and stock prices can
change substantially. This market risk will affect the Fund's net
asset values per share, which will fluctuate as the values of the
Fund's portfolio securities change. Not all stock prices change
uniformly or at the same time, not all stock markets move in the
same direction at the same time and other factors can affect a
particular stock's price (for example poor earnings reports by an
issuer, loss of major customers, major litigation against an issuer
and changes in government regulations affecting an industry). Not
all of these factors can be predicted. Changes in the overall
market prices can occur at any time. The Fund attempts to limit
market risks by diversifying its investments, that is, by not
holding a substantial amount of the stock of any one company, and
by not investing too great a percentage of the Fund's assets in any
one company.
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, for example, the mining and metal
industries, 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 that segment. 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 Have Special Risks. While foreign
securities offer special investment opportunities, there are also
special risks. The change in value of a foreign currency against
the U.S. dollar will result in a change in the U.S. dollar value of
securities denominated in that foreign currency. Foreign issuers
are not subject to the same accounting and disclosure requirements
that U.S. companies are subject to. The value of foreign
investments may be affected by exchange control regulations,
expropriation or nationalization of a company's assets, foreign
taxes, delays in settlement of transactions, changes in
governmental economic or monetary policy in the U.S. or abroad, or
other political and economic factors. More information about the
risks and potential rewards of investing in foreign securities is
contained 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. 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.
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. These risks and
the hedging strategies the Fund may use are described in greater
detail in the Statement of Additional Information.
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 detailed
information about these practices, including limitations on their
use that may help to reduce some of the risks.
Foreign Securities. Because generally 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.
Investments in securities of issuers in underdeveloped countries
generally involve more risk and may be considered highly
speculative. There is no limit on the amount of the Fund's assets
that may be invested in foreign securities.
ADRs, EDRs and GDRs. ADRs are receipts issued by a U.S.
bank or trust company which evidence ownership of underlying
securities of foreign companies. ADRs are traded on domestic
exchanges or in the U.S. over-the-counter market and generally are
in registered form. If ADRs are bought through banks that do not
have a contractual relationship with the foreign issuer of the
security underlying the ADR to issue and service the ADR, there is
a risk that the Fund will not learn of corporate actions affecting
the issuer in a timely manner. EDRs and GDRs are receipts
evidencing an arrangement with a non-U.S. bank similar to that for
ADRs and are designed for use in non-U.S. securities markets. EDRs
and GDRs are not necessarily quoted in the same currency as the
underlying security.
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.
Warrants and Rights. Warrants are options to purchase stock
at set prices that are valid for a limited period of time. Rights
are similar to warrants but normally have a short duration and are
distributed by the issuer to its shareholders. The Fund may invest
up to 5% of its total assets in warrants and rights. That 5% does
not apply to warrants or rights 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 total assets may be invested in
warrants and rights 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.
Convertible Securities. Convertible securities are bonds,
preferred stocks and other securities that normally pay a fixed
rate of interest or dividend and give the owner the option to
convert the security into common stock. While the value of
convertible securities depends in part on interest rate changes and
the credit quality of the issuer, the price will also change based
on the price of the underlying stock. While convertible securities
generally have less potential for gain than common stock, their
income provides a cushion against the stock price's declines. They
generally pay less income than non-convertible bonds. The Manager
generally analyzes these investments from the perspective of the
growth potential of the underlying stock and treats them as "equity
substitutes."
Preferred Stock. The Fund may invest in preferred stock.
Generally, preferred stock is an equity security that has a
specified dividend and ranks after bonds and before common stocks
in its claim on income for dividend payments and on assets should
the issuing company be liquidated. While most preferred stocks pay
a dividend, the Fund may purchase preferred stock where the issuer
has omitted, or is in danger of omitting, payment of its dividend.
Such investments would be made primarily for their capital
appreciation potential. Certain preferred stock may be convertible
into or exchangeable for a given number of common shares. Such
preferred stock tends to be more volatile than nonconvertible
preferred stock, which behaves more like a fixed-income security.
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,
even after including the operations of any predecessors.
Securities of these companies may have limited liquidity (which
means that the Fund may have difficulty selling them at an
acceptable price when it wants to) and the prices of these
securities may be volatile. The Fund currently intends to invest no
more than 5% of its net assets in securities of small, unseasoned
issuers.
Illiquid and Restricted Securities. Under the policies and
procedures established by the Fund's Board of Trustees, the Manager
determines the liquidity of certain of the Fund's investments.
Investments may be illiquid because of the absence of an active
trading market, making it difficult to value them or dispose of
them promptly at an acceptable price. A restricted security is one
that has a contractual restriction on its resale or which cannot be
sold publicly until it is registered under the Securities Act of
1933. The Fund will not invest more than 10% of its net assets in
illiquid or restricted securities. The Fund's percentage
limitation on these investments does not apply to certain
restricted securities that are eligible for resale to qualified
institutional purchasers. See "Illiquid and Restricted Securities"
in the Statement of Additional Information.
Loans of Portfolio Investments. To raise cash for liquidity
purposes, the Fund may lend its portfolio investments to brokers,
dealers and other types of 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 portfolio
securities 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. They 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.
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." While the Fund currently does not engage extensively
in hedging, the fund may use these instruments for hedging purposes
and, in the case of covered calls, non-hedging purposes as
described below.
The Fund may write covered call options and 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 and writing covered calls,
hedge the Fund's portfolio against price fluctuations. Other
hedging strategies, such as buying futures, tend to increase the
Fund's exposure to the securities market.
Forward contracts may be used to try to manage foreign
currency risks on the Fund's foreign investments. Foreign currency
options may be 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 that
relate to broadly-based securities 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 or sell 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. Writing a
put requires segregation of liquid assets to cover the put. The
Fund will not write a put if it will require more than 25% of the
Fund's total assets to be segregated to cover the put obligation.
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 the
Fund owns and segregates liquid assets to satisfy its obligation if
the call is exercised. After the Fund writes a call, not more than
25% of the Fund's total assets may be subject to calls. 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
(NASDAQ) of the Nasdaq Stock Market, Inc.
The Fund may buy or sell foreign currency puts and calls only
if they are traded on a securities or commodities exchange or over-
the-counter market, or are quoted by recognized dealers in those
options.
Forward Contracts. Forward contracts are foreign currency
exchange contracts. They are used to buy or sell foreign currency
for future delivery at a fixed price. The Fund uses them to try to
"lock in" the U.S. dollar price of a security denominated in a
foreign currency that the Fund has bought or sold, or to protect
against possible losses from changes in the relative values of the
U.S. dollar and foreign currency. The Fund may also use "cross-
hedging" where the Fund hedges against changes in currencies other
than the currency in which a security it holds is denominated.
Derivative Investments. In general, a "derivative
investment" is a specially designed investment. Its performance is
linked to the performance of another investment or security.
Examples of derivative investments in which the Fund may invest
include index-linked notes (principal or interest payments on the
note depend on performance of a market index) or equity-linked debt
securities (at maturity, principal is payable in an amount based on
the issuer's common stock price at maturity). In the broadest
sense, exchange-traded options and futures contracts (discussed in
"Hedging," above) may be considered "derivative investments."
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 the 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.
Other Investment Restrictions. The Fund has other investment
restrictions which are fundamental policies. Under these funda
mental policies, the Fund cannot do any of the following:
The Fund cannot invest in Metal Investments if, as a result,
more than 10% of the Fund's total assets would be invested in Metal
Investments.
The Fund cannot 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).
The Fund cannot acquire more than 10% of the outstanding
voting securities of any one issuer.
The Fund cannot 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).
The Fund cannot 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)).
The Fund cannot 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 organized in 1983 as a
Maryland corporation but was reorganized in 1985 as a Massachusetts
business trust. The Fund is an open-end management investment
company.
The Fund is governed by a Board of Trustees, which is
responsible for protecting the interests of shareholders under
Massachusetts law. The Trustees meet periodically throughout the
year to oversee the Fund's activities, review its performance, and
review the actions of the Manager. "Trustees and Officers of the
Fund" in the Statement of Additional Information names the Trustees
and provides more information about them and the officers of the
Fund. Although the Fund will not normally hold annual meetings of
its shareholders, it may hold shareholder meetings from time to
time on important matters, and shareholders have the right to call
a meeting to remove a Trustee or to take other action described in
the Fund's Declaration of Trust.
The Board of Trustees has the power, without shareholder
approval, to divide unissued shares of the Fund into two or more
classes. The Board has done so, and the Fund currently has three
classes of shares, Class A, Class B and Class C. All classes
invest in the same investment portfolio. Each class has its own
dividends and distributions and pays certain expenses which may be
different for the different classes. Each class may have a
different net asset value. Each share has one vote at shareholder
meetings, with fractional shares voting proportionally on matters
submitted to the vote of shareholders. Shares of each class may
have separate voting rights on matters in which interests of one
class are different from interests of another class, and shares of
a particular class vote as a class on matters that affect that
class alone. Shares are freely transferrable.
The Manager and Its Affiliates. The Fund is managed by the
Manager, OppenheimerFunds Inc., which is responsible for selecting
the Fund's investments and handling its day-to-day business. The
Manager carries out its duties, subject to the policies established
by the Board of 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 $50 billion as of June 30, 1996, and with more than 3 million
shareholder accounts. The Manager is owned by Oppenheimer
Acquisition Corp., a holding company that is owned in part by
senior officers of the Manager and controlled by Massachusetts
Mutual Life Insurance Company.
Portfolio Manager. The Portfolio Manager of the Fund is
Diane Sobin. She is a Vice President of the Manager and, as of
December 4, 1995, is the person principally responsible for the
day-to-day management of the Fund's portfolio. Prior to joining
the Manager in 1995, Ms. Sobin was a Vice President and Senior
Portfolio Manager at Dean Witter InterCapital Inc.
Fees and Expenses. Under the Investment Advisory Agreement,
the Fund pays the Manager a monthly fee at the following annual
rates, 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 net assets in excess of $800
million. The Fund's management fee for its last fiscal year was
0.75% of average annual net assets of Class A shares, and 0.75% of
the average annual net assets (annualized) of Class B shares and
Class C shares. This rate may be higher than the rate paid by some
other mutual funds.
The Fund pays expenses related to its daily operations, such
as custodian fees, Trustees' fees, transfer agency fees, legal and
auditing costs. Those expenses are paid out of the Fund's assets
and are not paid directly by shareholders. However, those expenses
reduce the net asset value of shares, and therefore are indirectly
borne by shareholders through their investment. More information
about the Investment Advisory Agreement and the other expenses paid
by the Fund is contained in the Statement of Additional
Information.
There is also information about the Fund's brokerage policies
and practices in "Brokerage Policies of the Fund" in the Statement
of Additional Information. That section discusses how brokers and
dealers are selected for the Fund's portfolio transactions. When
deciding which brokers to use, the Manager is permitted by the
Investment Advisory Agreement to consider whether brokers have sold
shares of the Fund or any other funds for which the Manager serves
as investment adviser.
The Distributor. The Fund's shares are sold through
dealers, brokers and other financial institutions that have a sales
agreement with OppenheimerFunds Distributor, Inc., a subsidiary of
the Manager that acts as the Fund's Distributor. The Distributor
also distributes the shares of other "Oppenheimer funds" managed by
the Manager and is sub-distributor for funds managed by a
subsidiary of the Manager.
The Transfer Agent. The Fund's Transfer Agent is
OppenheimerFunds Services, a division of the Manager, which acts as
the shareholder servicing agent for the Fund on an "at-cost" basis.
It also acts as the shareholder servicing agent for the other
Oppenheimer funds. Shareholders should direct inquiries about
their 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 term
"total return" to illustrate its performance. The performance of
each class of shares is shown separately, because the performance
of each class of shares will usually be different as a result of
the different kinds of expenses each class bears. These returns
measure the performance of a hypothetical account in 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
data may be useful to help you see how well your investment has
done over time and to compare it to 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. More detailed
information about how total returns are calculated is contained in
the Statement of Additional Information, which also contains
information about other ways to measure and compare the Fund's
performance. The Fund's investment performance will vary over time,
depending on market conditions, the composition of the portfolio,
expenses and which class of shares you purchase.
Total Returns. There are different types of "total returns"
used to measure the Fund's performance. Total return is the change
in value of a hypothetical investment in the Fund over a given
period, assuming that all dividends and capital gains distributions
are reinvested in additional shares. The cumulative total return
measures the change in value over the entire period (for example,
ten years). An average annual total return shows the average rate
of return for each year in a period that would produce the
cumulative total return over the entire period. However, average
annual total returns do not show the Fund's actual year-by-year
performance.
When total returns are quoted for Class A shares, normally the
current maximum initial sales charge has been deducted. When total
returns are shown for Class B and Class C shares, normally the
contingent deferred sales charge that applies to the period for
which total return is shown has been deducted. However, total
returns may also be quoted "at net asset value," without
considering the effect of either the front-end or the appropriate
contingent deferred sales charge, as applicable, and those returns
would be less if sales charges were deducted. 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 past fiscal year ended June
30, 1996, followed by a graphical comparison of the Fund's
performance to an appropriate broad-based market index.
Management's Discussion of Performance. The Fund's
performance during its past fiscal year was positively affected by
relatively expansive global economic growth that raised concerns
about inflation. Inflation concerns tend to increase the demand
for gold. Increased demand for gold jewelry also served to
increase gold prices. The Fund also benefited from its focus on
investments in securities of companies that were lower-cost mineral
producers having rising production capacities. The Fund's other
metal investments performed well, due to increased demand for these
metals as a result of relatively strong economies in the U.S. and
abroad.
Comparing the Fund's Performance to the Market. The graphs
below show the performance of a hypothetical $10,000 investment in
Class A, Class B and Class C shares of the Fund at June 30, 1996.
In the case of Class A shares, performance is measured over a ten-
year period. In the case of Class B and Class C shares,
performance is measured from inception of the class on November 1,
1995. The Fund's performance reflects the deduction of the 5.75%
current maximum initial sales charge on Class A shares, the
applicable contingent deferred sales charge on Class B and Class C
shares, and reinvestment of all dividends and capital gains
distributions.
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. The Fund's investments are
concentrated in one group of industries while the Morgan Stanley
World 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.
Class A Shares
Comparison of Change in Value of
$10,000 Hypothetical Investments in:
Oppenheimer Gold & Special Minerals Fund (Class A)
and Morgan Stanley World Index
[Graph]
Average Annual Total Returns of Class A
Shares of the Fund at 6/30/96(1)
1-Year 5-Year 10-Year
-0.62% 6.20% 12.99%
Class B Shares
Comparison of Change in Value of
$10,000 Hypothetical Investments in:
Oppenheimer Gold & Special Minerals Fund Class B)
and Morgan Stanley World Index
[Graph]
Cumulative Total Return of Class B Shares
of the Fund at 6/30/96(2)
Life
9.25%
Class C Shares
Comparison of Change in Value of
$10,000 Hypothetical Investments in:
Oppenheimer Gold & Special Minerals Fund (Class C)
and Morgan Stanley World Index
[Graph]
Cumulative Total Return of Class C Shares
of the Fund at 6/30/96(3)
Life(3)
13.41%
Total returns and the ending account values in the graphs reflect
reinvestment of all dividends and capital gains distributions.
1The inception date of the Fund (Class A shares) was 7/19/83.
Class A returns are shown net of the applicable 5.75% maximum
initial sales charge.
2Class B shares of the Fund were first publicly offered on 11/1/95.
The cumulative total return and the ending account value in the
graph are shown net of the applicable 5% contingent deferred sales
charge for the period.
3Class C shares of the Fund were first publicly offered on 11/1/95.
The cumulative total return and the ending account value in the
graph are shown net of the applicable 1% contingent deferred sales
charge for the period.
Graphs are not drawn to same scale.
Past performance is not predictive of future performance.
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 charge rates are described in "Buying
Class A Shares" below.
Class B Shares. If you buy Class B shares, you pay no sales
charge at the time of purchase, but if you sell your shares within
six years of buying them, you will normally pay a contingent
deferred sales charge. That sales charge varies depending on how
long you own your shares as described in "Buying Class B Shares"
below.
Class C Shares. If you buy Class C shares, you pay no sales
charge at the time of purchase, but if you sell your shares within
12 months of buying them, you will normally pay a contingent
deferred sales charge of 1% as discussed in "Buying Class C Shares"
below.
Which Class of Shares Should You Choose? Once you decide that
the Fund is an appropriate investment for you, the decision as to
which class of shares is better suited to your needs depends on a
number of factors which you should discuss with your financial
advisor. The Fund's operating costs that apply to a class of
shares and the effect of the different types of sales charges on
your investment will vary your investment results over time. The
most important factors to consider are how much you plan to invest
and how long you plan to hold your investment. If your goals and
objectives change over time and you plan to purchase additional
shares, you should re-evaluate those factors to see if you should
consider another class of shares.
In the following discussion, to help provide you and your
financial advisor with a framework in which to choose a class, we
have made some assumptions using a hypothetical investment in the
Fund. We used the sales charge rates that apply to each class,
considering the effect of the annual asset-based sales charge on
Class B and Class C expenses (which, like all expenses, will affect
your investment return). For the sake of comparison, we have
assumed that there is a 10% rate of appreciation in the investment
each year. Of course, the actual performance of your investment
cannot be predicted and will vary, based on the Fund's actual
investment returns and the operating expenses borne by each class
of shares, and which class of shares you invest in. The factors
discussed below are not intended to be investment advice or
recommendations, because each investor's financial considerations
are different. The discussion below of the factors to consider in
purchasing a particular class of shares assumes that you will
purchase only one class of shares and not a combination of shares
of different classes.
How Long Do You Expect to Hold Your Investment? While
future financial needs cannot be predicted with certainty, knowing
how long you expect to hold your investment will assist you in
selecting the appropriate class of shares. Because of the effect of
class-based expenses, your choice will also depend on how much you
plan to invest. For example, the reduced sales charges available
for larger purchases of Class A shares may, over time, offset the
effect of paying an initial sales charge on your investment (which
reduces the amount of your investment dollars used to buy shares
for your account), compared to the effect over time of higher
class-based expenses on Class B or Class C shares for which no
initial sales charge is paid.
Investing for the Short Term. If you have a short-term
investment horizon (that is, you plan to hold your shares for not
more than six years), you should probably consider purchasing Class
A or Class C shares rather than Class B shares, because of the
effect of the Class B contingent deferred sales charge if you
redeem in less than 7 years, as well as the effect of the Class B
asset-based sales charge on the investment return for that class in
the short-term. Class C shares might be the appropriate choice
(especially for investments of less than $100,000), because there
is no initial sales charge on Class C shares, and the contingent
deferred sales charge does not apply to amounts you sell after
holding them one year.
However, if you plan to invest more than $100,000 for the
shorter term, then the more you invest and the more your investment
horizon increases toward six years, Class C shares might not be as
advantageous as Class A shares. That is because the annual asset-
based sales charge on Class C shares will have a greater impact on
your account over the longer term than the reduced front-end sales
charge available for larger purchases of Class A shares. For
example, Class A shares might be more advantageous than Class C (as
well as Class B) shares for investments of more than $100,000
expected to be held for 5 or 6 years (or more). For investments
over $250,000 expected to be held 4 to 6 years (or more), Class A
shares may become more advantageous than Class C (and Class B)
shares. If investing $500,000 or more, Class A shares may be more
advantageous as your investment horizon approaches 3 years or more.
And for investors who invest $1 million or more, in most cases
Class A shares will be the most advantageous choice, no matter how
long you intend to hold your shares. For that reason, the
Distributor normally will not accept purchase orders of $500,000 or
more of Class B shares or $1 million or more of Class C shares,
from a single investor.
Investing for the Longer Term. If you are investing for the
longer term, for example, for retirement, and do not expect to need
access to your money for seven years or more, Class B shares may be
an appropriate consideration, if you plan to invest less than
$100,000. If you plan to invest more than $100,000 over the long
term, Class A shares will likely be more advantageous than Class B
shares or Class C shares, as discussed above, because of the effect
of the expected lower expenses for Class A shares and the reduced
initial sales charges available for larger investments in Class A
shares under the Fund's Right of Accumulation.
Of course, these examples are based on approximations of the
effect of current sales charges and expenses on a hypothetical
investment over time, using the assumed annual performance returns
stated above, and therefore, you should analyze your options
carefully.
Are There Differences in Account Features That Matter to
You? Because some account features may not be available to Class
B or Class C shareholders, or other features (such as Automatic
Withdrawal Plans) might not be advisable (because of the effect of
the contingent deferred sales charge) for Class B or Class C
shareholders, you should carefully review how you plan to use your
investment account before deciding which class of shares 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 of shares than for selling
another class. It is important that investors understand that the
purpose of the Class B and Class C contingent deferred sales charge
and asset-based sales charges are the same as the purpose of the
front-end sales charge on sales of Class A shares: that is, to
compensate the Distributor for commissions it pays to dealers and
financial institutions for selling shares.
How Much Must You Invest? You can open a Fund account with a
minimum initial investment of $1,000 and make additional
investments at any time with as little as $25. There are reduced
minimum investments under special investment plans.
With Asset Builder Plans, Automatic Exchange Plans,
403(b)(7) custodial plans and military allotment plans, you can
make initial and subsequent investments of as little as $25; and
subsequent purchases of at least $25 can be made by telephone
through AccountLink.
Under pension ,profit-sharing and 401(k) plans and
Individual Retirement Accounts (IRAs), you can make an initial
investment of as little as $250 (if your IRA is established under
an Asset Builder Plan, the $25 minimum applies), and subsequent
investments may be as little as $25.
There is no minimum investment requirement if you are buying
shares by reinvesting dividends from the Fund or other Oppenheimer
funds (a list of them appears in the Statement of Additional
Information, or you can ask your dealer or call the Transfer
Agent), or by reinvesting distributions from unit investment trusts
that have made arrangements with the Distributor.
