Registration No. 2-86903
File No. 811-3864
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. 32 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [X]
Amendment No. 30 [X]
OPPENHEIMER MULTIPLE STRATEGIES FUND
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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:
[ ] Immediately upon filing pursuant to paragraph (b)
[X] On January 29, 1999, pursuant to paragraph (b)
[ ] 60 days after filing, pursuant to paragraph (a)(1)
[ ] On ________, 1999, pursuant to paragraph (a)(1)
[ ] 75 days after filing, pursuant to paragraph (a)(2)
[ ] On ________, pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ] This post effective amendment designates a new effective date for a
previously filed post-effective amendment.
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<PAGE>
Oppenheimer Multiple Strategies Fund
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Prospectus dated January 29, 1999
Oppenheimer Multiple Strategies Fund is a mutual fund that seeks total
return consistent with preservation of principal as its goal. It invests in a
variety of equity and debt securities of U.S. and foreign issuers, as well as
money market instruments.
This Prospectus contains important information about the Fund's
objective, its investment policies, strategies and risks. It also contains
important information about how to buy and sell shares of the Fund and other
account features. Please read this Prospectus carefully before you invest and
keep it for future reference about your account.
(OppenheimerFunds logo)
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved the Fund's securities nor has it determined that this
Prospectus is accurate or complete. It is a criminal offense to represent
otherwise.
<PAGE>
Contents
About the Fund
The Fund's Objective and Investment Strategies
Main Risks of Investing in the Fund
The Fund's Past Performance
Fees and Expenses of the Fund
About the Fund's Investments
How the Fund is Managed
About Your Account
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How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Special Investor Services
AccountLink
PhoneLink
OppenheimerFunds Web Site
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Financial Highlights
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<PAGE>
About the Fund
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The Fund's Objective and Investment Strategies
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What Is the Fund's Investment Objective? The Fund's objective is to seek high
total investment return consistent with preservation of principal.
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What Does the Fund Invest In? The Fund's investment Manager,
OppenheimerFunds, Inc., uses a variety of different types of securities and
investment strategies to seek the Fund's objective:
o Equity securities, such as common stocks, preferred stocks and
convertible securities, of issuers in the U.S. and foreign countries
o Debt securities, such as bonds and notes issued by domestic and foreign
companies (which can include lower-grade, high-yield securities),
securities issued or guaranteed by the U.S. government and its
agencies and instrumentalities including mortgage-related securities
(these are referred to as "U.S. government securities"), and debt
obligations of foreign governments
o Money market instruments, which are obligations that have a maturity of
13 months or less, including short-term U.S. government securities,
corporate and bank debt obligations and commercial paper
o Hedging instruments, such as put and call options, foreign currency
forward contracts, futures and certain derivative investments to try
to enhance income or to manage investment risks.
These investments are more fully explained in "About the Fund's
Investments," below.
|X| How Does the Manager Decide What Securities to Buy or Sell? In
selecting securities for the Fund, the Fund's portfolio managers use
different investment styles to carry out an asset allocation strategy that
seeks broad diversification across asset classes. They normally maintain a
balanced mix of equity securities on the one hand, and debt securities and
cash on the other, although the Fund has no requirements to weight the
portfolio holdings in a fixed proportion. Therefore, the portfolio's mix of
equity and debt securities and cash will change over time.
The debt securities in the portfolio normally include a mix of U.S.
government securities, high-yield corporate bonds and foreign bonds, to seek
current income. The relative amounts of those types of debt securities in the
portfolio will change over time, because those sectors of the bond markets
generally react differently to changing economic environments.
The portfolio managers employ both "growth" and "value" styles in
selecting equity securities, using fundamental analysis of a company's
financial statements and management structure, and analysis of the company's
operations and product development, as well as the industry of which the
issuer is part. Value investing seeks issuers that are temporarily out of
favor or undervalued in the market by various measures, such as the stock's
price/earnings ratio. Growth investing seeks issuers that the manager
believes have possibilities for increases in stock price because of strong
earnings growth compared to the market, the development of new products or
services or other favorable economic factors.
Who Is the Fund Designed For? The Fund is designed primarily for investors
seeking high total return from their investment over the long term, from a
fund employing a variety of investments and investment styles in a
diversified portfolio. While the Fund selects investments consistent with the
goal of preservation of principal, investors should be willing to assume the
risks of short-term share price fluctuations that are typical for a fund with
significant investments in stocks and foreign securities. Since the Fund's
income level will fluctuate, it is not designed for investors needing an
assured level of current income. For the long-term, the Fund may be
appropriate for a part of an investor's retirement plan portfolio.
Main Risks of Investing in the Fund
All investments carry risks to some degree. The Fund's investments in
stocks and bonds are subject to changes in their value from a number of
factors. They include changes in general stock and bond market movements
(this is referred to as "market risk"), or the change in value of particular
stocks or bonds because of an event affecting the issuer (in the case of
bonds, this is known as "credit risk"). High-yield, lower-grade bonds
(commonly called "junk bonds") are subject to greater credit risks than
investment-grade securities. The Fund can have significant amounts of its
assets invested in foreign securities. Therefore, it will be subject to the
risks of economic, political or other events that can affect the values of
securities of issuers in particular foreign countries. Changes in interest
rates can also affect stock and bond prices (this is known as "interest rate
risk").
These risks collectively form the risk profile of the Fund, and can
affect the value of the Fund's investments, its investment performance and
its price per share. These risks mean that you can lose money by investing in
the Fund. When you redeem your shares, they may be worth more or less than
what you paid for them.
The Manager tries to reduce risks by carefully researching securities
before they are purchased, and in some cases by using hedging techniques. The
Fund attempts to reduce its exposure to market risks by diversifying its
investments, that is, by not holding a substantial amount of stock of any one
company and by not investing too great a percentage of the Fund's assets in
any one issuer. Also, the Fund does not concentrate 25% or more of its
investments in any one industry.
However, changes in the overall market prices of securities and the
income they pay can occur at any time. The share price of the Fund will
change daily based on changes in market prices of securities and market
conditions, and in response to other economic events. There is no assurance
that the Fund will achieve its investment objective.
|X| Risks of Investing in Stocks. Stocks fluctuate in price, and their
short-term volatility at times may be great. The Fund will normally invest at
least 25% of its total assets in stocks and other equity securities, and the
value of the Fund's portfolio therefore will be affected by changes in the
stock markets. Market risk will affect the Fund's net asset value per share,
which will fluctuate as the values of the Fund's portfolio securities
change. A variety of factors can affect the price of a particular stock and
the prices of individual stocks do not all move in the same direction
uniformly or at the same time. Different stock markets may behave differently
from each other.
Additionally, stocks of issuers in a particular industry may be
affected by changes in economic conditions that affect that industry more
than others, or by changes in government regulations, availability of basic
resources or supplies, or other events. Other factors can affect a particular
stock's price, such as poor earnings reports by the issuer, loss of major
customers, major litigation against the issuer, or changes in government
regulations affecting the issuer. The Fund can invest in securities of large
companies and also small and medium-size companies, which may have more
volatile stock prices than large companies.
|X| Risks of Foreign Investing. The Fund can buy securities issued by
companies or governments in any country, including developed and
underdeveloped countries. While the Fund has no limits on the amounts it can
invest in foreign securities, it normally expects to invest not more than 50%
of its assets in foreign securities. 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.
There may be transaction costs and risks from the conversion of certain
European currencies to the euro that commenced in January 1999. For example,
brokers and the Fund's custodian bank must convert their computer systems and
records to reflect the euro values of securities. If they are not prepared,
there could be delays in settlement of securities trades and additional costs
to the Fund.
|_| Special Risks of Emerging and Developing Markets. Securities
in emerging and developing market countries may offer special investment
opportunities, but investments in these countries present risks not found in
more mature markets. Those securities may be more difficult to sell at an
acceptable price and their prices may be more volatile than securities of
issuers in more developed markets. Settlements of trades may be subject to
greater delays so that the Fund might not receive the proceeds of a sale of a
security on a timely basis.
Emerging markets might have less developed trading markets and
exchanges. Emerging countries may have less developed legal and accounting
systems and investments may be subject to greater risks of government
restrictions on withdrawing the sales proceeds of securities from the
country. Economies of developing countries may be more dependent on
relatively few industries that may be highly vulnerable to local and global
changes. Governments may be more unstable and present greater risks of
nationalization or restrictions on foreign ownership of stocks of local
companies. These investments may be very speculative.
|X| Credit Risk. Debt securities are subject to credit risk. Credit
risk relates to the ability of the issuer of a security to make interest and
principal payments on the security as they become due. If the issuer fails to
pay interest, the Fund's income might be reduced and if the issuer fails to
repay principal, the value of that security and of the Fund's shares might be
reduced. While the Fund's investments in U.S. government securities are
subject to little credit risk, the Fund's other investments in debt
securities, particularly high-yield lower-grade debt securities, are subject
to risks of default.
|_| Special Risks of Lower-Grade Securities. Because the Fund
can invest up to 35% of its total assets in securities below investment-grade
to seek high income, the Fund's credit risks are greater than those of funds
that buy only investment-grade bonds. Lower-grade debt securities (commonly
called "junk bonds") may be subject to greater market fluctuations and
greater risks of loss of income and principal than investment-grade debt
securities. Securities that are (or that have fallen) below investment grade
are exposed to a greater risk that the issuers of those securities might not
meet their debt obligations. These risks can reduce the Fund's share prices
and the income it earns.
|X| Interest Rate Risks. The values of debt securities are subject to
change when prevailing interest rates change. When interest rates fall, the
values of already-issued debt securities generally rise. When interest rates
rise, the values of already-issued debt securities generally fall. The
magnitude of these fluctuations will often be greater for longer-term debt
securities than shorter-term debt securities. The Fund's share prices can go
up or down when interest rates change because of the effect of the changes on
the value of the Fund's investments in debt securities.
|X| Prepayment Risk. Prepayment risk occurs when the issuer of a
security can prepay the principal prior to the security's maturity.
Securities subject to prepayment risk, including the CMOs and other
mortgage-related securities that the Fund can buy, generally offer less
potential for gains when prevailing interest rates decline, and have greater
potential for loss when interest rates rise. The impact of prepayments on the
price of a security may be difficult to predict and may increase the
volatility of the price. Additionally, the Fund might buy mortgage-related
securities at a premium. Accelerated prepayments on those securities could
cause the Fund to lose a portion of its principal investment represented by
the premium the Fund paid.
If interest rates rise rapidly, prepayments might occur at slower rates
than expected, which could have the effect of lengthening the expected
maturity of a short or medium-term security. That could cause its value to
fluctuate more widely in response to changes in interest rates. In turn, this
could cause the value of the Fund's shares to fluctuate more.
|X| There Are Special Risks in Using Derivative Investments. The Fund
can use derivatives to seek increased returns or to try to hedge investment
risks. In general terms, a derivative investment is an investment contract
whose value depends on (or is derived from) the value of an underlying asset,
interest rate or index. Options, futures, CMOs, and structured notes are
examples of derivatives the Fund can use.
If the issuer of the derivative does not pay the amount due, the Fund
can lose money on the investment. Also, the underlying security or investment
on which the derivative is based, and the derivative itself, might not
perform the way the Manager expected it to perform. If that happens, the
Fund's share price could decline or the Fund could get less income than
expected. The Fund has limits on the amount of particular types of
derivatives it can hold. However, using derivatives can cause the Fund to
lose money on its investment and/or increase the volatility of its share
prices.
How Risky is the Fund Overall? In the short term, domestic and foreign stock
markets can be volatile, and the price of the Fund's shares will go up and
down in response to those changes. The Fund's income-oriented investments may
help cushion the Fund's total return from changes in stock prices, but debt
securities are subject to credit and interest rate risks. In the
OppenheimerFunds spectrum, the Fund may be less volatile than funds that
focus only on stock investments, but has more risks than funds that focus
solely on investment grade bonds.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
The Fund's Past Performance
The bar chart and table below show one measure of the risks of
investing in the Fund, by showing changes in the Fund's performance (for its
Class A shares) from year to year for the last ten calendar years and by
showing how the average annual total returns of the Fund's shares compare to
those of broad-based market indices. The Fund's past investment performance
is not necessarily an indication of how the Fund will perform in the future.
Annual Total Returns (Class A) (as of 12/31 each year)
[See appendix to prospectus for data in bar chart showing annual total
returns]
Sales charges are not included in the calculations of return in this bar
chart, and if those charges were included, the returns would be less than
those shown.
During the period shown in the bar chart, the highest return (not annualized)
for a calendar quarter was 11.15% (4th Q '98) and the lowest return (not
annualized) for a calendar quarter was -10.39% (3rd Q '98).
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Average Annual Total Returns 5 Years 10 Years
for the periods ended (or life of (or life of
December 31, 1998 1 Year class, class,
if less) if less)
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Class A Shares 0.90% 10.98% 11.16%
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S&P 500 Index (from 4/30/87) 28.60% 24.05% 19.19%
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Lehman Bros. Aggregate Bond
Index 8.69% 7.27% 9.26%
(from 12/31/88)
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Class B Shares (inception 1.47% 12.28% N/A
8/29/95)
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S&P 500 Index (from 8/31/95) 28.60% 28.91% N/A
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Lehman Bros. Aggregate Bond
Index 8.69% 8.20% N/A
(from 8/31/95)
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Class C Shares (inception 5.20% 11.34% 11.61%
12/01/93)
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S&P 500 Index (from 11/30/93) 28.60% 24.05% 23.92%
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Lehman Bros. Aggregate Bond
Index 8.69% 8.69% 7.2%
(from 11/30/93)
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The Fund's average annual total returns in the table include the applicable
sales charge for Classes A, B and C shares: for Class A, the current maximum
initial sales charge of 5.75%; for Class B, the contingent deferred sales
charges of 5% (1-year) and 3% (life of class); and for Class C, the 1%
contingent deferred sales charge for the 1-year period.
The returns measure the performance of a hypothetical account and assume that
all dividends and capital gains distributions have been reinvested in
additional shares. Because the Fund invests in stocks, the Fund's performance
is compared to the Standard & Poor's 500 Index, an unmanaged index of U.S.
equity securities. Because the Fund also invests in debt securities, the Fund
also compares its performance to the Lehman Brothers Aggregate Bond Index, an
unmanaged index of U.S. corporate, government and mortgage-backed securities.
However, it must be remembered that the index performance reflects the
reinvestment of income but does not consider the effects of capital gains or
transaction costs. Also, the Fund may have investments that vary from the
indices.
Fees and Expenses of the Fund
The Fund pays a variety of expenses directly for management of its
assets, administration, distribution of its shares and other services. Those
expenses are subtracted from the Fund's assets to calculate the Fund's net
asset value per share. All shareholders therefore pay those expenses
indirectly. Shareholders pay other expenses directly, such as sales charges
and account transaction charges. The following tables are provided to help
you understand the fees and expenses you may pay if you buy and hold shares
of the Fund. The numbers below are based on the Fund's expenses during its
fiscal year ended September 30, 1998.
Shareholder Fees (charges paid directly from your investment):
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Class A Shares Class B Shares Class C Shares
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Maximum Sales Charge
(Load) on purchases 5.75% None None
(as % of offering price)
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Maximum Deferred Sales
Charge (Load) (as % of
the None1 5%2 1%3
lower of the original
offering
price or redemption
proceeds)
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1. A contingent deferred sales charge may apply to redemptions of
investments of $1 million or more ($500,000 for retirement plan accounts)
of Class A shares. See "How to Buy Shares" for details.
2. Applies to redemptions in first year after purchase. The contingent
deferred sales charge declines to 1% in the sixth year and is eliminated
after that.
3. Applies to shares redeemed within 12 months of purchase.
Annual Fund Operating Expenses (deducted from Fund assets):
(% of average daily net assets)
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Class A Shares Class B Shares Class C Shares
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Management Fees 0.70% 0.70% 0.70%
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Distribution and/or 0.17% 1.00% 1.00%
Service (12b-1)
Fees
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Other Expenses 0.21% 0.21% 0.21%
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Total Annual Operating 1.08% 1.91% 1.91%
Expenses
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Expenses may vary in future years. "Other expenses" include transfer agent
fees, custodial expenses, and accounting and legal expenses the Fund pays.
Examples. These examples are intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
examples assume that you invest $10,000 in a class of shares of the Fund for
the time periods indicated and reinvest your dividends and distributions.
The first example assumes that you redeem all of your shares at the end
of those periods. The second example assumes that you keep your shares. Both
examples also assume that your investment has a 5% return each year and that
the class's operating expenses remain the same. Your actual costs may be
higher or lower because expenses will vary over time. Based on these
assumptions your expenses would be as follows:
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If shares are redeemed: 1 Year 3 Years 5 Years 10 Years1
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Class A Shares $679 $899 $1,136 $1,816
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Class B Shares $694 $900 $1,232 $1,818
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Class C Shares $294 $600 $1,032 $2,233
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If shares are not 1 Year 3 Years 5 Years 10 Years1
redeemed:
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Class A Shares $679 $899 $1,136 $1,816
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Class B Shares $194 $600 $1,032 $1,818
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Class C Shares $194 $600 $1,032 $2,233
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In the first example, expenses include the initial sales charge for Class A
and the applicable Class B or Class C contingent deferred sales charges. In
the second example, the Class A expenses include the sales charge, but Class
B and Class C expenses do not include the contingent deferred sales charges.
1. Class B expenses for years 7 through 10 are based on Class A expenses,
since Class B shares automatically convert to Class A after 6 years.
About the Fund's Investments
The Fund's Principal Investment Policies. The composition of the Fund's
portfolio among the different types of permitted investments will vary over
time based upon the evaluation of economic and market trends by the Manager.
At times the Fund may focus more on investing for capital appreciation with
less emphasis on income, while seeking to preserve principal. At other times,
for example when stock markets are less stable, the Fund may have substantial
amounts of income-seeking investments, such as money market instruments.
In seeking broad diversification of the Fund's portfolio over asset
classes, issuers and economies, the portfolio managers consider overall and
relative economic conditions in U.S. and foreign markets. They seek broad
diversification by investing in different countries to help moderate the
special risks of investing in foreign securities and lower-grade, high-yield
debt securities. The Statement of Additional Information contains more
detailed information about the Fund's investment policies and risks.
Stock Investments. The Fund invests in equity securities of issuers that may
be of small, medium or large size, to seek capital growth. Equity securities
include common stocks, preferred stocks and securities convertible into
common stock. Although convertible securities are a type of debt security,
the Manager considers convertible securities to be "equity equivalents"
because of the conversion feature and their rating has less impact on the
investment decision than in the case of other debt securities. The Fund
invests in securities issued by domestic or foreign companies that the
Manager believes have appreciation potential.
The Fund's equity investments may be exchange-traded or
over-the-counter securities. Over-the-counter securities may have less
liquidity than exchange-traded securities, and stocks of companies with
smaller capitalization have greater risk of volatility than stocks of larger
companies.
Debt Securities. The Fund can also invest in debt securities, such as U.S.
government securities, foreign government securities, and foreign and
domestic corporate bonds, notes and debentures, for their income
possibilities. The Fund will normally invest at least 25% of its assets in
fixed-income senior securities, such as bonds and notes.
The debt securities the Fund buys may be rated by nationally recognized
rating organizations or they may be unrated securities assigned a rating by
the Manager. The Fund's investments may be above or below investment grade in
credit quality. The Manager does not rely solely on ratings by rating
organizations in selecting debt securities but evaluates business and
economic factors affecting an issuer as well.
The Fund's foreign debt investments can be denominated in U.S. dollars
or in foreign currencies and can include "Brady Bonds." Those are U.S.
dollar-denominated debt securities collateralized by zero-coupon U.S.
Treasury securities. They are typically issued by governments of emerging
market countries and are considered speculative securities with higher risks
of default. The Fund will buy foreign currency only in connection with the
purchase and sale of foreign securities and not for speculation.
|X| U.S. Government Securities. The Fund can invest in securities
issued or guaranteed by the U.S. Treasury or other U.S. government agencies
or federally-chartered corporate entities referred to as "instrumentalities".
These are referred to as "U.S. government securities" in this Prospectus.
They can include collateralized mortgage obligations (CMOs) and other
mortgage-related securities. Mortgage-related securities are subject to
additional risks of unanticipated prepayments of the underlying mortgages,
which can affect the income stream to the Fund from those securities as well
as their values.
|_| U.S. Treasury Obligations. These include Treasury bills
(having maturities of one year or less when issued), Treasury notes (having
maturities of from one to ten years), and Treasury bonds (having maturities
of more than ten years when issued). Treasury securities are backed by the
full faith and credit of the United States as to timely payments of interest
and repayment of principal. The Fund can buy U. S. Treasury securities that
have been "stripped" of their interest coupons by a Federal Reserve Bank,
zero-coupon U.S. Treasury securities described below, and Treasury
Inflation-Protection Securities ("TIPS"). Although not rated, Treasury
obligations have little credit risk but prior to their maturity are subject
to interest rate risk.
|_| Obligations Issued or Guaranteed by U.S. Government Agencies
or Instrumentalities. These include direct obligations and mortgage-related
securities that have different levels of credit support from the U.S.
government. Some are supported by the full faith and credit of the U.S.
government, such as Government National Mortgage Association pass-through
mortgage certificates (called "Ginnie Maes"). Some are supported by the right
of the issuer to borrow from the U.S. Treasury under certain circumstances,
such as Federal National Mortgage Association bonds ("Fannie Maes"). Others
are supported only by the credit of the entity that issued them, such as
Federal Home Loan Mortgage Corporation obligations ("Freddie Macs"). These
have relatively little credit risk.
|_| Mortgage-Related U.S. Government Securities. The Fund can buy
interests in pools of residential or commercial mortgages, in the form of
collateralized mortgage obligations ("CMOs") and other "pass-through"
mortgage securities. CMOs that are U.S. government securities have collateral
to secure payment of interest and principal. They may be issued in different
series each having different interest rates and maturities. The collateral is
either in the form of mortgage pass-through certificates issued or guaranteed
by a U.S. agency or instrumentality or mortgage loans insured by a U.S.
government agency. The Fund can have significant amounts of its assets
invested in mortgage-related U.S. government securities.
The prices and yields of CMOs are determined, in part, by assumptions
about the cash flows from the rate of payments of the underlying mortgages.
Changes in interest rates may cause the rate of expected prepayments of those
mortgages to change. In general, prepayments increase when general interest
rates fall and decrease when interest rates rise.
If prepayments of mortgages underlying a CMO occur faster than expected
when interest rates fall, the market value and yield of the CMO could be
reduced. Additionally, the Fund may have to reinvest the prepayment proceeds
in other securities paying interest at lower rates, which could reduce the
Fund's yield.