How Are Shares Purchased? You can buy shares several ways --
through any dealer, broker or financial institution that has a
sales agreement with the Distributor, directly through the
Distributor or automatically from your bank account through an
Asset Builder Plan under the OppenheimerFunds AccountLink service.
The Distributor may appoint certain servicing agents as the
Distributor's agent to accept purchase and redemption orders. When
you buy shares, be sure to specify Class A, Class B or Class C
shares. If you do not choose, your investment will be made in
Class A shares.
Buying Shares Through Your Dealer. Your dealer will place
your order with the Distributor on your behalf.
Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "OppenheimerFunds Distributor, Inc." Mail it to P.O.
Box 5270, Denver, Colorado 80217. If you don't list a dealer on
the application, the Distributor will act as your agent in buying
the shares. However, it is recommended that you discuss your
investment first with a financial advisor, to be sure it is
appropriate for you.
Buying Shares Through OppenheimerFunds AccountLink. You can
use AccountLink to link your Fund account with an account at a U.S.
bank or other financial institution that is an Automated Clearing
House (ACH) member. You can then transmit funds electronically to
purchase shares, to have the Transfer Agent send redemption
proceeds, or to transmit dividends and distributions.
Shares are purchased for your account on AccountLink on the
regular business day the Distributor is instructed by you to
initiate the ACH transfer to buy shares. You can provide those
instructions automatically, under an Asset Builder Plan, described
below, or by telephone instructions using OppenheimerFunds
PhoneLink, also described below. You should request AccountLink
privileges on the application or dealer settlement instructions
used to establish your account. Please refer to "AccountLink" below
for more details.
Asset Builder Plans. You may purchase shares of the Fund
(and up to four other Oppenheimer funds) automatically each month
from your account at a bank or other financial institution under an
Asset Builder Plan with AccountLink. Details are on the Application
and in the Statement of Additional Information.
At What Price Are Shares Sold? Shares are sold at the
public offering price based on the net asset value (and any initial
sales charge that applies) that is next determined after the
Distributor receives the purchase order in Denver, Colorado. In
most cases, to enable you to receive that day's offering price, the
Distributor or its designated agent must receive your order by the
time of day The New York Stock Exchange closes, which is normally
4:00 P.M., New York time, but may be earlier on some days (all
references to time in this Prospectus mean "New York time"). The
net asset value of each class of shares is determined as of that
time on each day The New York Stock Exchange is open (which is a
"regular business day").
If you buy shares through a dealer, the dealer must receive
your order by the close of The New York Stock Exchange on a regular
business day and transmit it to the Distributor so that it is
received before the Distributor's close of business that day, which
is normally 5:00 P.M. The Distributor may reject any purchase order
for the Fund's shares, in its sole discretion.
cial Sales Charge Arrangements for Certain Persons. Appendix A
to this Prospectus sets forth conditions for the waiver of , or
exemption from, sales charges or the special sales charge rates
that apply to purchases of shares of the Fund (including purchases
by exchange) by a person who was a shareholder of one of the Former
Quest for Value Funds (as defined in the Appendix).
ing Class A Shares. Class A shares are sold at their offering
price, which is normally net asset value plus an initial sales
charge. However, in some cases, described below, purchases are not
subject to an initial sales charge, and the offering price will be
the net asset value. In some cases, reduced sales charges may be
available, as described below. Out of the amount you invest, the
Fund receives the net asset value to invest for your account. The
sales charge varies depending on the amount of your purchase. A
portion of the sales charge may be retained by the Distributor and
allocated to your dealer as commission. The current sales charges
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
of Offering of Amount of Offering
Amount of 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 reallow the entire commission
to dealers. If that occurs, the dealer may be considered an
"underwriter" under Federal securities laws.
Class A Contingent Deferred Sales Charge. There is no
initial sales charge on purchases of Class A shares of any one or
more of the Oppenheimer funds in the following cases:
purchases aggregating $1 million or more; or
purchases by an OppenheimerFunds prototype 401(k) plan that:
(1) buys shares costing $500,000 or more, or (2) has, at the time
of purchase, 100 or more eligible participants, or (3) certifies
that it projects to have annual plan purchases of $200,000 or more.
The Distributor pays dealers of record commissions on those
purchases in an amount equal to the sum of 1.0% of the first $2.5
million, plus 0.50% of the next $2.5 million, plus 0.25% of
purchases over $5 million. That commission will be paid only on the
amount of those purchases in excess of $1 million ($500,000, for
purchases by OppenheimerFunds prototype 401(k) plans) that were not
previously subject to a front-end sales charge and dealer commi
n.
If you redeem any of those shares within 18 months of the end
of the calendar month of their purchase, a contingent deferred
sales charge (called the "Class A contingent deferred sales
charge") may be deducted from the redemption proceeds. That sales
charge may be equal to 1.0% of 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 contingent deferred sales charge will
apply.
Special Arrangements With Dealers. The Distributor may
advance up to 13 months' commissions to dealers that have
established special arrangements with the Distributor for Asset
Builder Plans for their clients. Dealers whose sales of Class A
shares of Oppenheimer funds (other than money market funds) under
OppenheimerFunds-sponsored 403(b)(7) custodial plans exceed $5
million per year (calculated per quarter), will receive monthly
one-half of the Distributor's retained commissions on those sales,
and if those sales exceed $10 million per year, those dealers will
receive the Distributor's entire retained commission on those
sales.
Reduced Sales Charges for Class A Share Purchases. You may be
eligible to buy Class A shares at reduced sales charge rates in one
or more of the following ways:
Right of Accumulation. To qualify for the lower sales
charge rates that apply to larger purchases of Class A shares, you
and your spouse can add together Class A and Class B shares you
purchase for your individual accounts, or jointly, or for trust or
custodial accounts on behalf of your children who are minors. A
fiduciary can count all shares purchased for a trust, estate or
other fiduciary account (including one or more employee benefit
plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class
A and Class B shares of the Fund and other Oppenheimer funds to
reduce the sales charge rate that applies to current purchases of
Class A shares. You can also include Class A and Class B shares of
Oppenheimer funds you previously purchased subject to an initial or
contingent deferred sales charge to reduce the sales charge rate
for current purchases of Class A shares, provided that you still
hold your investment in one of the Oppenheimer funds. The value of
those shares will be based on the greater of the amount you paid
for the shares or their current value (at offering price). The
Oppenheimer funds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from
the Distributor. The reduced sales charge will apply only to
current purchases and must be requested when you buy your shares.
Letter of Intent. Under a Letter of Intent, if you purchase
Class A shares or Class A and Class B shares of the Fund and other
Oppenheimer funds during a 13-month period, you can reduce the
sales charge rate that applies to your purchases of Class A shares.
The total amount of the intended purchases of both Class A and
Class B shares will determine your reduced sales charge rate for
the Class A shares purchased during that period. This can include
purchases made up to 90 days before the date of the Letter. More
information is contained in the Application and in "Reduced Sales
Charges" in the Statement of Additional Information.
Waivers of Class A Sales Charges. The Class A sales charges
are not imposed in the circumstances described below. There is an
explanation of this policy in "Reduced Sales Charges" in the
Statement of Additional Information.
Waivers of Initial and Contingent Deferred Sales Charges for
Certain Purchasers. Class A shares purchased by the following
investors are not subject to any Class A sales charges:
the Manager or its affiliates;
present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced
Sales Charges" in the Statement of Additional Information) of the
Fund, the Manager and its affiliates, and retirement plans
established by them for their employees;
registered management investment companies, or separate
accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose;
dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
employees and registered representatives (and their spouses)
of dealers or brokers described above or financial institutions
that have entered into sales arrangements with such dealers or
brokers (and are identified to the Distributor) or with the
Distributor; the purchaser must certify to the Distributor at the
time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor
children);
dealers, brokers, banks or registered investment advisers
that have entered into an agreement with the Distributor providing
specifically for the use of shares of the Fund in particular
investment products or employee benefit plans made available to
their clients (those clients may be charged a transaction fee by
their dealer, broker or adviser for the purchase or sale of shares
of the Fund);
employee benefit plans purchasing shares through a
shareholder servicing agent which the Distributor has appointed as
its agent to accept those purchase orders;
directors, trustees, officers or full-time employees of
OpCap Advisors or its affiliates, their relatives or any trust,
pension, profit sharing or other benefit plan which beneficially
owns shares for those persons;
accounts for which Oppenheimer Capital is the investment
adviser (the Distributor must be advised of this arrangement) and
persons who are directors or trustees of the company or trust which
is the beneficial owner of such accounts;
any unit investment trust that has entered into an
appropriate agreement with the Distributor;
a TRAC-2000 401(k) plan (sponsored by the former Quest for
Value Advisors) whose Class B or Class C shares of a Former Quest
for Value Fund were exchanged for Class A shares of that Fund due
to the termination of the Class B and C TRAC-2000 program on
November 4, 1995; or
qualified retirement plans that had agreed with the former
Quest for Value Advisors to purchase shares of any of the Former
Quest for Value Funds at net asset value, with such shares to be
held through DCXchange, a sub-transfer agency mutual fund
clearinghouse, provided that such arrangements are consummated and
share purchases commence by December 31, 1996.
Waivers of Initial and Contingent Deferred Sales Charges in
Certain Transactions. Class A shares issued or purchased in the
following transactions are not subject to Class A sales charges:
shares issued in plans of reorganization, such as mergers,
asset acquisitions and exchange offers, to which the Fund is a
party;
shares purchased by the reinvestment of loan repayments by
a participant in a retirement plan for which the Manager or its
affiliates acts as sponsor;
shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds
(other than Oppenheimer Cash Reserves) or unit investment trusts
for which reinvestment arrangements have been made with the
Distributor;
shares purchased and paid for with the proceeds of shares
redeemed in the past 12 months from a mutual fund (other than a
fund managed by the Manager or any of its subsidiaries) on which an
initial sales charge or contingent deferred sales charge was paid
(this waiver also applies to shares purchased by exchange of shares
of Oppenheimer Money Market Fund, Inc. that were purchased and paid
for in this manner); this waiver must be requested when the
purchase order is placed for your shares of the Fund, and the
Distributor may require evidence of your qualification for this
waiver; or
shares purchased with the proceeds of maturing principal of
units of any Qualified Unit Investment Liquid Trust Series.
Waivers of the Class A Contingent Deferred Sales Charge for
Certain Redemptions . The Class A contingent deferred sales charge
does not apply to purchases of Class A shares at net asset value
without sales charge as described in the two sections above. It is
also waived if shares that would otherwise be subject to the
contingent deferred sales charge are redeemed in the following
cases:
for retirement distributions or loans to participants or
beneficiaries from qualified retirement plans, deferred
compensation plans or other employee benefit plans, including
OppenheimerFunds prototype 401(k) plans (these are all referred to
as "Retirement Plans");
to return excess contributions made to Retirement Plans;
to make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the original account value;
involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see "Shareholder Account
Rules and Policies," below);
if, at the time a purchase order is placed for Class A
shares that would otherwise be subject to the Class A contingent
deferred sales charge, the dealer agrees 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 service
providers or their 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.
ing 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. The Class B contingent deferred
sales charge is paid to the Distributor to reimburse its expenses
of providing distribution-related services to the Fund in
connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 6 years, and (3)
shares held the longest during the 6-year period. The contingent
deferred sales charge is not imposed in the circumstances described
in "Waivers of Class B and Class C Sales Charges," below.
The amount of the contingent deferred sales charge will depend
on the number of years since you invested and the dollar amount
being redeemed, according to the following schedule:
Contingent Deferred Sales Charge
Years Since Beginning of Month In on Redemptions in that Year
Which Purchase Order Was Accepted (As % of Amount Subject to Charge)
- --------------------------------- ----------------------------------
0 - 1 5.0%
1 - 2 4.0%
2 - 3 3.0%
3 - 4 3.0%
4 - 5 2.0%
5 - 6 1.0%
6 and following None
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of
the month in which the purchase was made.
Automatic Conversion of Class B Shares. 72 months after you
purchase Class B shares, those shares will automatically convert to
Class A shares. This conversion feature relieves Class B
shareholders at that time 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 distributing Class B shares and
servicing accounts. This Plan is described below under
"Distribution and Service Plans for Class B and Class C Shares".
Waivers of Class B Sales Charges. The Class B contingent
deferred sales charge will not apply to shares purchased in certain
types of transactions, nor will it apply to shares redeemed in
certain circumstances, as described below under "Waivers of Class
B and Class C Sales Charges."
ing 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. The Class C
contingent deferred sales charge is paid to compensate the
Distributor for its expenses of providing distribution-related
services to the Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 12 months, and (3)
shares held the longest during the 12-month period.
Distribution and Service Plans for Class B and Class C
Shares. The Fund has adopted Distribution and Service Plans for
Class B and Class C shares to compensate the Distributor for its
services and costs in distributing Class B and Class C shares and
servicing accounts. Under the Plans, the Fund pays the Distributor
an annual "asset-based sales charge" of 0.75% per year on Class B
shares that are outstanding for 6 years or less and on Class C
shares. The Distributor also receives a service fee of 0.25% per
year under each plan.
Under each Plan, both fees are computed on the average of the
net asset value of shares in the respective class, determined as of
the close of each regular business day during the period. The
asset-based sales charge and service fees increase Class B and
Class C expenses by up to 1.00% of the net assets per year of the
respective class.
The Distributor uses the service fees to compensate dealers
for providing personal services for accounts that hold Class B or
Class C shares. Those services are similar to those provided under
the Class A Service Plan, described above. The Distributor pays
the 0.25% service fees to dealers in advance for the first year
after Class B or Class C shares have been sold by the dealer.
After the shares have been held for a year, the Distributor pays
the service fees to dealers on a quarterly basis.
The asset-based sales charge allows investors to buy Class B
or Class C shares without a front-end sales charge while allowing
the Distributor to compensate dealers that sell those shares. The
Fund pays the asset-based sales charges to the Distributor for its
services rendered in distributing Class B and Class C shares.
Those payments are at a fixed rate that is not related to the
Distributor's expenses. The services rendered by the Distributor
include paying and financing the payment of sales commissions,
service fees and other costs of distributing and selling Class B
and C C shares.
The Distributor currently pays sales commissions of 3.75% of
the purchase price of Class B shares to dealers from its own
resources at the time of sale. Including the advance of the
service fee, the total amount paid by the Distributor to the dealer
at the time of sale of Class B shares is therefore 4.00% of the
purchase price. The Distributor retains the Class B asset-based
sales charge. The Distributor currently pays sales commissions of
0.75% of the purchase price of Class C shares to dealers from its
own resources at the time of sale. Including the advance of the
service fee, the total amount paid by the Distributor to the dealer
at the time of sale of Class C shares is therefore 1.00% of the
purchase price. The Distributor plans to pay the asset-based sales
charge as an ongoing commission to the dealer on Class C shares
that have been outstanding for a year or more.
The Distributor's actual expenses in selling Class B and Class
C shares may be more than the payments it receives from contingent
deferred sales charges collected on redeemed shares and from the
Fund under the Distribution and Service Plans for Class B and Class
C shares. If either Plan is terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of the asset-based
sales charge to the Distributor for distributing shares before the
Plan was terminated. At June 30, 1996, the end of the Class B Plan
year, the Distributor had incurred unreimbursed expenses under the
Plan of $184,746 (equal to 3.78% of the Fund's net assets
represented by Class B shares on that date)which have been carried
over into the present Plan year. At June 30, 1996, the end of the
Class C Plan year, the Distributor had incurred unreimbursed
expenses under the Plan of $29,556 (equal to 2.13% of the Fund's
net assets represented by Class C shares on that date)which have
been carried over into the present Plan year.
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
in "Reduced Sales Charges" in the Statement of Additional
Information.
Waivers for Redemptions of Shares in Certain Cases. The Class
B and Class C contingent deferred sales charges will be waived for
redemptions of shares in the following cases if the Transfer Agent
is notified that these conditions apply to the redemption:
distributions to participants or beneficiaries from
Retirement Plans, if the distributions are made (a) under an
Automatic Withdrawal Plan after the participant reaches age 59-1/2,
as long as the payments are no more than 10% of the account value
annually (measured from the date the Transfer Agent receives the
request), or (b) following the death or disability (as defined in
the Internal Revenue Code) of the participant or beneficiary (the
death or disability must have occurred after the account was
established);
redemptions from accounts other than Retirement Plans
following the death or disability of the last surviving
shareholder, including a trustee of a "grantor" trust or revocable
living trust for which the trustee is also the sole beneficiary(the
death or disability must have occurred after the account was
established and for disability you must provide evidence of a
determination of disability by the Social Security Administration);
returns of excess contributions to Retirement Plans;
distributions from retirement plans to make "substantially
equal periodic payments" as permitted in Section 72(t) of the
Internal Revenue Code that do not exceed 10% of the account value
annually, measured from the date the Transfer Agent receives the
request;
shares redeemed involuntarily, as described in "Shareholder
Account Rules and Policies," below; or
distributions from OppenheimerFunds prototype 401(k) plans
(1) for hardship withdrawals; (2) under a Qualified Domestic
Relations Order, as defined in the Internal Revenue Code; (3) to
meet minimum distribution requirements as defined in the Internal
Revenue Code; (4) to make "substantially equal periodic payments"
as described in Section 72(t) of the Internal Revenue Code; or (5)
for separation from service.
Waivers for Shares Sold or Issued in Certain Transactions.
The contingent deferred sales charge is also waived on Class B and
Class C shares sold or issued in the following cases:
shares sold to the Manager or its affiliates;
shares sold to registered management investment companies or
separate accounts of insurance companies having an agreement with
the Manager or the Distributor for that purpose; or
shares issued in plans of reorganization to which the Fund
is a party.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account
to your account at your bank or other financial institution to
enable you to send money electronically between those accounts to
perform a number of types of account transactions. These include
purchases of shares by telephone (either through a service
representative or by PhoneLink, described below), automatic
investments under Asset Builder Plans, and sending dividends and
distributions or Automatic Withdrawal Plan payments directly to
your bank account. Please refer to the Application for details or
call the Transfer Agent for more information.
AccountLink privileges should be requested on the Application
you use to buy shares, or on your dealer's settlement instructions
if you buy your shares through your dealer. After your account is
established, you can request AccountLink privileges by sending
signature-guaranteed instructions to the Transfer Agent.
AccountLink privileges will apply to each shareholder listed in the
registration on your account as well as to your dealer
representative of record unless and until the Transfer Agent
receives written instructions terminating or changing those
privileges. After you establish AccountLink for your account, any
change of bank account information must be made by signature-
guaranteed instructions to the Transfer Agent signed by all
shareholders who own the account.
Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase
shares in amounts up to $250,000 through a telephone
representative, call the Distributor at 1-800-852-8457. The
purchase payment will be debited from your bank account.
PhoneLink. PhoneLink is the OppenheimerFunds automated
telephone system that enables shareholders to perform a number of
account transactions automatically using a touch-tone phone.
PhoneLink may be used on already-established Fund accounts after
you obtain a Personal Identification Number (PIN), by calling the
special PhoneLink number: 1-800-533-3310.
Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have
established AccountLink privileges to link your bank account with
the Fund, to pay for these purchases.
Exchanging Shares. With the OppenheimerFunds Exchange
Privilege, described below, you can exchange shares automatically
by phone from your Fund account to another Oppenheimer funds
account you have already established by calling the special
PhoneLink number. Please refer to "How to Exchange Shares," below,
for details.
Selling Shares. You can redeem shares by telephone
automatically by calling the PhoneLink number and the Fund will
send the proceeds directly to your AccountLink bank account.
Please refer to "How to Sell Shares," below, for details.
Automatic Withdrawal and Exchange Plans. The Fund has several
plans that enable you to sell shares automatically or exchange them
to another Oppenheimer funds account on a regular basis:
Automatic Withdrawal Plans. If your Fund account is worth
$5,000 or more, you can establish an Automatic Withdrawal Plan to
receive payments of at least $50 on a monthly, quarterly, semi-
annual or annual basis. The checks may be sent to you or sent
automatically to your bank account on AccountLink. You may even set
up certain types of withdrawals of up to $1,500 per month by
telephone. You should consult the Application and Statement of
Additional Information for more details.
Automatic Exchange Plans. You can authorize the Transfer
Agent to exchange automatically 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.
nvestment 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 subject to an initial sales charge and to Class A or
Class B shares on which you paid a contingent deferred sales charge
when you redeemed them. This privilege does not apply to Class C
shares. You must be sure to ask the Distributor for this privilege
when you send your payment. Please consult the Statement of
Additional Information for more details.
Retirement Plans. Fund shares are available as an investment for
your retirement plans. If you participate in a plan sponsored by
your employer, the plan trustee or administrator must make the
purchase of shares for your retirement plan account. The
Distributor offers a number of different retirement plans that can
be used by individuals and employers:
Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
403(b)(7) Custodial Plans for employees of eligible tax-
exempt organizations, such as schools, hospitals and charitable
organizations
SEP-IRAs (Simplified Employee Pension Plans) for small
business owners or people with income from self-employment,
including SAR/SEP-IRAs
Pension and Profit-Sharing Plans for self-employed persons
and other employers
401(k) Prototype Retirement Plans for businesses
Please call the Distributor for the OppenheimerFunds plan
documents, which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account by selling
(redeeming) some or all of your shares on any regular business day.
Your shares will be sold at the next net asset value calculated
after your order is received and accepted by the Transfer Agent.
The Fund offers you a number of ways to sell your shares: in
writing or by telephone. You can also set up Automatic Withdrawal
Plans to redeem shares on a regular basis, as described above. If
you have questions about any of these procedures, and especially if
you are redeeming shares in a special situation, such as due to the
death of the owner, or from a retirement plan, please call the
Transfer Agent first, at 1-800-525-7048, for assistance.
Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must
submit a withholding form with your request to avoid delay. If your
retirement plan account is held for you by your employer, you must
arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the
Statement of Additional Information.
Certain Requests Require a Signature Guarantee. To protect
you and the Fund from fraud, certain redemption requests must be in
writing and must include a signature guarantee in the following
situations (there may be other situations also requiring a
signature guarantee):
You wish to redeem more than $50,000 worth of shares and
receive a check
A redemption check is not payable to all shareholders listed
on the account statement
A redemption check is not sent to the address of record on
your statement
Shares are being transferred to a Fund account with a
different owner or name
Shares are redeemed by someone other than the owners (such
as an Executor)
Where Can I Have My Signature Guaranteed? The Transfer
Agent will accept a guarantee of your signature by a number of
financial institutions, including: a U.S. bank, trust company,
credit union or savings association, or by a foreign bank that has
a U.S. correspondent bank, or by a U.S. registered dealer or broker
in securities, municipal securities or government securities, or by
a U.S. national securities exchange, a registered securities
association or a clearing agency. If you are signing on behalf of
a corporation, partnership or other business, or as a fiduciary,
you must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that
includes:
Your name,
The Fund's name,
Your Fund account number (from your account statement),
The dollar amount or number of shares to be redeemed,
Any special payment instructions,
Any share certificates for the shares you are selling,
The signatures of all registered owners exactly as the
account is registered, and
Any special requirements or documents requested by the
Transfer Agent to assure proper authorization of the person asking
to sell shares.
Use the following address for requests by mail:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
Send courier or Express Mail requests to:
OppenheimerFunds Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of
record may also sell your shares by telephone. To receive the
redemption price on a regular business day, your call must be
received by the Transfer Agent by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M., but may be earlier
on some days. You may not redeem shares held in an
OppenheimerFunds retirement plan or under a share certificate by
telephone.
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 or Wire. There
are no dollar limits on telephone redemption proceeds sent to a
bank account designated when you establish AccountLink. Normally
the ACH transfer to your bank is initiated on the business day
after the redemption. You do not receive dividends on the proceeds
of the shares you redeemed while they are waiting to be
transferred.
Shareholders may also have the Transfer Agent send redemption
proceeds of $2,500 or more by Federal Funds wire to a designated
commercial bank account if the bank is a member of the Federal
Reserve wire system. There is a $10 fee for each Federal Funds
wire. To place a wire redemption request, call the Transfer Agent
at 1-800-852-8457. The wire will normally be transmitted on the
next bank business day after the shares are redeemed. There is a
possibility that the wire may be delayed up to seven days to enable
the Fund to sell securities to pay the redemption proceeds. No
dividends are accrued or paid on the proceeds of shares that have
been redeemed and are awaiting transmittal by wire. To establish
wire redemption privileges on an account that is already
established, please contact the Transfer Agent for instructions.
ling Shares Through Your Dealer. The Distributor has made
arrangements to repurchase Fund shares from dealers and brokers on
behalf of their customers. Brokers or dealers may charge for that
service. Please call your dealer for more information about this
procedure. Please refer to "Special Arrangements For Repurchase of
Shares From Dealers and Brokers" in the Statement of Additional
Information for more details.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain
Oppenheimer funds at net asset value per share at the time of
exchange, without sales charge. To exchange shares, you must meet
several conditions:
Shares of the fund selected for exchange must be available
for sale in your state of residence
The prospectuses of this Fund and the fund whose shares you
want to buy must offer the exchange privilege
You must hold the shares you buy when you establish your
account for at least 7 days before you can exchange them; after the
account is open 7 days, you can exchange shares every regular
business day
You must meet the minimum purchase requirements for the fund
you purchase by exchange
Before exchanging into a fund, you should obtain and read
its prospectus
Shares of a particular class of the Fund may be exchanged only
for shares of the same class in the other Oppenheimer funds. For
example, you can exchange Class A shares of this Fund only for
Class A shares of another fund. At present, Oppenheimer Money
Market Fund, Inc., offers only one class of shares, which are
considered to be Class A shares for this purpose. In some cases,
sales charges may be imposed on exchange transactions. Please
refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.
Exchanges may be requested in writing or by telephone:
Written Exchange Requests. Submit an OppenheimerFunds
Exchange Request form, signed by all owners of the account. Send
it to the Transfer Agent at the addresses listed in "How to Sell
Shares."
Telephone Exchange Requests. Telephone exchange requests may
be made either by calling a service representative at
1-800-852-8457 or by using PhoneLink for automated exchanges, by
calling 1-800-533-3310. Telephone exchanges may be made only
between accounts that are registered with the same name(s) and
address. Shares held under certificates may not be exchanged by
telephone.
You can find a list of Oppenheimer funds currently available
for exchanges in the Statement of Additional Information or obtain
one by calling a service representative at 1-800-525-7048. That
list can change from time to time.
There are certain exchange policies you should be aware of:
Shares are normally redeemed from one fund and purchased
from the other fund in the exchange transaction on the same regular
business day on which the Transfer Agent receives an exchange
request that is in proper form by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M., but may be earlier
on some days. However, either fund may delay the purchase of
shares of the fund you are exchanging into up to 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 the shares of
the other fund, which may result in a capital gain or loss. For
more information about taxes affecting exchanges, please refer to
"How to Exchange Shares" in the Statement of Additional
Information.
If the Transfer Agent cannot exchange all the shares you
request because of a restriction cited above, only the shares
eligible for exchange will be exchanged.
Shareholder Account Rules and Policies
Net Asset Value Per Share is determined for each class of
shares as of the close of The New York Stock Exchange, on each day
the Exchange is open by dividing the value of the Fund's net assets
attributable to a class by the number of shares of that class that
are outstanding. The Fund's Board of Trustees has established
procedures to value the Fund's securities to determine net asset
value. In general, securities values are based on market value.
There are special procedures for valuing illiquid and restricted
securities and obligations for which market values cannot be
readily obtained. These procedures are described more completely
in the Statement of Additional Information.
The offering of shares may be suspended during any period in
which the determination of net asset value is suspended, and the
offering may be suspended by the Board of Trustees at any time the
Board believes it is in the Fund's best interest to do so.
Telephone Transaction Privileges for purchases, redemptions
or exchanges may be modified, suspended or terminated by the Fund
at any time. If an account has more than one owner, the Fund and
the Transfer Agent may rely on the instructions of any one owner.
Telephone privileges apply to each owner of the account and the
dealer representative of record for the account unless and until
the Transfer Agent receives cancellation instructions from an owner
of the account.
The Transfer Agent will record any telephone calls to verify
data concerning transactions and has adopted other procedures to
confirm that telephone instructions are genuine, by requiring
callers to provide tax identification numbers and other account
data or by using PINs, and by confirming such transactions in
writing. If the Transfer Agent does not use reasonable procedures
it may be liable for losses due to unauthorized transactions, but
otherwise neither the Transfer Agent nor the Fund will be liable
for losses or expenses arising out of telephone instructions
reasonably believed to be genuine. If you are unable to reach the
Transfer Agent during periods of unusual market activity, you may
not be able to complete a telephone transaction and should consider
placing your order by mail.
Redemption or transfer requests will not be honored until
the Transfer Agent receives all required documents in proper form.
From time to time, the Transfer Agent in its discretion may waive
certain of the requirements for redemptions stated in this
Prospectus.
Dealers that can perform account transactions for their
clients by participating in NETWORKING through the National
Securities Clearing Corporation are responsible for obtaining their
clients' permission to perform those transactions and are
responsible to their clients who are shareholders of the Fund if
the dealer performs any transaction erroneously or improperly.
The redemption price for shares will vary from day to day
because the values of the securities in the Fund's portfolio
fluctuate, and the redemption price, which is the net asset value
per share, will normally be different for Class A, Class B and
Class C shares. Therefore, the redemption value of your shares may
be more or less than their original cost.
Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the
shareholder under the redemption procedures described above) within
7 days after the Transfer Agent receives redemption instructions in
proper form, except under unusual circumstances determined by the
Securities and Exchange Commission delaying or suspending such
payments. For accounts registered in the name of a broker/dealer,
payment will be forwarded within 3 business days. The Transfer
Agent may delay forwarding a check or processing a payment via
AccountLink for recently purchased shares, but only until the
purchase payment has cleared. That delay may be as much as 10 days
from the date the shares were purchased. That delay may be avoided
if you purchase shares by certified check or arrange with your bank
to provide telephone or written assurance to the Transfer Agent
that your purchase payment has cleared.
Involuntary redemptions of small accounts may be made by the
Fund if the account value has fallen below $500 for reasons other
than the fact that the market value of shares has dropped, and in
some cases involuntary redemptions may be made to repay the
Distributor for losses from the cancellation of share purchase
orders.
Under unusual circumstances, shares of the Fund may be
redeemed "in kind," which means that the redemption proceeds will
be paid with securities from the Fund's portfolio. Please refer to
"How to Sell Shares" in the Statement of Additional Information for
more details.
"Backup Withholding" of Federal income tax may be applied at
the rate of 31% from dividends, distributions and redemption
proceeds (including exchanges) if you fail to furnish the Fund a
certified Social Security or Employer Identification Number when
you sign your application, or if you violate Internal Revenue
Service regulations on tax reporting of income.
The Fund does not charge a redemption fee, but if your
dealer or broker handles your redemption, they may charge a fee.
That fee can be avoided by redeeming your Fund shares directly
through the Transfer Agent. Under the circumstances described in
"How to Buy Shares," you may be subject to a contingent deferred
sales charges when redeeming certain Class A, Class B and Class C
shares.
To avoid sending duplicate copies of materials to
households, the Fund will mail only one copy of each annual and
semi-annual report to shareholders having the same last name and
address on the Fund's records. However, each shareholder may call
the Transfer Agent at 1-800-525-7048 to ask that copies of those
materials be sent personally to that shareholder.
Dividends, Capital Gains and Taxes
idends. 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. Also dividends
paid on Class A shares will generally be higher than for Class B or
Class C shares because expenses allocable to Class B or Class C
shares are expected to be higher. 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 Fund
Account. You can reinvest all distributions in another Oppenheimer
fund account you have established.
es. If your account is not a tax-deferred retirement account,
you should be aware of the following tax implications of investing
in the Fund. The Fund's distributions from long-term capital gains
are taxable to shareholders as long-term capital gains, no matter
how long you held your shares. Dividends paid by the Fund from
short-term capital gains and net investment income, including
certain net realized foreign exchange gains, are taxable as
ordinary income. These dividends and distributions are subject to
Federal income tax and may be subject to state or local taxes.
Your distributions are taxable as described above, whether you
reinvest them in additional shares or take them in cash. Corporate
shareholders may be entitled to the corporate dividends-received
deduction for some portion of the Fund's distributions treated as
ordinary income, subject to applicable limitations under the
Internal Revenue Code. Every year the Fund will send you and the
IRS a statement showing the aggregate amount and character of the
dividends and other distributions you received for 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 A
Special Sales Charge Arrangements for Shareholders of the Fund
Who Were Shareholders of the Former Quest for Value Funds
The initial and contingent sales charge rates and waivers for
Class A, Class B and Class C shares of the Fund described elsewhere
in this Prospectus are modified as described below for those
shareholders of (i) Quest for Value Fund, Inc., Quest for Value
Growth and Income Fund, Quest for Value Opportunity Fund, Quest for
Value Small Capitalization Fund and Quest for Value Global Equity
Fund, Inc. on November 24, 1995, when OppenheimerFunds, Inc. became
the investment adviser to those funds, and (ii) Quest for Value
U.S. Government Income Fund, Quest for Value Investment Quality
Income Fund, Quest for Global Income Fund, Quest for Value New York
Tax-Exempt Fund, Quest for Value National Tax-Exempt Fund and Quest
for Value California Tax-Exempt Fund when those funds merged into
various Oppenheimer funds on November 24, 1995. The funds listed
above are referred to in this Prospectus as the "Former Quest for
Value Funds." The waivers of initial and contingent deferred sales
charges described in this Appendix apply to shares of the Fund (i)
acquired by such shareholder pursuant to an exchange of shares of
one of the Oppenheimer funds that was one of the Former Quest for
Value Funds or (ii) received by such shareholder pursuant to the
merger of any of the Former Quest for Value Funds into an
Oppenheimer fund on November 24, 1995.
Class A Sales Charges
Reduced Class A Initial Sales Charge Rates for Certain Former
Quest Shareholders
Purchases by Groups, Associations and Certain Qualified
Retirement Plans. The following table sets forth the initial sales
charge rates for Class A shares purchased by a "Qualified
Retirement Plan" through a single broker, dealer or financial
institution, or by members of "Associations" formed for any purpose
other than the purchase of securities if that Qualified Retirement
Plan or that Association purchased shares of any of the Former
Quest for Value Funds or received a proposal to purchase such
shares from OCC Distributors prior to November 24, 1995. For this
purpose only, a "Qualified Retirement Plan" includes any 401(k)
plan, 403(b) plan, and SEP/IRA or IRA plan for employees of a
single employer.
Front-End Front-End
Sales Sales Commission
Charge Charge as
Number of as a as a Percentage
Eligible Percentage Percentage of
Employees of Offering of Amount Offering
or Members Price Invested Price
- -------------------------------------------------------------
9 or fewer 2.50% 2.56% 2.00%
- -------------------------------------------------------------
At least 10 but
not more than 49 2.00% 2.04% 1.60%
For purchases by Qualified Retirement Plans and Associations
having 50 or more eligible employees or members, there is no
initial sales charge on purchases of Class A shares, but those
shares are subject to the Class A contingent deferred sales charge
described on pages 27 and 28 of this Prospectus.
Purchases made under this arrangement qualify for the lower of
the sales charge rate in the table based on the number of eligible
employees in a Qualified Retirement Plan or members of an
Association or the sales charge rate that applies under the Rights
of Accumulation described above in the Prospectus. In addition,
purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they
qualified to purchase shares of any of the Former Quest For Value
Funds by virtue of projected contributions or investments of $1
million or more each year. Individuals who qualify under this
arrangement for reduced sales charge rates as members of
Associations, or as eligible employees in Qualified Retirement
Plans also may purchase shares for their individual or custodial
accounts at these reduced sales charge rates, upon request to the
Fund's Distributor.
Special Class A Contingent Deferred Sales Charge Rates
Class A shares of the Fund purchased by exchange of shares of other
Oppenheimer funds that were acquired as a result of the merger of
Former Quest for Value Funds into those Oppenheimer funds, and
which shares were subject to a Class A contingent deferred sales
charge prior to November 24, 1995 will be subject to a contingent
deferred sales charge at the following rates: if they are redeemed
within 18 months of the end of the calendar month in which they
were purchased, at a rate equal to 1.0% if the redemption occurs
within 12 months of their initial purchase and at a rate of 0.50 of
1.0% if the redemption occurs in the subsequent six months. Class
A shares of any of the Former Quest for Value Funds purchased
without an initial sales charge on or before November 22, 1995 will
continue to be subject to the applicable contingent deferred sales
charge in effect as of that date as set forth in the then-current
prospectus for such fund.
Waiver of Class A Sales Charges for Certain Shareholders
Class A shares of the Fund purchased by the following investors are
not subject to any Class A initial or contingent deferred sales
charges:
Shareholders of the Fund who were shareholders of the AMA
Family of Funds on February 28, 1991 and who acquired shares of any
of the Former Quest for Value Funds by merger of a portfolio of the
AMA Family of Funds.
Shareholders of the Fund who acquired shares of any Former
Quest for Value Fund by merger of any of the portfolios of the
Unified Funds.
Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions
The Class A contingent deferred sales charge will not apply to
redemptions of Class A shares of the Fund purchased by the
following investors who were shareholders of any Former Quest for
Value Fund:
Investors who purchased Class A shares from a dealer that is
not or was not permitted to receive a sales load or redemption fee
imposed on a shareholder with whom that dealer has a fiduciary
relationship under the Employee Retirement Income Security Act of
1974 and regulations adopted under that law.
Participants in Qualified Retirement Plans that purchased
shares of any of the Former Quest For Value Funds pursuant to a
special "strategic alliance" with the distributor of those funds.
The Fund's Distributor will pay a commission to the dealer for
purchases of Fund shares as described above in "Class A Contingent
Deferred Sales Charge."
Class A, Class B and Class C Contingent Deferred Sales Charge
Waivers
Waivers for Redemptions of Shares Purchased Prior to March 6,
1995.
In the following cases, the contingent deferred sales charge will
be waived for redemptions of Class A, B or C shares of the Fund
acquired by merger of a Former Quest for Value Fund into the Fund
or by exchange from an Oppenheimer fund that was a Former Quest for
Value Fund or into which such fund merged, if those shares were
purchased prior to March 6, 1995: in connection with
(i) distributions to participants or beneficiaries of plans
qualified under Section 401(a) of the Internal Revenue Code or from
custodial accounts under Section 403(b)(7) of the Code, Individual
Retirement Accounts, deferred compensation plans under Section 457
of the Code, and other employee benefit plans, and returns of
excess contributions made to each type of plan, (ii) withdrawals
under an automatic withdrawal plan holding only either Class B or
C shares if the annual withdrawal does not exceed 10% of the
initial value of the account, and (iii) liquidation of a
shareholder's account if the aggregate net asset value of shares
held in the account is less than the required minimum value of such
accounts.
Waivers for Redemptions of Shares Purchased on or After March 6,
1995 but Prior to November 24, 1995.
In the following cases, the contingent deferred sales charge will
be waived for redemptions of Class A, B or C shares of the Fund
acquired by merger of a Former Quest for Value Fund into the Fund
or by exchange from an Oppenheimer fund that was a Former Quest For
Value Fund or into which such fund merged, if those shares were
purchased on or after March 6, 1995, but prior to November 24,
1995: (1) distributions to participants or beneficiaries from
Individual Retirement Accounts under Section 408(a) of the Internal
Revenue Code or retirement plans under Section 401(a), 401(k),
403(b) and 457 of the Code, if those distributions are made either
(a) to an individual participant as a result of separation from
service or (b) following the death or disability (as defined in the
Code) of the participant or beneficiary; (2) returns of excess
contributions to such retirement plans; (3) redemptions other than
from retirement plans following the death or disability of the
shareholder(s) (as evidenced by a determination of total disability
by the U.S. Social Security Administration); (4) withdrawals under
an automatic withdrawal plan (but only for Class B or C shares)
where the annual withdrawals do not exceed 10% of the initial value
of the account; and (5) liquidation of a shareholder's account if
the aggregate net asset value of shares held in the account is less
than the required minimum account value. A shareholder's account
will be credited with the amount of any contingent deferred sales
charge paid on the redemption of any Class A, B or C shares of the
Fund described in this section if within 90 days after that
redemption, the proceeds are invested in the same Class of shares
in this Fund or another Oppenheimer fund.
Special Dealer Arrangements
Dealers who sold Class B shares of a Former Quest for Value Fund to
Quest for Value prototype 401(k) plans that were maintained on the
TRAC-2000 recordkeeping system and that were transferred to an
OppenheimerFunds prototype 401(k) plan shall be eligible for an
additional one-time payment by the Distributor of 1% of the value
of the plan assets transferred, but that payment may not exceed
$5,000 as to any one plan. Dealers who sold Class C shares of a
Former Quest for Value Fund to Quest for Value prototype 401(k)
plans that were maintained on the TRAC-2000 recordkeeping system
and (i) the shares held by those plans were exchanged for Class A
shares, or (ii) the plan assets were transferred to an
OppenheimerFunds prototype 401(k) plan, shall be eligible for an
additional one-time payment by the Distributor of 1% of the value
of the plan assets transferred, but that payment may not exceed
$5,000.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER 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 each class of shares of the
Fund. For Class A Shares, that graph will cover each of the Fund's
last ten fiscal years from 6/30/86 through 6/30/96 and in the case
of the Fund's Class B and Class C shares the graphs will cover the
period from the inception of the Classes (November 1, 1995) through
June 30, 1996. The graphs 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."
Oppenheimer Morgan
Fiscal Year Gold & Special Stanley
(Period) Ended Minerals Fund A World Index
06/30/86 $ 9,425 $10,000
06/30/87 $18,129 $14,610
06/30/88 $24,154 $14,426
06/30/89 $25,709 $16,108
06/30/90 $26,505 $17,341
06/30/91 $23,667 $16,594
06/30/92 $24,870 $17,395
06/30/93 $29,132 $20,425
06/30/94 $$31,536 $22,625
06/30/95 $32,177 $25,163
06/30/96 $33,929 $29,943
Oppenheimer Morgan
Fiscal Year Gold & Special Stanley
(Period) Ended Minerals Fund B World Index
11/01/95(1) $10,000 $10,000
06/30/96 $10,925 $11,434
Oppenheimer Morgan
Fiscal Year Gold & Special Stanley
(Period) Ended Minerals Fund C World Index
11/01/95(2) $10,000 $10,000
06/30/96 $11,341 $11,434
- ----------------------
(1)Class B shares of the Fund were first publicly offered on
November 1, 1995
(2)Class C shares of the Fund were first publicly offered on
November 1, 1995
<PAGE>
Oppenheimer Gold & Special Minerals Fund
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
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, OppenheimerFunds Inc., OppenheimerFunds Distributor,
Inc. or any affiliate thereof. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any state to any person to whom it is
unlawful to make such an offer in such state.
PRO410.001.1096 Printed on recycled paper
<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 October 18, 1996
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 October 18, 1996. It should be
read together with the Prospectus, which may be obtained by writing
to the Fund's Transfer Agent, OppenheimerFunds Services, at P.O.