When interest rates rise rapidly and if prepayments occur more slowly
than expected, a short- or medium-term CMO can in effect become a long-term
security, subject to greater fluctuations in value. These prepayment risks
can make the prices of CMOs very volatile when interest rates change. The
prices of longer-term debt securities tend to fluctuate more than those of
shorter-term debt securities. That volatility will affect the Fund's share
prices.
|X| Private-Issuer Mortgage-Backed Securities. The Fund can invest a
substantial portion of its assets in mortgage-backed securities issued by
private issuers, which do not offer the credit backing of U.S. government
securities. Primarily these would include multi-class debt or pass-through
certificates secured by mortgage loans. They may be issued by banks, savings
and loans, mortgage bankers and other non-governmental issuers. Private
issuer mortgage-backed securities are subject to the credit risks of the
issuers (as well as the interest rate risks and prepayment risks of CMOs,
discussed above), although in some cases they may be supported by insurance
or guarantees.
|X| Asset-Backed Securities. The Fund can buy asset-backed securities,
which are fractional interests in pools of loans collateralized by loans or
other assets or receivables. They are issued by trusts and special purpose
corporations that pass the income from the underlying pool to the buyer of
the interest. These securities are subject to the risk of default by the
issuer as well as by the borrowers of the underlying loans in the pool.
|X| High-Yield, Lower-Grade Debt Securities. The Fund can purchase a
variety of lower-grade, high yield debt securities, including bonds,
debentures, notes, preferred stocks, loan participation interests, structured
notes, asset-backed securities, among others, to seek current income. These
securities are sometimes called "junk bonds." The Fund has no requirements as
to the maturity of the debt securities it can buy, or as to the market
capitalization range of the issuers of those securities. The Fund limits
these investments to not more than 35% of its assets.
Lower-grade debt securities are those rated below "Baa" by Moody's
Investors Service or lower than "BBB" by Standard & Poor's or similar ratings
by other nationally-recognized rating organizations. The Fund can invest in
securities rated as low as "C" or "D" or which are in default at the time the
Fund buys them. While securities rated "Baa" by Moody's or "BBB" by S&P are
considered "investment grade," they have some speculative characteristics.
The special risks these securities are subject to mean that the Fund
may not achieve the expected income from them and that the Fund's net asset
value per share may be affected by declines in value of these securities.
Money Market Instruments. The Fund can invest in money market instruments,
which are debt obligations maturing in 13 months or less. They include
short-term certificates of deposit, bankers' acceptances, commercial paper
(including variable amount master demand notes), U.S. Government obligations,
and other debt instruments (including bonds) issued by corporations. These
securities may have variable or floating interest rates. The Fund's
investments in commercial paper in general will be limited to paper in the
top two rating categories of Standard & Poor's or Moody's.
Can the Fund's Investment Objective and Policies Change? The Fund's Board of
Trustees can change non-fundamental investment policies without shareholder
approval, although significant changes will be described in amendments to
this Prospectus. Fundamental policies are those that cannot be changed
without the approval of a majority of the Fund's outstanding voting shares.
The Fund's objective is a fundamental policy. Investment restrictions that
are fundamental policies are listed in the Statement of Additional
Information. An investment policy is not fundamental unless this Prospectus
or the Statement of Additional Information says that it is.
Portfolio Turnover. The Fund can engage in short-term trading to try to
achieve its objective. Portfolio turnover affects brokerage costs the Fund
pays. If the Fund realizes capital gains when it sells its portfolio
investments, it must generally pay those gains out to shareholders,
increasing their taxable distributions. The Financial Highlights table below
shows the Fund's portfolio turnover rates during prior fiscal years.
Other Investment Strategies. To seek its objective, the Fund can also use
the investment techniques and strategies described below. The Fund might not
always use all of the different types of techniques and investments described
below. These techniques involve certain risks, although some are designed to
help reduce investment or market risks.
|X| Bank Loan Participation Agreements. The Fund can invest in bank
loan participation agreements. They provide the Fund an undivided interest in
a loan made by the issuing bank in the proportion the Fund's interest bears
to the total principal amount of the loan. In evaluating the risk of these
investments, the Manager looks to the creditworthiness of the borrower that
is obligated to make principal and interest payments on the loan. Not more
than 5% of the Fund's net assets can be invested in participation interests
of any one borrower.
|X| Repurchase Agreements. The Fund can enter into repurchase
agreements. In a repurchase transaction, the Fund buys a security and
simultaneously sells it to the vendor for delivery at a future date.
Repurchase agreements must be fully collateralized. However, if the vendor
fails to pay the resale price on the delivery date, the Fund could incur
costs in disposing of the collateral and might experience losses if there is
any delay in its ability to do so. There is no limit on the amount of the
Fund's net assets that may be subject to repurchase agreements of 7 days or
less.
|X| Zero-Coupon and "Stripped" Securities. Some of the U.S. government
debt securities the Fund buys are zero-coupon bonds that pay no interest.
They are issued at a substantial discount from their face value. "Stripped"
securities are the separate income or principal components of a debt
security. Some CMOs or other mortgage-related securities may be stripped,
with each component having a different proportion of principal or interest
payments. One class might receive all the interest and the other all the
principal payments.
Zero-coupon and stripped securities are subject to greater fluctuations
in price from interest rate changes than interest-bearing securities. The
Fund may have to pay out the imputed income on zero-coupon securities without
receiving the actual cash currently. Interest-only securities are
particularly sensitive to changes in interest rates.
The values of interest-only mortgage related securities are also very
sensitive to prepayments of underlying mortgages. Principal-only securities
are also sensitive to changes in interest rates. When prepayments tend to
fall, the timing of the cash flows to these securities increases, making them
more sensitive to changes in interest rates. The market for some of these
securities may be limited, making it difficult for the Fund to dispose of its
holdings at an acceptable price.
|X| "When-Issued" and "Delayed-Delivery" Transactions. The Fund can
purchase securities on a "when-issued" basis and may purchase or sell
securities on a "delayed-delivery" basis. These terms refer to securities
that have been created and for which a market exists, but which are not
available for immediate delivery. There might be a loss to the Fund if the
value of the security declines prior to the settlement date.
|X| 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 Board can increase that limit to 15%).
Certain restricted securities that are eligible for resale to qualified
institutional purchasers may not be subject to that limit. The Manager
monitors holdings of illiquid securities on an ongoing basis to determine
whether to sell any holdings to maintain adequate liquidity.
|X| Derivative Investments. The Fund can invest in a number of
different kinds of "derivative" investments. In the broadest sense,
exchange-traded options, futures contracts, mortgage-related securities and
other hedging instruments the Fund can use may be considered "derivative
investments." In addition to using hedging instruments, the Fund may use
other derivative investments because they offer the potential for increased
income and principal value.
Markets underlying securities and indices may move in a direction not
anticipated by the Manager. Interest rate and stock market changes in the
U.S. and abroad may also influence the performance of derivatives. As a
result of these risks the Fund could realize less principal or income from
the investment than expected. Certain derivative investments held by the
Fund may be illiquid.
|X| Hedging. The Fund can buy and sell certain kinds of futures
contracts, put and call options, forward contracts and options on futures and
broadly-based securities indices. These are all referred to as "hedging
instruments." The Fund is not required to use hedging instruments to seek
its objective. The Fund does not use hedging instruments for speculative
purposes, and has limits on its use of them.
The Fund could buy and sell options, futures and forward contracts for
a number of purposes. It might do so to try to manage its exposure to the
possibility that the prices of its portfolio securities may decline, or to
establish a position in the securities market as a temporary substitute for
purchasing individual securities. It might do so to try to manage its
exposure to changing interest rates. Forward contracts can be used to try to
manage foreign currency risks on the Fund's foreign investments.
Options trading involves the payment of premiums and has special tax
effects on the Fund. There are also special risks in particular hedging
strategies. For example, if a covered call written by the Fund is exercised
on an investment that has increased in value, the Fund will be required to
sell the investment at the call price and will not be able to realize any
profit if the investment has increased in value above the call price. In
writing a put, there is a risk that the Fund may be required to buy the
underlying security at a disadvantageous price.
If the Manager used a hedging instrument at the wrong time or judged
market conditions incorrectly, the strategy could 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.
Year 2000 Risks. Because many computer software systems in use today cannot
distinguish the year 2000 from the year 1900, the markets for securities in
which the Fund invests could be detrimentally affected by computer failures
beginning January 1, 2000. Failure of computer systems used for securities
trading could result in settlement and liquidity problems for the Fund and
other investors. That failure could have a negative impact on handling
securities trades, pricing and accounting services. Data processing errors by
government issuers of securities could result in economic uncertainties, and
those issuers may incur substantial costs in attempting to prevent or fix
such errors, all of which could have a negative effect on the Fund's
investments and returns.
The Manager, the Distributor and the Transfer Agent have been working
on necessary changes to their computer systems to deal with the year 2000 and
expect that their systems will be adapted in time for that event, although
there cannot be assurance of success. Additionally, the services they
provide depend on the interaction of their computer systems with those of
brokers, information services, the Fund's Custodian and other parties.
Therefore, any failure of the computer systems of those parties to deal with
the year 2000 may also have a negative effect on the services they provide to
the Fund. The extent of that risk cannot be ascertained at this time.
How the Fund Is Managed
The Manager. The Fund's investment Manager, OppenheimerFunds, Inc., chooses
the Fund's investments and handles its day-to-day business. The Manager
carries out its duties, subject to the policies established by the Board of
Trustees, under an Investment Advisory Agreement that states the Manager's
responsibilities. The Agreement sets forth the fees paid by the Fund to the
Manager and describes the expenses that the Fund is responsible to pay to
conduct its business.
The Manager has operated as an investment adviser since 1959. The
Manager (including subsidiaries) currently manages investment companies,
including other Oppenheimer funds, with assets of more than $95 billion as of
December 31, 1998, and with more than 4 million shareholder accounts. The
Manager is located at Two World Trade Center, 34th Floor, New York, New York
10048-0203.
|X| Portfolio Managers. The Fund's management team includes four
portfolio managers. Each is a Vice President of the Fund. They are the
persons principally responsible for the day-to-day management of the Fund's
portfolio. Richard H. Rubinstein, a Senior Vice President of the Manager, has
been a portfolio manager of the Fund since April 15, 1991. Since August 21,
1998, David Negri, a Senior Vice President of the Manager, George Evans and
Michael Levine, who are both Vice Presidents of the Manager, have been
portfolio managers of the Fund. Each serves as an officer and manager of
other Oppenheimer funds. Prior to joining the Manager in June 1994, Mr.
Levine was a portfolio manager and research associate for Amas Securities,
Inc.
|X| Advisory Fees. Under the Investment Advisory Agreement, the Fund
pays the Manager an advisory fee at an annual rate that declines on
additional assets as the Fund grows: 0.75% of the first $200 million of
average annual net assets of the Fund, 0.72% of the next $200 million, 0.69%
of the next $200 million, 0.66% of the next $200 million, 0.60% of the next
$700 million and 0.58% of average annual net assets in excess of $1.5
billion. The Fund's management fee for its last fiscal year ended September
30, 1998 was 0.70% of average annual net assets for each class of shares.
- ------------------------------------------------------------------------------
About Your Account
- ------------------------------------------------------------------------------
How to Buy Shares
How Are Shares Purchased? You can buy shares several ways -- through any
dealer, broker or financial institution that has a sales agreement with the
Fund's Distributor, or directly through the Distributor, or automatically
through an Asset Builder Plan under the OppenheimerFunds AccountLink
service. The Distributor may appoint certain servicing agents to accept
purchase (and redemption) orders. The Distributor, in its sole discretion,
may reject any purchase order for the Fund's shares.
|X| Buying Shares Through Your Dealer. Your dealer will place your
order with the Distributor on your behalf.
|X| Buying Shares Through the Distributor. Complete an OppenheimerFunds
New Account Application and return it with a check payable to
"OppenheimerFunds Distributor, Inc." Mail it to P.O. Box 5270, Denver,
Colorado 80217. If you don't list a dealer on the application, the
Distributor will act as your agent in buying the shares. However, we
recommend that you discuss your investment with a financial advisor before
you make a purchase to be sure that the Fund is appropriate for you.
|X| Buying Shares by Federal Funds Wire. Shares purchased through the
Distributor may be paid for by Federal Funds wire. The minimum investment is
$2,500. Before sending a wire, call the Distributor's Wire Department at
1-800-525-7048 to notify the Distributor of the wire, and to receive further
instructions.
|X| Buying Shares Through OppenheimerFunds AccountLink. With
AccountLink, shares are purchased for your account on the regular business
day the Distributor is instructed by you to initiate the Automated Clearing
House (ACH) transfer to buy the shares. You can provide those instructions
automatically, under an Asset Builder Plan, described below, or by telephone
instructions using OppenheimerFunds PhoneLink, also described below. Please
refer to "AccountLink," below for more details.
|X| Buying Shares Through Asset Builder Plans. You may purchase shares
of the Fund (and up to four other Oppenheimer funds) automatically each month
from your account at a bank or other financial institution under an Asset
Builder Plan with AccountLink. Details are in the Asset Builder Application
and the Statement of Additional Information.
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, 403(b) plans, Automatic Exchange Plans
and military allotment plans, you can make initial and subsequent investments
for as little as $25. Subsequent purchases of at least $25 can be made by
telephone through AccountLink.
|_| Under retirement plans, such as IRAs, pension and profit-sharing
plans and 401(k) plans, you can start your account with as little as $250. If
your IRA is started under an Asset Builder Plan, the $25 minimum applies.
Additional purchases may be as little as $25.
|_| The minimum investment requirement does not apply to 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 reinvesting distributions from unit investment trusts
that have made arrangements with the Distributor.
At What Price Are Shares Sold? Shares are sold at their offering price (the
net asset value per share plus any initial sales charge that applies). The
offering price that applies to a purchase order is based on the next
calculation of the net asset value per share that is made after the
Distributor receives the purchase order at its offices in Denver, Colorado,
or after any agent appointed by the Distributor receives the order and sends
it to the Distributor.
|_| The net asset value of each class of shares is determined as of the
close of The New York Stock Exchange, on each day the Exchange is open for
trading (referred to in this Prospectus as a "regular business day"). The
Exchange normally closes at 4:00 P.M., New York time, but may close earlier
on some days. (All references to time in this Prospectus mean "New York
time").
The net asset value per share is determined 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. To determine net asset value, the Fund's Board
of Trustees has established procedures to value the Fund's securities, in
general based on market value. The Board has adopted special procedures for
valuing illiquid and restricted securities and obligations for which market
values cannot be readily obtained. Because some foreign securities trade in
markets and exchanges that operate on weekends and U.S. holidays, the values
of some of the Fund's foreign investments may change significantly on days
when investors cannot buy or redeem Fund shares.
|_| To receive the offering price for a particular day, in most cases
the Distributor or its designated agent must receive your order by the time
of day The New York Stock Exchange closes that day. If your order is
received on a day when the Exchange is closed or after it has closed, the
order will receive the next offering price that is determined after your
order is received.
|_| If you buy shares through a dealer, your dealer must receive the
order by the close of The New York Stock Exchange and transmit it to the
Distributor so that it is received before the Distributor's close of business
on a regular business day (normally 5:00 P.M.) to receive that day's offering
price. Otherwise, the order will receive the next offering price that is
determined.
- ------------------------------------------------------------------------------
What Classes of Shares Does the Fund Offer? The Fund offers investors three
different classes of shares. The different classes of shares represent
investments in the same portfolio of securities, but the classes are subject
to different expenses and will likely have different share prices. When you
buy shares, be sure to specify the class of shares. If you do not choose a
class, your investment will be made in Class A shares.
|X| Class A Shares. If you buy Class A shares, you pay an initial
sales charge (on investments up to $1 million for regular accounts or
$500,000 for certain retirement plans). The amount of that sales charge will
vary depending on the amount you invest. The sales charge rates are listed in
"How Can I Buy Class A Shares?" below.
|X| Class B Shares. If you buy Class B shares, you pay no sales charge
at the time of purchase, but you will pay an annual asset-based sales charge,
and if you sell your shares within six years of buying them, you will
normally pay a contingent deferred sales charge. That contingent deferred
sales charge varies depending on how long you own your shares, as described
in "How Can I Buy Class B Shares?" below.
- ------------------------------------------------------------------------------
|X| Class C Shares. If you buy Class C shares, you pay no sales charge
at the time of purchase, but you will pay an annual asset-based sales charge,
and if you sell your shares within 12 months of buying them, you will
normally pay a contingent deferred sales charge of 1%, as described in "How
Can I Buy 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
best suited to your needs depends on a number of factors that you should
discuss with your financial advisor. Some 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. 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 discussion below is not intended to be investment advice or a
recommendation, because each investor's financial considerations are
different. You should review these factors with your financial advisor. The
discussion below assumes that you will purchase only one class of shares, and
not a combination of shares of different classes.
|X| 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,
compared to the effect over time of higher class-based expenses on shares of
Class B or Class C.
|_| Investing for the Short Term. If you have a relatively 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. That is because of the effect of the Class B
contingent deferred sales charge if you redeem within six 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 as 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.
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 less than
$100,000 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
appropriate.
Of course, these examples are based on approximations of the effect of
current sales charges and expenses projected over time, and do not detail all
of the considerations in selecting a class of shares. You should analyze your
options carefully with your financial advisor before making that choice.
|X| Are There Differences in Account Features That Matter to You? Some
account features may not be available to Class B or Class C shareholders.
Other features (such as Automatic Withdrawal Plans) may not be advisable
(because of the effect of the contingent deferred sales charge) for Class B
or Class C shareholders. Therefore, you should carefully review how you plan
to use your investment account before deciding which class of shares to buy.
Additionally, the dividends payable to Class B and Class C shareholders
will be reduced by the additional expenses borne by those classes that are
not borne by Class A shares, such as the Class B and Class C asset-based
sales charges described below and in the Statement of Additional
Information. Share certificates are not available for Class B and Class C
shares, and if you are considering using your shares as collateral for a
loan, that may be a factor to consider.
|X| How Does It Affect Payments to My Broker? A salesperson, such as a
broker, may receive different compensation for selling one class of shares
than for selling another class. It is important to remember that Class B and
Class C contingent deferred sales charges and asset-based sales charges have
the same purpose as the front-end sales charge on sales of Class A shares: to
compensate the Distributor for commissions and expenses it pays to dealers
and financial institutions for selling shares. The Distributor may pay
additional compensation from its own resources to securities dealers or
financial institutions based upon the value of shares of the Fund owned by
the dealer or financial institution for its own account or for its customers.
Special Sales Charge Arrangements and Waivers. Appendix C to the Statement
of Additional Information details the conditions for the waiver of sales
charges that apply in certain cases, and the special sales charge rates that
apply to purchases of shares of the Fund by certain groups, or under
specified retirement plan arrangements or in other special types of
transactions.
How Can I Buy 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
other cases, reduced sales charges may be available, as described below or in
the Statement of Additional Information. 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 or allocated
to your dealer as commission. The Distributor reserves the right to reallow
the entire commission to dealers. The current sales charge rates and
commissions paid to dealers and brokers are as follows:
------------------------------------------------------------------------------
Front-End Sales Front-End Sales
Charge As a Charge As a Commission As
Percentage of Percentage of Percentage of
Amount of Purchase Offering Price Net Offering Price
Amount Invested
------------------------------------------------------------------------------
------------------------------------------------------------------------------
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%
------------------------------------------------------------------------------
|X| 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 aggregating $1 million or more or for certain purchases by
particular types of retirement plans described in Appendix C to the Statement
of Additional Information. The Distributor pays dealers of record
commissions in an amount equal to 1.0% of purchases of $1 million or more
other than by those retirement accounts. For those retirement plan accounts,
the commission is 1.0% of the first $2.5 million, plus 0.50% of the next $2.5
million, plus 0.25% of purchases over $5 million, calculated on a calendar
year basis. In either case, the commission will be paid only on purchases
that were not previously subject to a front-end sales charge and dealer
commission.1
If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge (called
the "Class A contingent deferred sales charge") may be deducted from the
redemption proceeds. That sales charge will be equal to 1.0% of the lesser
of (1) the aggregate net asset value of the redeemed shares at the time of
redemption (excluding shares purchased by reinvestment of dividends or
capital gain distributions) or (2) the original net asset value of the
redeemed shares. However, the Class A contingent deferred sales charge will
not exceed the aggregate amount of the commissions the Distributor paid to
your dealer on all purchases of Class A shares of all Oppenheimer funds you
made that were subject to the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is payable
when shares are redeemed, the Fund will first redeem shares that are not
subject to the sales charge, including shares purchased by reinvestment of
dividends and capital gains. Then the Fund will redeem other shares in the
order in which you purchased them. The Class A contingent deferred sales
charge is waived in certain cases described in Appendix C to the Statement of
Additional Information.
The Class A contingent deferred sales charge is not charged on
exchanges of shares under the Fund's exchange privilege (described below).
However, if the shares acquired by exchange are redeemed within 18 calendar
months of the end of the calendar month in which the exchanged shares were
originally purchased, then the sales charge will apply.
How Can I Reduce Sales Charges for Class A Share Purchases? You may be
eligible to buy Class A shares at reduced sales charge rates under the Fund's
"Right of Accumulation" or a Letter of Intent, as described in "Reduced Sales
Charges" in the Statement of Additional Information.
|X| Waivers of Class A Sales Charges. The Class A initial and
contingent deferred sales charges are not imposed in the circumstances
described in Appendix C to the Statement of Additional Information. In order
to receive a waiver of the Class A contingent deferred sales charge, you must
notify the Transfer Agent when purchasing shares whether any of the special
conditions apply.
How Can I Buy 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. The Class B contingent
deferred sales charge is paid to compensate the Distributor for its expenses
of providing distribution-related services to the Fund in connection with the
sale of Class B shares.
The contingent deferred sales charge will be based on the lesser of the
net asset value of the redeemed shares at the time of redemption or the
original net asset value. 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,
|_| shares purchased by the reinvestment of dividends or capital
gains distributions, or
|_| shares redeemed in the special circumstances described in
Appendix C to the Statement of Additional Information.
To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order:
(1) shares acquired by reinvestment of dividends and capital gains
distributions,
(2) shares held for over 6 years, and
(3) shares held the longest during the 6-year period.
The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule:
------------------------------------------------------------------------------
Contingent Deferred Sales Charge on
Years Since Beginning of Month in Redemptions in That Year
Which (As % of Amount Subject to Charge)
Purchase Order was Accepted
------------------------------------------------------------------------------
------------------------------------------------------------------------------
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. In applying the sales charge,
all purchases are considered to have been made on the first regular business
day of the month in which the purchase was made.
|X| Automatic Conversion of Class B Shares. Class B shares
automatically convert to Class A shares 72 months after you purchase them.
This conversion feature relieves Class B shareholders of the asset-based
sales charge that applies to Class B shares under the Class B Distribution
and Service Plan, described below. The conversion is based on the relative
net asset value of the two classes, and no sales load or other charge is
imposed. When Class B shares convert, any other Class B shares that were
acquired by the reinvestment of dividends and distributions on the converted
shares will also convert to Class A shares. The conversion feature is subject
to the continued availability of a tax ruling described in the Statement of
Additional Information.
How Can I Buy 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. 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.
The contingent deferred sales charge will be based on the lesser of the
net asset value of the redeemed shares at the time of redemption or the
original net asset value. The contingent deferred sales charge is not
imposed on:
|_| the amount of your account value represented by the increase in
net asset value over the initial purchase price,
|_| shares purchased by the reinvestment of dividends or capital
gains distributions, or
|_| shares redeemed in the special circumstances described in
Appendix C to the Statement of Additional Information.
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 (12b-1) Plans.
|X| Service Plan for Class A Shares. The Fund has adopted a Service
Plan for Class A shares. It reimburses the Distributor for a portion of its
costs incurred for services provided to accounts that hold Class A shares.
Reimbursement is made quarterly at an annual rate of up to 0.25% of the
average annual net assets of Class A shares of the Fund represented by Class
A shares acquired on or after April 1, 1988. The rate is 0.15% on assets
representing shares acquired before that date. The Distributor currently uses
all of those fees to pay dealers, brokers, banks and other financial
institutions quarterly for providing personal service and maintenance of
accounts of their customers that hold Class A shares.
|X| 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 pay 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 and on Class C shares. The Distributor also receives a
service fee of 0.25% per year under each plan.
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. Because these fees are paid out of the Fund's assets on an ongoing
basis, over time these fees will increase the cost of your investment and may
cost you more than other types of sales charges.
The Distributor uses the service fees to compensate dealers for
providing personal services for accounts that hold Class B or Class C
shares. The Distributor pays the 0.25% service fees to dealers in advance
for the first year after the shares were 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 Distributor currently pays sales commission 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 sales of Class B shares
is therefore 4.00% of the purchase price. The Distributor retains the Class
B asset-based sales charge.
The Distributor 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 pays 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.
Special Investor Services
AccountLink. You can use our AccountLink feature to link your Fund account
with an account at a U.S. bank or other financial institution. It must be an
Automated Clearing House (ACH) member. AccountLink lets you:
|_| transmit funds electronically to purchase shares by telephone
(through a service representative or by PhoneLink) or automatically
under Asset Builder Plans, or
|_| have the Transfer Agent send redemption proceeds or transmit
dividends and distributions directly to your bank account. Please call
the Transfer Agent for more information.
You may purchase shares 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.
AccountLink privileges should be requested on your Application or your
dealer's settlement instructions if you buy your shares through a 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.
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.
|X| 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.
|X| Exchanging Shares. With the OppenheimerFunds Exchange Privilege,
described below, you can exchange shares automatically by phone from your
Fund account to another OppenheimerFunds account you have already established
by calling the special PhoneLink number.
|X| 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.
Can I Submit Transaction Requests by Fax? You may send requests for certain
types of account transactions to the Transfer Agent by fax (telecopier).
Please call 1-800-525-7048 for information about which transactions may be
handled this way. Transaction requests submitted by fax are subject to the
same rules and restrictions as written and telephone requests described in
this Prospectus.
OppenheimerFunds Internet Web Site. You can obtain information about the
Fund, as well as your account balance, on the OppenheimerFunds Internet web
site, at http://www.oppenheimerfunds.com. Additionally, shareholders listed
in the account registration (and the dealer of record) may request certain
account transactions through a special section of that web site. To perform
account transactions, you must first obtain a personal identification number
(PIN) by calling the Transfer Agent at 1-800-533-3310. If you do not want to
have Internet account transaction capability for your account, please call
the Transfer Agent at 1-800-525-7048.
Automatic Withdrawal and Exchange Plans. The Fund has several plans that
enable you to sell shares automatically or exchange them to another
OppenheimerFunds account on a regular basis. Please call the Transfer Agent
or consult the Statement of Additional Information for details.
Reinvestment Privilege. If you redeem some or all of your Class A or Class B
shares of the Fund, you have up to 6 months to reinvest all or part of the
redemption proceeds in Class A shares of the Fund or other Oppenheimer funds
without paying a sales charge. This privilege applies only to Class A shares
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.
Retirement Plans. You may buy shares of the Fund for your retirement plan
account. If you participate in a plan sponsored by your employer, the plan
trustee or administrator must buy the shares for your plan account. The
Distributor also offers a number of different retirement plans that can be
used by individuals and employers:
|X| Individual Retirement Accounts (IRAs), including regular IRAs, Roth
IRAs, SIMPLE IRAs, rollover and Education IRAs.
|X| SEP-IRAs, which are Simplified Employee Pensions Plan IRAs for
small business owners or self-employed individuals.
|X| 403(b)(7) Custodial Plans, that are tax deferred plans for
employees of eligible tax-exempt organizations, such as schools, hospitals
and charitable organizations.
|X| 401(k) Plans, which are special retirement plans for businesses.
|X| Pension and Profit-Sharing Plans, designed for businesses and
self-employed individuals.
Please call the Distributor for OppenheimerFunds retirement plan
documents, which include applications and important plan information.
How to Sell Shares
You can sell (redeem) 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 in proper form (which means that it must comply with the
procedures described below) and is accepted by the Transfer Agent. The Fund
lets you sell your shares by writing a letter or by telephone. You can also
set up Automatic Withdrawal Plans to redeem shares on a regular basis. 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 account, please call the Transfer Agent
first, at 1-800-525-7048, for assistance.
|X| Certain Requests Require a Signature Guarantee. To protect you and
the Fund from fraud, the following redemption requests must be in writing and
must include a signature guarantee (although there may be other situations
that also require a signature guarantee):
|_| You wish to redeem $50,000 or more and receive a check
|_| The redemption check is not payable to all shareholders listed on
the account statement
|_| The redemption check is not sent to the address of record on your
account statement
|_| Shares are being transferred to a Fund account with a different
owner or name
|_| Shares are being redeemed by someone (such as an Executor) other
than the owners
|X| 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.
|X| Retirement Plan Accounts. There are special procedures to sell
shares in an OppenheimerFunds retirement plan account. Call the Transfer
Agent for a distribution request form. Special income tax withholding
requirements apply to distributions from retirement plans. You must submit a
withholding form with your redemption request to avoid delay in getting your
money and if you do not want tax withheld. If your employer holds your
retirement plan account for you in the name of the plan, you must ask the
plan trustee or administrator to request the sale of the Fund shares in your
plan account.
How Do I Sell 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 documents requested by the Transfer Agent to assure
proper authorization of the person asking to sell the shares.
- ------------------------------------------------------------------------------
Use the following address for requests by mail:
OppenheimerFunds Services
P.O. Box 5270, Denver
Colorado 80217-5270
- ------------------------------------------------------------------------------
Send courier or express mail requests to:
OppenheimerFunds Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
How Do I Sell 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 account or under a share certificate
by telephone.
|_| To redeem shares through a service representative, call
1-800-852-8457
|_| To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address on
the account statement, or, if you have linked your Fund account to your bank
account on AccountLink, you may have the proceeds sent to that bank account.
Are There Limits on Amounts Redeemed by Telephone?
|X| Telephone Redemptions Paid by Check. Up to $50,000 may be redeemed
by telephone in any 7-day period. The check must be payable to all owners of
record of the shares and must be sent to the address on the account
statement. This service is not available within 30 days of changing the
address on an account.
|X| Telephone Redemptions Through AccountLink. There are no dollar
limits on telephone redemption proceeds sent to a bank account designated
when you establish AccountLink. Normally the ACH 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.
Can I Sell Shares Through My 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. If your shares
are held in the name of your dealer, you must redeem them through your dealer.
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. In some cases, sales charges may be imposed on exchange transactions.
For tax purposes, exchanges of shares involve a sale 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. Please refer to "How to Exchange Shares" in the
Statement of Additional Information for more details.
How Do I Submit Exchange Requests? Exchanges may be requested in writing or
by telephone:
|X| Written Exchange Requests. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the Transfer
Agent at the address on the back cover. Exchanges of shares held under
certificates cannot be processed unless the Transfer Agent receives the
certificates with the request.
|X| 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.
Are There Limitations on Exchanges? 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 conforms to the
policies described above. It must be received 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 exchange. For example, the receipt of multiple
exchange requests from a "market timer" might require the Fund to sell
securities at a disadvantageous time and/or price.
|_| Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange request that
it believes 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.
|_| 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
More information about the Fund's policies and procedures for buying, selling
and exchanging shares is contained in the Statement of Additional Information.
|X| 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.
|X| 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 the Transfer Agent receives cancellation instructions from an owner of
the account.
|X| 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. The Transfer Agent and the Fund will
not be liable for losses or expenses arising out of telephone instructions
reasonably believed to be genuine.
|X| 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.
|X| 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.
|X| The redemption price for shares will vary from day to day because
the value of the securities in the Fund's portfolio fluctuates. The
redemption price, which is the net asset value per share, will normally
differ for each class of shares. The redemption value of your shares may be
more or less than their original cost.
|X| Payment for redeemed shares ordinarily is made in cash. It is
forwarded by check or through AccountLink (as elected by the shareholder)
within seven days after the Transfer Agent receives redemption instructions
in proper form. However, under unusual circumstances determined by the
Securities and Exchange Commission, payment may be delayed or suspended. For
accounts registered in the name of a broker-dealer, payment will normally be
forwarded within three business days after redemption.
|X| The Transfer Agent may delay forwarding a check or processing a
payment via AccountLink for recently purchased shares, but only until the
purchase payment has cleared. That delay may be as much as 10 days from the
date the shares were purchased. That delay may be avoided if you purchase
shares by Federal Funds wire or certified check, or arrange with your bank to
provide telephone or written assurance to the Transfer Agent that your
purchase payment has cleared.
|X| 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. In some cases involuntary
redemptions may be made to repay the Distributor for losses from the
cancellation of share purchase orders.
|X| Shares may be "redeemed in kind" under unusual circumstances (such
as a lack of liquidity in the Fund's portfolio to meet redemptions). This
means that the redemption proceeds will be paid with securities from the
Fund's portfolio.
|X| "Backup Withholding" of Federal income tax may be applied against
taxable dividends, distributions and redemption proceeds (including
exchanges) if you fail to furnish the Fund your correct, certified Social
Security or Employer Identification Number when you sign your application, or
if you under-report your income to the Internal Revenue Service.
|X| To avoid sending duplicate copies of materials to households, the
Fund will mail only one copy of each annual and semi-annual report to
shareholders having the same last name and address on the Fund's records.
However, each shareholder may call the Transfer Agent at 1-800-525-7048 to
ask that copies of those materials be sent personally to that shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund intends to declare dividends separately for each class of
shares from net investment income on a quarterly basis and to pay them to
shareholders in March, June, September and December on a date selected by the
Board of Trustees. Dividends and distributions paid on Class A shares will
generally be higher than dividends for Class B and Class C shares, which
normally have higher expenses than Class A. The Fund has no fixed dividend
rate and cannot guarantee that it will pay any dividends or distributions.
Capital Gains. The Fund may realize capital gains on the sale of portfolio
securities. If it does, it may make distributions out of any net short-term
or long-term capital gains in December of each year. The Fund may make
supplemental distributions of dividends and capital gains following the end
of its fiscal year. There can be no assurance that the Fund will pay any
capital gains distributions in a particular year.
What Choices Do I Have for Receiving Distributions? When you open your
account, specify on your application how you want to receive your dividends
and distributions. You have four options:
|X| 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.
|X| Reinvest Long-Term Capital Gains Only. You can elect to reinvest
long-term capital gains distributions in the Fund while receiving dividends
by check or having them sent to your bank account through AccountLink.
|X| 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 through AccountLink.
|X| Reinvest Your Distributions in Another OppenheimerFunds Account.
You can reinvest all distributions in the same class of shares of another
OppenheimerFunds account you have established.
Taxes. If your shares are not held in a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the Fund.
Distributions are subject to federal income tax and may be subject to state
or local taxes. Dividends paid from short-term capital gains and net
investment income are taxable as ordinary income. Long-term capital gains
are taxable as long-term capital gains when distributed to shareholders. It
does not matter how long you have held your shares. Whether you reinvest your
distributions in additional shares or take them in cash, the tax treatment is
the same.
Every year the Fund will send you and the IRS a statement showing the
amount of any taxable distribution you received in the previous year. Any
long-term capital gains will be separately identified in the tax information
the Fund sends you after the end of the calendar year.
|X| Avoid "Buying a Dividend". If you buy shares on or just before the
ex-dividend date or just before the Fund declares a capital gain
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.
|X| Remember, There May Be Taxes on Transactions. Because the Fund's
share price fluctuates, you may have a capital gain or loss when you sell or
exchange your shares. 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.
Any capital gain is subject to capital gains tax.
|X| Returns of Capital Can Occur. 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.
This information is only a summary of certain federal tax information
about your investment. You should consult with your tax adviser about the
effect of an investment in the Fund on your particular tax situation.
Financial Highlights
The Financial Highlights Table is presented to help you understand the Fund's
financial performance for the past 5 fiscal years. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned (or lost) on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by KPMG LLP, the Fund's
independent auditors, whose report, along with the Fund's financial
statements, is included in the Statement of Additional information, which is
available on request.
PAGE>
Financial Highlights
================================================================================
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------
Year Ended September 30, Year Ended December 31,
1998 1997 1996(2) 1995 1994 1993
===================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $16.17 $14.09 $13.07 $11.52 $13.05 $11.63
- -------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .51 .50 .49 .52 .54 .44
Net realized and unrealized gain (loss) (1.22) 2.88 .96 2.08 (.75) 1.43
------ ------ ------ ------ ------ -----
Total income (loss) from investment
operations (.71) 3.38 1.45 2.60 (.21) 1.87
- -------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.49) (.51) (.43) (.49) (.53) (.44)
Distributions from net realized gain (1.28) (.79) (.56) -- (.79) (.01)
------ ------ ------ ------ ------ -----
Total dividends and distributions
to shareholders (1.77) (1.30) (.43) (1.05) (1.32) (.45)
- -------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.69 $16.17 $14.09 $13.07 $11.52 $13.05
====== ====== ====== ====== ====== ======
===================================================================================================================
Total Return, at Net Asset Value(4) (4.71)% 25.46% 11.22% 22.79% (1.59)% 16.30%
===================================================================================================================
Ratios/Supplemental Data
Net assets,end of period
(in thousands) $624,895 $712,470 $264,359 $251,353 $237,771 $277,914
- -------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $699,665 $395,436 $256,765 $249,660 $260,767 $272,303
- -------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 3.34% 3.30% 4.73%(5) 3.97% 4.10% 3.58%
Expenses 1.08% 1.16% 1.21%(5) 1.15% 1.09% 1.14%
- -------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 58.5% 51.0% 31.7% 28.5% 31.5% 32.7%
</TABLE>
1. For the period from December 1, 1993 (inception of offering) to December
31, 1993.
2. For the nine months ended September 30, 1996. The Fund changed its fiscal
year end from December 31 to September 30.
3. For the period from August 29, 1995 (inception of offering) to December
31, 1995.
4. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
<PAGE>
================================================================================
================================================================================
<TABLE>
<CAPTION>
Class B Class C
- -------------------------------------------------------- ---------------------------------------------------------------------
Period
Ended
Year Ended September 30, Dec. 31, Year Ended September 30, Year Ended December 31,
1998 1997 1996(2) 1995(3) 1998 1997 1996(2) 1995 1994 1993(1)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$16.04 $14.01 $13.03 $13.28 $16.07 $14.02 $13.01 $11.49 $13.05 $12.86
- ------------------------------------------------------------------------------------------------------------------------------------
.38 .45 .41 .17 .38 .41 .40 .40 .44 (.97)
(1.20) 2.78 .93 .41 (1.20) 2.83 .96 2.07 (.77) 1.29
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
(.82) 3.23 1.34 .58 (.82) 3.24 1.36 2.47 (.33) .32
- ------------------------------------------------------------------------------------------------------------------------------------
(.37) (.41) (.36) (.27) (.36) (.40) (.35) (.39) (.44) (.12)
(1.28) (.79) -- (.56) (1.28) (.79) -- (.56) (.79) (.01)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
(1.65) (1.20) (.36) (.83) (1.64) (1.19) (.35) (.95) (1.23) (.13)
- ------------------------------------------------------------------------------------------------------------------------------------
$13.57 $16.04 $14.01 $13.03 $13.61 $16.07 $14.02 $13.01 $11.49 $13.05
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
====================================================================================================================================
(5.49)% 24.34% 10.37% 4.44% (5.43)% 24.42% 10.55% 21.69% (2.50)% 2.51%
====================================================================================================================================
$73,036 $67,916 $5,996 $1,265 $48,417 $49,539 $21,087 $15,405 $9,182 $396
- ------------------------------------------------------------------------------------------------------------------------------------
$74,442 $25,113 $3,546 $ 520 $52,325 $33,813 $17,898 $11,827 $5,601 $194
- ------------------------------------------------------------------------------------------------------------------------------------
2.53% 2.26% 3.69% (5) 2.62% (5) 2.51% 2.61% 3.84%(5) 3.08% 3.30% 2.19%(3)
1.91% 1.96% 2.12% (5) 2.27% (5) 1.91% 1.97% 2.07%(5) 1.99% 2.00% 2.50%(5)
- ------------------------------------------------------------------------------------------------------------------------------------
58.5% 51.0% 31.7% 28.5% 58.5% 51.0% 31.7% 28.5% 31.5% 32.7%
</TABLE>
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
September 30, 1998, were $446,088,367 and $426,392,607, respectively.
<PAGE>
33
Appendix to Prospectus of
Oppenheimer Multiple Strategies Fund
Graphic Material included in the Prospectus of Oppenheimer Multiple
Strategies Fund (the "Fund") under the heading "Annual Total Returns (Class
A) (as of 12/31 each year)":
A bar chart will be included in the Prospectus of the Fund depicting
the annual total returns of a hypothetical investment in Class A shares of
the Fund for each of the ten most recent calendar years, without deducting
sales charges. Set forth below are the relevant data points that will appear
on the bar chart.
Calendar Annual
Year Total
Ended Returns
12/31/89 18.21%
12/31/90 0.93%
12/31/91 14.67%
12/31/92 7.54%
12/31/93 16.30%
12/31/94 -1.59%
12/31/95 22.79%
12/31/96 17.23%
12/31/97 17.77%
12/31/98 7.05%
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For More Information About Oppenheimer Multiple Strategies Fund:
The following additional information about the Fund is available without
charge upon request:
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Statement of Additional Information
This document includes additional information about the Fund's investment
policies, risks, and operations. It is incorporated by reference into
this Prospectus (which means it is legally part of this Prospectus).
Annual and Semi-Annual Reports
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Additional information about the Fund's investments and performance is
available in the Fund's Annual and Semi-Annual Reports to shareholders.
The Annual Report includes a discussion of market conditions and
investment strategies that significantly affected the Fund's performance
during its last fiscal year.
How to Get More Information:
You can request the Statement of Additional Information, the Annual and
Semi-Annual Reports, and other information about the Fund or your account:
By Telephone:
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Call OppenheimerFunds Services toll-free: 1-800-525-7048
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By Mail:
Write to:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217-5270
On the Internet:
You can read or down-load documents on the OppenheimerFunds web site:
http://www.oppenheimerfunds.com
You can also obtain copies of the Statement of Additional Information and
other Fund documents and reports by visiting the SEC's Public Reference
Room in Washington, D.C. (Phone 1-800-SEC-0330) or the SEC's Internet web
site at http://www.sec.gov. Copies may be obtained upon payment of a
duplicating fee by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-6009.
No one has been authorized to provide any information about the Fund or
to make any representations about the Fund other than what is contained
in this Prospectus. This Prospectus is not an offer to sell shares of the
Fund, nor a solicitation of an offer to buy shares of the Fund, to any
person in any state or other jurisdiction where it is unlawful to make
such an offer.
The Fund's shares are distributed by:
[logo] OppenheimerFunds Distributor, Inc.
SEC File No. 811-3864
PR0240.001.0199
Printed on recycled paper.
<PAGE>
Oppenheimer Multiple Strategies Fund
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Statement of Additional Information dated January 29, 1999
This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Fund and supplements
information in the Prospectus dated January 29, 1999. It should be read
together with the Prospectus. You can obtain the Prospectus 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, or by downloading it from the OppenheimerFunds Internet web site
at www.oppenheimerfunds.com.
Contents
Page
About the Fund
Additional Information About the Fund's Investment Policies and Risks..
The Fund's Investment Policies.....................................
Other Investment Techniques and Strategies.........................
Investment Restrictions............................................
How the Fund is Managed ...............................................
Organization and History...........................................
Trustees and Officers..............................................
The Manager........................................................
Brokerage Policies of the Fund.........................................
Distribution and Service Plans.........................................
Performance of the Fund................................................
About Your Account
How To Buy Shares......................................................
How To Sell Shares.....................................................
How To Exchange Shares.................................................
Dividends, Capital Gains and Taxes.....................................
Additional Information About the Fund..................................
Financial Information About the Fund
Independent Auditors' Report...........................................
Financial Statements...................................................
Appendix A: Ratings Definitions........................................ A-1
Appendix B: Industry Classifications................................... B-1
Appendix C: Special Sales Charge Arrangements and Waivers.............. C-1
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<PAGE>
ABOUT THE FUND
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Additional Information About the Fund's Investment Policies and Risks
The investment objective, the principal investment policies and the
main risks of the Fund are described in the Prospectus. This Statement of
Additional Information contains supplemental information about those policies
and risks and the types of securities that the Fund's investment Manager,
OppenheimerFunds, Inc., can select for the Fund. Additional information is
also provided about the strategies that the Fund may use to try to achieve
its objective.
The Fund's Investment Policies. The composition of the Fund's portfolio and
the techniques and strategies that the Manager will use will vary over time.
The Fund is not required to use all of the investment techniques and
strategies described below in seeking its goal. It may use some of the
special investment techniques and strategies at some times or not at all.