Box 5270, Denver, Colorado 80217 or by calling the Transfer Agent
at the toll-free number shown above.
Contents
Page
About the Fund
Investment Objective and Policies. . . . . . . . . . . . . . 2
Investment Policies and Strategies. . . . . . . . . . . 2
Other Investment Techniques and Strategies. . . . . . . 5
Other Investment Restrictions . . . . . . . . . . . . . 17
How the Fund is Managed . . . . . . . . . . . . . . . . . . 18
Organization and History. . . . . . . . . . . . . . . . 18
Trustees and Officers of the Fund . . . . . . . . . . . 19
The Manager and Its Affiliates. . . . . . . . . . . . . 24
Brokerage Policies of the Fund . . . . . . . . . . . . . . . 26
Performance of the Fund. . . . . . . . . . . . . . . . . . . 28
Distribution and Service Plans . . . . . . . . . . . . . . . 30
About Your Account
How To Buy Shares . . . . . . . . . . . . . . . . . . . 32
How To Sell Shares. . . . . . . . . . . . . . . . . . . 39
How To Exchange Shares. . . . . . . . . . . . . . . . . 43
Dividends, Capital Gains and Taxes . . . . . . . . . . . . . 45
Additional Information About the Fund. . . . . . . . . . . . 47
Financial Information About the Fund
Independent Auditors' Report . . . . . . . . . . . . . . . . 49
Financial Statements . . . . . . . . . . . . . . . . . . . . 50
Appendix A: Industry Classifications. . . . . . . . . . . . A-1
<PAGE>
<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, OppenheimerFunds, Inc. (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 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).
Foreign Securities. As noted in the Prospectus, the Fund may
invest in securities (which may be dominated in U.S. dollars or
non-U.S. currencies) issued or guaranteed by foreign corporations,
certain supranational entities (described below) and foreign
governments or their agencies or instrumentalities, and in
securities issued by U.S. corporations denominated in non-U.S.
currencies. All of these are considered to be "foreign
securities." 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
sub-custodians or depositories holding them must be approved by the
Fund's Board of Trustees to the extent that approval is required
under applicable rules of the Securities and Exchange Commission.
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.
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: (1) the
risk of substantial price fluctuations of gold and precious metals;
(2) 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; (3) unpredictable
international monetary policies, economic and political conditions;
(4) possible U.S. governmental regulation of Metal Investments, as
well as foreign regulation of such investments; and (5) 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."
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.
Other Investment Techniques and Strategies
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.
Warrants. Warrants are options to purchase equity securities
at set prices valid for a specified period of time. The prices of
warrants do not necessarily move in a manner parallel to the prices
of the underlying securities. The price the Fund pays for a
warrant will be lost unless the warrant is exercised prior to its
expiration. Rights are similar to warrants, but normally have a
short duration and are distributed directly by the issuer to its
shareholders. Rights and warrants have no voting rights, receive
no dividends and have no rights with respect to the assets of the
issuer.
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.
Illiquid and Restricted Securities. To enable the Fund to
sell restricted securities not registered under the Securities Act
of 1933, the Fund may have to cause those securities to be
registered. The expenses of registration of restricted securities
may be negotiated by the Fund with the issuer at the time such
securities are purchased by the Fund, if such registration is
required before such securities may be sold publicly. When
registration must be arranged because the Fund wishes to sell the
security, a considerable period may elapse between the time the
decision is made to sell the securities and the time the Fund would
be permitted to sell them. The Fund would bear the risks of any
downward price fluctuation during that period. The Fund may also
acquire, through private placements, securities having contractual
restrictions on their resale, which might limit the Fund's ability
to dispose of such securities and might lower the amount realizable
upon the sale of such securities.
The Fund has percentage limitations that apply to purchases of
restricted securities, as stated in the Prospectus. Those
percentage restrictions do not limit purchases of restricted
securities that are eligible for sale to qualified institutional
purchasers pursuant to Rule 144A under the Securities Act of 1933,
provided that those securities have been determined to be liquid by
the Board of 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. In a portfolio securities lending transaction, the
Fund receives from the borrower an amount equal to the interest
paid or the dividends declared on the loaned securities during the
term of the loan as well as the interest on the collateral
securities, less any finders' administrative or other fees the Fund
pays in connection with the loan. 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.
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.
Writing Covered Call. When the Fund writes a call on a
security, it receives a premium and agrees to sell the callable
investment to a purchaser of a corresponding call 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. The Fund retains the risk of loss should the price of the
underlying security decline during the call period, which may be
offset to some by the premium.
To terminate its obligation on a call it has written, the Fund
may purchase a corresponding call in a "closing purchase
transaction." A profit or loss will be realized, depending upon
whether the net of the amount of 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, 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.
Writing Put Options. A put option on an investment gives
the purchaser the right to sell, and the writer the obligation to
buy, the underlying investment at the exercise price during the
option period. Writing a put covered by segregated liquid assets
equal to the exercise price of the put has the same economic effect
to the Fund as writing a covered call. The premium the Fund
receives from writing a put option represents a profit, as long as
the price of the underlying investment remains above the exercise
price. However, the Fund has also assumed the obligation during
the option period to buy the underlying investment from the buyer
of the put at the exercise price, even though the value of the
investment may fall below the exercise price. If the put expires
unexercised, the Fund (as the writer of the put) realizes a gain in
the amount of the premium less transaction costs. If the put is
exercised, the Fund must fulfill its obligation to purchase the
underlying investment at the exercise price, which will usually
exceed the market value of the investment at that time. In that
case, the Fund may incur a loss, equal to the sum of the sale price
of the underlying investment and the premium received minus the sum
of the exercise price and any transaction costs incurred.
When writing put options on securities or on foreign
currencies, to secure its obligation to pay for the underlying
security, the Fund will deposit in escrow liquid assets with a
value equal to or greater than the exercise price of the underlying
securities. The Fund therefore forgoes the opportunity of
investing the segregated assets or writing calls against those
assets. As long as the obligation of the Fund as the put writer
continues, it may be assigned an exercise notice by the broker-
dealer through whom such option was sold, requiring the Fund to
take delivery of the underlying security against payment of the
exercise price. The Fund has no control over when it may be
required to purchase the underlying security, since it may be
assigned an exercise notice at any time prior to the termination of
its obligation as the writer of the put. This obligation
terminates upon expiration of the put, or such earlier time at
which the Fund effects a closing purchase transaction by purchasing
a put of the same series as that previously sold. Once the Fund
has been assigned an exercise notice, it is thereafter not allowed
to effect a closing purchase transaction.
The Fund may effect a closing purchase transaction to realize
a profit on an outstanding put option it has written or to prevent
an underlying security from being put. Furthermore, effecting such
a closing purchase transaction will permit the Fund to write
another put option to the extent that the exercise price thereof is
secured by the deposited assets, or to utilize the proceeds from
the sale of such assets for other investments by the Fund. The
Fund will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the
premium received from writing the option. As above for writing
covered calls, any and all such profits described herein from
writing puts are considered short-term gains for Federal tax
purposes, and when distributed by the Fund, are taxable as ordinary
income.
Purchasing Puts and Calls. When the Fund purchases a call
(other than in a closing purchase transaction), it pays a premium,
and, except as to calls on stock indices or futures, has the right
to buy the underlying investment from a seller of a corresponding
call on the same investment during the call period at a fixed
exercise price. 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
exercise price, transaction costs and the premium paid, and the
call is exercised. If the call is not exercised or sold (whether
or not at a profit), it will become worthless at its expiration
date and the Fund will lose its premium payment and the right to
purchase the underlying investment.
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).
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 Indices and Futures. 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. 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.
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. The Fund
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 covers
the option by maintaining in a segregated account with the Fund's
custodian, liquid assets in an amount not less than the exercise
price of the option.
Forward Contracts. A Forward Contract involves bilateral
obligations of one party to purchase, and another party to sell, a
specific currency at a future date (which may be any fixed number
of days from the date of the contract agreed upon by the parties),
at a price set at the time the contract is entered into. These
contracts are traded in the interbank market conducted directly
between currency traders (usually large commercial banks) and their
customers. The Fund may enter into a Forward Contract to "lock in"
the U.S. dollar price of a security denominated in a foreign
currency which it has purchased or sold but which has not yet
settled, or to protect against a possible loss resulting from an
adverse change in the relationship between the U.S. dollar and a
foreign currency.
The Fund may use Forward Contracts to protect against
uncertainty in the level of future exchange rates. The use of
Forward Contracts does not eliminate fluctuations in the prices of
the underlying securities the Fund owns or intends to acquire, but
it does fix a rate of exchange in advance. In addition, although
Forward Contracts limit the risk of loss due to a decline in the
value of the hedged currencies, at the same time they limit any
potential gain that might result should the value of the currencies
increase.
The Fund may enter into Forward Contracts with respect to
specific transactions. For example, when the Fund enters into a
contract for the purchase of 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. To do so, the Fund enters into a Forward
Contract, for a fixed amount of U.S. dollars per unit of foreign
currency, for the purchase or sale of the amount of foreign
currency involved in the underlying transaction ( transaction
hedge ). The fund will thereby be able to protect itself against
a possible loss resulting from an adverse change in the
relationship between the currency exchange rates during the period
between the date on which the security is purchased or sold, or on
which the payment is declared, and the date on which such payments
are made or received.
The Fund may also use Forward Contracts to lock in the value
of portfolio positions ( position hedges ). In a position hedge,
for example, when the Fund believes that a foreign currency in
which the Fund has security holdings may suffer a substantial
decline against the U.S. dollar, the Fund may enter into a forward
sale contract to sell an amount of that foreign currency for a
fixed U.S. dollar amount. Additionally, 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 U.S. dollar amount.
The Fund may also enter into a forward contract to sell a
foreign currency other than that in which the underlying security
is denominated. This technique is referred to as cross hedging,
and is done when the foreign currency sold through the forward
contract is correlated with the foreign currency or currencies in
which the underlying security positions are denominated. The
foreign currency sold through the forward contract may be sold for
a fixed U.S. dollar amount or for a fixed amount of another
currency correlated with the U.S. dollar.
The Fund may also cross hedge its portfolio positions by
entering into a forward contract to buy or sell a foreign currency
other than the currency in which its underlying securities are
denominated for a fixed amount in U.S. dollars or a fixed amount in
another currency which is correlated with the U.S. dollar. If the
Fund does not own portfolio securities denominated in the currency
on the long side of the cross hedge, the Fund will not be required
to later purchase portfolio securities denominated in that
currency. Instead, the Fund may unwind the cross hedge by
reversing the original transaction, that is, by transacting in a
forward contract that is opposite to the original cross hedge or it
may extend the hedge by "rolling" the hedge forward.
The success of cross hedging is dependent on many factors,
including the ability of the Manager to correctly identify and
monitor the correlation among foreign currencies and between
foreign currencies and the U.S. dollar. To the extent that these
correlations are not identical, the Fund may experience losses or
gains on both the underlying security and the cross currency hedge.
However, the Manager shall determine that any cross hedge is a bona
fide hedge in that it is expected to reduce the volatility of the
Fund s total return.
The Fund s Custodian will identify liquid assets of the Fund
having a value equal to the aggregate amount of the Fund s
commitment under Forward Contracts to cover its short positions.
The Fund will not enter into such Forward Contracts or maintain a
net exposure to such contracts where the consummation of the
contracts would obligate the Fund to deliver an amount of foreign
currency in excess of the value of the Fund s portfolio securities
or other assets denominated in that currency or another currency
that is the subject of the hedge. The Fund, however, in order to
avoid excess transactions and transaction costs, may maintain a net
exposure to Forward Contracts in excess of the value of the Fund s
portfolio securities or other assets denominated in these
currencies provided the excess amount is covered by liquid
securities denominated in any currency, at lest equal at all times
to the amount of such excess. As an alternative, the Fund may
purchase a call option permitting the Fund to purchase the amount
of foreign currency being hedged by a forward sale contract at a
price no higher than the forward contract price or the Fund may
purchase a put option permitting the Fund to sell the amount of
foreign currency subject to a forward purchase contract at a price
as high or higher than the forward contact 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. Such contracts are not traded on
an exchange. Therefore, 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 investors
should be aware of the costs 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.
Additional Information About Hedging Instruments and Their
Use. The Fund's Custodian, or a securities depository acting for
the Custodian, will act as the Fund's escrow agent, through the
facilities of the Options Clearing Corporation ("OCC"), as to the
investments on which the Fund has written options 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. 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.
When the Fund writes an over-the-counter("OTC") option, it
will enter into an arrangement with a primary U.S. Government
securities dealer, which would establish a formula price at which
the Fund would have the absolute right to repurchase that OTC
option. That formula price would generally be based on a multiple
of the premium received for the option, plus the amount by which
the option is exercisable below the market price of the underlying
security (that is, the extent to which the option is "in-the-
money"). When the Fund writes an OTC option, it will treat as
illiquid (for purposes of the limit on its assets that may be
invested in illiquid securities, stated in the Prospectus) the
mark-to-market value of any OTC option held by it. The Securities
and Exchange Commission is evaluating whether OTC options should be
considered liquid securities, and the procedure described above
could be affected by the outcome of that evaluation.
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 total 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). Position limits also apply
to Futures. An exchange may order the liquidation of positions
found to be in violation of those limits and may impose certain
other sanctions. Due to requirements under the Investment Company
Act of 1940 (the "Investment Company Act"), when the Fund purchases
a Stock Index Future, the Fund will maintain, in a segregated
account or accounts with its Custodian, liquid assets of any type,
including equity and debt securities of any grade, in an amount
equal to the market value of the securities underlying such Future,
less the margin deposit applicable to it.
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: (1) 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; (2)
purchasing calls or puts which expire in less than three months;
(3) effecting closing transactions with respect to calls or puts
written or purchased less than three months previously; (4)
exercising puts or calls held by the Fund for less than three
months; or (5) writing calls on investments held less than three
months.
Certain foreign currency exchange contracts (Forward
Contracts) in which the Fund may invest are treated as "Section
1256 contracts." Gains or losses relating to Section 1256
contracts generally are characterized under the Internal Revenue
Code as 60% long-term and 40% short-term capital gains or losses.
However, foreign currency gains or losses arising from certain
Section 1256 contracts (including Forward Contracts) generally are
treated as ordinary income or loss. In addition, Section 1256
contracts held by the Fund at the end of each taxable year are
"marked-to-market" with the result that unrealized gains or losses
are treated as though they were realized. These contracts also may
be marked-to-market for purposes of the excise tax applicable to
investment company distributions and for other purposes under rules
prescribed pursuant to the Internal Revenue Code. An election can
be made by the Fund to exempt these transactions from this marked-
to-market treatment.
Certain Forward Contracts entered into by the Fund may result
in "straddles" for federal income tax purposes. The straddle rules
may affect the timing and the character of gains or losses
recognized by the Fund on straddle positions. Generally, a loss
sustained on the disposition of a position(s) making up a straddle
is allowed only to the extent such loss exceeds any unrecognized
gain in the offsetting positions making up the straddle.
Disallowed loss is generally allowed at the point where there is no
unrecognized gain in the offsetting positions making up the
straddle, or the offsetting position is disposed of.
Under the Internal Revenue Code, generally 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 are treated as ordinary income or ordinary loss.
Similarly, on disposition of debt securities denominated in a
foreign currency and on disposition of foreign currency forward
contracts, gains or losses attributable to fluctuations in the
value of a foreign currency between the date of acquisition of the
security or contract and the date of 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. In addition to
the risks associated with hedging that are discussed in the
Prospectus and above, there is a risk in using short hedging by
selling Stock Index Futures 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.
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.
Other Investment Restrictions
The Fund's most significant investment restrictions are
described in the Prospectus. The following are 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:
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;
invest in real estate or in interests in real estate, but
may purchase readily marketable securities of companies holding
real estate or interests therein;
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;
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;
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;
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;
invest in interests in oil or gas exploration or development
programs; or
invest in companies for the purpose of acquiring control or
management thereof.
Non-Fundamental Investment Restrictions. 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: (1) it will not invest in
oil, gas or other mineral leases; and (2) 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. Ms. Macaskill
is not a director of Oppenheimer Money Market Fund, Inc.
Otherwise, all of the Trustees are also trustees or directors of
Oppenheimer Fund, Oppenheimer Global Fund, Oppenheimer Growth Fund,
Oppenheimer Target Fund, Oppenheimer Discovery Fund, Oppenheimer
Enterprise Fund, Oppenheimer Global Growth & Income Fund,
Oppenheimer Global Emerging Growth Fund, Oppenheimer International
Growth Fund, Oppenheimer Municipal Bond Fund, Oppenheimer New York
Municipal Fund, Oppenheimer California Municipal Fund, Oppenheimer
Money Market Fund, Inc., Oppenheimer Multi-State Municipal Trust,
Oppenheimer Asset Allocation Fund, Oppenheimer U.S. Government
Trust, Oppenheimer Multi-Sector Income Trust and Oppenheimer World
Bond Fund (collectively the "New York-based Oppenheimer funds").
Ms. Macaskill and 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 September 20,
1996, the Trustees and officers of the Fund as a group owned of
record or beneficially less than 1% of the outstanding shares of
each class 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: 71
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).
Robert G. Galli, Trustee*; Age: 63
Vice Chairman of the Manager; formerly he held the following
positions: Vice President and Counsel of Oppenheimer
Acquisition Corp., the Manager's parent holding company;
Executive Vice President and General Counsel and 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.
Benjamin Lipstein, Trustee; Age: 73
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, President and Trustee*; Age: 48
President, CEO and a Director of the Manager; Chairman and a
director of SSI and SFSI President and a director of OAC,
HarbourView and Oppenheimer Partnership Holdings, Inc., a
holding company subsidiary of the Manager; a director of
Oppenheimer Real Asset Management, Inc.; formerly Executive
Vice President of the Manager.
Elizabeth B. Moynihan, Trustee; Age: 67
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: 69
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 President and Chief Executive Officer of The
Conference Board, Inc. (international economic and business
research) and a director of Lumbermens Mutual Casualty
Company, American Motorists Insurance Company and American
Manufacturers Mutual Insurance Company.
Edward V. Regan, Trustee; Age: 66
40 Park Avenue, New York, New York 10016
Chairman of Municipal Assistance Corporation for the City of
New York; Senior Fellows of Jerome Levy Economics Institute,
Bard College; 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: 64
200 Park Avenue, New York, New York 10166
Founder Chairman of Russell Reynolds Associates, Inc.
(executive recruiting); Chairman of Directorship, Inc.
(consulting and publishing); a director of XYAN Inc.
(printing) Professional Staff Limited and American Scientific
Resources, Inc.; a trustee of Mystic Seaport Museum,
International House, Greenwich Hospital and the Greenwich
Historical Society.
Sidney M. Robbins, Trustee; Age: 84
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; Emeritus Founding
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, Vice Chairman and Trustee*; Age: 70
Chairman Emeritus and a director of the Manager; formerly
Chairman of the Manager and the Distributor.
Pauline Trigere, Trustee; Age: 83
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: 65
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), IMC Global Inc.
(chemicals and animal feed) and Texas Instruments, Inc.
(electronics); 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.
Andrew J. Donohue, Secretary; Age: 46
Executive Vice President and General Counsel of the Manager
and the Distributor; President and a director of Centennial;
Executive Vice President General Counsel and a director of
HarbourView, SSI, SFSI and Oppenheimer Partnership Holdings,
Inc.; President and director of Real Asset Management, Inc.;
General Counsel of OAC; Executive Vice President, Chief Legal
Officer and a director of MultiSource Services, Inc. (a
broker-dealer) an officer of other Oppenheimer funds; formerly
Senior Vice President and Associate General Counsel of the
Manager and the Distributor, 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.
Diane Sobin, Vice President and Portfolio Manager; Age:
35
Vice President of the Manager; an officer of other Oppenheimer
funds; formerly a Vice President and Senior Portfolio Manager at
Dean Witter InterCapital, Inc.
George C. Bowen, Treasurer; Age: 60
3410 South Galena Street, Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice
President and Treasurer of the Distributor and HarbourView;
Senior Vice President, Treasurer, Assistant Secretary and a
director of Centennial; Senior Vice President, Treasurer and
Secretary of SSI, Vice President, Treasurer and Secretary of
SFSI; Treasurer of OAC; Vice President and Treasurer of
Oppenheimer Real Asset Management Inc.; Chief Executive
Officer, Treasurer and a director of MultiSource Services,
Inc. (a broker-dealer);an officer of other Oppenheimer funds.
Robert G. Zack, Assistant Secretary; Age: 48
Senior Vice President and Associate General Counsel of the
Manager; Assistant Secretary of SSI and SFSI; an officer of
other Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer; Age: 37
3410 South Galena Street, Denver, Colorado 80231
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 T. Farrar, Assistant Treasurer; Age: 31
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager/Mutual Fund Accounting; an
officer of other Oppenheimer funds; 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.