In selecting securities for the Fund's portfolio, the Manager evaluates
the merits of particular securities primarily through the exercise of its own
investment analysis. That process may include, among other things, evaluation
of the issuer's historical operations, prospects for the industry of which
the issuer is part, the issuer's financial condition, its pending product
developments and business (and those of competitors), the effect of general
market and economic conditions on the issuer's business, and legislative
proposals that might affect the issuer.
|X| Investments in Equity Securities. The Fund's investments in equity
securities can include those of foreign and U.S. companies. Equity securities
include common stocks, preferred stocks, rights and warrants, and securities
convertible into common stock. The Fund's investments can include stocks of
companies in any market capitalization range, if the Manager believes the
investment is consistent with the Fund's objective, including the
preservation of principal. Certain equity securities might be selected not
only for their appreciation possibilities but because they may provide
dividend income.
Small-cap growth companies may offer greater opportunities for capital
appreciation than securities of large, more established companies. However,
these securities also involve greater risks than securities of larger
companies. Securities of small capitalization issuers may be subject to
greater price volatility in general than securities of large-cap and mid-cap
companies. Therefore, to the degree that the Fund has investments in smaller
capitalization companies at times of market volatility, the Fund's share
price may fluctuate more. Those investments may be limited to the extent the
Manager believes that such investments would be inconsistent with the goal of
preservation of principal. As noted below, the Fund limits investments in
unseasoned small-cap issuers.
|_| Preferred Stocks. Preferred stock, unlike common stock, has a
stated dividend rate payable from the corporation's earnings. Preferred stock
dividends may be cumulative or non-cumulative, participating, or auction
rate. "Cumulative" dividend provisions require all or a portion of prior
unpaid dividends to be paid before dividends can be paid on the issuer's
common stock.
If interest rates rise, the fixed dividend on preferred stocks may be
less attractive, causing the price of preferred stocks to decline. Preferred
stock may have mandatory sinking fund provisions, as well as provisions
allowing calls or redemptions prior to maturity, which also have a negative
impact on prices when interest rates decline. The rights of preferred stock
on distribution of a corporation's assets in the event of a liquidation are
generally subordinate to the rights associated with a corporation's debt
securities. Preferred stock generally has a preference over common stock on
the distribution of a corporation's assets in the event of liquidation of the
corporation. Preferred stock may be "participating" stock, which means that
it may be entitled to a dividend exceeding the stated dividend in certain
cases.
|_| Growth Companies. The Fund may invest in securities of
"growth" companies. Growth companies are those companies that the Manager
believes are entering into a growth cycle in their business, with the
expectation that their stock will increase in value. They may be established
companies as well as newer companies in the development stage.
Growth companies may have a variety of characteristics that in the
Manager's view define them as "growth" issuers. They may be generating or
applying new technologies, new or improved distribution techniques or new
services. They may own or develop natural resources. They may be companies
that can benefit from changing consumer demands or lifestyles, or companies
that have projected earnings in excess of the average for their sector or
industry. In each case, they have prospects that the Manager believes are
favorable for the long term. The portfolio managers of the Fund look for
growth companies with strong, capable management, sound financial and
accounting policies, successful product development and marketing and other
factors.
|_| Convertible Securities. While convertible securities are a
form of debt security, in many cases their conversion feature (allowing
conversion into equity securities) causes them to be regarded more as "equity
equivalents." As a result, the rating assigned to the security has less
impact on the Manager's investment decision with respect to convertible
securities than in the case of non-convertible fixed income securities.
Convertible securities are subject to the credit risks and interest rate
risks described below in "Debt Securities."
To determine whether convertible securities should be regarded as
"equity equivalents," the Manager examines the following factors:
(1) whether, at the option of the investor, the convertible security can be
exchanged for a fixed number of shares of common stock of the
issuer,
(2) whether the issuer of the convertible securities has restated its
earnings per share of common stock on a fully diluted basis
(considering the effect of conversion of the convertible
securities), and
(3) the extent to which the convertible security may be a defensive "equity
substitute," providing the ability to participate in any
appreciation in the price of the issuer's common stock.
|_| Rights and Warrants. As a fundamental policy, the Fund cannot
invest more than 5% of its total assets in warrants nor more than 2% of that
amount in warrants that are not listed on the New York or American Stock
Exchanges. That limit does not apply to warrants and rights the Fund has
acquired as part of units of securities or that are attached to other
securities that the Fund buys.
Warrants basically are options to purchase equity securities at
specific prices valid for a specific period of time. Their prices do not
necessarily move parallel to the prices of the underlying securities. 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.
|X| Debt Securities. The Fund can invest in a variety of domestic and
foreign debt securities for current income. Foreign debt securities are
subject to the risks of foreign securities described above. In general,
domestic and foreign fixed-income securities are also subject to two
additional types of risk: credit risk and interest rate risk.
|_| Credit Risk. Credit risk relates to the ability of the issuer to
meet interest or principal payments or both as they become due. In general,
lower-grade, higher-yield bonds are subject to credit risk to a greater
extent than lower-yield, higher-quality bonds.
The Fund's debt investments can include investment-grade and
non-investment-grade bonds (commonly referred to as "junk bonds").
Investment-grade bonds are bonds rated at least "Baa" by Moody's Investors
Service, Inc., at least "BBB" by Standard & Poor's Rating Service or Duff &
Phelps, Inc., or have comparable ratings by another nationally recognized
statistical rating organization.
In making investments in debt securities, the Manager may rely to some
extent on the ratings of ratings organizations or it may use its own research
to evaluate a security's credit-worthiness. If the securities are unrated, to
be considered part of the Fund's holdings of investment-grade securities,
they must be judged by the Manager to be of comparable quality to bonds rated
as investment grade by a rating organization.
|_| Special Risks of Lower-Grade Securities. The Fund can invest a
substantial portion of its assets in lower-grade debt securities. Because
lower-grade securities tend to offer higher yields than investment grade
securities, the Fund may invest in lower-grade securities if the Manager is
trying to achieve greater income. In some cases, the appreciation
possibilities of lower-grade securities may be a reason they are selected for
the Fund's portfolio. However, these investments will be made only when
consistent with the Fund's goal of preservation of principal that is part of
the Fund's objective.
The Fund may invest up to 35% of its total assets in "lower grade" debt
securities. "Lower-grade" debt securities are those rated below "investment
grade" which means they have a rating lower than "Baa" by Moody's or lower
than "BBB" by Standard & Poor's or Duff & Phelps, or similar ratings by other
rating organizations. If they are unrated, and are determined by the Manager
to be of comparable quality to debt securities rated below investment grade,
they are included in the limitation on the percentage of the Fund's assets
that can be invested in lower-grade securities. The Fund can invest in
securities rated as low as "C" or "D" or which are in default at the time the
Fund buys them.
Some of the special credit risks of lower-grade securities are
discussed below. There is a greater risk that the issuer may default on its
obligation to pay interest or to repay principal than in the case of
investment grade securities. The issuer's low creditworthiness may increase
the potential for its insolvency. An overall decline in values in the high
yield bond market is also more likely during a period of a general economic
downturn. An economic downturn or an increase in interest rates could
severely disrupt the market for high yield bonds, adversely affecting the
values of outstanding bonds as well as the ability of issuers to pay interest
or repay principal. In the case of foreign high yield bonds, these risks are
in addition to the special risks of foreign investing discussed in the
Prospectus and in this Statement of Additional Information.
However, the Fund's limitations on these investments may reduce some of
the risks to the Fund, as will the Fund's policy of diversifying its
investments. Additionally, to the extent they can be converted into stock,
convertible securities may be less subject to some of these risks than
non-convertible high yield bonds, since stock may be more liquid and less
affected by some of these risk factors.
While securities rated "Baa" by Moody's or "BBB" by Standard & Poor's
or Duff & Phelps are investment grade and are not regarded as junk bonds,
those securities may be subject to special risks, and have some speculative
characteristics. The debt security ratings definitions of the principal
rating definitions are included in Appendix A to this Statement of Additional
Information.
|_| Interest Rate Risk. Interest rate risk refers to the
fluctuations in value of fixed-income securities resulting from the inverse
relationship between price and yield. For example, an increase in general
interest rates will tend to reduce the market value of already-issued
fixed-income investments, and a decline in general interest rates will tend
to increase their value. In addition, debt securities with longer maturities,
which tend to have higher yields, are subject to potentially greater
fluctuations in value from changes in interest rates than obligations with
shorter maturities.
Fluctuations in the market value of fixed-income securities after the
Fund buys them will not affect the interest payable on those securities, nor
the cash income from them. However, those price fluctuations will be
reflected in the valuations of the securities, and therefore the Fund's net
asset values will be affected by those fluctuations.
|X| Mortgage-Related Securities. Mortgage-related securities are a form
of derivative investment collateralized by pools of commercial or residential
mortgages. Pools of mortgage loans are assembled as securities for sale to
investors by government agencies or entities or by private issuers. These
securities include collateralized mortgage obligations ("CMOs"), mortgage
pass-through securities, stripped mortgage pass-through securities, interests
in real estate mortgage investment conduits ("REMICs") and other real estate
related securities.
Mortgage-related securities that are issued or guaranteed by agencies
or instrumentalities of the U.S. government have relatively little credit
risk (depending on the nature of the issuer) but are subject to interest rate
risks and prepayment risks, as described in the Prospectus.
As with other debt securities, the prices of mortgage-related
securities tend to move inversely to changes in interest rates. The Fund can
buy mortgage-related securities that have interest rates that move inversely
to changes in general interest rates, based on a multiple of a specific
index. Although the value of a mortgage-related security may decline when
interest rates rise, the converse is not always the case.
In periods of declining interest rates, mortgages are more likely to be
prepaid. Therefore, a mortgage-related security's maturity can be shortened
by unscheduled prepayments on the underlying mortgages. Therefore, it is not
possible to predict accurately the security's yield. The principal that is
returned earlier than expected may have to be reinvested in other investments
having a lower yield than the prepaid security. Therefore, these securities
may be less effective as a means of "locking in" attractive long-term
interest rates, and they may have less potential for appreciation during
periods of declining interest rates, than conventional bonds with comparable
stated maturities.
Prepayment risks can lead to substantial fluctuations in the value of a
mortgage-related security. In turn, this can affect the value of the Fund's
shares. If a mortgage-related security has been purchased at a premium, all
or part of the premium the Fund paid may be lost if there is a decline in the
market value of the security, whether that results from interest rate changes
or prepayments on the underlying mortgages. In the case of stripped
mortgage-related securities, if they experience greater rates of prepayment
than were anticipated, the Fund may fail to recoup its initial investment on
the security.
During periods of rapidly rising interest rates, prepayments of
mortgage-related securities may occur at slower than expected rates. Slower
prepayments effectively may lengthen a mortgage-related security's expected
maturity. Generally, that would cause the value of the security to fluctuate
more widely in response to changes in interest rates. If the prepayments on
the Fund's mortgage-related securities were to decrease broadly, the Fund's
effective duration, and therefore its sensitivity to interest rate changes,
would increase.
As with other debt securities, the values of mortgage-related
securities may be affected by changes in the market's perception of the
creditworthiness of the entity issuing the securities or guaranteeing them.
Their values may also be affected by changes in government regulations and
tax policies.
|_| Collateralized Mortgage Obligations. CMOs are multi-class bonds
that are backed by pools of mortgage loans or mortgage pass-through
certificates. They may be collateralized by:
(1) pass-through certificates issued or guaranteed by Ginnie Mae, Fannie
Mae, or Freddie Mac,
(2) unsecuritized mortgage loans insured by the Federal Housing
Administration or guaranteed by the Department of Veterans'
Affairs,
(3) unsecuritized conventional mortgages,
(4) other mortgage-related securities, or
(5) any combination of these.
Each class of CMO, referred to as a "tranche," is issued at a specific
coupon rate and has a stated maturity or final distribution date. Principal
prepayments on the underlying mortgages may cause the CMO to be retired much
earlier than the stated maturity or final distribution date. The principal
and interest on the underlying mortgages may be allocated among the several
classes of a series of a CMO in different ways. One or more tranches may have
coupon rates that reset periodically at a specified increase over an index.
These are floating rate CMOs, and typically have a cap on the coupon rate.
Inverse floating rate CMOs have a coupon rate that moves in the reverse
direction to an applicable index. The coupon rate on these CMOs will increase
as general interest rates decrease. These are usually much more volatile than
fixed rate CMOs or floating rate CMOs.
|X| U.S. Government Securities. These are securities issued or
guaranteed by the U.S. Treasury or other U.S. government agencies or
federally-chartered corporate entities referred to as "instrumentalities."
The obligations of U.S. government agencies or instrumentalities in which the
Fund may invest may or may not be guaranteed or supported by the "full faith
and credit" of the United States. "Full faith and credit" means generally
that the taxing power of the U.S. government is pledged to the payment of
interest and repayment of principal on a security. If a security is not
backed by the full faith and credit of the United States, the owner of the
security must look principally to the agency issuing the obligation for
repayment. The owner might be able to assert a claim against the United
States if the issuing agency or instrumentality does not meet its commitment.
The Fund will invest in securities of U.S. government agencies and
instrumentalities only if the Manager is satisfied that the credit risk with
respect to such instrumentality is minimal.
|_| U.S. Treasury Obligations. These include Treasury bills (having
maturities of one year or less when issued), Treasury notes (having
maturities of from one to ten years), and Treasury bonds (having maturities
of more than ten years). Treasury securities are backed by the full faith and
credit of the United States as to timely payments of interest and repayments
of principal. They also can include U. S. Treasury securities that have been
"stripped" by a Federal Reserve Bank, zero-coupon U.S. Treasury securities
described below, and Treasury Inflation-Protection Securities ("TIPS").
|_| Treasury Inflation-Protection Securities. The Fund can buy these
U.S. Treasury securities, called "TIPS," that are designed to provide an
investment vehicle that is not vulnerable to inflation. The interest rate
paid by TIPS is fixed. The principal value rises or falls semi-annually based
on changes in the published Consumer Price Index. If inflation occurs, the
principal and interest payments on TIPS are adjusted to protect investors
from inflationary loss. If deflation occurs, the principal and interest
payments will be adjusted downward, although the principal will not fall
below its face amount at maturity.
|_| Obligations Issued or Guaranteed by U.S. Government Agencies or
Instrumentalities. These include direct obligations and mortgage related
securities that have different levels of credit support from the government.
Some are supported by the full faith and credit of the U.S. government, such
as Government National Mortgage Association pass-through mortgage
certificates (called "Ginnie Maes"). Some are supported by the right of the
issuer to borrow from the U.S. Treasury under certain circumstances, such as
Federal National Mortgage Association bonds ("Fannie Maes"). Others are
supported only by the credit of the entity that issued them, such as Federal
Home Loan Mortgage Corporation obligations ("Freddie Macs").
|_| U.S. Government Mortgage-Related Securities. The Fund can invest
in a variety of mortgage-related securities that are issued by U.S.
government agencies or instrumentalities, some of which are described below.
|_| GNMA Certificates. The Government National Mortgage
Association ("GNMA") is a wholly-owned corporate instrumentality of the
United States within the U.S. Department of Housing and Urban Development.
GNMA's principal programs involve its guarantees of privately-issued
securities backed by pools of mortgages. Ginnie Maes are debt securities
representing an interest in one or a pool of mortgages that are insured by
the Federal Housing Administration or the Farmers Home Administration or
guaranteed by the Veterans Administration.
The Ginnie Maes in which the Fund invests are of the "fully modified
pass-through" type. They provide that the registered holders of the
Certificates will receive timely monthly payments of the pro-rata share of
the scheduled principal payments on the underlying mortgages, whether or not
those amounts are collected by the issuers. Amounts paid include, on a pro
rata basis, any prepayment of principal of such mortgages and interest (net
of servicing and other charges) on the aggregate unpaid principal balance of
the Ginnie Maes, whether or not the interest on the underlying mortgages has
been collected by the issuers.
The Ginnie Maes purchased by the Fund are guaranteed as to timely
payment of principal and interest by GNMA. It is expected that payments
received by the issuers of Ginnie Maes on account of the mortgages backing
the Ginnie Maes will be sufficient to make the required payments of principal
of and interest on those GNMA Certificates. However if those payments are
insufficient, the guaranty agreements between the issuers of the Certificates
and GNMA require the issuers to make advances sufficient for the payments. If
the issuers fail to make those payments, GNMA will do so.
Under Federal law, the full faith and credit of the United States is
pledged to the payment of all amounts that may be required to be paid under
any guaranty issued by GNMA as to such mortgage pools. An opinion of an
Assistant Attorney General of the United States, dated December 9, 1969,
states that such guaranties "constitute general obligations of the United
States backed by its full faith and credit." GNMA is empowered to borrow from
the United States Treasury to the extent necessary to make any payments of
principal and interest required under those guaranties.
Ginnie Maes are backed by the aggregate indebtedness secured by the
underlying FHA-insured, FMHA-insured or VA-guaranteed mortgages. Except to
the extent of payments received by the issuers on account of such mortgages,
Ginnie Maes do not constitute a liability of those issuers, nor do they
evidence any recourse against those issuers. Recourse is solely against GNMA.
Holders of Ginnie Maes (such as the Fund) have no security interest in or
lien on the underlying mortgages.
Monthly payments of principal will be made, and additional prepayments
of principal may be made, to the Fund with respect to the mortgages
underlying the Ginnie Maes held by the Fund. All of the mortgages in the
pools relating to the Ginnie Maes in the Fund are subject to repayment
without any significant premium or penalty, at the option of the mortgagors.
While the mortgages on 1-to-4-family dwellings underlying certain Ginnie Maes
have a stated maturity of up to 30 years, it has been the experience of the
mortgage industry that the average life of comparable mortgages, as a result
of prepayments, refinancing and payments from foreclosures, is considerably
less.
|_| Federal Home Loan Mortgage Corporation Certificates. FHLMC, a
corporate instrumentality of the United States, issues FHLMC Certificates
representing interests in mortgage loans. FHLMC guarantees to each registered
holder of a FHLMC Certificate timely payment of the amounts representing a
holder's proportionate share in:
(i) interest payments less servicing and guarantee fees,
(ii) principal prepayments and
(iii) the ultimate collection of amounts representing the holder's
proportionate interest in principal payments on the
mortgage loans in the pool represented by the FHLMC
Certificate, in each case whether or not such amounts are
actually received.
The obligations of FHLMC under its guarantees are obligations solely of
FHLMC and are not backed by the full faith and credit of the United States.
|_| Federal National Mortgage Association (Fannie Mae)
Certificates. Fannie Mae, a federally-chartered and privately-owned
corporation, issues Fannie Mae Certificates which are backed by a pool of
mortgage loans. Fannie Mae guarantees to each registered holder of a Fannie
Mae Certificate that the holder will receive amounts representing the
holder's proportionate interest in scheduled principal and interest payments,
and any principal prepayments, on the mortgage loans in the pool represented
by such Certificate, less servicing and guarantee fees, and the holder's
proportionate interest in the full principal amount of any foreclosed or
other liquidated mortgage loan. In each case the guarantee applies whether or
not those amounts are actually received. The obligations of Fannie Mae under
its guarantees are obligations solely of Fannie Mae and are not backed by the
full faith and credit of the United States or any of its agencies or
instrumentalities other than Fannie Mae.
|_| Zero-Coupon U.S. Government Securities. The Fund may buy
zero-coupon U.S. government securities. These will typically be U.S. Treasury
Notes and Bonds that have been stripped of their unmatured interest coupons,
the coupons themselves, or certificates representing interests in those
stripped debt obligations and coupons.
Zero-coupon securities do not make periodic interest payments and are
sold at a deep discount from their face value at maturity. The buyer
recognizes a rate of return determined by the gradual appreciation of the
security, which is redeemed at face value on a specified maturity date. This
discount depends on the time remaining until maturity, as well as prevailing
interest rates, the liquidity of the security and the credit quality of the
issuer. The discount typically decreases as the maturity date approaches.
Because zero-coupon securities pay no interest and compound
semi-annually at the rate fixed at the time of their issuance, their value is
generally more volatile than the value of other debt securities that pay
interest. Their value may fall more dramatically than the value of
interest-bearing securities when interest rates rise. When prevailing
interest rates fall, zero-coupon securities tend to rise more rapidly in
value because they have a fixed rate of return.
The Fund's investment in zero-coupon securities may cause the Fund to
recognize income and make distributions to shareholders before it receives
any cash payments on the zero-coupon investment. To generate cash to satisfy
those distribution requirements, the Fund may have to sell portfolio
securities that it otherwise might have continued to hold or to use cash
flows from other sources such as the sale of Fund shares.
|X| Money Market Instruments. The following is a brief description of
the types of money market securities the Fund can invest in. Money market
securities are high-quality, short-term debt instruments that may be issued
by the U.S. Government, corporations, banks or other entities. They may have
fixed, variable or floating interest rates.
|_| U.S. Government Securities. These include obligations issued
or guaranteed by the U.S. government or any of its agencies or
instrumentalities, described above.
|_| Bank Obligations. The Fund can buy time deposits,
certificates of deposit and bankers' acceptances. They must be :
o obligations issued or guaranteed by a domestic bank
(including a foreign branch of a domestic bank) having total
assets of at least $500 million, or
o banker's acceptances (which may or may not be supported by
letters of credit) but only if guaranteed by a U.S.
commercial bank with total assets of at least U.S. $500
million.
The Fund can purchase certificates of deposit of $100,000 or less of a
domestic bank even if that bank has assets of less than $500 million, if the
certificate of deposit is fully insured as to principal by the Federal
Deposit Insurance Corporation. The Fund can buy only one such certificate of
deposit from any one bank with that amount of assets and limits its
investments in those certificates of deposit to 10% of its assets. "Banks"
include U.S. commercial banks, savings banks and savings and loan
associations.
|_| Commercial Paper. The Fund can invest in commercial paper if
it is rated within the top two rating categories of Standard & Poor's and
Moody's. If the paper is not rated, it may be purchased if issued by a
company having a credit rating of at least "AA" by Standard & Poor's or "Aa"
by Moody's.
The Fund can buy commercial paper, including U.S. dollar-denominated
securities of foreign branches of U.S. banks, issued by other entities if the
commercial paper is guaranteed as to principal and interest by a bank,
government or corporation whose certificates of deposit or commercial paper
may otherwise be purchased by the Fund.
|_| Variable Amount Master Demand Notes. Master demand notes are
corporate obligations that permit the investment of fluctuating amounts by
the Fund at varying rates of interest under direct arrangements between the
Fund, as lender, and the borrower. They permit daily changes in the amounts
borrowed. The Fund has the right to increase the amount under the note at any
time up to the full amount provided by the note agreement, or to decrease the
amount. The borrower may prepay up to the full amount of the note without
penalty. These notes may or may not be backed by bank letters of credit.