[FN]
- ------------------
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; Ms. Macaskill and Mr. Spiro are officers) receive no
salary or fee from the Fund. The remaining Trustees of the Fund
(excluding Ms. Macaskill and Messrs. Galli and Spiro) received the
compensation shown below from the Fund, during its fiscal year
ended June 30, 1996 and from all of the New York-based Oppenheimer
funds (including the Fund) for which they served as Trustee or
Director. Compensation is paid for services in the positions below
their names:
Retirement Total
Benefits Compensation
Aggregate Accrued From All
Compensation as Part of New York-based
Name and Position From Fund Fund Expenses Oppenheimer funds1
Leon Levy, Chairman $8,350 $5,878 $141,000.00
and Trustee
Benjamin Lipstein, $5,105 $3,593 $ 86,200.00
Study Committee
Member and Trustee
Elizabeth B. Moynihan, $5,105 $3,593 $ 86,200.00
Study Committee
Member and Trustee
Kenneth A. Randall, $4,643 $3,268 $ 78,400.00
Audit Committee Chairman
and Trustee
Edward V. Regan, $4,074 $2,868 $ 68,800.00
Proxy Committee Chairman,2
Audit Committee
Member and Trustee
Russell S. Reynolds, Jr., $3,085 $2,172 $ 52,100.00
Proxy Committee Member2
and Trustee
Sidney M. Robbins, $7,231 $5,090 $122,100.00
Study Committee Chairman,
Audit Committee Vice-
Chairman and Trustee
Pauline Trigere, $3,085 $2,172 $ 52,100.00
Trustee
Clayton K. Yeutter, $3,085 $2,172 $ 52,100.00
Proxy Committee Member2
and Trustee
____________________
1For the 1995 calendar year (prior to the inception of the Proxy
Committee) during which the New York-based Oppenheimer funds,
listed in the first paragraph of this section, including
Oppenheimer Mortgage Income Fund and Oppenheimer Time Fund (which
ceased operation following the acquisition of their assets by
certain other Oppenheimer funds) but excluding Oppenheimer
International Growth Fund, which had not yet commenced operations.
2Committee position held during a portion of the period shown. The
Study and Audit Committees meet for all of the New York-based
Oppenheimer funds and the fees are allocated among the funds by the
Board.
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. During the fiscal year
ended June 30, 1996 a provisions of $35,980 was made for the Fund's
projected retirement obligations and payments of $2,813 were made
to retired trustees, resulting in an accumulated liability of
$91,440 at June 30, 1996.
Major Shareholders. As of September 20, 1996, no person
owned of record or was known by the Fund to own beneficially 5% or
more of the Fund's outstanding Class A, Class B or Class C shares
except: (i) Merrill Lynch Fenner & Smith Inc., 4800 Deer Lake Drive
East Fl. 3, Jacksonville, Florida 32246-6484 who owned of record
21,921 Class C shares (approximately 18.23% of the Fund's
outstanding Class C shares as of such date), (ii) John I. Weeks
Trust, 3604 E. Fulton Street, Apt 246, Grand Rapids, MI 49546-1398,
who owned of record 10,886.517 Class C shares (approximately 9.05%
of the Fund's outstanding Class C shares as of such date) and (iii)
Donaldson Luftkin Jenrette Securities Corporation, Inc., P.O. Box
2052, Jersey City, NJ 07303-9998 who owned of record 6,497.726
shares (approximately 5.40% of the Fund's outstanding Class C
shares as of such date).
The Manager and Its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled
by Massachusetts Mutual Life Insurance Company. OAC is also owned
in part by certain of the Manager's directors and officers, some of
whom also serve as officers of the Fund, and two of whom (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
Investment Advisory Agreement or by the Distributor under the
General Distributors Agreement are paid by the Fund. The
Investment Advisory Agreement lists examples of expenses paid by
the Fund, the major categories of which relate to interest, taxes,
brokerage commissions, fees to certain Trustees, legal and audit
expenses, custodian and transfer agent expenses, share issuance
costs, certain printing and registration costs and non-recurring
expenses, including litigation costs. For the Fund's fiscal years
ended June 30, 1994, 1995 and 1996, the management fees paid by the
Fund to the Manager were $1,414,294, $1,339,091 and $1,302,108
respectively.
The Investment Advisory Agreement contains no provision
limiting the Fund's expenses. However, independently of the
Investment 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 Investment 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
Investment Advisory 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 Investment
Advisory Agreement. The Investment Advisory Agreement permits the
Manager to act as investment adviser for any other person, firm or
corporation and to use the name "Oppenheimer" in connection with
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, 1994, 1995 and 1996, the aggregate
sales charges on sales of the Fund's Class A shares were
$1,175,491, $842,093 and $632,631, respectively, of which the
Distributor and an affiliated broker-dealer retained in the
aggregate $277,123, $202,059 and $149,888 in those respective
years. During the Fund's fiscal year ended June 30, 1996, the
contingent deferred sales charges on the Fund's Class B shares
totalled $13,383, all of which the Distributor retained. During
the Fund's fiscal year ended June 30, 1996, the contingent deferred
sales charges collected on the Fund's Class C shares totalled
$1,459, all of which the Distributor retained. For additional
information about distribution of the Fund's shares and the
payments made by the Fund to the Distributor in connection with
such activities, please refer to "Distribution and Service Plans,"
below.
The Transfer Agent. OppenheimerFunds Services, the Fund's
Transfer Agent, is responsible for maintaining the Fund's
shareholder registry and shareholder accounting records, and for
shareholder servicing and administrative functions.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of
the duties of the Manager under the Investment 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 Investment 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 Investment 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.
Most purchases of money market instruments and debt
obligations are principal transactions at net prices. For those
transactions, instead of using a broker the Fund normally deals
directly with the selling or purchasing principal or market maker
unless it is determined that a better price or execution can be
obtained by using a broker. Purchases of these securities from
underwriters include a commission or concession paid by the issuer
to the underwriter, and purchases from dealers include a spread
between the bid and asked price. The Fund seeks to obtain prompt
execution of such orders at the most favorable net price.
The research services provided by a particular broker may be
useful only to one or more of the advisory accounts of the Manager
and its affiliates, and investment research received for the
commissions of those other accounts may be useful both to the Fund
and one or more of such other accounts. Such research, which may
be supplied by a third party at the instance of a broker, includes
information and analyses on particular companies and industries as
well as market or economic trends and portfolio strategy, receipt
of market quotations for portfolio evaluations, information
systems, computer hardware and similar products and services. If
a research service also assists the Manager in a non-research
capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to
the Manager in the investment decision-making process may be paid
for in commission dollars. The Board of Trustees has permitted the
Manager to use concessions on fixed price offerings 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 Investment 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, 1994, 1995 and
1996 total brokerage commissions paid by the Fund (not including
spreads or concessions on principal transactions on a net trade
basis) were $568,856, $780,211 and $394,900, respectively. During
the fiscal year ended June 30, 1996, $275,710 was paid to brokers
as commissions in return for research services; the aggregate
dollar amount of those transactions was $71,996,438. The
transactions giving rise to those commissions were allocated in
accordance with the Manager's internal allocation procedures.
Performance of the Fund
Total Return Information. As described in the Prospectus, from
time to time the "average annual total return," "cumulative total
return," "average annual total return at net asset value" and
"total return at net asset value" of an investment in a class of
shares of the Fund may be advertised. An explanation of how these
total returns are calculated for each class and the components of
those calculations is set forth below.
The Fund's advertisements of its performance data must, under
applicable rules of the Securities and Exchange Commission, include
the average annual total returns for each advertised class of
shares of the Fund for the 1, 5, and 10-year periods (or the life
of the class, if less) ending as of the most recently-ended
calendar quarter prior to the publication of the advertisement.
This enables an investor to compare the Fund's performance to the
performance of other funds for the same periods. However, a number
of factors should be considered before using such information as a
basis for comparison with other investments. An investment in the
Fund is not insured; its returns and share prices are not
guaranteed and normally will fluctuate on a daily basis. When
redeemed, an investor's shares may be worth more or less than their
original cost. Returns for any given past period are not a
prediction or representation by the Fund of future returns. The
returns of each class of shares of the Fund are affected by
portfolio quality, the type of investments the Fund holds and its
operating expenses allocated to the particular class.
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:
1/n
(ERV)
(---) -1 = Average Annual Total Return
( P )
Cumulative Total Returns. The cumulative "total return"
calculation measures the change in value of a hypothetical
investment of $1,000 over an entire period of years. Its
calculation uses some of the same factors as average annual total
return, but it does not average the rate of return on an annual
basis. Cumulative total return is determined as follows:
ERV - P
------- = Total Return
P
In calculating total returns for 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, 1996 were (0.62)%, 6.20% and 12.99%, respectively. The
cumulative "total return" on Class A shares of the Fund for the ten
year period ended June 30, 1996 was 239.28%. The cumulative total
return on Class B shares of the Fund for the period from November
1, 1995 through June 30, 1996 was 9.25%. The cumulative total
return on Class C shares for the period from November 1, 1995,
through June 30, 1996 was 13.41%.
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, 1996 was 259.98%. The average annual total returns at net
asset value for the one, five and ten-year periods ended June 30,
1996, for Class A shares of the Fund were 5.44%, 7.47% and 13.67%
respectively. The cumulative total return at net asset value for
Class B shares for the period from November 1, 1995 through June
30, 1996 was 14.25%. The cumulative total return at net asset
value for Class C shares for the period from November 1, 1995
through June 30, 1996 was 14.41%.
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
also include in its advertisements and sales literature performance
information about the Fund or rankings of the Fund's performance
cited in newspapers or periodicals, such as The New York Times.
These articles may include quotations of performance from other
sources, such as Lipper Analytical Services, Inc. ("Lipper") or
Morningstar, Inc. and Lipper is 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.
Morningstar is 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.
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 payments were 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, 1996, payments under the
Plan for Class A shares totaled $345,697, all of which was paid by
the Distributor to Recipients including $7,495 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 allow the service fee payment to
be paid by the Distributor to Recipients in advance for the first
year such shares are outstanding, and thereafter on a quarterly
basis, as described in the Prospectus. The advance payment is
based on the net asset value of shares sold. An exchange of shares
does not entitle the Recipient to an advance service fee payment.
In the event shares are redeemed during the first year such shares
are outstanding, the Recipient will be obligated to repay a pro
rata portion of such advance payment to the Distributor. Payments
made under the Class B plan during the period from November 1, 1995
through June 30, 1996 totalled $16,774, all of which was retained
by the Distributor. Payments made under the Class C Plan during
the period from November 1, 1995 through June 30, 1996 totalled
$5,463, all of which was retained by the Distributor. As of June
30, 1996, the Distributor had incurred unreimbursed expenses under
the Class B and Class C Plans of $184,746 and $29,556, respectively
(equal to 3.78% and 2.13% of Class B and Class C shares,
respectively, on that date) which have been carried into the
present Plan year.
Although the Class B and the Class C Plans permit the
Distributor to retain both the asset-based sales charges and the
service fees on such shares, or to pay Recipients the service fee
on a quarterly basis without payment in advance, the Distributor
presently intends to pay the service fee to Recipients in the
manner described above. A minimum holding period may be
established from time to time under the Class B and the Class C
Plan by the Board. Initially, the Board has set no minimum holding
period. All payments under the Class B and the Class C Plan are
subject to the limitations imposed by the Rules of Fair Practice of
the National Association of Securities Dealers, Inc. The
Distributor anticipates that it will take a number of years for it
to recoup (from the Fund's payments to the Distributor under the
Class B or Class C Plan and from contingent deferred sales charges
collected on redeemed Class B or Class C shares) the sales
commissions paid to authorized brokers or dealers.
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
Automated Quotation System ("NASDAQ") of the Nasdaq Stock Market,
Inc. for which last sale information is regularly reported are
valued at the last reported sale price on their primary exchange or
NASDAQ that day (or, in the absence of sales that day, at values
based on the last sale price of the preceding trading day, or
closing bid and asked prices that day); (ii) securities traded on
a foreign securities exchange are valued generally at the last
sales price available to the pricing service approved by the Fund's
Board of Trustees or to the Manager as reported by the principal
exchange on which the security is traded at its last trading
session on or immediately preceding the valuation date, or at the
mean between "bid" and "asked" prices obtained from the principal
exchange or two active market makers in the security on the basis
of reasonable inquiry; (iii) long-term debt securities having a
remaining maturity in excess of 60 days are valued based on the
mean between the "bid" and "asked" prices determined by a portfolio
pricing service approved by the Fund's Board of Trustees or
obtained by the Manager from two active market makers in the
security on the basis of reasonable inquiry; (iv) debt instruments
having a maturity of more than 397 days when issued, and non-money
market type instruments having a maturity of 397 days or less when
issued, which have a remaining maturity of 60 days or less are
valued at the mean between "bid" and "asked" prices determined by
a pricing service approved by the Fund's Board of Trustees or
obtained by the Manager from two active market makers in the
security on the basis of reasonable inquiry; (v) money market-type
debt securities that had a maturity of less than 397 days when
issued that have a remaining maturity of 60 days or less are valued
at cost, adjusted for amortization of premiums and accretion of
discounts; and (vi) securities (including restricted securities)
not having readily-available market quotations are valued at fair
value determined under the Board's procedures. If the Manager is
unable to locate two market makers willing to give quotes (see
(ii), (iii) and (iv) above), the security may be priced at the mean
between the "bid" and "asked" prices provided by a single active
market maker.
In the case of U.S. Government Securities and mortgage-backed
securities, where last sale information is not generally available,
such pricing procedures may include matrix comparisons to the
prices for comparable instruments on the basis of quality, yield,
maturity and other special factors involved. The Manager may use
pricing services approved by the Board of Trustees to price any of
the types of securities described above to price U.S. Government
Securities, mortgage-backed securities, foreign government
securities and corporate bonds. The Manager will monitor the
accuracy of such pricing services, which may include comparing
prices used for portfolio evaluation to actual sales prices of
selected securities.
Trading in securities on European and Asian exchanges and
over-the-counter markets is normally completed before the close of
the New York Stock Exchange. Events affecting the values of
foreign securities traded in securities markets that occur between
the time their prices are determined and the close of the New York
Stock Exchange will not be reflected in the Fund's calculation of
net asset value unless the Board of Trustees or the Manager, under
procedures established by the Board of Trustees, determines that
the particular event is likely to effect a material change in the
value of such security. Foreign currency, including forward
contracts, will be valued at the closing price in the London
foreign exchange market that day as provided by a reliable bank,
dealer or pricing service. The values of securities denominated in
foreign currency will be converted to U.S. dollars at the closing
price in the London foreign exchange market that day as provided by
a reliable bank, dealer or pricing service.
Puts, calls and Futures are valued at the last sales price on
the principal exchange on which they are traded, or on NASDAQ, as
applicable, as determined by a pricing service approved by the
Board of Trustees or by the Manager. If there were no sales that
day, value shall be the last sale price on the preceding trading
day if it is within the spread of the closing bid and asked prices
on the principal exchange or on NASDAQ on the valuation date, or,
if not, value shall be the closing bid price on the principal
exchange or on NASDAQ on the valuation date. If the put, call or
future is not traded on an exchange or on NASDAQ, it shall be
valued at the mean between bid and asked prices obtained by the
Manager from two active market makers (which in certain cases may
be the bid price if no asked price is available).
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 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, aunts, uncles,
nieces, nephews, 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 Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer California Municipal Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer Insured Municipal Fund
Oppenheimer Main Street California
Municipal Fund
Oppenheimer Florida Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer New Jersey Municipal
Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income &
Growth Fund
Oppenheimer International Growth Fund
Oppenheimer Enterprise Fund
Oppenheimer Bond Fund for Growth
Oppenheimer 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
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Growth & Income Fund
Rochester Fund Municipals*
Rochester Portfolio Series-Limited Term
New York Municipal Fund*
Oppenheimer Disciplined Value Fund
Oppenheimer Disciplined Allocation Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Growth Fund
Oppenheimer LifeSpan Income 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.
*Shares of the Fund are not presently exchangeable for shares
of these funds.
There is an initial sales charge on the purchase of Class A
shares of each of the Oppenheimer funds except Money Market Funds
(under certain circumstances described herein, redemption proceeds
of Money Market Fund shares may be subject to a contingent
deferred sales charge).
Letters of Intent. A Letter of Intent (referred to as a
"Letter") is an investor's statement in writing to the Distributor
of the intention to purchase Class A shares or Class A and Class B
shares of the Fund (and other Oppenheimer funds) during a 13-month
period (the "Letter of 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.
Retirement Plans. In describing certain types of employee
benefit plans that may purchase Class A shares without being
subject to the Class A contingent differed sales charge, the term
"employee benefit plan" means any plan or arrangement, whether or
not "qualified" under the Internal Revenue Code, including, medical
savings accounts, payroll deduction plans or similar plans in which
Class A shares are purchased by a fiduciary or other person for the
account of participants who are employees of a single employer or
of affiliated employers, if the Fund account is registered in the
name of the fiduciary or other person for the benefit of
participants in the plan.
The term "group retirement plan" means any qualified or non-
qualified retirement plan (including 457 plans, SEPs, SARSEPs,
403(b) plans, and SIMPLE plans) for employees of a corporation or
a sole proprietorship, members and employees of a partnership or
association or other organized group of persons (the members of
which may include other groups), if the group has made special
arrangements with the Distributor and all members of the group
participating in the plan purchase Class A shares of the Fund
through a single investment dealer, broker or other financial
institution designated by the group.
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.
Selling Shares by Wire. The wire of redemption proceeds may
be delayed if a Fund's Custodian bank is not open for business on
a day when the Fund would normally authorize the wire to be made,
which is usually the Fund's next regular business day following the
redemption. In those circumstances, the wire will not be
transmitted until the next bank business day on which the Fund is
open for business. No dividends will be paid on the proceeds of
redeemed shares awaiting transfer by wire.
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 on behalf of their
customers. The shareholder should contact the broker or dealer to
arrange this type of redemption. The repurchase price per share
will be the net asset value next computed after the Distributor
receives 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 Municipal Fund which only offers
Class A and Class B shares, (Class B and Class C shares of
Oppenheimer Cash Reserves are generally available only by exchange
from the same class of shares of other Oppenheimer funds or through
OppenheimerFunds sponsored 401(k) plans).
For accounts established on or before March 8, 1996 holding
Class M shares of Oppenheimer Bond Fund for Growth, Class M shares
can be exchanged only for Class A shares of other Oppenheimer
funds, including Rochester Fund Municipals and Limited Term New
York Municipal Fund. Class A shares of Rochester Fund Municipals
or Limited Term New York Municipal Fund acquired on the exchange of
Class M shares of Oppenheimer Bond Fund for Growth may be exchanged
for Class M shares of that fund. For accounts of Oppenheimer Bond
Fund for Growth established after March 8, 1996, Class M shares may
be exchanged for Class A shares of other Oppenheimer funds except
Rochester Funds Municipals and Limited Term New York Municipals.
Exchanges to Class M shares of Oppenheimer Bond Fund for Growth are
permitted from Class A shares of Oppenheimer Money Market Fund,
Inc. or Oppenheimer Cash Reserves that were acquired by exchange
from Class M shares. Otherwise no exchanges of any class of any
Oppenheimer fund into Class M shares are permitted.
Class A shares of 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).
Shares of this Fund acquired by reinvestment of dividends or
distributions from any other of the Oppenheimer funds (except
Oppenheimer Cash Reserves) or from any unit investment trust for
which reinvestment arrangements have been made with the Distributor
may be exchanged at net asset value for shares of any of the
Oppenheimer funds.
No contingent deferred sales charge is imposed on exchanges of
shares of either class purchased subject to a contingent deferred
sales charge. However, 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. 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 more
than one account. The Fund may accept requests for exchanges of up
to 50 accounts per day from representatives of authorized dealers
that qualify for this privilege. In connection with any exchange
request, the number of shares exchanged may be less than the number
requested if the exchange or the number requested would include
shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information or would include shares covered
by a share certificate that is not tendered with the request. In
those cases, only the shares available for exchange without
restriction will be exchanged.
When exchanging shares by telephone, a shareholder must either
have an existing account in, or obtain and acknowledge receipt of
a prospectus of, the fund to which the exchange is to be made. For
full or partial exchanges of an account made by telephone, any
special account features such as Asset Builder Plans, Automatic
Withdrawal Plans and retirement plan contributions will be switched
to the new account unless the Transfer Agent is instructed
otherwise. If all telephone lines are busy (which might occur, for
example, during periods of substantial market fluctuations),
shareholders might not be able to request exchanges by telephone
and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business
day the Transfer Agent receives an exchange request in proper form
(the "Redemption Date"). Normally, shares of the fund to be
acquired are purchased on the Redemption Date, but such purchases
may be delayed by either fund up to five business days if it
determines that it would be disadvantaged by an immediate transfer
of the redemption proceeds. The Fund reserves the right, in its
discretion, to refuse any exchange request that may disadvantage it
(for example, if the receipt of multiple exchange requests from a
dealer might require the disposition of portfolio securities at a
time or at a price that might be disadvantageous to the Fund).
The different Oppenheimer funds available for exchange have
different investment objectives, policies and risks, and a
shareholder should assure that the Fund selected is appropriate for
his or her investment and should be aware of the tax consequences
of an exchange. For federal income tax purposes, an exchange
transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. "Reinvestment Privilege," above,
discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and
the Transfer Agent are unable to provide investment, tax or legal
advice to a shareholder in connection with an exchange request or
any other investment transaction.
Dividends, Capital Gains and Taxes
Dividends and Distributions. Dividends will be payable on
shares held of record at the time of the previous determination of
net asset value, or as otherwise described in "How to Buy Shares."
Daily dividends on newly purchased shares will not be declared or
paid until such time as Federal Funds (funds credited to a member
bank's account at the Federal Reserve Bank) are available from the
purchase payment for such shares. Normally, purchase checks
received from investors are converted to Federal Funds on the next
business day. Dividends will be declared on shares repurchased by
a dealer or broker for three business days following the trade date
(i.e., to and including the day prior to settlement of the
repurchase). If all shares in an account are redeemed, all
dividends accrued on shares of the same class in the account will
be paid together with the redemption proceeds.
Dividends, distributions and the proceeds of the redemption of
Fund shares represented by checks returned to the Transfer Agent by
the Postal Service as undeliverable will be invested in shares of
Oppenheimer Money Market Fund, Inc., as promptly as possible after
the return of such checks to the Transfer Agent to enable the
investor to earn a return on otherwise idle funds.
The amount of a class's distributions may vary from time to
time depending on market conditions, the composition of a Fund's
portfolio, and expenses borne by the Fund or borne separately by a
class, as described in "Alternative Sales Arrangements -- Class A,
Class B and Class C shares" above. Dividends are calculated in the
same manner, at the same time and on the same day for shares of
each class. However, dividends on Class B and Class C shares are
expected to be lower than dividends on Class A shares as a result
of the asset-based sales charges on Class B and Class C shares, and
will also differ in amount as a consequence of any difference in
net asset value between the classes.
Tax Status of the 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 prior distributions must be re-characterized at the end of
the fiscal year as a result of the effect of a Fund's investment
policies, shareholders may have a non-taxable return of capital,
which will be identified in notices to shareholders. There is no
fixed dividend rate and there can be no assurance as to the payment
of any dividends or the realization of any capital gains.
If 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. For example, if the Fund
derives 30% or more of its gross income from the sale of securities
held less than three months, it may fail to qualify (see "Tax
Aspects of Covered Calls and Hedging Instruments", above). If it
did not so qualify, the Fund would be treated for tax purposes as
an ordinary corporation and would not receive a tax deduction for
payments made to shareholders.
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>
<PAGE>
<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, 1996, 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 five-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, 1996, 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, 1996, 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 five-year period then ended, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
/s/ KPMG Peat Marwick LLP
Denver, Colorado
July 22, 1996
<PAGE>
Statement of Investments June 30, 1996
<TABLE>
<CAPTION>
Face Market Value
Amount(1) See Note 1
<S> <C> <C>
====================================================================================================================================
Convertible Corporate Bonds and Notes--1.5%
- ------------------------------------------------------------------------------------------------------------------------------------
Ashanti Capital Ltd., 5.50% Gtd. Exchangeable Nts., 3/15/03 $ 1,000,000 $ 935,000
--------------------------------------------------------------------------------------------------
Lonrho Finance PLC, 6% Gtd. Cv. Bonds, 2/27/04GBP 1,000,000 1,571,281
-----------
Total Convertible Corporate Bonds and Notes (Cost $2,504,522) 2,506,281
Shares
====================================================================================================================================
Common Stocks--90.3%
- ------------------------------------------------------------------------------------------------------------------------------------
Basic Materials--87.7%
- ------------------------------------------------------------------------------------------------------------------------------------
Chemicals--3.2% Engelhard Corp. 110,000 2,530,000
--------------------------------------------------------------------------------------------------
Johnson Matthey PLC 302,500 2,923,555
-----------
5,453,555
- ------------------------------------------------------------------------------------------------------------------------------------
Gold and Platinum--68.2%
- ------------------------------------------------------------------------------------------------------------------------------------
Gold Mining: Australia--9.9% Acacia Resources Ltd.(2) 300,000 708,348
--------------------------------------------------------------------------------------------------
Delta Gold NL(2) 1,000,000 2,557,923
--------------------------------------------------------------------------------------------------
Gold Mines of Kalgoorlie Ltd. 1,597,604 1,747,785
--------------------------------------------------------------------------------------------------
Golden Shamrock Mines Ltd.(2) 2,000,000 1,794,481
--------------------------------------------------------------------------------------------------
Great Central Mines NL(2) 317,000 868,246
--------------------------------------------------------------------------------------------------
Newcrest Mining Ltd. 500,000 2,006,986
--------------------------------------------------------------------------------------------------
Placer Pacific Ltd. 800,000 1,164,839
--------------------------------------------------------------------------------------------------
Plutonic Resources Ltd. 350,000 1,790,546
--------------------------------------------------------------------------------------------------
Renison Goldfields Ltd.(2) 116,000 264,765
--------------------------------------------------------------------------------------------------
RGC Ltd. 500,000 2,420,189
--------------------------------------------------------------------------------------------------
Sons of Gwalia Ltd. 180,000 1,275,026
-----------
16,599,134
- ------------------------------------------------------------------------------------------------------------------------------------
Gold Mining: Canada--21.9% Agnico-Eagle Mines, Ltd. 75,000 1,218,750
--------------------------------------------------------------------------------------------------
Barrick Gold Corp. 220,000 5,967,500
--------------------------------------------------------------------------------------------------
Cambior, Inc. 215,000 2,841,750
--------------------------------------------------------------------------------------------------
Dayton Mining Corp.(2) 520,000 3,122,391
--------------------------------------------------------------------------------------------------
Dayton Mining Corp.(2)(3) 320,000 1,921,472
--------------------------------------------------------------------------------------------------
Glamis Gold Ltd. 120,000 856,754
--------------------------------------------------------------------------------------------------
Goldcorp, Inc., Cl. A(2) 60,000 992,956
--------------------------------------------------------------------------------------------------
Hemlo Gold Mines, Inc. 250,000 2,672,779
--------------------------------------------------------------------------------------------------
Kap Resources Ltd.(2) 525,000 1,422,431
--------------------------------------------------------------------------------------------------
Kinross Gold(2) 84,600 638,084
--------------------------------------------------------------------------------------------------
Metallica Resources, Inc.(2) 100,000 362,473
--------------------------------------------------------------------------------------------------
Monarch Resources(2)(3) 300,000 538,217
--------------------------------------------------------------------------------------------------
Pegasus Gold, Inc.(2) 80,000 980,000
--------------------------------------------------------------------------------------------------
Placer Dome, Inc. 170,000 4,058,750
--------------------------------------------------------------------------------------------------
Prime Resource Group, Inc. 255,000 1,885,957
--------------------------------------------------------------------------------------------------
Royal Oak Mines, Inc.(2) 150,000 553,125
</TABLE>
6 Oppenheimer Gold & Special Minerals Fund
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Gold Mining: Canada Teck Corp., Cl. B 150,000 $ 3,075,526
(continued) --------------------------------------------------------------------------------------------------
TVX Gold, Inc.(2)(4) 385,000 2,819,232
--------------------------------------------------------------------------------------------------
Viceroy Resources Corp.(2) 145,000 838,813
-----------
36,766,960
- ------------------------------------------------------------------------------------------------------------------------------------
Gold Mining: Anglo American Corp. of South Africa Ltd., ADR 55,000 3,478,750
South Africa--9.6% --------------------------------------------------------------------------------------------------
Ashanti Goldfields Co. Ltd., Sponsored GDR 145,000 2,863,750
--------------------------------------------------------------------------------------------------
Driefontein Consolidated Ltd. ADR 235,000 3,084,375
--------------------------------------------------------------------------------------------------
Free State Consolidated Gold Mines Ltd., ADR 55,000 508,750
--------------------------------------------------------------------------------------------------
Southvaal Holdings Ltd., ADR 50,000 1,789,690
--------------------------------------------------------------------------------------------------
Vaal Reefs Exploration & Mining Co. Ltd., ADR 260,000 2,080,000
--------------------------------------------------------------------------------------------------
Western Areas Gold Mining Co. Ltd., Unsponsored ADR 152,281 2,373,695
-----------
16,179,010
- ------------------------------------------------------------------------------------------------------------------------------------
Gold Mining: Amax Gold, Inc.(2) 95,000 522,500
United States--15.2% --------------------------------------------------------------------------------------------------
Battle Mountain Gold Co., Cl. A 170,000 1,232,500
--------------------------------------------------------------------------------------------------
Coeur d'Alene Mines Corp. 25,000 459,375
--------------------------------------------------------------------------------------------------
Crown Resources Corp.(2) 175,000 918,750
--------------------------------------------------------------------------------------------------
Getchell Gold Corp.(2) 80,000 2,640,000
--------------------------------------------------------------------------------------------------
Hecla Mining Co.(2) 130,000 910,000
--------------------------------------------------------------------------------------------------
Homestake Mining Co. 215,000 3,681,875
--------------------------------------------------------------------------------------------------
Newmont Mining Corp. 164,291 8,111,868
--------------------------------------------------------------------------------------------------
Santa Fe Pacific Gold Corp. 496,000 7,006,000
-----------
25,482,868
- ------------------------------------------------------------------------------------------------------------------------------------
Gold Related Investment--8.1% Cambiex Exploration, Inc.(2)(5) 1,500,000 768,881
--------------------------------------------------------------------------------------------------
Canarc Resource Corp.(2) 282,500 351,672
--------------------------------------------------------------------------------------------------
Canarc Resource Corp.(2) 450,000 560,193
--------------------------------------------------------------------------------------------------
Euro-Nevada Mining Corp. 170,500 7,303,825
--------------------------------------------------------------------------------------------------
Franco-Nevada Mining Corp. Ltd. 60,000 3,800,472
--------------------------------------------------------------------------------------------------
Manila Mining Corp., Cl. B 420,000,000 416,807
--------------------------------------------------------------------------------------------------
Nelson Gold Corp. Ltd.(2) 500,000 439,361
-----------
13,641,211
- ------------------------------------------------------------------------------------------------------------------------------------
Platinum Mining--3.5% Anglo American Platinum Corp. Ltd., Unsponsored ADR(2) 133,240 830,751
--------------------------------------------------------------------------------------------------
Rustenburg Platinum Holdings Ltd., ADR 79,479 1,238,887
--------------------------------------------------------------------------------------------------
Stillwater Mining Co.(2) 160,000 3,780,000
-----------
5,849,638
-----------
114,518,821
- ------------------------------------------------------------------------------------------------------------------------------------
Metals--16.3%
- ------------------------------------------------------------------------------------------------------------------------------------
Aluminum--0.7% Nippon Light Metal Co. 200,000 1,134,193
- ------------------------------------------------------------------------------------------------------------------------------------
Copper--5.4% Aur Resources, Inc.(2) 100,000 713,961
--------------------------------------------------------------------------------------------------
Freeport-McMoRan Copper & Gold, Inc., Cl. A 224,455 6,705,593
--------------------------------------------------------------------------------------------------
Freeport-McMoRan Copper & Gold, Inc., Cl. B 30,000 956,250
--------------------------------------------------------------------------------------------------
Phelps Dodge Corp. 10,000 623,750
-----------
8,999,554
</TABLE>
7 Oppenheimer Gold & Special Minerals Fund
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Metals: Diversified--5.1% Aber Resources Ltd.(2) 70,000 $ 909,843
--------------------------------------------------------------------------------------------------
Aluminum Co. of America 12,000 688,500
--------------------------------------------------------------------------------------------------
Ashton Mining Ltd. 600,000 850,018
--------------------------------------------------------------------------------------------------
Brush Wellman, Inc. 70,000 1,330,000
--------------------------------------------------------------------------------------------------
Elkem AS 150,000 2,066,551
--------------------------------------------------------------------------------------------------
RTZ Corp. PLC 93,000 1,378,563
--------------------------------------------------------------------------------------------------
Western Mining Corp. Holdings Ltd. 199,988 1,432,351
-----------
8,655,826
- ------------------------------------------------------------------------------------------------------------------------------------
Metals: Miscellaneous--3.1% J&L Specialty Steel, Inc. 20,000 297,500
--------------------------------------------------------------------------------------------------
Korea Zinc Co. 60,000 1,375,784
--------------------------------------------------------------------------------------------------
Pasminco Ltd. 1,250,000 1,761,032
--------------------------------------------------------------------------------------------------
PT Tambang Timah, GDR(3) 101,000 1,866,005
-----------
5,300,321
- ------------------------------------------------------------------------------------------------------------------------------------
Nickel--2.0% Eramet SA 25,000 1,682,663
--------------------------------------------------------------------------------------------------
Falconbridge Ltd. 75,000 1,631,127
-----------
3,313,790
-----------
27,403,684
- ------------------------------------------------------------------------------------------------------------------------------------
Industrial--2.6%
- ------------------------------------------------------------------------------------------------------------------------------------
Manufacturing--2.6% Madeco SA, ADR 60,000 1,687,500
--------------------------------------------------------------------------------------------------
Svedala Industri, AB Free 140,000 2,647,889
-----------
4,335,389
-----------
Total Common Stocks (Cost $115,003,266) 151,711,449
====================================================================================================================================
Preferred Stocks--1.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Battle Mountain Gold Co., $3.25 Cum. Cv. (Cost $1,761,270) 34,500 1,690,500
====================================================================================================================================
Other Securities--0.9%
- ------------------------------------------------------------------------------------------------------------------------------------
Coeur d'Alene Corp. $1.488 Cum. Mandatory Adjustable Redeemable
Cv. Securities (Cost $1,487,499) 70,000 1,382,500
</TABLE>
8 Oppenheimer Gold & Special Minerals Fund
<PAGE>
<TABLE>
<CAPTION>
Market Value
Units See Note 1
<S> <C> <C>
====================================================================================================================================
Rights, Warrants and Certificates--0.2%
- ------------------------------------------------------------------------------------------------------------------------------------
Kap Resources Ltd. Wts., Cl. A, Exp. 8/00 252,500 $ 295,837
--------------------------------------------------------------------------------------------------
Lynas Gold NL Wts., Exp. 6/99 1,200,000 75,557
-----------
371,394
-----------
Total Rights, Warrants and Certificates (Cost $253,473) 371,394
Face
Amount(1)
====================================================================================================================================
Repurchase Agreement--6.4%
- ------------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Canadian Imperial Bank of Commerce,
5.45%, dated 6/28/96, to be repurchased at $10,804,905 on 7/1/96,
collateralized by U.S. Treasury Bonds, 9.125%--11.25%, 2/15/15--5/11/18,
with a value of $3,817,669, and U.S. Treasury Nts., 5.25%--8.50%,
1/11/97--11/15/04, with a value of $7,214,885 (Cost $10,800,000) $10,800,000 10,800,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $131,810,030) 100.3% 168,462,124
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (0.3) (420,908)
----------- ------------
Net Assets 100.0% $168,041,216
============ ============
</TABLE>
1. Face amount is reported in U.S. Dollars, except for those denoted in the
following currency: GBP--British Pound Sterling
2. Non-income producing security.
3. 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 $4,325,694 or 2.57% of the Fund's net assets, at June 30,
1996.
4. Identifies issues considered to be illiquid--See Note 5 of Notes to Financial
Statements.
5. 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, 1996. The
aggregate fair value of all securities of affiliated companies as of June 30,
1996 amounted to $768,881. Transaction during the period in which the issuer was
an affiliate are as follows:
<TABLE>
<CAPTION>
Balance Balance
June 30, 1995 Gross Additions Gross Reductions June 30, 1996
--------------- --------------- ---------------- ---------------- Dividend
Shares Cost Shares Cost Shares Cost Shares Cost Income
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
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 $ -- $112,921 $756,573 $ --
======== ======== ======== ======== ========
See accompanying Notes to Financial Statements.
</TABLE>
9 Oppenheimer Gold & Special Minerals Fund
<PAGE>
<TABLE>
Statement of Assets and Liabilities June 30, 1996
<CAPTION>
<S> <C> <C>
====================================================================================================================================
Assets Investments, at value--see accompanying statement:
Unaffiliated companies (cost $131,053,457) $167,693,243
Affiliated companies (cost $756,573) 768,881
-------------------------------------------------------------------------------------------------
Cash 52,385
-------------------------------------------------------------------------------------------------
Receivables:
Shares of beneficial interest sold 581,512
Interest and dividends 332,889
-------------------------------------------------------------------------------------------------
Other 11,612
-----------
Total assets 169,440,522
====================================================================================================================================
Liabilities Payables and other liabilities:
Shares of beneficial interest redeemed 1,050,405
Trustees' fees 98,912
Distribution and service plan fees 92,044
Shareholder reports 73,724
Transfer and shareholder servicing agent fees 39,342
Other 44,879
-----------
Total liabilities 1,399,306
====================================================================================================================================
Net Assets $168,041,216
============
====================================================================================================================================
Composition of Paid-in capital $142,419,044
Net Assets -------------------------------------------------------------------------------------------------
Undistributed net investment income 196,070
-------------------------------------------------------------------------------------------------
Accumulated net realized loss on investment and foreign currency transactions (11,226,872)
Net unrealized appreciation on investments and translation of assets and
liabilities denominated in foreign currencies 36,652,974
------------
Net assets $168,041,216
============
====================================================================================================================================
Net Asset Value Class A Shares:
Per Share Net asset value and redemption price per share (based on net assets of
$161,768,648 and 11,431,464 shares of beneficial interest outstanding) $ 14.15
Maximum offering price per share
(net asset value plus sales charge of 5.75% of offering price) $ 15.01
-------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $4,882,302 and 346,098 shares of beneficial interest outstanding) $ 14.11
-------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $1,390,266 and 98,421 shares of beneficial interest outstanding) $ 14.13
See accompanying Notes to Financial Statements.
</TABLE>
10 Oppenheimer Gold & Special Minerals Fund
<PAGE>
<TABLE>
<CAPTION>
Statement of Operations For the Year Ended June 30, 1996
<S> <C> <C>
====================================================================================================================================
Investment Income Dividends (net of foreign withholding taxes of $204,229) $ 2,041,697
-------------------------------------------------------------------------------------------------
Interest 811,802
-----------
Total income 2,853,499
====================================================================================================================================
Expenses Management fees--Note 4 1,302,108
-------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 389,957
-------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 345,697
Class B 16,774
Class C 5,463
-------------------------------------------------------------------------------------------------
Shareholder reports 144,207
-------------------------------------------------------------------------------------------------
Custodian fees and expenses 87,095
-------------------------------------------------------------------------------------------------
Trustees' fees and expenses--Note 1 44,813
-------------------------------------------------------------------------------------------------
Legal and auditing fees 40,606
-------------------------------------------------------------------------------------------------
Insurance expenses 15,454
-------------------------------------------------------------------------------------------------
Registration and filing fees:
Class B 1,739
Class C 367
-------------------------------------------------------------------------------------------------
Other 27,690
------------
Total expenses 2,421,970
====================================================================================================================================
Net Investment Income 431,529
====================================================================================================================================
Realized and Unrealized Net realized loss on:
Gain (Loss) Investments:
Unaffiliated companies (550,265)
Affiliated companies (112,921)
Foreign currency transactions (824,935)
------------
Net realized loss (1,488,121)
-------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 8,543,423
Translation of assets and liabilities denominated in foreign currencies 1,997,763
------------
Net change 10,541,186
------------
Net realized and unrealized gain on investments and foreign
currency transactions 9,053,065
====================================================================================================================================
Net Increase in Net Assets Resulting From Operations $9,484,594
==========
See accompanying Notes to Financial Statements.
</TABLE>
11 Oppenheimer Gold & Special Minerals Fund
<PAGE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets Year Ended June 30,
----------------------------
1996 1995
<S> <C> <C>
====================================================================================================================================
Operations Net investment income $ 431,529 $ 794,753
-------------------------------------------------------------------------------------------------
Net realized gain (loss) (1,488,121) 4,149,068
-------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 10,541,186 (2,322,499)
----------- -----------
Net increase in net assets resulting from operations 9,484,594 2,621,322
----------- -----------
====================================================================================================================================
Dividends and Distributions Dividends from net investment income:
To Shareholders Class A (705,030) (878,199)
====================================================================================================================================
Beneficial Interest Net increase (decrease) in net assets resulting from beneficial interest
Transactions transactions--Note 2:
Class A (18,971,659) (9,037,115)
Class B 5,082,545 --
Class C 1,429,900 --
====================================================================================================================================
Net Assets Total decrease (3,679,650) (7,293,992)
-------------------------------------------------------------------------------------------------
Beginning of period 171,720,866 179,014,858
----------- -----------
End of period (including undistributed net investment
income of $196,070 and $636,579, respectively) $168,041,216 $171,720,866
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
12 Oppenheimer Gold & Special Minerals Fund
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A Class B Class C
---------------------------------------------------- ------- --------
Period Period
Year Ended June 30, Ended Ended
---------------------------------------------------- June 30, June 30,
1996 1995 1994 1993 1992 1996(1) 1996(1)
<S> <C> <C> <C> <C> <C> <C> <C>
====================================================================================================================================
Per Share Operating Data:
Net asset value, beginning of period $13.48 $13.28 $12.32 $10.68 $10.36 $12.33 $12.33
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .04 .06 .06 .06 .16 (.01) (.01)
Net realized and unrealized gain .69 .21 .96 1.72 .35 1.79 1.81
------ ------ ------ ------ ------ ------ ------
Total income from
investment operations .73 .27 1.02 1.78 .51 1.78 1.80
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.06) (.07) (.06) (.14) (.19) -- --
------ ------ ------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (.06) (.07) (.06) (.14) (.19) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.15 $13.48 $13.28 $12.32 $10.68 $14.11 $14.13
====== ====== ====== ====== ====== ====== ======
====================================================================================================================================
Total Return, at Net Asset Value(2) 5.44% 2.03% 8.25% 17.15% 5.08% 14.25% 14.41%
====================================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $161,769 $171,721 $179,015 $158,982 $133,345 $4,882 $1,390
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $171,427 $178,579 $175,093 $124,869 $137,906 $2,588 $840
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 0.25% 0.45% 0.50% 0.61% 1.25% (0.25)%(3) (0.26)%(3)
Expenses 1.38% 1.36% 1.31% 1.38% 1.38% 2.22%(3) 2.19%(3)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 37.6% 35.8% 29.5% 23.9% 39.4% 37.6% 37.6%
Average brokerage commission rate(5) $0.0211 $0.0204 -- -- -- $0.0211 $0.0211
</TABLE>
1. For the period from November 1, 1995 (inception of offering) to June 30,
1996.
2. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
3. Annualized.
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, 1996 were $60,652,556 and $77,616,914, respectively.
5. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period divided by the total number of related
shares purchased and sold.
See accompanying Notes to Financial Statements.
13 Oppenheimer Gold & Special Minerals Fund
<PAGE>
Notes to Financial Statements
================================================================================
1. Significant
Accounting Policies
Oppenheimer Gold & Special Minerals Fund (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's investment objective is to seek
capital appreciation by primarily investing in securities of companies engaged
in mining, processing, fabricating or distributing gold or other metals or
minerals. The Fund's investment advisor is OppenheimerFunds, Inc. (the Manager).