Because these notes are direct lending arrangements between the lender
and borrower, it is not expected that there will be a trading market for
them. There is no secondary market for these notes, although they are
redeemable (and thus are immediately repayable by the borrower) at principal
amount, plus accrued interest, at any time. Accordingly, the Fund's right to
redeem such notes is dependent upon the ability of the borrower to pay
principal and interest on demand.
The Fund has no limitations on the type of issuer from whom these notes
will be purchased. However, in connection with such purchases and on an
ongoing basis, the Manager will consider the earning power, cash flow and
other liquidity ratios of the issuer, and its ability to pay principal and
interest on demand, including a situation in which all holders of such notes
made demand simultaneously. Investments in master demand notes are subject to
the limitation on investments by the Fund in illiquid securities, described
in the Prospectus. Currently, the Fund does not intend that its investments
in variable amount master demand notes will exceed 5% of its total assets.
|_| Portfolio Turnover. "Portfolio turnover" describes the rate at
which the Fund traded its portfolio securities during its last fiscal year.
For example, if a fund sold all of its securities during the year, its
portfolio turnover rate would have been 100%. The Fund's portfolio turnover
rate will fluctuate from year to year. Currently, the Fund does not expect to
have a portfolio turnover rate of more than 100% annually.
Increased portfolio turnover creates higher brokerage and transaction
costs for the Fund,
which may reduce its overall performance. Additionally, the realization of
capital gains from selling portfolio securities may result in distributions
of taxable long-term capital gains to shareholders, since the Fund will
normally distribute all of its capital gains realized each year, to avoid
excise taxes under the Internal Revenue Code.
Other Investment Techniques and Strategies. In seeking its objective, the
Fund may from time to time use the types of investment strategies and
investments described below. It is not required to use all of these
strategies at all times, and at times may not use them.
|X| Foreign Securities. The Fund expects to have substantial
investments in foreign securities. These include equity securities issued by
foreign companies and debt securities issued by foreign companies or
governments, including supra-national entities. "Foreign securities" include
equity and debt securities of companies organized under the laws of countries
other than the United States and debt securities issued or guaranteed by
governments other than the U.S. government or by foreign supra-national
entities. They also include securities of companies (including those that are
located in the U.S. or organized under U.S. law) that derive a significant
portion of their revenue or profits from foreign businesses, investments or
sales, or that have a significant portion of their assets abroad. They may be
traded on foreign securities exchanges or in the foreign over-the-counter
markets.
Securities of foreign issuers that are represented by American
Depository Receipts or that are listed on a U.S. securities exchange or
traded in the U.S. over-the-counter markets are not considered "foreign
securities" for the purpose of the Fund's investment allocations, because
they are not subject to many of the special considerations and risks,
discussed below, that apply to foreign securities traded and held abroad.
Because the Fund may purchase securities denominated in foreign
currencies, a change in the value of such foreign currency against the U.S.
dollar will result in a change in the amount of income the Fund has available
for distribution. Because a portion of the Fund's investment income may be
received in foreign currencies, the Fund will be required to compute its
income in U.S. dollars for distribution to shareholders, and therefore the
Fund will absorb the cost of currency fluctuations. After the Fund has
distributed income, subsequent foreign currency losses may result in the
Fund's having distributed more income in a particular fiscal period than was
available from investment income, which could result in a return of capital
to shareholders.
Investing in foreign securities offers potential benefits not available
from investing solely in securities of domestic issuers. They include 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. The Fund will hold foreign currency only in
connection with the purchase or sale of foreign securities.
|_| Foreign Debt Obligations. The debt obligations of foreign
governments and entities may or may not be supported by the full faith and
credit of the foreign government. The Fund may buy securities issued by
certain "supra-national" entities, which include entities designated or
supported by governments to promote economic reconstruction or development,
international banking organizations and related government agencies. Examples
are the International Bank for Reconstruction and Development (commonly
called the "World Bank"), the Asian Development bank and the Inter-American
Development Bank.
The governmental members of these supra-national entities are
"stockholders" that typically make capital contributions and may be committed
to make additional capital contributions if the entity is unable to repay its
borrowings. A supra-national entity's lending activities may be limited to a
percentage of its total capital, reserves and net income. There can be no
assurance that the constituent foreign governments will continue to be able
or willing to honor their capitalization commitments for those entities.
The Fund can invest in U.S. dollar-denominated "Brady Bonds." These
foreign debt obligations may be fixed-rate par bonds or floating-rate
discount bonds. They are generally collateralized in full as to repayment of
principal at maturity by U.S. Treasury zero coupon obligations that have the
same maturity as the Brady Bonds. Brady Bonds can be viewed as having three
or four valuation components: (i) the collateralized repayment of principal
at final maturity; (ii) the collateralized interest payments; (iii) the
uncollateralized interest payments; and (iv) any uncollateralized repayment
of principal at maturity. Those uncollateralized amounts constitute what is
called the "residual risk."
If there is a default on collateralized Brady Bonds resulting in
acceleration of the payment obligations of the issuer, the zero coupon U.S.
Treasury securities held as collateral for the payment of principal will not
be distributed to investors, nor will those obligations be sold to distribute
the proceeds. The collateral will be held by the collateral agent to the
scheduled maturity of the defaulted Brady Bonds. The defaulted bonds will
continue to remain outstanding, and the face amount of the collateral will
equal the principal payments which would have then been due on the Brady
Bonds in the normal course. Because of the residual risk of Brady Bonds and
the history of defaults with respect to commercial bank loans by public and
private entities of countries issuing Brady Bonds, Brady Bonds are considered
speculative investments.
|_| Risks of Foreign Investing. Investments in foreign securities
may offer special opportunities for investing but also present special
additional risks and considerations not typically associated with investments
in domestic securities. Some of these additional risks are:
o reduction of income by foreign taxes;
o fluctuation in value of foreign investments due to changes in currency
rates or currency control regulations (for example, currency
blockage);
o transaction charges for currency exchange;
o lack of public information about foreign issuers;
o lack of uniform accounting, auditing and financial reporting standards
in foreign countries comparable to those applicable to domestic
issuers;
o less volume on foreign exchanges than on U.S. exchanges;
o greater volatility and less liquidity on foreign markets than in the
U.S.;
o less governmental regulation of foreign issuers, stock exchanges and
brokers than in the U.S.;
o greater difficulties in commencing lawsuits;
o higher brokerage commission rates than in the U.S.;
o increased risks of delays in settlement of portfolio transactions or
loss of certificates for portfolio securities;
o possibilities in some countries of expropriation, confiscatory
taxation, political, financial or social instability or adverse
diplomatic developments; and
o 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.
|_| Special Risks of Emerging Markets. Emerging and developing
markets abroad may also offer special opportunities for growth investing but
have greater risks than more developed foreign markets, such as those in
Europe, Canada, Australia, New Zealand and Japan. There may be even less
liquidity in their securities markets, and settlements of purchases and sales
of securities may be subject to additional delays. They are subject to
greater risks of limitations on the repatriation of income and profits
because of currency restrictions imposed by local governments. Those
countries may also be subject to the risk of greater political and economic
instability, which can greatly affect the volatility of prices of securities
in those countries. The Manager will consider these factors when evaluating
securities in these markets, because the selection of those securities must
be consistent with the Fund's goal of preservation of principal.
|_| Risks of Conversion to Euro. On January 1, 1999, eleven
countries in the European Union adopted the euro as their official currency.
However, their current currencies (for example, the franc, the mark, and the
lire) will also continue in use until January 1, 2002. After that date, it is
expected that only the euro will be used in those countries. A common
currency is expected to confer some benefits in those markets, by
consolidating the government debt market for those countries and reducing
some currency risks and costs. But the conversion to the new currency will
affect the Fund operationally and also has potential risks, some of which are
listed below. Among other things, the conversion will affect:
o issuers in which the Fund invests, because of changes in the
competitive environment from a consolidated currency market
and greater operational costs from converting to the new
currency. This might depress securities values.
o vendors the Fund depends on to carry out its business, such as
its Custodian (which holds the foreign securities the Fund
buys), the Manager (which must price the Fund's investments to
deal with the conversion to the euro) and brokers, foreign
markets and securities depositories. If they are not prepared,
there could be delays in settlements and additional costs to
the Fund.
o exchange contracts and derivatives that are outstanding during
the transition to the euro. The lack of currency rate
calculations between the affected currencies and the need to
update the Fund's contracts could pose extra costs to the Fund.
The Manager is upgrading (at its expense) its computer and bookkeeping
systems to deal with the conversion. The Fund's Custodian has advised the
Manager of its plans to deal with the conversion, including how it will
update its record keeping systems and handle the redenomination of
outstanding foreign debt. The Fund's portfolio manager will also monitor the
effects of the conversion on the issuers in which the Fund invests. The
possible effect of these factors on the Fund's investments cannot be
determined with certainty at this time, but they may reduce the value of some
of the Fund's holdings and increase its operational costs.
|X| Zero-Coupon Securities. The Fund can buy zero-coupon and delayed
interest securities, and "stripped" securities. Stripped securities are debt
securities whose interest coupons are separated from the security and sold
separately. The Fund can buy different types of zero-coupon or stripped
securities, including, among others, U.S. Treasury notes or bonds that have
been stripped of their interest coupons, U.S. Treasury bills issued without
interest coupons, and certificates representing interests in stripped
securities.
The Fund may buy zero-coupon and delayed interest securities, and
"stripped" securities of corporations and of foreign government issuers.
These are similar in structure to zero-coupon and "stripped" U.S. government
securities, but in the case of foreign government securities may or may not
be backed by the "full faith and credit" of the issuing foreign government.
Zero coupon securities issued by foreign governments and by corporations will
be subject to greater credit risks than U.S. government zero-coupon
securities.
Zero-coupon securities do not make periodic interest payments and are
sold at a deep discount from their face value. The buyer recognizes a rate of
return determined by the gradual appreciation of the security, which is
redeemed at face value on a specified maturity date. This discount depends on
the time remaining until maturity, as well as prevailing interest rates, the
liquidity of the security and the credit quality of the issuer. In the
absence of threats to the issuer's credit quality, the discount typically
decreases as the maturity date approaches. Some zero-coupon securities are
convertible, in that they are zero-coupon securities until a predetermined
date, at which time they convert to a security with a specified coupon rate.
Because zero-coupon securities pay no interest and compound
semi-annually at the rate fixed at the time of their issuance, their value is
generally more volatile than the value of other debt securities. Their value
may fall more dramatically than the value of interest-bearing securities when
interest rates rise. When prevailing interest rates fall, zero-coupon
securities tend to rise more rapidly in value because they have a fixed rate
of return.
The Fund's investment in zero-coupon securities may cause the Fund to
recognize income and make distributions to shareholders before it receives
any cash payments on the zero-coupon investment. To generate cash to satisfy
those distribution requirements, the Fund may have to sell portfolio
securities that it otherwise might have continued to hold or to use cash
flows from other sources such as the sale of Fund shares.
|X| Commercial (Privately-Issued) Mortgage-Related Securities. The Fund
may invest in commercial mortgage related securities issued by private
entities. Generally these are multi-class debt or pass-through certificates
secured by mortgage loans on commercial properties. They are subject to the
credit risk of the issuer. These securities typically are structured to
provide protection to investors in senior classes from possible losses on the
underlying loans. They do so by having holders of subordinated classes take
the first loss if there are defaults on the underlying loans. They may also
be protected to some extent by guarantees, reserve funds or additional
collateralization mechanisms.
|X| "Stripped" Mortgage-Related Securities. The Fund can invest in
stripped mortgage-related securities that are created by segregating the cash
flows from underlying mortgage loans or mortgage securities to create two or
more new securities. Each has a specified percentage of the underlying
security's principal or interest payments. These are a form of derivative
investment.
Mortgage securities may be partially stripped so that each class
receives some interest and some principal. However, they may be completely
stripped. In that case all of the interest is distributed to holders of one
type of security, known as an "interest-only" security, or "I/O," and all of
the principal is distributed to holders of another type of security, known as
a "principal-only" security or "P/O." Strips can be created for pass-through
certificates or CMOs.
The yields to maturity of I/Os and P/Os are very sensitive to principal
repayments (including prepayments) on the underlying mortgages. If the
underlying mortgages experience greater than anticipated prepayments of
principal, the Fund might not fully recoup its investment in an I/O based on
those assets. If underlying mortgages experience less than anticipated
prepayments of principal, the yield on the P/Os based on them could decline
substantially.
|X| Floating Rate and Variable Rate Obligations. Variable rate
demand obligations have a demand feature that allows the Fund to tender the
obligation to the issuer or a third party prior to its maturity. The tender
may be at par value plus accrued interest, according to the terms of the
obligations.
The interest rate on a floating rate demand note is adjusted
automatically according to a stated prevailing market rate, such as a bank's
prime rate, the 91-day U.S. Treasury Bill rate, or some other standard. The
instrument's rate is adjusted automatically each time the base rate is
adjusted. The interest rate on a variable rate demand note is also based on a
stated prevailing market rate but is adjusted automatically at specified
intervals of not less than one year. Generally, the changes in the interest
rate on such securities reduce the fluctuation in their market value. As
interest rates decrease or increase, the potential for capital appreciation
or depreciation is less than that for fixed-rate obligations of the same
maturity. The Manager may determine that an unrated floating rate or variable
rate demand obligation meets the Fund's quality standards by reason of being
backed by a letter of credit or guarantee issued by a bank that meets those
quality standards.
Floating rate and variable rate demand notes that have a stated
maturity in excess of one year may have features that permit the holder to
recover the principal amount of the underlying security at specified
intervals not exceeding one year and upon no more than 30 days' notice. The
issuer of that type of note normally has a corresponding right in its
discretion, after a given period, to prepay the outstanding principal amount
of the note plus accrued interest. Generally the issuer must provide a
specified number of days' notice to the holder.
|X| Investing in Small, Unseasoned Companies. The Fund can invest in
securities of small, unseasoned companies. These are companies that have been
in operation for less than three years, including the operations of any
predecessors. Securities of these companies may be subject to volatility in
their prices. They may have a limited trading market, which may adversely
affect the Fund's ability to dispose of them and can reduce the price the
Fund might be able to obtain for them. Other investors that own a security
issued by a small, unseasoned issuer for which there is limited liquidity
might trade the security when the Fund is attempting to dispose of its
holdings of that security. In that case the Fund might receive a lower price
for its holdings than might otherwise be obtained. The Fund currently does
not intend to invest more than 5% of its net assets in those securities.
|X| When-Issued and Delayed-Delivery Transactions. The Fund may invest
in securities on a "when-issued" basis and may purchase or sell securities on
a "delayed-delivery" or "forward commitment" basis. When-issued and
delayed-delivery are terms that refer to securities whose terms and indenture
are available and for which a market exists, but which are not available for
immediate delivery.
When such transactions are negotiated, the price (which is generally
expressed in yield terms) is fixed at the time the commitment is made.
Delivery and payment for the securities take place at a later date (generally
within 45 days of the date the offer is accepted). The securities are subject
to change in value from market fluctuations during the period until
settlement. The value at delivery may be less than the purchase price. For
example, changes in interest rates in a direction other than that expected by
the Manager before settlement will affect the value of such securities and
may cause a loss to the Fund. During the period between purchase and
settlement, no payment is made by the Fund to the issuer and no interest
accrues to the Fund from the investment. No income begins to accrue to the
Fund on a when-issued security until the Fund receives the security at
settlement of the trade.
The Fund will engage in when-issued transactions to secure what the
Manager considers to be an advantageous price and yield at the time of
entering into the obligation. When the Fund enters into a when-issued or
delayed-delivery transaction, it relies on the other party to complete the
transaction. Its failure to do so may cause the Fund to lose the opportunity
to obtain the security at a price and yield the Manager considers to be
advantageous.
When the Fund engages in when-issued and delayed-delivery transactions,
it does so for the purpose of acquiring or selling securities consistent with
its investment objective and policies for its portfolio or for delivery
pursuant to options contracts it has entered into, and not for the purpose of
investment leverage. Although the Fund will enter into delayed-delivery or
when-issued purchase transactions to acquire securities, it may dispose of a
commitment prior to settlement. If the Fund chooses to dispose of the right
to acquire a when-issued security prior to its acquisition or to dispose of
its right to delivery or receive against a forward commitment, it may incur a
gain or loss.
At the time the Fund makes the commitment to purchase or sell a
security on a when-issued or delayed delivery basis, it records the
transaction on its books and reflects the value of the security purchased in
determining the Fund's net asset value. In a sale transaction, it records the
proceeds to be received. The Fund will identify on its books liquid assets at
least equal in value to the value of the Fund's purchase commitments until
the Fund pays for the investment.
When issued and delayed-delivery transactions can be used by the Fund
as a defensive technique to hedge against anticipated changes in interest
rates and prices. For instance, in periods of rising interest rates and
falling prices, the Fund might sell securities in its portfolio on a forward
commitment basis to attempt to limit its exposure to anticipated falling
prices. In periods of falling interest rates and rising prices, the Fund
might sell portfolio securities and purchase the same or similar securities
on a when-issued or delayed-delivery basis to obtain the benefit of currently
higher cash yields.
|X| Participation Interests. The Fund can invest in participation
interests, subject to the Fund's limitation on investments in illiquid
investments. A participation interest is an undivided interest in a loan made
by the issuing financial institution in the proportion that the buyers
participation interest bears to the total principal amount of the loan. No
more than 5% of the Fund's net assets can be invested in participation
interests of the same borrower. The issuing financial institution may have no
obligation to the Fund other than to pay the Fund the proportionate amount of
the principal and interest payments it receives.
Participation interests are primarily dependent upon the
creditworthiness of the borrowing corporation, which is obligated to make
payments of principal and interest on the loan. There is a risk that a
borrower may have difficulty making payments. If a borrower fails to pay
scheduled interest or principal payments, the Fund could experience a
reduction in its income. The value of that participation interest might also
decline, which could affect the net asset value of the Fund's shares. If the
issuing financial institution fails to perform its obligations under the
participation agreement, the Fund might incur costs and delays in realizing
payment and suffer a loss of principal and/or interest.
|X| Repurchase Agreements. The Fund can acquire securities subject to
repurchase agreements. It may do so for liquidity purposes to meet
anticipated redemptions of Fund shares, or pending the investment of the
proceeds from sales of Fund shares, or pending the settlement of portfolio
securities transactions, or for temporary defensive purposes, as described
below.
In a repurchase transaction, the Fund buys a security from, and
simultaneously resells it to, an approved vendor for delivery on an
agreed-upon future date. The resale price exceeds the purchase price by an
amount that reflects an agreed-upon interest rate effective for the period
during which the repurchase agreement is in effect. Approved vendors include
U.S. commercial banks, U.S. branches of foreign banks, or broker-dealers that
have been designated as primary dealers in government securities. They must
meet credit requirements set by the Fund's Board of Trustees from time to
time.
The majority of these transactions run from day to day, and delivery
pursuant to the resale typically occurs within one to five days of the
purchase. Repurchase agreements having a maturity beyond seven days are
subject to the Fund's limits on holding illiquid investments. The Fund will
not enter into a repurchase agreement that causes more than 10% of its net
assets to be subject to repurchase agreements having a maturity beyond seven
days. There is no limit on the amount of the Fund's net assets that may be
subject to repurchase agreements having maturities of seven days or less.
Repurchase agreements, considered "loans" under the Investment Company
Act, are 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. 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 Manager will monitor the vendor's
creditworthiness to confirm that the vendor is financially sound and will
continuously monitor the collateral's value.
|X| 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. To enable the
Fund to sell its holdings of a restricted security not registered under the
Securities Act of 1933, the Fund may have to cause those securities to be
registered. The expenses of registering restricted securities may be
negotiated by the Fund with the issuer at the time the Fund buys the
securities. When the Fund must arrange registration because the Fund wishes
to sell the security, a considerable period may elapse between the time the
decision is made to sell the security and the time the security is registered
so that the Fund could sell it. The Fund would bear the risks of any downward
price fluctuation during that period.
The Fund may also acquire restricted securities through private
placements. Those securities have contractual restrictions on their public
resale. Those restrictions might limit the Fund's ability to dispose of the
securities and might lower the amount the Fund could realize upon the sale.
The Fund has 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 under Rule 144A of the Securities Act of
1933, if those securities have been determined to be liquid 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 holdings of that security may be
considered to be illiquid.
Illiquid securities include repurchase agreements maturing in more than
seven days and participation interests that do not have puts exercisable
within seven days.
|X| Forward Rolls. The Fund can enter into "forward roll" transactions
with respect to mortgage related securities. In this type of transaction, the
Fund sells a mortgage related security to a buyer and simultaneously agrees
to repurchase a similar security (the same type of security, and having the
same coupon and maturity) at a later date at a set price. The securities that
are repurchased will have the same interest rate as the securities that are
sold, but typically will be collateralized by different pools of mortgages
(with different prepayment histories) than the securities that have been
sold. Proceeds from the sale are invested in short-term instruments, such as
repurchase agreements. The income from those investments, plus the fees from
the forward roll transaction, are expected to generate income to the Fund in
excess of the yield on the securities that have been sold.
The Fund will only enter into "covered" rolls. To assure its future
payment of the purchase price, the Fund will identify on its books liquid
assets in an amount equal to the payment obligation under the roll.
These transactions have risks. During the period between the sale and
the repurchase, the Fund will not be entitled to receive interest and
principal payments on the securities that have been sold. It is possible that
the market value of the securities the Fund sells may decline below the price
at which the Fund is obligated to repurchase securities.
|X| Loans of Portfolio Securities. To raise cash for liquidity purposes
or income, the Fund can lend its portfolio securities to brokers, dealers and
other types of financial institutions approved by the Fund's Board of
Trustees. As a fundamental policy, these loans are limited to not more than
25% of the value of the Fund's net assets. The Fund currently does not intend
to engage in loans of securities, but if it does so, such loans will not
likely exceed 5% 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 recovery of the loaned securities if the borrower defaults. The
Fund must receive collateral for a loan. Under current applicable regulatory
requirements (which are subject to change), on each business day the loan
collateral must be at least equal to the value of the loaned securities. It
must consist of cash, bank letters of credit, securities of the U.S.
government or its agencies or instrumentalities, or other cash equivalents in
which the Fund is permitted to invest. To be acceptable as collateral,
letters of credit must obligate a bank to pay amounts demanded by the Fund if
the demand meets the terms of the letter. The terms of the letter of credit
and the issuing bank both must be satisfactory to the Fund.