The Fund offers Class A, Class B and Class C shares. Class A shares are sold
with a front-end sales charge. Class B and Class C shares may be subject to a
contingent deferred sales charge. All classes of shares have identical rights to
earnings, assets and voting privileges, except that each class has its own
distribution and/or service plan, expenses directly attributable to a particular
class and exclusive voting rights with respect to matters affecting a single
class. Class B shares will automatically convert to Class A shares six years
after the date of purchase. The following is a summary of significant accounting
policies consistently followed by the Fund.
================================================================================
Investment Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
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 are valued under consistently applied procedures established by the
Board of Trustees to determine fair value in good faith. Short-term "money
market type" debt securities having a remaining maturity of 60 days or less are
valued at cost (or last determined market value) adjusted for amortization to
maturity of any premium or discount.
================================================================================
Foreign Currency Translation. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of securities and investment income are translated at
the rates of exchange prevailing on the respective dates of such transactions.
The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
================================================================================
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
================================================================================
Allocation of Income, Expenses, and Gains and Losses. Income, expenses (other
than those attributable to a specific class) and gains and losses are allocated
daily to each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
================================================================================
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required. At June 30, 1996, the Fund
had available for federal income tax purposes an unused capital loss carryover
of approximately $10,674,000 which expires between 2000 and 2004.
================================================================================
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, 1996, a provision of $35,980 was made for the Fund's projected benefit
obligations and payments of $2,831 were made to retired trustees, resulting in
an accumulated liability of $91,440 at June 30, 1996.
14 Oppenheimer Gold & Special Minerals Fund
<PAGE>
================================================================================
1. Significant
Accounting Policies
(continued)
Distributions to Shareholders. Dividends and distributions to shareholders are
recorded on the ex-dividend date.
- --------------------------------------------------------------------------------
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
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, 1996, 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, 1996,
amounts have been reclassified to reflect a decrease in undistributed net
investment income of $167,008 and a decrease in accumulated net realized loss on
investments of $167,008.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. Discount on securities purchased is amortized over the life of
the respective securities, in accordance with federal income tax requirements.
Realized gains and losses on investments and unrealized appreciation and
depreciation are determined on an identified cost basis, which is the same basis
used for federal income tax purposes.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
================================================================================
2. Shares of
Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of beneficial
interest. Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
Year Ended June 30, 1996(1) Year Ended June 30, 1995
---------------------------------- -----------------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A:
Sold 11,015,184 $155,317,009 17,062,570 $227,723,637
Dividends reinvested 48,035 625,897 60,139 779,406
Redeemed (12,375,016) (174,914,565) (17,857,834) (237,540,158)
----------- ------------ ----------- ------------
Net decrease (1,311,797) $(18,971,659) (735,125) $(9,037,115)
=========== ============ =========== ============
- ------------------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 434,241 $6,371,373 -- $ --
Dividends reinvested -- -- -- --
Redeemed (88,143) (1,288,828) -- --
----------- ------------ ----------- ------------
Net increase 346,098 $5,082,545 -- $ --
=========== ============ =========== ============
- ------------------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 665,116 $9,742,400 -- $ --
Dividends reinvested -- -- -- --
Redeemed (566,695) (8,312,500) --
----------- ------------ ----------- ------------
Net increase 98,421 $1,429,900 -- $ --
=========== ============ =========== ============
</TABLE>
1. For the year ended June 30, 1996 for Class A shares, and for the period from
November 1, 1995 (inception of offering) to June 30, 1996 for Class B and Class
C shares.
================================================================================
3. Unrealized Gains and
Losses on Investments
At June 30, 1996, net unrealized appreciation on investments of $36,652,094 was
composed of gross appreciation of $43,029,691, and gross depreciation of
$6,377,597.
15 Oppenheimer Gold & Special Minerals Fund
<PAGE>
Notes to Financial Statements (Continued)
================================================================================
4. Management Fees
And Other Transactions
With Affiliates
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of 0.75% on the first
$200 million of average annual net assets, 0.72% on the next $200 million, 0.69%
on the next $200 million, 0.66% on the next $200 million and 0.60% 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
applicable regulatory limit on Fund expenses.
For the year ended June 30, 1996, commissions (sales charges paid by
investors) on sales of Class A shares totaled $632,631, of which $149,888 was
retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of the Fund's Class B and
Class C shares totaled $156,794 and $11,946, of which $2,157 was paid to an
affiliated broker/dealer for Class B shares. During the year ended June 30,
1996, OFDI received contingent deferred sales charges of $13,383 and $1,459,
respectively, upon redemption of Class B and Class C shares as reimbursement for
sales commissions advanced by OFDI at the time of sale of such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the transfer
and shareholder servicing agent for the Fund, and for other registered
investment companies. OFS's total costs of providing such services are allocated
ratably to these companies.
The Fund has adopted a Service Plan for Class A shares to reimburse OFDI
for a portion of its costs incurred in connection with the personal service and
maintenance of accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate that may not exceed 0.25% of the average annual net
assets of Class A shares of the Fund. OFDI uses the service fee to reimburse
brokers, dealers, banks and other financial institutions quarterly for providing
personal service and maintenance of accounts of their customers that hold Class
A shares. During the year ended June 30, 1996, OFDI paid $7,495 to an affiliated
broker/dealer as reimbursement for Class A personal service and maintenance
expenses.
The Fund has adopted compensation type Distribution and Service Plans for
Class B and Class C shares to compensate OFDI for its services and costs in
distributing Class B and Class C shares and servicing accounts. Under the Plans,
the Fund pays OFDI an annual asset-based sales charge of 0.75% per year on Class
B shares that are outstanding for 6 years or less and on Class C shares, as
compensation for sales commissions paid from its own resources at the time of
sale and associated financing costs. If the Plans are terminated by the Fund,
the Board of Trustees may allow the Fund to continue payments of the asset-based
sales charge to OFDI for certain expenses it incurred before the Plans were
terminated. OFDI also receives a service fee of 0.25% per year as compensation
for costs incurred in connection with the personal service and maintenance of
accounts that hold shares of the Fund, including amounts paid to brokers,
dealers, banks and other financial institutions. Both fees are computed on the
average annual net assets of Class B and Class C shares, determined as of the
close of each regular business day. During the year ended June 30, 1996, OFDI
retained $16,774 and $5,463, respectively, as compensation for Class B and Class
C sales commissions and service fee advances, as well as financing costs. At
June 30, 1996, OFDI had incurred unreimbursed expenses of $184,746 for Class B
and $29,556 for Class C.
================================================================================
5. Illiquid and
Restricted Securities
At June 30, 1996, investments in securities included issues that are illiquid or
restricted. The securities are often purchased in private placement
transactions, are not registered under the Securities Act of 1933, may have
contractual restrictions on resale, and are valued under methods approved by the
Board of Trustees as reflecting fair value. A security may also be considered
illiquid if its valuation has not changed for a certain period of time. The Fund
intends to invest no more than 10% of its net assets (determined at the time of
purchase and reviewed from time to time) in illiquid or restricted securities.
The aggregate value of these securities subject to this limitation at June 30,
1996 was $2,819,232, which represents 1.68% of the Fund's net assets.
Information concerning these securities is as follows:
Valuation Per
Unit as of
Security Acquisition Dates Cost Per Unit June 30, 1996
- --------------------------------------------------------------------------------
TVX Gold, Inc. 6/28/93--6/25/96 $4.77 $7.32
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.
<PAGE>
Appendix A
Corporate Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
Food
Gas Utilities
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking<PAGE>
<PAGE>
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
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>
OPPENHEIMER GOLD & SPECIAL MINERALS FUND
FORM N-1A
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
(1) Condensed Financial Information (See Part A,
Prospectus): Filed herewith.
(2) Report of Independent Auditors (see Part B,
Statement of Additional Information): Filed herewith.
(3) Statement of Investments (see Part B, Statement of
Additional Information): Filed herewith.
(4) Statement of Assets and Liabilities (see Part B,
Statement of Additional Information): Filed herewith.
(5) Statement of Operations (see Part B, Statement of
Additional Information): Filed herewith.
(6) Statements of Changes in Net Assets (see Part B,
Statement of Additional Information): Filed herewith.
(7) Notes to Financial Statements (see Part B, Statement
of Additional Information): Filed herewith.
(b) Exhibits
(1) Amended and Restated Declaration of Trust dated
August 15, 1995: Previously filed with Post-Effective Amendment
No. 22, 8/31/95, to Registrant's Registration Statement and
incorporated herein by reference.
(2) By-Laws amended as of 8/6/87: Previously filed with
Post-Effective Amendment No. 10, 10/28/88, to the Registrant's
Registration Statement, and refiled with Post-Effective Amendment
No. 20, 9/2/94, pursuant to item 102 of Regulation S-T, and
incorporated herein by reference.
(3) Not applicable.
(4) (i) Specimen Share Certificate for Class A
Shares: Previously filed with Registrant's Post-Effective
Amendment No. 21 to Registrant's Registration Statement, 10/31/94,
and incorporated herein by reference.
(ii) Specimen Share Certificate for Class B
Shares: Previously filed with Post-Effective Amendment No. 22,
8/31/95 to Registrant's Registration Statement, and incorporated
herein by reference.
(iii) Specimen Share Certificate for Class C
Shares: Previously filed with Post-Effective Amendment No. 22,
8/31/95 to Registrant's Registration Statement, and incorporated
herein by reference.
(5) Investment Advisory Agreement dated June 20, 1991:
Previously filed with Registrant's Post-Effective Amendment No. 14,
8/30/91, and refiled with Post-Effective Amendment No. 20, 9/2/94,
pursuant to Item 102 of Regulation S-T, and incorporated herein by
reference.
(6) (a) General Distributor's Agreement dated
12/10/92: Previously filed with Registrant's Post-Effective
Amendment No. 18 to Registrant's Registration Statement, 8/2/93,
and incorporated herein by reference.
(b) Form of Oppenheimer Funds Distributor, Inc.
Dealer Agreement: Filed with Post-Effective Amendment No. 14 of
Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850), 9/30/94,
and incorporated herein by reference.
(c) Form of Oppenheimer Funds Distributor, Inc.
Broker Agreement: Filed with Post-Effective Amendment No. 14 of
Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850), 9/30/94,
and incorporated herein by reference.
(d) Broker Agreement between Oppenheimer Funds
Management, Inc. and Newbridge Securities dated 10/1/86:
Previously filed with Post-Effective Amendment No. 25 of
Oppenheimer Special Fund (Reg. No. 2-45272), 11/1/86, and refiled
with Post-Effective Amendment No. 45, of Oppenheimer Special Fund
(Reg. No. 2-45272) 8/22/94, pursuant to Item 102 of Regulation S-T,
and incorporated herein by reference.
(e) Form of Oppenheimer Funds Distributor, Inc.
Agency Agreement: Filed with Post-Effective Amendment No. 14 of
Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850), 9/30/94,
and incorporated herein by reference.
(7) Retirement Plan for Non-Interested Trustees or
Directors (adopted by Registrant - 6/7/90): Previously filed with
Post-Effective Amendment No. 97 of Oppenheimer Fund (Reg. No. 2-
14586), 8/30/90, refiled with Post-Effective Amendment No. 45 of
Oppenheimer Growth Fund (Reg. No. 2-45272), 8/22/94, pursuant to
Item 102 of Regulation S-T, and incorporated herein by reference.
(8) Custody Agreement dated 11/12/92: Previously filed
with Registrant's Post-Effective Amendment No. 18 to Registrant's
Registration Statement, 8/2/93, and incorporated herein by
reference.
(9) Not applicable.
(10) Opinion and Consent of Counsel dated 10/4/85: Filed
with Registrant's Post-Effective Amendment No. 5, 11/1/85, and
refiled with Post-Effective Amendment No. 20, 9/2/94, pursuant to
Item 102 of Regulation S-T, and incorporated herein by reference.
(11) Independent Auditor's Consent: Filed herewith.
(12) Not applicable.
(13) Investment Letter dated 5/31/83 from Oppenheimer
Management Corporation to Registrant: Previously filed with
Registrant's Post-Effective Amendment No. 10, 10/28/88, and refiled
with Post-Effective Amendment No. 20, 9/2/94, pursuant to Item 102
of Regulation S-T, and incorporated herein by reference.
(14) (i) Form of Standardized and Non-Standardized
Profit-Sharing Plan and Money Purchase Pension Plan for self-
employed persons and corporations: Previously filed with Post-
Effective Amendment No. 15 of Oppenheimer Mortgage Income Fund
(Reg. No. 33-6614), 1/19/95, and incorporated herein by reference.
(ii) Form of Individual Retirement Account Trust
Agreement: Previously filed with Post-Effective Amendment No. 21
of Oppenheimer U.S. Government Trust (Reg. No. 2-76645), 8/25/93,
and incorporated herein by reference.
(iii) Form of Tax Sheltered Retirement Plan and
Custody Agreement for employees of public schools and tax-exempt
organizations: Previously filed with Post-Effective Amendment No.
47 of Oppenheimer Growth Fund (Reg. No. 2-45272), 10/21/94, and
incorporated herein by reference.
(iv) Form of Simplified Employee Pension IRA:
Previously filed with Post-Effective Amendment No. 15 of
Oppenheimer Mortgage Income Fund (Reg. No. 33-6614), 1/19/95, and
incorporated herein by reference.
(v) Form of Prototype 410(k) Plan Filed with
Post-Effective Amendment No. 7 to the Registration Statement for
Oppenheimer Strategic Income & Growth Fund (File No. 33-47378),
9/28/95, and incorporated herein by reference.
(15) (i) Service Plan and Agreement for Class A Shares
dated June 10, 1993: Filed with Registrant's Post-Effective
Amendment No. 21, 10/31/94, and incorporated herein by reference.
(ii) Distribution and Service Plan and Agreement
for Class B shares dated as of August 15, 1995: Previously filed
with Post-Effective Amendment No. 22, 8/31/95, to Registrant's
Registration Statement, and incorporated herein by reference.
(iii) Distribution and Service Plan and Agreement
for Class C shares dated as of August 15, 1995: Previously filed
with Post-Effective Amendment No. 22, 8/31/95, to Registrant's
Registration Statement, and incorporated herein by reference.
(16) Performance Data Computation Schedule: Filed
herewith.
(17) (i) Financial Data Schedule for Class A Shares:
Filed herewith.
(ii) Financial Data Schedule For Class B Shares:
Filed herewith.
(iii) Financial Data Schedule for Class C Shares:
Filed herewith.
(18) Oppenheimer Funds Multiple Class Plan under Rule
18f-3 dated 10/24/95: Filed with Post-Effective Amendment No. 12
to the Registration Statement of Oppenheimer California Tax-Exempt
Fund (Reg. No. 33-23566), 10/95, and incorporated herein by
reference.
-- (i) Powers of Attorney (including certified Board
resolutions): Previously filed with Post-Effective Amendment No.
18 to Registrant's Registration Statement, 8/2/93, and incorporated
herein by reference.
(ii) Powers of Attorney for Bridget A. Macaskill: Filed
herewith.
Item 25. Persons Controlled by or Under Common Control with
Registrant
None
Item 26. Number of Holders of Securities
Number of Record
Holders as of
Title of Class September 20, 1996
Class A Shares of Beneficial Interest 11,144,498
Class B Shares of Beneficial Interest 407,161
Class C Shares of Beneficial Interest 120,200
Item 27. Indemnification
Reference is made to paragraphs (c) through (g) of Section 12
of Article SEVENTH of Registrant's Declaration of Trust filed as
Exhibit 24(b)(1) to this Registration Statement.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of Registrant pursuant to the foregoing
provisions or otherwise, Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by Registrant of expenses incurred or paid
by a trustee, officer or controlling person of Registrant in the
successful defense of any action, suit or proceeding) is asserted
by such trustee, officer or controlling person, Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933
and will be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
(a) OppenheimerFunds, Inc. is the investment adviser of the
Registrant; it and certain subsidiaries and affiliates act in the
same capacity to other registered investment companies as described
in Parts A and B hereof and listed in Item 28(b) below.
(b) There is set forth below information as to any other
business, profession, vocation or employment of a substantial
nature in which each officer and director of OppenheimerFunds, Inc.
is, or at any time during the past two fiscal years has been,
engaged for his/her own account or in the capacity of director,
officer, employee, partner or trustee.
Name & Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- ------------------------------
Mark J.P. Anson,
Vice President Formerly Vice President of Equity
Derivatives at Salomon Brothers,
Inc.
Peter M. Antos,
Senior Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; a
Chartered Financial Analyst; Senior
Vice President of HarbourView; prior
to March, 1996 he was the senior
equity portfolio manager for the
Panorama Series Fund, Inc. (the
"Company") and other mutual funds
and pension funds managed by G.R.
Phelps & Co. Inc. ("G.R. Phelps"),
the Company's former investment
adviser, which was a subsidiary of
Connecticut Mutual Life Insurance
Company; was also responsible for
managing the common stock department
and common stock investments of
Connecticut Mutual Life Insurance
Co.
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
Bruce Bartlett,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds;
formerly a Vice President and Senior
Portfolio Manager at First of
America Investment Corp.
Ellen Batt,
Assistant Vice President None
Kathleen Beichert,
Assistant Vice President Formerly employed by Smith Barney,
Inc.
David Bernard, Vice
President Previously a Regional Sales Director
for Retirement Plan Services at
Charles Schwab & Co., Inc.
Robert J. Bishop,
Vice President Assistant Treasurer of the
Oppenheimer Funds (listed below);
previously a Fund Controller for
OppenheimerFunds, Inc. (the
"Manager").
George Bowen, Senior Vice
President & Treasurer Treasurer of the New York-based
Oppenheimer Funds; Vice President
and Treasurer of the Denver-based
Oppenheimer Funds. Vice President
and Treasurer of OppenheimerFunds
Distributor, Inc. (the
"Distributor") and HarbourView Asset
Management Corporation
("HarbourView"), an investment
adviser subsidiary of the Manager;
Senior Vice President, Treasurer,
Assistant Secretary and a director
of Centennial Asset Management
Corporation ("Centennial"), an
investment adviser subsidiary of the
Manager; Vice President, Treasurer
and Secretary of Shareholder
Services, Inc. ("SSI") and
Shareholder Financial Services, Inc.
("SFSI"), transfer agent
subsidiaries of the Manager;
Director and Chief Executive Officer
of Multi-Source Services, Inc.;
President, Treasurer and Director of
Centennial Capital Corporation; Vice
President and Treasurer of Main
Street Advisers.
Scott Brooks,
Assistant Vice President None.
Susan Burton,
Assistant Vice President Previously a Director of Educational
Services for H.D. Vest Investment
Securities, Inc.
Michael A. Carbuto,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; Vice
President of Centennial.
Ruxandra Chivu,
Assistant Vice President None.
O. Leonard Darling,
Executive Vice President Formerly Co-Director of Fixed Income
for State Street Research &
Management Co.
Robert A. Densen,
Senior Vice President None.
Robert Doll, Jr., Executive
Vice President and Director An officer and/or portfolio manager
of certain Oppenheimer funds.
John Doney, Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Andrew J. Donohue, Executive
Vice President, General
Counsel and Director Secretary of the New York-based
Oppenheimer Funds; Vice President
and Secretary of the Denver-based
Oppenheimer Funds; Secretary of the
Oppenheimer Quest and Oppenheimer
Rochester Funds; Executive Vice
President, Director and General
Counsel of the Distributor;
President and a Director of
Centennial; formerly Senior Vice
President and Associate General
Counsel of the Manager and the
Distributor.
George Evans, Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Scott Farrar, Vice President Assistant Treasurer of the New York-
based and Denver-based Oppenheimer
funds.
Katherine P. Feld, Vice
President and Secretary Vice President and Secretary of
OppenheimerFunds Distributor, Inc.;
Secretary of HarbourView Asset
Management Corporation, Main Street
Advisers, Inc. and Centennial Asset
Management Corporation; Secretary,
Vice President and Director of
Centennial Capital Corporation.
Ronald H. Fielding, Senior
Vice President; Chairman:
Rochester Division Formerly Chairman of the Board and
Director of Rochester Fund
Distributors, Inc. ("RFD");
President and Director of Fielding
Management Company, Inc. ("FMC");
President and Director of Rochester
Capital Advisors, Inc. ("RCAI");
Managing Partner of Rochester
Capital Advisors, L.P.; President
and Director of Rochester Fund
Services, Inc. ("RFS"); President
and Director of Rochester Tax
Managed Fund, Inc.; an officer,
Director and/or portfolio manager of
certain Oppenheimer funds.
John Fortuna,
Assistant Vice President
Jon S. Fossel,
Chairman of the Board Director of OAC, the Manager's
parent holding company; President,
CEO and a director of HarbourView; a
director of SSI and SFSI; President,
Director, Trustee, and Managing
General Partner of the Denver-based
Oppenheimer Funds; President and
Chairman of the Board of Main Street
Advisers, Inc.; formerly Chief
Executive Officer of the Manager.
Patricia Foster,
Vice President An officer of certain Oppenheimer
funds; Secretary and General Counsel
of Rochester Capital Advisors, L.P.
and Secretary of Rochester Tax
Managed Fund, Inc.
Robert G. Galli,
Vice Chairman Trustee of the New York-based
Oppenheimer Funds; Vice President
and Counsel of OAC; formerly he held
the following positions: Vice
President and a director of
HarbourView and Centennial, a
director of SFSI and SSI, an officer
of other Oppenheimer Funds.
Linda Gardner,
Assistant Vice President None.
Janelle Gellerman,
Assistant Vice President None.
Jill Glazerman, None.