When it lends securities, the Fund receives amounts equal to the
dividends or interest on loaned securities. It also receives one or more of
(a) negotiated loan fees, (b) interest on securities used as collateral, and
(c) interest on any short-term debt securities purchased with such loan
collateral. Either type of interest may be shared with the borrower. The Fund
may also pay reasonable finder's, custodian and administrative fees in
connection with these loans. 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.
|X| Asset-Backed Securities. Asset-backed securities are fractional
interests in pools of assets, typically accounts receivable or consumer
loans. They are issued by trusts or special-purpose corporations. They are
similar to mortgage-backed securities, described above, and are backed by a
pool of assets that consist of obligations of individual borrowers. The
income from the pool is passed through to the holders of participation
interest in the pools. The pools may offer a credit enhancement, such as a
bank letter of credit, to try to reduce the risks that the underlying debtors
will not pay their obligations when due. However, the enhancement, if any,
might not be for the full par value of the security. If the enhancement is
exhausted and only required payments of principal are not made, the Fund
could suffer a loss on its investment or delays in receiving payment.
The value of an asset-backed security is affected by changes in the
market's perception of the asset backing the security, the creditworthiness
of the servicing agent for the loan pool, the originator of the loans, or the
financial institution providing any credit enhancement, and is also affected
if any credit enhancement has been exhausted. The risks of investing in
asset-backed securities are ultimately related to payment of consumer loans
by the individual borrowers. As a purchaser of an asset-backed security, the
Fund would generally have no recourse to the entity that originated the loans
in the event of default by a borrower. The underlying loans are subject to
prepayments, which may shorten the weighted average life of asset-backed
securities and may lower their return, in the same manner as in the case of
mortgage-backed securities and CMOs, described above. Unlike mortgage-backed
securities, asset-backed securities typically do not have the benefit.
|X| Derivatives. The Fund can invest in a variety of derivative
investments to seek income or for hedging purposes. Some derivative
investments the Fund can use are the hedging instruments described below in
this Statement of Additional Information. However, the Fund is not obligated
to use derivatives in seeking its objective.
Some of the derivative investments the Fund can use include debt
exchangeable for common stock of an issuer or "equity-linked debt securities"
of an issuer. At maturity, the debt security is exchanged for common stock of
the issuer or it is payable in an amount based on the price of the issuer's
common stock at the time of maturity. Both alternatives present a risk that
the amount payable at maturity will be less than the principal amount of the
debt because the price of the issuer's common stock might not be as high as
the Manager expected.
Other derivative investments the Fund can invest in include
mortgage-related securities (described above) and "index-linked" notes.
Principal and/or interest payments on these notes depend on the performance
of an underlying index. Currency-indexed securities are another derivative
the Fund may use. Typically these are short-term or intermediate-term debt
securities. Their value at maturity or the rates at which they pay income are
determined by the change in value of the U.S. dollar against one or more
foreign currencies or an index. In some cases, these securities may pay an
amount at maturity based on a multiple of the amount of the relative currency
movements. This type of index security offers the potential for increased
income or principal payments but at a greater risk of loss than a typical
debt security of the same maturity and credit quality.
|X| Hedging. Although the Fund can use hedging instruments, it is not
obligated to use them in seeking its objective. To attempt to protect against
declines in the market value of the Fund's portfolio, to permit the Fund to
retain unrealized gains in the value of portfolio securities that have
appreciated, or to facilitate selling securities for investment reasons, the
Fund could:
o sell futures contracts,
o buy puts on such futures or on securities, or
o write covered calls on securities or futures. Covered calls may also
be used to increase the Fund's income, but the Manager does not
expect to engage extensively in that practice.
The Fund can use hedging to establish a position in the securities
market as a temporary substitute for purchasing particular securities. In
that case the Fund would normally seek to purchase the securities and then
terminate that hedging position. The Fund might also use this type of hedge
to attempt to protect against the possibility that its portfolio securities
would not be fully included in a rise in value of the market. To do so the
Fund could:
o buy futures, or
o buy calls on such futures or on securities.
The Fund's strategy of hedging with futures and options on futures will
be incidental to the Fund's activities in the underlying cash market. The
particular hedging instruments the Fund can use are described below. The Fund
may employ new hedging instruments and strategies when they are developed, if
those investment methods are consistent with the Fund's investment objective
and are permissible under applicable regulations governing the Fund.
|_| Futures. The Fund can buy and sell futures contracts that relate to
(1) broadly-based stock indices (these are referred to as "stock index
futures"), (2) bond indices (these are referred to as "bond index futures"),
(3) debt securities (these are referred to as "interest rate futures"), (4)
foreign currencies (these are referred to as "forward contracts") and (5)
commodities.
A broadly-based stock index is used as the basis for trading stock
index futures. They may in some cases be based on stocks of issuers in a
particular industry or group of industries. A stock index assigns relative
values to the common stocks included in the index and its value fluctuates in
response to the changes in value of the underlying stocks. A stock index
cannot be purchased or sold directly. Bond index futures are similar
contracts based on the future value of the basket of securities that comprise
the index. These contracts obligate the seller to deliver, and the purchaser
to take, cash to settle the futures transaction. There is no delivery made of
the underlying securities to settle the futures obligation. Either party may
also settle the transaction by entering into an offsetting contract.
An interest rate future obligates the seller to deliver (and the
purchaser to take) cash or a specified type of debt security to settle the
futures transaction. Either party could also enter into an offsetting
contract to close out the position.
The Fund can invest a portion of its assets in commodity futures
contracts. Commodity futures may be based upon commodities within five main
commodity groups: (1) energy, which includes crude oil, natural gas, gasoline
and heating oil; (2) livestock, which includes cattle and hogs; (3)
agriculture, which includes wheat, corn, soybeans, cotton, coffee, sugar and
cocoa; (4) industrial metals, which includes aluminum, copper, lead, nickel,
tin and zinc; and (5) precious metals, which includes gold, platinum and
silver. The Fund may purchase and sell commodity futures contracts, options
on futures contracts and options and futures on commodity indices with
respect to these five main commodity groups and the individual commodities
within each group, as well as other types of commodities.
No money is paid or received by the Fund on the purchase or sale of a
future. Upon entering into a futures transaction, the Fund will be required
to deposit an initial margin payment with the futures commission merchant
(the "futures broker"). Initial margin payments will be deposited with the
Fund's Custodian bank in an account registered in the futures broker's name.
However, the futures broker can gain access to that account only under
specified conditions. As the future is marked to market (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 daily.
At any time prior to 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 any additional cash must be
paid by or released to the Fund. Any loss or gain on the future is then
realized by the Fund for tax purposes. All futures transactions (except
forward contracts) are effected through a clearinghouse associated with the
exchange on which the contracts are traded.
|_| Put and Call Options. The Fund can buy and sell certain kinds of
put options ("puts") and call options ("calls"). The Fund can buy and sell
exchange-traded and over-the-counter put and call options, including index
options, securities options, currency options, commodities options, and
options on the other types of futures described above.
|_| Writing Covered Call Options. The Fund can write (that is,
sell) covered calls. If the Fund sells a call option, it must be covered.
That means the Fund must own the security subject to the call while the call
is outstanding, or, for certain types of calls, the call may be covered by
segregating liquid assets to enable the Fund to satisfy its obligations if
the call is exercised. Up to 35% of the Fund's total assets may be subject to
calls the Fund writes.
When the Fund writes a call on a security, it receives cash (a
premium). The Fund agrees to sell the underlying security to a purchaser of a
corresponding call on the same security during the call period at a fixed
exercise price regardless of market price changes during the call period. The
call period is usually not more than nine months. The exercise price may
differ from the market price of the underlying security. The Fund has the
risk of loss that the price of the underlying security may decline during the
call period. That risk may be offset to some extent by the premium the Fund
receives. If the value of the investment does not rise above the call price,
it is likely that the call will lapse without being exercised. In that case
the Fund would keep the cash premium and the investment.
When the Fund writes a call on an index, it receives cash (a premium).
If the buyer of the call exercises it, the Fund will pay an amount of cash
equal to the difference between the closing price of the call and the
exercise price, multiplied by a specified multiple that determines the total
value of the call for each point of difference. If the value of the
underlying investment does not rise above the call price, it is likely that
the call will lapse without being exercised. In that case, the fund would
keep the cash premium.
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 calls traded on exchanges or as to other acceptable escrow
securities. In that way, no margin will be required for such transactions.
OCC will release the securities on the expiration of the option or when the
Fund enters into a closing transaction.
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
will establish a formula price at which the Fund will have the absolute right
to repurchase that OTC option. The formula price will 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 option is "in the money"). When the Fund writes an OTC option, it
will treat as illiquid (for purposes of its restriction on holding illiquid
securities) the mark-to-market value of any OTC option it holds, unless the
option is subject to a buy-back agreement by the executing broker.
To terminate its obligation on a call it has written, the Fund may
purchase a corresponding call in a "closing purchase transaction." The Fund
will then realize a profit or loss, depending upon whether the net of the
amount of the option transaction costs and the premium received on the call
the Fund wrote is more or less than the price of the call the Fund purchases
to close out the transaction. The Fund may realize a profit if the call
expires unexercised, because the Fund will retain the underlying security and
the premium it received when it wrote the call. Any such profits are
considered short-term capital gains for Federal income tax purposes, as are
the premiums on lapsed calls. When distributed by the Fund they are taxable
as ordinary income. If the Fund cannot effect a closing purchase transaction
due to the lack of a market, it will have to hold the callable securities
until the call expires or is exercised.
The Fund may also write calls on a futures contract without owning the
futures contract or securities deliverable under the contract. To do so, at
the time the call is written, the Fund must cover the call by segregating an
equivalent dollar amount of liquid assets. The Fund will segregate additional
liquid assets if the value of the segregated assets drops below 100% of the
current value of the future. Because of this segregation requirement, in no
circumstances would the Fund's receipt of an exercise notice as to that
future require the Fund to deliver a futures contract. It would simply put
the Fund in a short futures position, which is permitted by the Fund's
hedging policies.
|_| Writing Put Options. The Fund can sell put options. A put
option on securities gives the purchaser the right to sell, and the writer
the obligation to buy, the underlying investment at the exercise price during
the option period. The Fund will not write puts if, as a result, more than
25% of the Fund's net assets would be required to be segregated to cover such
put options.
If the Fund writes a put, the put must be covered by segregated liquid
assets. The premium the Fund receives from writing a put represents a profit,
as long as the price of the underlying investment remains equal to or above
the exercise price of the put. However, the Fund also assumes the obligation
during the option period to buy the underlying investment from the buyer of
the put at the exercise price, even if the value of the investment falls
below the exercise price. If a put the Fund has written expires unexercised,
the Fund realizes a gain in the amount of the premium less the transaction
costs incurred. If the put is exercised, the Fund must fulfill its obligation
to purchase the underlying investment at the exercise price. That price will
usually exceed the market value of the investment at that time. In that case,
the Fund may incur a loss if it sells the underlying investment. That loss
will be 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 the Fund incurred.
When writing a put option on a security, 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 Fund's obligation as the put writer continues, it may be
assigned an exercise notice by the broker-dealer through which the put was
sold. That notice will require the Fund to take delivery of the underlying
security and pay 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. That obligation terminates upon expiration of the put. It
may also terminate if, before it receives an exercise notice, the Fund
effects a closing purchase transaction by purchasing a put of the same series
as it sold. Once the Fund has been assigned an exercise notice, it cannot
effect a closing purchase transaction.
The Fund may decide to effect a closing purchase transaction to realize
a profit on an outstanding put option it has written or to prevent the
underlying security from being put. Effecting a closing purchase transaction
will also permit the Fund to write another put option on the security, or to
sell the security and use the proceeds from the sale for other investments.
The Fund will realize a profit or loss from a closing purchase transaction
depending on whether the cost of the transaction is less or more than the
premium received from writing the put option. Any profits from writing puts
are considered short-term capital gains for Federal tax purposes, and when
distributed by the Fund, are taxable as ordinary income.
|_| Purchasing Calls and Puts. The Fund can purchase calls to
protect against the possibility that the Fund's portfolio will not
participate in an anticipated rise in the securities market. When the Fund
buys a call (other than in a closing purchase transaction), it pays a
premium. The Fund then 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. The Fund benefits only if it sells the call at a
profit or if, during the call period, the market price of the underlying
investment is above the sum of the call price plus the transaction costs and
the premium paid for the call and the Fund exercises the call. If the Fund
does not exercise the call or sell it (whether or not at a profit), the call
will become worthless at its expiration date. In that case the Fund will have
paid the premium but lost the right to purchase the underlying investment.
The Fund can buy puts whether or not it holds the underlying investment
in its portfolio. When the Fund purchases a put, it pays a premium and,
except as to puts on indices, has the right to sell the underlying investment
to a seller of a put on a corresponding investment during the put period at a
fixed exercise price.
Buying a put on an investment the Fund does not own (such as an index
or future) permits the Fund either to resell the put or to buy the underlying
investment and sell it at the exercise price. The resale price will vary
inversely to the price of the underlying investment. If the market price of
the underlying investment is above the exercise price and, as a result, the
put is not exercised, the put will become worthless on its expiration date.
Buying a put on securities or futures the Fund owns 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 date. In that case the Fund will
have paid the premium but lost the right to sell the underlying investment.
However, the Fund may sell the put prior to its expiration. That sale may or
may not be at a profit.
When the Fund purchases a call or put on an index or future, it pays a
premium, but settlement is in cash rather than by delivery of the underlying
investment to the Fund. Gain or loss depends on changes in the index in
question (and thus on price movements in the securities market generally)
rather than on price movements in individual securities or futures contracts.
The Fund may buy a call or put only if, after the purchase, the value
of all call and put options held by the Fund will not exceed 5% of the Fund's
total assets.
|_| Buying and Selling Options on Foreign Currencies. The Fund
can buy and sell calls and puts on foreign currencies. They include puts and
calls that trade on a securities or commodities exchange or in the
over-the-counter markets or are quoted by major recognized dealers in such
options. The Fund could use these calls and puts to try to protect against
declines in the dollar value of foreign securities and increases in the
dollar cost of foreign securities the Fund wants to acquire.
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 those securities may be partially offset by purchasing calls or
writing puts on that foreign currency. If the Manager anticipates a decline
in the dollar value of a foreign currency, the decline in the dollar value of
portfolio securities denominated in that currency might be partially offset
by writing calls or purchasing puts on that foreign currency. However, the
currency rates could fluctuate in a direction adverse to the Fund's position.
The Fund will then have incurred option premium payments and transaction
costs without a corresponding benefit.
A call the Fund writes on a foreign currency 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 it can do so for additional cash consideration held in a
segregated account by its Custodian bank) upon conversion or exchange of
other foreign currency held in its portfolio.
The Fund could write a call on a foreign currency to provide a hedge
against a decline 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. That decline might be one that occurs due to an
expected adverse change in the exchange rate. This is known as a
"cross-hedging" strategy. In those circumstances, the Fund covers the option
by maintaining cash, U.S. government securities or other liquid, high grade
debt securities in an amount equal to the exercise price of the option, in a
segregated account with the Fund's Custodian bank.
|_| Risks of Hedging with Options and Futures. 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.
The Fund's option activities could affect its portfolio turnover rate
and brokerage commissions. The exercise of calls written by the Fund might
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 could pay a brokerage commission each time it buys a call or
put, sells a call or put, or buys or sells an underlying investment in
connection with the exercise of a call or put. Those commissions could be
higher on a relative basis 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. 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 investment.
If a covered call written by the Fund is exercised on an investment
that has increased in value, the Fund will be required to sell the investment
at the call price. It will not be able to realize any profit if the
investment has increased in value above the call price.
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. The Fund
might experience losses if it could not close out a position because of an
illiquid market for the future or option.
There is a risk in using short hedging by selling futures or purchasing
puts on broadly-based indices or futures to attempt to protect against
declines in the value of the Fund's portfolio securities. The risk is that
the prices of the futures or the applicable index will correlate imperfectly
with the behavior of the cash prices of the Fund's securities. For example,
it is possible that while the Fund has used hedging instruments in a short
hedge, the market may advance and the value of the securities held in the
Fund's portfolio might decline. If that occurred, the Fund would lose money
on the hedging instruments and also experience a decline in the value of 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
securities will tend to move in the same direction as the indices upon which
the hedging instruments are based.
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 portfolio securities being hedged and movements in the price of the
hedging instruments, the Fund might use hedging instruments in a greater
dollar amount than the dollar amount of portfolio securities being hedged. It
might do so if the historical volatility of the prices of the portfolio
securities being hedged is more than the historical volatility of the
applicable index.
The ordinary spreads between prices in the cash and futures markets are
subject to distortions, due to differences in the nature of those markets.
First, all participants in the futures market are subject to margin deposit
and maintenance requirements. Rather than meeting additional margin deposit
requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, the liquidity of the futures market 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 market could be reduced, thus producing distortion.
Third, from the point of view of speculators, the deposit requirements in the
futures market are less onerous than margin requirements in the securities
markets. Therefore, increased participation by speculators in the futures
market may cause temporary price distortions.
The Fund can use hedging instruments to establish a position in the
securities markets as a temporary substitute for the purchase of individual
securities (long hedging) by buying futures and/or calls on such futures,
broadly-based indices or on securities. It is possible that when the Fund
does so the market might decline. If the Fund then concludes not to invest in
securities because of concerns that the market might decline further 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 securities purchased.
|_| 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 "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 a foreign currency. The Fund limits its exposure in
foreign currency exchange contracts in a particular foreign currency to the
amount of its assets denominated in that currency or a closely-correlated
currency. The Fund may also use "cross-hedging" where the Fund hedges against
changes in currencies other than the currency in which a security it holds is
denominated.
Under a forward contract, one party agrees to purchase, and another
party agrees to sell, a specific currency at a future date. That date may be
any fixed number of days from the date of the contract agreed upon by the
parties. The transaction price is set at the time the contract is entered
into. These contracts are traded in the inter-bank market conducted directly
among currency traders (usually large commercial banks) and their customers.
The Fund may use forward contracts to protect against uncertainty in
the level of future exchange rates. The use of forward contracts does not
eliminate the risk of 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. Although forward contracts may reduce the risk of loss from a
decline in the value of the hedged currency, at the same time they limit any
potential gain if the value of the hedged currency increases.
When the Fund enters into a contract for the purchase or sale of a
security denominated in a foreign currency, or when it anticipates receiving
dividend payments in a foreign currency, the Fund might desire to "lock-in"
the U.S. dollar price of the security or the U.S. dollar equivalent of the
dividend payments. To do so, the Fund could enter into a forward contract for
the purchase or sale of the amount of foreign currency involved in the
underlying transaction, in a fixed amount of U.S. dollars per unit of the
foreign currency. This is called a "transaction hedge." The transaction hedge
will protect the Fund against a loss from an adverse change in 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
the payments are made or received.
The Fund could also use forward contracts to lock in the U.S. dollar
value of portfolio positions. This is called a "position hedge." When the
Fund believes that foreign currency might suffer a substantial decline
against the U.S. dollar, it could enter into a forward contract to sell an
amount of that foreign currency approximating the value of some or all of the
Fund's portfolio securities denominated in that foreign currency. When the
Fund believes that the U.S. dollar might suffer a substantial decline against
a foreign currency, it could enter into a forward contract to buy that
foreign currency for a fixed dollar amount. Alternatively, the Fund could
enter into a forward contract to sell a different foreign currency for a
fixed U.S. dollar amount if the Fund believes that the U.S. dollar value of
the foreign currency to be sold pursuant to its forward contract will fall
whenever there is a decline in the U.S. dollar value of the currency in which
portfolio securities of the Fund are denominated. That is referred to as a
"cross hedge."
The Fund will cover its short positions in these cases by identifying
to its Custodian bank assets having a value equal to the aggregate amount of
the Fund's commitment under forward contracts. The Fund will not enter into
forward contracts or maintain a net exposure to such contracts if 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.
However, to avoid excess transactions and transaction costs, the Fund
may maintain a net exposure to forward contracts in excess of the value of
the Fund's portfolio securities or other assets denominated in foreign
currencies if the excess amount is "covered" by liquid securities denominated
in any currency. The cover must be at least equal at all times to the amount
of that excess. As one 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. As another alternative, 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.
The precise matching of the amounts under forward contracts and the
value of the securities involved generally will not be possible because the
future value of securities denominated in foreign currencies will change as a
consequence of market movements between the date the forward contract is
entered into and the date it is sold. In some cases the Manager might decide
to sell the security and deliver foreign currency to settle the original
purchase obligation. If the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver, the Fund may
have to purchase additional foreign currency on the "spot" (that is, cash)
market to settle the security trade. If the market value of the security
instead exceeds the amount of foreign currency the Fund is obligated to
deliver to settle the trade, the Fund might have to sell on the spot market
some of the foreign currency received upon the sale of the security. There
will be additional transaction costs on the spot market in those cases.
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 to pay additional transactions costs.
The use of forward contracts in this manner might reduce the Fund's
performance if there are unanticipated changes in currency prices to a
greater degree than if the Fund had not entered into such contracts.
At or before the maturity of a forward contract requiring the Fund to
sell a currency, the Fund might sell a portfolio security and use the sale
proceeds to make delivery of the currency. In the alternative the Fund might
retain the security and offset its contractual obligation to deliver the
currency by purchasing a second contract. Under that contract the Fund will
obtain, on the same maturity date, the same amount of the currency that it is
obligated to deliver. Similarly, the Fund might 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. The gain or loss will depend on the extent to which the
exchange rate or rates between the currencies involved moved between the
execution dates of the first contract and offsetting contract.
The costs 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 brokerage fees or commissions
are involved. Because these contracts are not traded on an exchange, the Fund
must evaluate the credit and performance risk of the counterparty under each
forward contract.
Although the Fund values its assets daily in terms of U.S. dollars, it
does not intend to convert its holdings of foreign currencies into U.S.
dollars on a daily basis. The Fund may convert foreign currency from time to
time, and will incur costs in doing so. Foreign exchange dealers do not
charge a fee for conversion, but they do seek to realize a profit based on
the difference between the prices at which they buy and sell various
currencies. Thus, a dealer might offer to sell a foreign currency to the Fund
at one rate, while offering a lesser rate of exchange if the Fund desires to
resell that currency to the dealer.
|_| Regulatory Aspects of Hedging Instruments. When using futures and
options on futures, the Fund is required to operate within certain guidelines
and restrictions with respect to the use of futures as established by the
Commodities Futures Trading Commission (the "CFTC"). In particular, the Fund
is exempted from registration with the CFTC as a "commodity pool operator" if
the Fund complies with the requirements of Rule 4.5 adopted by the CFTC. The
Rule does not limit the percentage of the Fund's assets that may be used for
futures margin and related options premiums for a bona fide hedging position.
However, under the Rule, the Fund must limit its aggregate initial futures
margin and related options premiums to not more than 5% of the Fund's net
assets for hedging strategies that are not considered bona fide hedging
strategies under the Rule. Under the Rule, the Fund must also use short
futures and options on futures solely for bona fide hedging purposes within
the meaning and intent of the applicable provisions of the Commodity Exchange
Act.
Transactions in options by the Fund are subject to limitations
established by the option exchanges. The exchanges limit the maximum number
of options that may be written or held by a single investor or group of
investors acting in concert. Those limits apply 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 that the Fund may
write or hold may be affected by options written or held by other entities,
including other investment companies having the same adviser as the Fund (or
an adviser that is an affiliate of the Fund's adviser). The exchanges also
impose position limits on futures transactions. An exchange may order the
liquidation of positions found to be in violation of those limits and may
impose certain other sanctions.
Under the Investment Company Act, when the Fund purchases a future, it
must maintain cash or readily marketable short-term debt instruments in an
amount equal to the market value of the securities underlying the future,
less the margin deposit applicable to it. The account must be a segregated
account or accounts held by the Fund's Custodian bank.
|_| Tax Aspects of Certain Hedging Instruments. Certain foreign
currency exchange contracts in which the Fund may invest are treated as
"Section 1256 contracts" under the Internal Revenue Code. In general, gains
or losses relating to Section 1256 contracts are characterized as 60%
long-term and 40% short-term capital gains or losses under the Code. However,
foreign currency gains or losses arising from Section 1256 contracts that are
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," and unrealized gains or losses are treated as
though they were realized. These contracts also may be marked-to-market for
purposes of determining 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 those
transactions from this marked-to-market treatment.
Certain forward contracts the Fund enters into may result in
"straddles" for Federal income tax purposes. The straddle rules may affect
the character and timing of gains (or losses) recognized by the Fund on
straddle positions. Generally, a loss sustained on the disposition of a
position making up a straddle is allowed only to the extent that the 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, the following gains or losses are
treated as ordinary income or loss:
(1) gains or losses attributable to fluctuations in exchange rates that
occur between the time the Fund accrues interest or other
receivables or accrues expenses or other liabilities denominated in
a foreign currency and the time the Fund actually collects such
receivables or pays such liabilities, and
(2) gains or losses attributable to fluctuations in the value of a foreign
currency between the date of acquisition of a debt security
denominated in a foreign currency or foreign currency forward
contracts and the date of disposition.
Currency gains and losses are offset against market gains and losses on
each trade before determining a net "Section 988" gain or loss under the
Internal Revenue Code for that trade, which may increase or decrease the
amount of the Fund's investment income available for distribution to its
shareholders.
Investment Restrictions
|X| What Are "Fundamental Policies?" Fundamental policies are those
policies that the Fund has adopted to govern its investments that can be
changed only by the vote of a "majority" of the Fund's outstanding voting
securities. Under the Investment Company Act, a "majority" vote is defined as
the vote of the holders of the lesser of:
|_| 67% or more of the shares present or represented by proxy at a
shareholder meeting, if the holders of more than 50% of the outstanding
shares are present or represented by proxy, or
|_| more than 50% of the outstanding shares.
The Fund's investment objective is a fundamental policy. Other policies
described in the Prospectus or this Statement of Additional Information are
"fundamental" only if they are identified as such. The Fund's Board of
Trustees can change non-fundamental policies without shareholder approval.
However, significant changes to investment policies will be described in
supplements or updates to the Prospectus or this Statement of Additional
Information, as appropriate. The Fund's most significant investment policies
are described in the Prospectus.
|X| Does the Fund Have Additional Fundamental Policies? The following
investment restrictions are fundamental policies of the Fund.
|_| The Fund cannot buy securities issued or guaranteed by any one
issuer if more than 5% of its total assets would be invested in securities of
that issuer or if it would then own more than 10% of that issuer's voting
securities. That restriction applies to 75% of the Fund's total assets. The
limit does not apply to securities issued by the U.S. government or any of
its agencies or instrumentalities.
|_| The Fund cannot lend money. However, it can buy debt securities
that its investment policies and restrictions permit it to purchase. The Fund
may also lend its portfolio securities subject to the percentage restrictions
set forth in this Statement of Additional Information and may enter into
repurchase agreements.
|_| The Fund cannot concentrate investments. That means it cannot
invest 25% or more of its total assets in companies in any one industry.
Obligations of the U.S. government, its agencies and instrumentalities are
not considered to be part of an "industry" for the purposes of this
restriction.
|_| The Fund cannot buy or sell real estate, including futures
contracts. However, the Fund can purchase debt securities secured by real
estate or interests in real estate.
|_| The Fund cannot underwrite securities of other companies. A
permitted exception is in case it is deemed to be an underwriter under the
Securities Act of 1933 when reselling any securities held in its own
portfolio.
|_| The Fund cannot invest in physical commodities or commodity
contracts. However, the Fund may buy and sell the hedging instruments
permitted by any of its other investment policies. The Fund can also buy and
sell options, futures, securities or other instruments backed by, or the
investment return from which is linked to changes in the price of, physical
commodities.
|_| The Fund cannot invest in the securities issued by any company for
the purpose of acquiring control or management of that company, except in
connection with a merger, reorganization, consolidation or acquisition of
assets.
|_| The Fund cannot invest in or hold securities of any issuer if
officers and Trustees of the Fund or the Manager individually beneficially
own more than 1/2 of 1% of the securities of that issuer and together own
more than 5% of the securities of that issuer.
|_| The Fund cannot buy securities on margin. However, this does not
prohibit the Fund from making margin deposits in connection with any of the
hedging instruments permitted by any of its other investment policies.
|_| The Fund cannot borrow money in excess of 5% of the value of its
total assets. It can borrow only as a temporary measure for extraordinary or
emergency purposes.
|_| The Fund cannot mortgage, hypothecate or pledge any of its assets
to secure a debt. However, the escrow arrangements in connection with hedging
instruments are not considered to involve a mortgage, hypothecation or pledge.
|_| The Fund cannot issue "senior securities," but this does not
prohibit certain investment activities for which assets of the Fund are
designated as segregated, or margin, collateral or escrow arrangements are
established, to cover the related obligations. Examples of those activities
include borrowing money, reverse repurchase agreements, delayed-delivery and
when-issued arrangements for portfolio securities transactions, and contracts
to buy or sell derivatives, hedging instruments, options or futures.
Unless the Prospectus or this Statement of Additional Information
states that a percentage restriction applies on an ongoing basis, it applies
only at the time the Fund makes an investment. The Fund need not sell
securities to meet the percentage limits if the value of the investment
increases in proportion to the size of the Fund.
For purposes of the Fund's policy not to concentrate its investments as
described above, the Fund has adopted the industry classifications set forth
in Appendix B to this Statement of Additional Information. This is not a
fundamental policy.
How the Fund is Managed
Organization and History. The Fund is an open-end, diversified management
investment company with an unlimited number of authorized shares of
beneficial interest. The Fund was organized as a Massachusetts business trust
in 1987.
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. 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.
|X| Classes of Shares. 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 of shares:
o has its own dividends and distributions,
o pays certain expenses which may be different for the different classes,
o may have a different net asset value,
o may have separate voting rights on matters in which interests of one
class are different from interests of another class, and
o votes as a class on matters that affect that class alone.
Shares are freely transferable, and each share of each class has one
vote at shareholder meetings, with fractional shares voting proportionally on
matters submitted to the vote of shareholders. Each share of the Fund
represents an interest in the Fund proportionately equal to the interest of
each other share of the same class.
The Trustees are authorized to create new series and classes of shares.
The Trustees may reclassify unissued shares of the Fund into additional
series or classes of shares. The Trustees also may divide or combine the
shares of a class into a greater or lesser number of shares without changing
the proportionate beneficial interest of a shareholder in the Fund. Shares do
not have cumulative voting rights or preemptive or subscription rights.
Shares may be voted in person or by proxy at shareholder meetings.
|X| Meetings of Shareholders. 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. It will also do so
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. If the Trustees receive a request from at least 10
shareholders 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. The
shareholders making the request must have been shareholders for at least six
months and must hold shares of the Fund valued at $25,000 or more or
constituting at least 1% of the Fund's outstanding shares, whichever is less.
The Trustees may also take other action as permitted by the Investment
Company Act.
|X| Shareholder and Trustee Liability. The Fund's Declaration of Trust
contains an express disclaimer of shareholder or Trustee liability for the
Fund's obligations. It also provides for indemnification and reimbursement of
expenses out of the Fund's property for any shareholder held personally
liable for its obligations. The Declaration of Trust also states that upon
request, the Fund shall assume the defense of any claim made against a
shareholder for any act or obligation of the Fund and shall satisfy any
judgment on that claim. Massachusetts law permits a shareholder of a business
trust (such as the Fund) to be held personally liable as a "partner" under
certain circumstances. However, the risk that a Fund shareholder will incur
financial loss from being held liable as a "partner" of the Fund is limited
to the relatively remote circumstances in which the Fund would be unable to
meet its obligations.
The Fund's contractual arrangements state that any person doing
business with the Fund (and each shareholder of the Fund) agrees under its
Declaration of Trust to look solely to the assets of the Fund for
satisfaction of any claim or demand that may arise out of any dealings with
the Fund. The contracts further state that the Trustees shall have no
personal liability to any such person, to the extent permitted by law.
Trustees and Officers of the Fund. The Fund's Trustees and officers and their
principal occupations and business affiliations and occupations during the
past five years are listed below. Trustees denoted with an asterisk (*) below
are deemed to be "interested persons" of the Fund under the Investment
Company Act. All of the Trustees are Trustees or Directors of the following
New York-based Oppenheimer funds2:
Oppenheimer California Municipal Fund Oppenheimer Large Cap Growth Fund
Oppenheimer Capital Appreciation Fund Oppenheimer Money Market Fund, Inc.
Oppenheimer Developing Markets Fund Oppenheimer Multiple Strategies Fund
Oppenheimer Discovery Fund Oppenheimer Multi-Sector Income Trust
Oppenheimer Enterprise Fund Oppenheimer Multi-State Municipal
Trust
Oppenheimer Global Fund Oppenheimer Municipal Bond Fund
Oppenheimer Global Growth & Income Fund Oppenheimer New York Municipal Fund
Oppenheimer Gold & Special Minerals Oppenheimer Series Fund, Inc.
Fund
Oppenheimer Growth Fund Oppenheimer U.S. Government Trust
Oppenheimer International Growth Fund Oppenheimer World Bond Fund
Oppenheimer International Small
Company Fund
Ms. Macaskill and Messrs. Spiro, Donohue, Bowen, Zack, Bishop and
Farrar respectively hold the same offices with the other New York-based
Oppenheimer funds as with the Fund. As of January 1, 1999, the Trustees and
officers of the Fund as a group owned of record or beneficially less than 1%
of each class of shares of the Fund. The foregoing statement does not reflect
ownership of shares of the Fund held of record by an employee benefit plan
for employees of the Manager, other than the shares beneficially owned under
the plan by the officers of the Fund listed above. Ms. Macaskill and Mr.
Donohue are trustees of that plan.
Leon Levy, Chairman of the Board of Trustees, Age: 73.
280 Park Avenue, New York, NY 10017
General Partner of Odyssey Partners, L.P. (investment partnership) (since
1982) and Chairman of Avatar Holdings, Inc. (real estate development).
Robert G. Galli, Trustee, Age: 65.
19750 Beach Road, Jupiter Island, FL 33469
A Trustee or Director of other Oppenheimer funds. Formerly he held the
following positions: Vice Chairman of the Manager, OppenheimerFunds, Inc.
(October 1995 to December 1997); Vice President (June 1990 to March 1994) and
General Counsel of Oppenheimer Acquisition Corp., the Manager's parent
holding company; Executive Vice President (December 1977 to October 1995),
General Counsel and a director (December 1975 to October 1993) of the
Manager; Executive Vice President and a director (July 1978 to October 1993)
and General Counsel of the Distributor, OppenheimerFunds Distributor, Inc.;
Executive Vice President and a director (April 1986 to October 1995) of
HarbourView Asset Management Corporation; Vice President and a director
(October 1988 to October 1993) of Centennial Asset Management Corporation,
(HarbourView and Centennial are investment adviser subsidiaries of the
Manager); and an officer of other Oppenheimer funds.
Benjamin Lipstein, Trustee, Age: 75.
591 Breezy Hill Road, Hillsdale, N.Y. 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University.
Bridget A. Macaskill,* President and Trustee, Age: 50.
Two World Trade Center, 34th Floor, New York, NY 10048-0203
President (since June 1991), Chief Executive Officer (since September 1995)
and a Director (since December 1994) of the Manager; President and director
(since June 1991) of HarbourView Asset Management Corp.; Chairman and a
director of Shareholder Services, Inc. (since August 1994), and Shareholder
Financial Services, Inc. (since September 1995) (both are transfer agent
subsidiaries of the Manager); President (since September 1995) and a director
(since October 1990) of Oppenheimer Acquisition Corp.; President (since
September 1995) and a director (since November 1989) of Oppenheimer
Partnership Holdings, Inc., a holding company subsidiary of the Manager; a
director (since July 1996) of Oppenheimer Real Asset Management, Inc., an
investment advisory subsidiary of the Manager; President and a director
(since October 1997) of OppenheimerFunds International Ltd., an offshore fund
management subsidiary of the Manager, and of Oppenheimer Millennium Funds
plc, an offshore investment company; President and a director or trustee of
other Oppenheimer funds; a director of Hillsdown Holdings plc (a U.K. food
company); and a director (until 1998) of NASDAQ Stock Market, Inc.
Elizabeth B. Moynihan, Trustee, Age: 69.
801 Pennsylvania Avenue, N.W., Washington, D.C. 20004
Author and architectural historian; a trustee of the Freer Gallery of Art
(Smithsonian Institute), a member of the Executive Committee of the Board
of Trustees of the National Building Museum; a member of the Trustees
Council, Preservation League of New York State.
Kenneth A. Randall, Trustee, Age: 71.
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Dominion Resources, Inc. (electric utility holding company),
Dominion Energy, Inc. (electric power and oil and gas producer), and Prime
Retail, Inc. (real estate investment trust); formerly President and Chief
Executive Officer of The Conference Board, Inc. (international economic and
business research) and a director of Lumbermens Mutual Casualty Company,
American Motorists Insurance Company and American Manufacturers Mutual
Insurance Company.
Edward V. Regan, Trustee, Age: 68.
40 Park Avenue, New York, New York 10016
Chairman of Municipal Assistance Corporation for the City of New York; Senior
Fellow of Jerome Levy Economics Institute, Bard College; RB Asset (real
estate manager); a director of OffitBank; Trustee, Financial Accounting
Foundation (FASB and GASB); formerly New York State Comptroller and trustee,
New York State and Local Retirement Fund.
Russell S. Reynolds, Jr., Trustee, Age: 67.
8 Sound Shore Drive, Greenwich, Connecticut 06830
Retired Founder Chairman of Russell Reynolds Associates, Inc. (executive
recruiting); Chairman of Directorship Inc. (corporate governance consulting);
a director of Professional Staff Limited (U.K); a trustee of Mystic Seaport
Museum, International House and Greenwich Historical Society.
Donald W. Spiro,* Vice Chairman and Trustee, Age: 73.
Two World Trade Center, 34th Floor, New York, NY 10048-0203
Chairman Emeritus (since August 1991) and a director (since January 1969) of
the Manager; formerly Chairman of the Manager and the Distributor.
Pauline Trigere, Trustee, Age: 86.
498 Seventh Avenue, New York, New York 10018
Chairman and Chief Executive Officer of P.T. Concept (design and sale of
women's fashions).
Clayton K. Yeutter, Trustee, Age: 68.
10475 E. Laurel Lane, Scottsdale, Arizona 85259
Of Counsel, Hogan & Hartson (a law firm); a director of Zurich Financial
Services, Caterpillar, Inc. (machinery), ConAgra, Inc. (food and agricultural
products), Farmers Insurance Company (insurance), FMC Corp. (chemicals and
machinery) and Texas Instruments, Inc. (electronics); formerly (in descending
chronological order) Counselor 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.
Richard H. Rubinstein, Vice President and Portfolio Manager, Age: 50.
Two World Trade Center, 34th Floor, New York, New York 10048-0203
Senior Vice President of the Manager (since October 1995); an officer of
other Oppenheimer funds (since June 1990).
George Evans, Vice President and Portfolio Manager, Age: 39.
Two World Trade Center, 34th Floor, New York, New York 10048-0203
Vice President of the Manager (since September 1990) and HarbourView Asset
Management Corp (since July 1994); an officer of other Oppenheimer funds.
David Negri, Vice President and Portfolio Manager, Age: 44.
Two World Trade Center, 34th Floor, New York, New York 10048-0203
Senior Vice President of the Manager (since June 1989); an officer of other
Oppenheimer funds.
Michael Levine, Vice President and Portfolio Manager, Age: 33.
Two World Trade Center, 34th Floor, New York, NY 10048-0203
Vice President of the Manager (since September 1996); an officer of other
Oppenheimer funds; formerly a portfolio manager and research associate for
Amas Securities, Inc..
Andrew J. Donohue, Secretary, Age: 48.
Two World Trade Center, 34th Floor, New York, NY 10048-0203
Executive Vice President (since January 1993), General Counsel (since October
1991) and a Director (since September 1995) of the Manager; Executive Vice
President and General Counsel (since September 1993) and a director (since
January 1992) of the Distributor; Executive Vice President, General Counsel
and a director of HarbourView Asset Management Corp., Shareholder Services,
Inc., Shareholder Financial Services, Inc. and Oppenheimer Partnership
Holdings, Inc. (since September 1995); President and a director of Centennial
Asset Management Corp. (since September 1995); President and a director of
Oppenheimer Real Asset Management, Inc. (since July 1996); General Counsel
(since May 1996) and Secretary (since April 1997) of Oppenheimer Acquisition
Corp.; Vice President of OppenheimerFunds International Ltd. and Oppenheimer
Millennium Funds plc (since October 1997); an officer of other Oppenheimer
funds.
George C. Bowen, Treasurer, Age: 62.
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President (since September 1987) and Treasurer (since March 1985)
of the Manager; Vice President (since June 1983) and Treasurer (since March
1985) of the Distributor; Vice President (since October 1989) and Treasurer
(since April 1986) of HarbourView Asset Management Corp.; Senior Vice
President (since February 1992), Treasurer (since July 1991) and a director
(since December 1991) of Centennial Asset Management Corp.; Vice President
and Treasurer (since August 1978) and Secretary (since April 1981) of
Shareholder Services, Inc.; Vice President, Treasurer and Secretary of
Shareholder Financial Services, Inc. (since November 1989); Assistant
Treasurer of Oppenheimer Acquisition Corp. (since March 1998); Treasurer of
Oppenheimer Partnership Holdings, Inc. (since November 1989); Vice President
and Treasurer of Oppenheimer Real Asset Management, Inc. (since July 1996);
Treasurer of OppenheimerFunds International Ltd. and Oppenheimer Millennium
Funds plc (since October 1997); a trustee or director and an officer of other
Oppenheimer funds; formerly Treasurer of Oppenheimer Acquisition Corp. (June
1990 - March 1998).
Robert G. Zack, Assistant Secretary, Age: 50.
Two World Trade Center, 34th Floor, New York, NY 10048-0203
Senior Vice President (since May 1985) and Associate General Counsel (since
May 1981) of the Manager; Assistant Secretary of Shareholder Services, Inc.
(since May 1985), and Shareholder Financial Services, Inc. (since November
1989); Assistant Secretary (since October 1997) of OppenheimerFunds
International Ltd. and Oppenheimer Millennium Funds plc; an officer of other
Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer, Age: 40.
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); an
officer of other Oppenheimer funds; formerly an Assistant Vice President of
the Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund
Controller for the Manager.
Scott T. Farrar, Assistant Treasurer, Age: 33.
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996);
Assistant Treasurer of OppenheimerFunds International Ltd. and Oppenheimer
Millennium Funds plc (since October 1997); an officer of other Oppenheimer
funds; formerly an Assistant Vice President of the Manager/Mutual Fund
Accounting (April 1994-May 1996), and a Fund Controller for the Manager.
|X| Remuneration of Trustees. The officers of the Fund and certain
Trustees of the Fund (Ms. Macaskill and Mr. Spiro) who are affiliated with
the Manager receive no salary or fee from the Fund. The remaining Trustees of
the Fund received the compensation shown below. The compensation from the
Fund was paid during its fiscal period ended September 30, 1998. The
compensation from all of the New York-based Oppenheimer funds (including the
Fund) was received as a director, trustee or member of a committee of the
boards of those funds during the calendar year 1998.
<PAGE>
------------------------------------------------------------------------------
Total
Retirement Compensation
Benefits from all
Aggregate Accrued as Part New York based
Trustee's Name Compensation of Fund Oppenheimer
and Other Positions from Fund Expenses Funds (21 Funds)1
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Leon Levy
Chairman $9770 None $162,600
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Robert G. Galli
Study Committee $3,295 None $113,383.33
Member2
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Benjamin Lipstein
Study Committee
Chairman, $8,445 None $140,550
Audit Committee Member
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Elizabeth B. Moynihan
Study Committee Member $5,949 None $99,000
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Kenneth A. Randall
Audit Committee $5,456 None $90,800
Chairman
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Edward V. Regan
Proxy Committee
Chairman, $5,395 None $89,800
Audit Committee Member
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Russell S. Reynolds,
Jr. $4,038 None $67,200
Proxy Committee Member
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Pauline Trigere $3,606 None $60,000
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Clayton K. Yeutter
Proxy Committee 4,038 None $67,200
Member
------------------------------------------------------------------------------
1 For the 1998 calendar year.
2 Aggregate compensation from the Fund reflects fees from 1/1/98 to
9/30/98. Total compensation for the 1998 calendar year includes
compensation received for serving as a Trustee or Director of 11 other
Oppenheimer funds.