Assistant Vice President
Ginger Gonzalez, Vice
President, Director of
Marketing Communications Formerly 1st Vice President /
Director of Graphic and Print
Communications for Shearson Lehman
Brothers.
Mildred Gottlieb,
Assistant Vice President Formerly served as a Strategy
Consultant for the Private Client
Division of Merrill Lynch.
Caryn Halbrecht,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds;
formerly Vice President of Fixed
Income Portfolio Management at
Bankers Trust.
Barbara Hennigar, Executive
Vice President and President
and Chief Executive Officer
of OppenheimerFunds Services,
a division of the Manager President and Director of SFSI;
President and Chief Executive
Officer of SSI.
Dorothy Hirshman,
Assistant Vice President None.
Alan Hoden,
Vice President None.
Merryl Hoffman,
Vice President None.
Scott T. Huebl,
Assistant Vice President None.
Richard Hymes,
Assistant Vice President
Jane Ingalls,
Assistant Vice President Formerly a Senior Associate with
Robinson, Lake/Sawyer Miller.
Ronald Jamison,
Vice President Formerly Vice President and
Associate General Counsel at
Prudential Securities, Inc.
Frank Jennings,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Formerly a Managing Director of
Global Equities at Paine Webber's
Mitchell Hutchins division.
Heidi Kagan,
Assistant Vice President None.
Thomas W. Chafer,
Vice President Formerly Senior Managing Director of
Van ECG Global.
Avram Kornberg,
Vice President Formerly a Vice President with
Bankers Trust.
Paul LaRocco,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Formerly a Securities Analyst for
Columbus Circle Investors.
Michael Levine,
Assistant Vice President
Stephen F. Libera,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; a
Chartered Financial Analyst; a Vice
President of HarbourView; prior to
March, 1996 he was the senior bond
portfolio manager for Panorama
Series Fund, Inc., other mutual
funds and pension accounts managed
by G.R. Phelps; was also responsible
for managing the public fixed-income
securities department at Connecticut
Mutual Life Insurance Co.
Mitchell J. Lindauer,
Vice President None.
Loretta McCarthy,
Executive Vice President None.
Bridget Macaskill, President,
Chief Executive Officer
and Director President, Director and Trustee of
the New York-based and the Denver-
based Oppenheimer funds; President
and a Director of OAC, HarbourView
and Oppenheimer Partnership
Holdings, Inc.; Director of Main
Street Advisers, Inc.; Chairman and
Director of SSI.
Timothy Martin,
Assistant Vice President Formerly Vice President, Mortgage
Trading, at S.A. Phelps & Co.,
Salomon Brothers, and Kidder
Peabody.
Sally Marzouk,
Vice President None.
Lisa Migan,
Assistant Vice President, None.
Robert J. Milnamow,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Formerly a Portfolio Manager with
Phoenix Securities Group.
Denis R. Molleur,
Vice President None.
Kenneth Nadler,
Vice President None.
David Negri, Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Barbara Niederbrach,
Assistant Vice President None.
Robert A. Nowaczyk,
Vice President None.
Robert E. Patterson,
Senior Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
John Pixie,
Assistant Vice President Formerly a Vice President with Cohen
Rafferty Securities, Inc.
Tilghman G. Pitts III,
Executive Vice President Chairman and Director of the
Distributor.
Jane Putnam, Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Formerly Senior Investment Officer
and Portfolio Manager with Chemical
Bank.
Russell Read,
Vice President Consultant for Prudential Insurance
on behalf of the General Motors
Pension Plan.
Thomas Reedy,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Formerly a Securities Analyst for
the Manager.
David Robertson,
Vice President None.
Adam Rochlin,
Vice President Formerly a Product Manager for
Metropolitan Life Insurance Company.
Michael S. Rosen
Vice President; President:
Rochester Division Formerly Vice President of RFS;
President and Director of RFD; Vice
President and Director of FMC; Vice
President and director of RCAI;
General Partner of RCA; an officer
and/or portfolio manager of certain
Oppenheimer funds.
David Rosenberg,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Richard H. Rubinstein,
Senior Vice President An officer and/or portfolio manager
of certain Oppenheimer funds;
formerly Vice President and
Portfolio Manager/Security Analyst
for Oppenheimer Capital Corp., an
investment adviser.
Lawrence Rudnick,
Assistant Vice President Formerly Vice President of Dollar
Dry Dock Bank.
James Ruff,
Executive Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Stephanie Seminara,
Vice President Formerly Vice President of Citicorp
Investment Services.
Diane Sobin, Vice President An officer and/or portfolio manager
of certain Oppenheimer funds;
formerly a Vice President and Senior
Portfolio Manager for Dean Witter
InterCapital, Inc.
Richard A. Soper, None.
Assistant Vice President
Nancy Sperte,
Executive Vice President None.
Donald W. Spiro,
Chairman Emeritus Vice Chairman and Trustee of the New
York-based Oppenheimer Funds;
formerly Chairman of the Manager and
the Distributor.
Arthur Steinmetz,
Senior Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Ralph Stellmacher,
Senior Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
John Stoma,
Senior Vice President,
Director Retirement Plans Formerly Vice President of U.S.
Group Pension Strategy and Marketing
for Manulife Financial.
Michael C. Strathearn,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; a
Chartered Financial Analyst; a Vice
President of HarbourView; prior to
March, 1996 he was an equity
portfolio manager for Panorama
Series Fund, Inc. and other mutual
funds and pension accounts managed
by G.R. Phelps.
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee, Director
or Managing Partner of the Denver-
based Oppenheimer Funds; President
and a Director
of Centennial; formerly President
and Director of OAMC, and Chairman
of the Board of SSI.
James Tobin, Vice President None.
Jay Tracey, Vice President Vice President of the Manager; Vice
President and Portfolio Manager of
Oppenheimer Discovery Fund,
Oppenheimer Global Emerging Growth
Fund and Oppenheimer Enterprise
Fund. Formerly Managing Director of
Buckingham Capital Management.
Gary Tyc, Vice President,
Assistant Secretary and
Assistant Treasurer Assistant Treasurer of the
Distributor and SFSI.
Ashwin Vasan, Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Valerie Victorson,
Vice President None.
Dorothy Warmack,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Jerry A. Webman,
Senior Vice President Director of New York-based tax-
exempt fixed income Oppenheimer
Funds; Formerly Managing Director
and Chief Fixed Income Strategist at
Prudential Mutual Funds.
Christine Wells,
Vice President None.
Kenneth B. White,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; a
Chartered Financial Analyst; Vice
President of HarbourView; prior to
March, 1996 he was an equity
portfolio manager for Panorama
Series Fund, Inc. and other mutual
funds and pension funds managed by
G.R. Phelps.
William L. Wilby,
Senior Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; Vice
President of HarbourView.
Carol Wolf,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; Vice
President of Centennial; Vice
President, Finance and Accounting
and member of the Board of Directors
of the Junior League of Denver, Inc.
Robert G. Zack, Senior
Vice President and
Assistant Secretary Associate General Counsel of the
Manager; Assistant Secretary of the
Oppenheimer Funds; Assistant
Secretary of SSI, SFSI; an officer
of other Oppenheimer Funds.
Arthur J. Zimmer,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; Vice
President of Centennial.
The Oppenheimer Funds include the New York-based Oppenheimer
Funds, the Denver-based Oppenheimer Funds, and the Rochester-based
Oppenheimer Funds, set forth below:
New York-based Oppenheimer Funds
Oppenheimer Asset Allocation Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Tax-Exempt Trust
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest for Value Funds
Oppenheimer Series Fund, Inc.
Oppenheimer Target Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer World Bond Fund
Denver-based Oppenheimer Funds
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Tax-Exempt Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Rochester-based Oppenheimer Funds
Bond Fund Series - Oppenheimer Bond Fund For Growth
Rochester Fund Municipals
Rochester Portfolio Series - Limited Term New York Municipal Fund
The address of OppenheimerFunds, Inc., the New York-based
Oppenheimer Funds, OppenheimerFunds Distributor, Inc., HarbourView
Asset Management Corp., Oppenheimer Partnership Holdings, Inc., and
Oppenheimer Acquisition Corp. is Two World Trade Center, New York,
New York 10048-0203.
The address of the Denver-based Oppenheimer Funds,
Shareholder Financial Services, Inc., Shareholder Services, Inc.,
OppenheimerFunds Services, Centennial Asset Management Corporation,
Centennial Capital Corp., Oppenheimer Real Asset Management, Inc.,
and Main Street Advisers, Inc. is 3410 South Galena Street, Denver,
Colorado 80231.
The address of the Rochester-based funds is 350 Linden
Oaks, Rochester, New York 14625-2807.
Item 29. Principal Underwriter
(a) OppenheimerFunds Distributor, Inc. is the Distributor of
Registrant's shares. It is also the Distributor of each of the
other registered open-end investment companies for which
OppenheimerFunds, Inc. is the investment adviser, as described in
Part A and B of this Registration Statement and listed in Item
28(b) above.
(b) The directors and officers of the Registrant's principal
underwriter are:
Positions and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
Susan P. Bader ++ Assistant Vice President None
Christopher Blunt Vice President None
38954 Plumbrook Drive
Farmington Hills, MI 48331
George Clarence Bowen+ Vice President & Treasurer Vice President and
Treasurer of the NY-
based Oppenheimer
funds/Vice President,
Secretary and
Treasurer of the
Denver-based
Oppenheimer funds
Julie Bowers Vice President None
21 Dreamwold Road
Scituate, MA 02066
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Maryann Bruce* Senior Vice President - None
Director - Financial
Institution Div.
Robert Coli Vice President None
12 White Tail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce DeLeon Ave.
Decatur, GA 30030
Bill Coughlin Vice President None
3425-1/2 Irving Avenue So.
Minneapolis, MN 55408
Mary Crooks+ Senior Vice President None
Paul Delli-Bovi Vice President None
750 W. Broadway
Apt. 5M
Long Beach, NY 11561
E. Drew Devereaux ++ Assistant Vice President None
Andrew John Donohue* Executive Vice Secretary of the
President, General New York-based
Counsel and Director Oppenheimer funds/
Vice President of
the Denver-based
Oppenheimer funds
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
Katherine P. Feld* Vice President & Secretary None
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding++ Vice President; Chairman:
Rochester Division None
Reed F. Finley Vice President - None
320 E. Maple, Ste. 254 Financial Institution Div.
Birmingham, MI 48009
Wendy Fishler* Vice President - None
Financial Institution Div.
Ronald R. Foster Senior Vice President None
139 Avant Lane
Cincinatti, OH 45249
Patricia Gadecki Vice President None
3906 Americana Drive
Tampa, FL 3334
Luiggino Galleto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President - None
5506 Bryn Mawr Financial Institution Div.
Dallas, TX 75209
Ralph Grant* Vice President/National None
Sales Manager - Financial
Institution Div.
Sharon Hamilton Vice President None
720 N. Juanita Ave. - #1
Redondo Beach, CA 90277
Carla Jiminez Vice President None
111 Rexford Court
Summerville, SC 29485
Mark D. Johnson Vice President None
7512 Cromwell Dr. Apt 1
Clayton, MO 63105
Michael Keogh* Vice President None
Richard Klein Vice President None
4011 Queen Avenue South
Minneapolis, MN 55410
Ilene Kutno* Vice President - None
Director - Regional Sales
Wayne A. LeBlang Senior Vice President - None
23 Fox Trail Director Eastern Div.
Lincolnshire, IL 60069
Dawn Lind Vice President - None
7 Maize Court Financial Institution Div.
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
John McDonough Vice President None
P.O. Box 760
50 Riverview Road
New Castle, NH 03854
Laura Mulhall* Senior Vice President - None
Director of Key Accounts
Timothy G. Mulligan ++ Vice President None
Charles Murray Vice President None
50 Deerwood Drive
Littleton, CO 80127
Wendy Murray Vice President None
114-B Larchmont Acres West
Larchmont, NY 10538
Joseph Norton Vice President None
2518 Fillmore Street
Apt. 1
San Francisco, CA 94115
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Randall Payne Vice President - None
1307 Wandering Way Dr. Financial Institution Div.
Charlotte, NC 28226
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice President None
1777 Larimer St. #807
Denver, CO 80202
Tilghman G. Pitts, III* Chairman & Director None
Elaine Puleo* Vice President - None
Financial Institution Div.,
Director -
Key Accounts
Minnie Ra Vice President - None
0895 Thirty-First Ave. Financial Institution Div.
Apt. 4
San Francisco, CA 94121
Michael Raso Vice President None
30 Hommocks Road
Apt. 30
Larchmont, NY 10538
John C. Reinhardt ++ Vice President None
Ian Robertson Vice President None
4204 Summit Way
Marietta, GA 30066
Michael S. Rosen++ Vice President, President:
Rochester Division None
Kenneth Rosenson Vice President None
3802 Knickerbocker Place
Apt. 3D
Indianapolis, IN 46240
James Ruff* President None
Timothy Schoeffler Vice President None
1717 Fox Hall Road
Wasington, DC 20007
Mark Schon Vice President None
10483 E. Corrine Dr.
Scottsdale, AZ 85259
Michael Sciortino Vice President None
785 Beau Chene Dr.
Mandeville, LA 70448
Robert Shore Vice President - None
26 Baroness Lane Financial Institution Div.
Laguna Niguel, CA 92677
Peggy Spilker ++ Vice President None
Michael Stenger Vice President None
c/o America Building
30 East Central Pkwy
Suite 1008
Cincinnati, OH 45202
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
David G. Thomas Vice President - None
111 South Joliet Circle Financial Institution Div.
#304
Aurora, CO 80112
Philip Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Gary Paul Tyc+ Assistant Treasurer None
Mark Stephen Vandehey+ Vice President None
Gregory K. Wilson Vice President None
2 Side Hill Road
Westport, CT 06880
* Two World Trade Center, New York, NY 10048-0203
+ 3410 South Galena St., Denver, CO 80231
++ 350 Linden Oaks, Rochester, NY 14625-2807 (the "Rochester
Division")
(c) Not applicable.
Item 30. Location of Accounts and Records
The accounts, books and other documents required to be
maintained by Registrant pursuant to Section 31(a) of the
Investment Company Act of 1940 and rules promulgated thereunder are
in the possession of OppenheimerFunds Inc., at its offices at 3410
South Galena Street, Denver, Colorado 80231.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or
the Investment Company Act of 1940, the Registrant certifies that
it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities
Act of 1933 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized,
in the City of New York and State of New York on the 17th day of
October, 1996.
OPPENHEIMER GOLD & SPECIAL MINERALS FUND
By: /s/ Bridget A. Macaskill
----------------------------------------
Bridget A. Macaskill, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following
persons in the capacities on the dates indicated:
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Leon Levy* Chairman of the
- -------------- Board of Trustees October 17, 1996
Leon Levy
/s/ Bridget A. Macaskill* President, Principal
- ------------------------- Executive Officer
Bridget A. Macaskill and Trustee October 17, 1996
/s/ George Bowen* Treasurer & Principal
- ----------------- Financial & Accounting
George Bowen Officer October 17, 1996
/s/ Robert G. Galli* Trustee October 17, 1996
- -------------------
Robert G. Galli
/s/ Benjamin Lipstein* Trustee October 17, 1996
- ----------------------
Benjamin Lipstein
/s/ Elizabeth B. Moynihan* Trustee October 17, 1996
- --------------------------
Elizabeth B. Moynihan
/s/ Kenneth A. Randall* Trustee October 17, 1996
- ----------------------
Kenneth A. Randall
/s/ Edward V. Regan* Trustee October 17, 1996
- --------------------
Edward V. Regan
/s/ Russell S. Reynolds, Jr.* Trustee October 17, 1996
- -----------------------------
Russell S. Reynolds, Jr.
/s/ Sidney M. Robbins* Trustee October 17, 1996
- ----------------------
Sidney M. Robbins
/s/ Donald W. Spiro* Trustee October 17, 1996
- --------------------
Donald W. Spiro
/s/ Pauline Trigere* Trustee October 17, 1996
- --------------------
Pauline Trigere
/s/ Clayton K. Yeutter* Trustee October 17, 1996
- -----------------------
Clayton K. Yeutter
*By: /s/ Robert G. Zack
- --------------------------------
Robert G. Zack, Attorney-in-Fact
</TABLE>
<PAGE>
OPPENHEIMER GOLD & SPECIAL MINERALS FUND
Registration No. 2-82590
Post-Effective Amendment No. 25
EXHIBIT INDEX
Form N-1A
Item No. Description
24(b)(11) Independent Auditor's Consent
24(b)(16) Performance Data Computation Schedule
24(b)(17)(i) Financial Data Schedule for Class A Shares
24(b)(17)(ii) Financial Data Schedule for Class B Shares
24(b)(17)(iii) Financial Data Schedule for Class C Shares
- -- Power of Attorney for Bridget A. Macaskill
Exhibit 24(b)(11)
INDEPENDENT AUDITORS' CONSENT
The Board of Trustees
Oppenheimer Gold & Special Minerals Fund:
We consent to the use of our report dated July 22, 1996 included
herein and to the reference to our firm under the heading
"Financial Highlights" in Part A of the Registration Statement.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Denver, Colorado
October 9, 1996
prosp\410.con
Oppenheimer Gold & Special Minerals Fund
Exhibit 24(b)(16) to Form N-1A
Performance Data Computation Schedule
The Fund's average annual total returns and total returns are calculated as
described below, on the basis of the Fund's distributions, for the past 10
years which are as follows:
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares
07/29/85 0.0240 0.0000 7.120
07/28/86 0.1370 0.0000 6.190
07/31/87 0.1500 0.8800 12.890
12/24/87 0.2050 1.6900 11.520
12/23/88 0.1800 0.7900 11.460
12/22/89 0.2700 1.3400 14.210
12/21/90 0.0400 0.0000 9.770
12/20/91 0.1850 0.0000 9.580
12/17/92 0.1360 0.0000 8.770
12/23/93 0.0590 0.0000 13.830
12/21/94 0.0670 0.0000 12.960
12/18/95 0.0586 0.0000 13.030
Class B Shares
No dividends declared.
Class C Shares
No dividends declared.
1. Average Annual Total Returns for the Periods Ended 06/30/96:
The formula for calculating average annual total return is as follows:
1 ERV n
--------------- = n (---) - 1 = average annual total return
number of years P
Where: ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year
$ 993.78 1 $1,351.17 .2
(---------) - 1 = -0.62% (---------) - 1 = 6.20%
$1,000 $1,000
Ten Year
$3,392.79 .1
(---------) - 1 = 12.99%
$1,000
Oppenheimer Gold & Special Minerals Fund
Page 2
1. Average Annual Total Returns for the Periods Ended 06/30/96 (Continued):
Class B Shares
Example assuming a maximum contingent deferred sales charge of 5.00% for the
inception year:
Inception
$1,092.51 1.5063
(---------) - 1 = 14.26%
$1,000
Class C Share
Example assuming a maximum contingent deferred sales charge of 1.00% for the
inception year:
Inception
$1,134.13 1.5063
(---------) - 1 = 20.88%
$1,000
Examples at NAV:
Class A Shares
One Year Five Year
$1,054.43 1 $1,433.59 .2
(---------) - 1 = 5.44% (---------) - 1 = 7.47%
$1,000 $1,000
Ten Year
$3,599.77 .1
(---------) - 1 = 13.67%
$1,000
Class B Shares
Inception
$1,142.51 1.5063
(---------) - 1 = 22.22%
$1,000
Class C Shares
Inception
$1,144.13 1.5063
(---------) - 1 = 22.48%
$1,000
Oppenheimer Gold & Special Minerals Fund
Page 3
2. Cumulative Total Returns for the Periods Ended 06/30/96:
The formula for calculating cumulative total return is as follows:
ERV - P
------- = Cumulative Total Return
P
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year
$ 993.78 - $1,000 $1,351.17 - $1,000
------------------ = -0.62% ------------------ = 35.12%
$1,000 $1,000
Ten Year
$3,392.79 - $1,000
------------------ = 239.28%
$1,000
Class B Shares
Example assuming a maximum contingent deferred sales charge of 5.00% for the
inception year:
Inception
$1,092.51 - $1,000
------------------ = 9.25%
$1,000
Class C Shares
Example assuming a maximum contingent deferred sales charge of 1.00% for the
inception year:
Inception
$1,134.13 - $1,000
------------------ = 13.41%
$1,000
Oppenheimer Gold & Special Minerals Fund
Page 4
2. Cumulative Total Returns for the Periods Ended 06/30/96 (Continued):
Examples at NAV:
Class A Shares
One Year Five Year
$1,054.43 - $1,000 $1,433.59 - $1,000
------------------ = 5.44% ------------------ = 43.36%
$1,000 $1,000
Ten Year
$3,599.77 - $1,000
------------------ = 259.98%
$1,000
Class B Shares
Inception
$1,142.51 - $1,000
------------------ = 14.25%
$1,000
Class C Shares
Inception
$1,144.13 - $1,000
------------------ = 14.41%
$1,000
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<NAME> Oppenheimer Gold & Special Minerals Fund - A
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NAME> Oppenheimer Gold & Special Minerals Fund - B
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POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
constitutes and appoints Andrew J. Donohue or Robert G. Zack, and
each of them, her true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for her and in
her capacity as a trustee of OPPENHEIMER GOLD & SPECIAL MINERALS
FUND, a Massachusetts business trust (the "Fund"), to sign on her
behalf any and all Registration Statements (including any post-
effective amendments to Registration Statements) under the
Securities Act of 1933, the Investment Company Act of 1940 and any
amendments and supplements thereto, and other documents in
connection thereunder, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-
in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully as to all intents
and purposes as she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, and each
of them, may lawfully do or cause to be done by virtue hereof.
Dated this 5th day of October, 1995.
/s/ Bridget A. Macaskill
- ---------------------------------
Bridget A. Macaskill