3 Includes $504 deferred under Deferred Compensation Plan described
below.
|X| Retirement Plan for Trustees. The Fund has adopted a retirement
plan that provides for payments to retired Trustees. Payments are up to 80%
of the average compensation paid during a Trustee's five years of service in
which the highest compensation was received. A Trustee must serve as trustee
for any of the New York-based Oppenheimer funds for at least 15 years to be
eligible for the maximum payment. Each Trustee's retirement benefits will
depend on the amount of the Trustee's future compensation and length of
service. Therefore the amount of those benefits cannot be determined at this
time, nor can we estimate the number of years of credited service that will
be used to determine those benefits.
|X| Deferred Compensation Plan for Trustees. The Board of Trustees has
adopted a Deferred Compensation Plan for disinterested trustees that enables
them to elect to defer receipt of all or a portion of the annual fees they
are entitled to receive from the Fund. Under the plan, the compensation
deferred by a Trustee is periodically adjusted as though an equivalent amount
had been invested in shares of one or more Oppenheimer funds selected by the
Trustee. The amount paid to the Trustee under the plan will be determined
based upon the performance of the selected funds.
Deferral of Trustees' fees under the plan will not materially affect
the Fund's assets, liabilities or net income per share. The plan will not
obligate the Fund to retain the services of any Trustee or to pay any
particular level of compensation to any Trustee. Pursuant to an Order issued
by the Securities and Exchange Commission, the Fund may invest in the funds
selected by the Trustee under the plan without shareholder approval for the
limited purpose of determining the value of the Trustee's deferred fee
account.
|X| Major Shareholders. As of January 1, 1999, the only person who
owned of record or was known by the Fund to own of record 5% or more of any
class of the Fund's outstanding shares was: Merrill Lynch Pierce Fenner &
Smith Inc., 4800 Deer Lake Drive East, 3rd Floor, Jacksonville, Florida
32246-6484, which owned 173,267.387 Class C shares (equal to 5.26% of the
Class C shares then outstanding) for the benefit of its customers.
The Manager. The Manager is wholly-owned by Oppenheimer Acquisition Corp., a
holding company controlled by Massachusetts Mutual Life Insurance Company.
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
enforced by the Manager.
|X| The Investment Advisory Agreement. The Manager provides investment
advisory and management services to the Fund under an investment advisory
agreement between the Manager and the Fund. The Manager selects securities
for the Fund's portfolio and handles its day-to-day business. The portfolio
managers of the Fund are employed by the Manager and are the persons who are
principally responsible for the day-to-day management of the Fund's
portfolio. Other members of the Manager's Equity Portfolio Team provide the
portfolio managers with counsel and support in managing the Fund's portfolio.
The agreement requires the Manager, at its expense, to provide the Fund
with adequate office space, facilities and equipment. It also requires the
Manager to provide and supervise the activities of all administrative and
clerical personnel required to provide effective administration for the Fund.
Those responsibilities include 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.
The Fund pays expenses not expressly assumed by the Manager under the advisory
agreement. The advisory agreement lists examples of expenses paid by the
Fund. The major categories relate to interest, taxes, brokerage commissions,
fees to certain Trustees, legal and audit expenses, custodian and transfer
agent expenses, share issuance costs, certain printing and registration costs
and non-recurring expenses, including litigation costs. The management fees
paid by the Fund to the Manager are calculated at the rates described in the
Prospectus, which are applied to the assets of the Fund as a whole. The fees
are allocated to each class of shares based upon the relative proportion of
the Fund's net assets represented by that class.
-------------------------------------------------------------------
Fiscal Year ended Management Fees Paid to OppenheimerFunds,
9/30: Inc.
-------------------------------------------------------------------
-------------------------------------------------------------------
1996 $1,544,001
-------------------------------------------------------------------
-------------------------------------------------------------------
1997 $3,267,378
-------------------------------------------------------------------
-------------------------------------------------------------------
1998 $5,796,545
-------------------------------------------------------------------
The investment advisory agreement states that in the absence of willful
misfeasance, bad faith, gross negligence in the performance of its duties or
reckless disregard of its obligations and duties under the investment advisory
agreement, the Manager is not liable for any loss resulting from a good faith
error or omission on its part with respect to any of its duties under the
agreement.
The agreement permits the Manager to act as investment adviser for any other
person, firm or corporation and to use the name "Oppenheimer" in connection with
other investment companies for which it may act as investment adviser or general
distributor. If the Manager shall no longer act as investment adviser to the
Fund, the Manager may withdraw the right of the Fund to use the name
"Oppenheimer" as part of its name.
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 to effect the Fund's
portfolio transactions. 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. The Manager may employ broker-dealers
that the Manager thinks, it its best judgment based on all relevant factors,
will implement the policy of the Fund to obtain, at reasonable expense, the
"best execution" of the Fund's portfolio transactions. "Best execution" means
prompt and reliable execution at the most favorable price obtainable. The
Manager need not seek competitive commission bidding. However, it is expected
to be aware of the current rates of eligible brokers and to minimize the
commissions paid to the extent consistent with the interests and policies of
the Fund as established by its Board of Trustees.
Under the investment advisory agreement, the Manager may select brokers
(other than affiliates) 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 charge, if the Manager makes a
good faith determination that the commission is fair and reasonable in
relation to the services provided. Subject to those considerations, as a
factor in selecting brokers for the Fund's portfolio transactions, the
Manager may also consider sales of shares of the Fund and other investment
companies for which the Manager or an affiliate serves as investment adviser.
Brokerage Practices Followed by the Manager. The Manager allocates brokerage
for the Fund subject to the provisions of the investment advisory agreement
and the procedures and rules described above. Generally, the Manager's
portfolio traders allocate brokerage based upon recommendations from the
Manager's portfolio managers. In certain instances, portfolio managers may
directly place trades and allocate brokerage. In either case, the Manager's
executive officers supervise the allocation of brokerage.
Transactions in securities other than those for which an exchange is the primary
market are generally done with principals or market makers. In transactions
on foreign exchanges, the Fund may be required to pay fixed brokerage
commissions and therefore would not have the benefit of negotiated
commissions available in U.S. markets. Brokerage commissions are paid
primarily for transactions in listed securities or for certain fixed-income
agency transactions in the secondary market. Otherwise brokerage commissions
are paid only if it appears likely that a better price or execution can be
obtained by doing so. In an option transaction, the Fund ordinarily uses the
same broker for the purchase or sale of the option and any transaction in the
securities to which the option relates. Other funds advised by the Manager
have investment policies similar to those of the Fund. Those other funds may
purchase or sell the same securities as the Fund at the same time as the
Fund, which could affect the supply and price of the securities. If two or
more funds advised by the Manager purchase the same security on the same day
from the same dealer, the transactions under those combined orders are
averaged as to price and allocated in accordance with the purchase or sale
orders actually placed for each account.
Most purchases of debt obligations are principal transactions at net prices.
Instead of using a broker for those transactions, the Fund normally deals
directly with the selling or purchasing principal or market maker unless the
Manager determines that a better price or execution can be obtained by using the
services of a broker. Purchases of portfolio securities from underwriters
include a commission or concession paid by the issuer to the underwriter.
Purchases from dealers include a spread between the bid and asked prices. The
Fund seeks to obtain prompt execution of these orders at the most favorable net
price.
The investment advisory agreement permits the Manager to allocate
brokerage for research services. 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. The investment research received for the
commissions of those other accounts may be useful both to the Fund and one or
more of the Manager's other accounts. Investment research may be supplied to
the Manager by a third party at the instance of a broker through which trades
are placed.
Investment research services include information and analysis on
particular companies and industries as well as market or economic trends and
portfolio strategy, market quotations for portfolio evaluations, information
systems, computer hardware and similar products and services. If a research
service also assists the Manager in a non-research capacity (such as
bookkeeping or other administrative functions), then only the percentage or
component that provides assistance to the Manager in the investment
decision-making process may be paid in commission dollars.
The Board of Trustees permits the Manager to use stated commissions on
secondary fixed-income agency trades to obtain research if the broker
represents 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 Board of Trustees permits the Manager to use concessions on
fixed-price offerings to obtain research, in the same manner as is permitted
for agency transactions.
The research services provided by brokers broadens the scope and
supplements the research activities of the Manager. That research provides
additional views and comparisons for consideration, and helps the Manager to
obtain market information for the valuation of securities that are either
held in the Fund's portfolio or are being considered for purchase. The
Manager provides information to the Board about the commissions paid to
brokers furnishing such services, together with the Manager's representation
that the amount of such commissions was reasonably related to the value or
benefit of such services.
------------------------------------------------------------------------------
Fiscal Year Ended 9/30: Total Brokerage Commissions Paid by the Fund1
------------------------------------------------------------------------------
------------------------------------------------------------------------------
1996 $262,222
------------------------------------------------------------------------------
------------------------------------------------------------------------------
1997 $424,443
------------------------------------------------------------------------------
------------------------------------------------------------------------------
1998 $748,323
------------------------------------------------------------------------------
1. Amounts do not include spreads or concessions on principal transactions
on a net trade basis.
2. In the fiscal year ended 9/30/98, the amount of transactions directed
to brokers for research services was $241,355,114 and the amount of the
commissions paid to broker-dealers for those services was $457,272.
Distribution and Service Plans
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 classes of shares. The Distributor is not obligated to
sell a specific number of shares. Expenses normally attributable to sales are
borne by the Distributor.
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares during the Fund's three most recent fiscal
years is shown in the table below.
------------------------------------------------------------------------------
Aggregate Class A Commissions Commissions Commissions
Fiscal Front-End Front- on Class A on Class B on Class C
Year Sales End Sales Shares Shares Shares
Ended Charges Charges Advanced by Advanced by Advanced by
9/30: on Class A Retained by Distributor1 Distributor1 Distributor1
Shares Distributor
------------------------------------------------------------------------------
------------------------------------------------------------------------------
1996 $286,317 $100,671 $7,566 $169,693 $59,436
------------------------------------------------------------------------------
------------------------------------------------------------------------------
1997 $589,802 $87,259 $7,547 $585,932 $164,027
------------------------------------------------------------------------------
------------------------------------------------------------------------------
1998 $910,294 $288,141 $88,505 $878,710 $134,394
------------------------------------------------------------------------------
1. The Distributor advances commission payments to dealers for certain
sales of Class A shares and for sales of Class B and Class C shares from
its own resources at the time of sale.
------------------------------------------------------------------------------
Class A Contingent
Deferred Sales Class B Contingent Class C Contingent
Fiscal Year Charges Retained Deferred Sales Deferred Sales
Ended 9/30 by Distributor Charges Charges
Retained by Retained by
Distributor Distributor
------------------------------------------------------------------------------
------------------------------------------------------------------------------
1998 None $164,466 $11,263
------------------------------------------------------------------------------
Distribution and Service Plans. The Fund has adopted a Service Plan for Class
A shares and Distribution and Service Plans for Class B and Class C shares
under Rule 12b-1 of the Investment Company Act. Under those plans the Fund
pays the Distributor for all or a portion of its costs incurred in connection
with the distribution and/or servicing of the shares of the particular class.
Each plan has been approved by a vote of the Board of Trustees,
including a majority of the Independent Trustees3, cast in person at a
meeting called for the purpose of voting on that plan. Each plan has also
been approved by the holders of a "majority" (as defined in the Investment
Company Act) of the shares of the applicable class. The shareholder votes for
the plans for Class B and Class C shares were cast by the Manager as the sole
initial holder of those classes of shares of the Fund.
Under the plans, the Manager and the Distributor, in their sole discretion, from
time to time, may use their own resources (at no direct cost to the Fund) to
make payments to brokers, dealers or other financial institutions for
distribution and administrative services they perform. The Manager may use
its profits from the advisory fee it receives from the Fund. In their sole
discretion, the Distributor and the Manager may increase or decrease the
amount of payments they make from their own resources to plan recipients.
Unless a plan is terminated as described below, the plan continues in effect
from year to year but only if the Fund's Board of Trustees and its Independent
Trustees specifically vote annually to approve its continuance. Approval must be
by a vote cast in person at a meeting called for the purpose of voting on
continuing the plan. A 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.
The Board of Trustees and the Independent Trustees must approve all material
amendments to a plan. An amendment to increase materially the amount of payments
to be made under a plan must be approved by shareholders of the class affected
by the amendment. Because Class B shares of the Fund automatically convert into
Class A shares after six years, the Fund must obtain the approval of both Class
A and Class B shareholders for a proposed material amendment to the Class A plan
that would materially increase payments under the plan. That approval must be by
a "majority" (as defined in the Investment Company Act) of the shares of each
Class, voting separately by class.
While the Plans are in effect, the Treasurer of the Fund shall provide separate
written reports on the plans to the Board of Trustees at least quarterly for
its review. The Reports shall detail the amount of all payments made under a
plan, and the purpose for which the payments were made. The reports on the
Class B plan and Class C plan shall also include the Distributor's
distribution costs for that quarter. Those reports are subject to the review
and approval of the Independent Trustees.
Each Plan states 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 the selection and nomination process as long as the
final decision as to selection or nomination is approved by a majority of the
Independent Trustees.
Under the plan for a class, no payment will be made to any recipient in any
quarter in which the aggregate net asset value of all Fund shares of that class
held by the recipient for itself and its customers does not exceed a minimum
amount, if any, that may be set from time to time by a majority of the
Independent Trustees. The Board of Trustees has set no minimum amount of assets
to qualify for payments under the plans.
|X| Class A Service Plan. Under the Class A service plan, the
Distributor currently uses the fees it receives from the Fund to pay brokers,
dealers and other financial institutions (they are referred to as
"recipients") for personal services and account maintenance services they
provide for their customers who hold Class A shares. The services 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. While the plan permits the Board to authorize
payments to the Distributor to reimburse itself for services under the plan,
the Board has not yet done so. The Distributor makes payments to plan
recipients quarterly at an annual rate not to exceed 0.25% of the average
annual net assets consisting of Class A shares acquired on or after April 1,
1988, held in the accounts of the recipients or their customers. The rate is
0.15% on average annual net assets consisting of shares acquired before April
1, 1988, and on average annual net assets representing shares acquired by
virtue of the reorganization of Oppenheimer Ninety-Ten Fund and Oppenheimer
Premium Income Fund with the Fund.
For the fiscal period ended September 30, 1998 payments under the Class A Plan
totaled $1,166,276, all of which was paid by the Distributor to recipients.
That included $83,283 paid to an affiliate of the Distributor's parent
company. Any unreimbursed expenses the Distributor incurs with respect to
Class A shares in any fiscal year cannot be recovered in subsequent years.
The Distributor may not use payments received the Class A Plan to pay any of
its interest expenses, carrying charges, or other financial costs, or
allocation of overhead.
|X| Class B and Class C Service and Distribution Plans. Under each
plan, service fees and distribution 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 Class B and Class C plans
provide for the Distributor to be compensated at a flat rate, whether the
Distributor's distribution expenses are more or less than the amounts paid by
the Fund under the plan during the period for which the fee is paid. The
types of services that recipients provide are similar to the services
provided under the Class A service plan, described above.
The Class B and the Class C Plans permit the Distributor to retain both the
asset-based sales charges and the service fees or to pay recipients the service
fee on a quarterly basis, without payment in advance. However, the Distributor
currently intends to pay the service fee to recipients in advance for the first
year after the shares are purchased. After the first year shares are
outstanding, the Distributor makes service fee payments quarterly on those
shares. The advance payment is based on the net asset value of shares sold.
Shares purchased by exchange do not qualify for the advance service fee payment.
If Class B or Class C shares are redeemed during the first year after their
purchase, the recipient of the service fees on those shares will be obligated to
repay the Distributor a pro rata portion of the advance payment of the service
fee made on those shares.
The Distributor retains the asset-based sales charge on Class B shares. The
Distributor retains the asset-based sales charge on Class C shares during the
first year the shares are outstanding. It pays the asset-based sales charge as
an ongoing commission to the recipient on Class C shares outstanding for a year
or more. If a dealer has a special agreement with the Distributor, the
Distributor will pay the Class B and/or Class C service fee and the asset-based
sales charge to the dealer quarterly in lieu of paying the sales commissions and
service fee in advance at the time of purchase.
The asset-based sales charges on Class B and Class C shares allow investors to
buy 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. The payments are made to the Distributor in
recognition that the Distributor:
o .....pays sales commissions to authorized brokers and dealers at the time of
sale and pays service fees as described above,
o may finance payment of sales commissions and/or the advance of the
service fee payment to recipients under the plans, or may provide
such financing from its own resources or from the resources of an
affiliate,
o employs personnel to support distribution of Class B and Class C
shares, and
o bears the costs of sales literature, advertising and prospectuses
(other than those furnished to current shareholders) and state "blue
sky" registration fees and certain other distribution expenses.
For the fiscal period ended September 30, 1998, payments under the
Class B plan totaled $744,275 (including $7,327 paid to an affiliate of the
Distributor's parent). The Distributor retained $618,987 of the total amount.
For the fiscal period ended September 30, 1998, payments under the Class C
plan totaled $523,274, (including $14,113 paid to an affiliate of the
Distributor's parent). The Distributor retained $227,791 of the total amount.
The Distributor's actual expenses in selling Class B and Class C shares may be
more than the payments it receives from the contingent deferred sales charges
collected on redeemed shares and from the Fund under the plans. As of
September 30, 1998, the Distributor had incurred unreimbursed expenses under
the Class B plan in the amount of $2,811,387 (equal to 4.50% of the Fund's
net assets represented by Class B shares on that date) and unreimbursed
expenses under the Class C plan of 576,876 (equal to 7.90% of the Fund's net
assets represented by Class C shares on that date). If either the Class B or
the Class C 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.
All payments under the Class B and the Class C plans are subject to the
limitations imposed by the Conduct Rules of the National Association of
Securities Dealers, Inc. on payments of asset-based sales charges and service
fees.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses a variety of terms to
illustrate its investment performance. Those terms include "cumulative total
return," "average annual total return," "average annual total return at net
asset value" and "total return at net asset value." An explanation of how
total returns are calculated is set forth below. The charts below show the
Fund's performance as of the Fund's most recent fiscal year end. You can
obtain current performance information by calling the Fund's Transfer Agent
at 1-800-525-7048 or by visiting the OppenheimerFunds Internet web site at
http://www.oppenheimerfunds.com.
The Fund's illustrations of its performance data in advertisements must
comply with rules of the Securities and Exchange Commission. Those rules
describe the types of performance data that may be used and how it is to be
calculated. In general, any advertisement by the Fund of its performance data
must include the average annual total returns for the advertised class of
shares of the Fund. Those returns must be shown 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 (or its
submission for publication).
Use of standardized performance calculations 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 the
Fund's performance information as a basis for comparison with other
investments:
|_| Total 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. Your account's performance will vary from the model
performance data if your dividends are received in cash, or you buy or sell
shares during the period, or you bought your shares at a different time and
price than the shares used in the model.
|_| An investment in the Fund is not insured by the FDIC or any other
government agency.
|_| The Fund's performance returns do not reflect the effect of taxes
on dividends and capital gains distributions.
|_| The principal value of the Fund's shares and total returns are not
guaranteed and normally will fluctuate on a daily basis.
|_| When an investor's shares are redeemed, they may be worth more or
less than their original cost.
|_| Total returns for any given past period represent historical
performance information and are not, and should not be considered, a
prediction of future returns.
The performance of each class of shares is shown separately, because
the performance of each class of shares will usually be different. That is
because of the different kinds of expenses each class bears. The total
returns of each class of shares of the Fund are affected by market
conditions, the quality of the Fund's investments, the maturity of debt
investments, the types of investments the Fund holds, and its operating
expenses that are allocated to the particular class.
|X| Total Return Information. There are different types of "total
returns" 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 and that the investment is redeemed at the end of the
period. Because of differences in expenses for each class of shares, the
total returns for each class are separately measured. 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 actual
year-by-year performance. The Fund uses standardized calculations for its
total returns as prescribed by the SEC. The methodology is discussed below.
In calculating total returns for Class A shares, the current maximum
sales charge of 5.75% (as a percentage of the offering price) is deducted
from the initial investment ("P") (unless the return is shown without sales
charge, as described below). For Class B shares, payment of the applicable
contingent deferred sales charge is applied, depending on the period for
which the return is shown: 5.0% in the first year, 4.0% in the second year,
3.0% in the third and fourth years, 2.0% in the fifth year, 1.0% in the sixth
year and none thereafter. For Class C shares, the 1% contingent deferred
sales charge is deducted for returns for the 1-year period.
|_| Average Annual Total Return. The "average annual total
return" of each class is an average annual compounded rate of return for each
year in a specified number of years. It is the rate of return based on the
change in value of a hypothetical initial investment of $1,000 ("P" in the
formula below) held for a number of years ("n" in the formula) to achieve an
Ending Redeemable Value ("ERV" in the formula) of that investment, according
to the following formula:
1/n
(ERV)
(---) -1 = Average Annual Total Return
( P )
|_| Cumulative Total Return. 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
|_| Total Returns at Net Asset Value. From time to time the Fund
may also quote a cumulative or an average annual total return "at net asset
value" (without deducting sales charges) for Class A, Class B or Class C
shares. Each is based on the difference in net asset value per share at the
beginning and the end of the period for a hypothetical investment in that
class of shares (without considering front-end or contingent deferred sales
charges) and takes into consideration the
reinvestment of dividends and capital gains distributions.
------------------------------------------------------------------------------
-----------------------------------------------------------------------------
The Fund's Total Returns for the Periods Ended 9/30/98
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Cumulative Average Annual Total Returns
Class Total Returns
of (10 years or
Shares Life of Class)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
5-Year 10-Year
1-Year (or (or
life-of-class) life-of-class)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
After Without After Without After Without After Without
Sales Sales Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge Charge Charge
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Class A 163.88% 179.98% -10.19% -4.71% 9.45% 10.75% 10.19%1 10.84%1
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Class B 32.44% 35.44% -9.78% -5.50% 9.53%2 10.33%2 N/A N/A
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Class C 57.71% 57.71% -6.28% -5.43% 9.89%3 9.89%3 N/A1 N/A1
------------------------------------------------------------------------------
1. Inception of Class A: 4/24/87
2. Inception of Class B: 8/29/95
3. Inception of Class C: 12/1/93
Other Performance Comparisons. The Fund compares its performance annually to
that of an appropriate broadly-based market index in its Annual Report to
shareholders. You can obtain that information by contacting the Transfer
Agent at the addresses or telephone numbers shown on the cover of this
Statement of Additional Information. The Fund may also compare its
performance to that of other investments, including other mutual funds, or
use rankings of its performance by independent ranking entities. Examples of
these performance comparisons are set forth below.
|X| Lipper Rankings. From time to time the Fund may publish the ranking
of the performance of its classes of shares by Lipper Analytical Services,
Inc. 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. Lipper currently ranks the
Fund's performance against all other balanced 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. Lipper also publishes "peer-group" indices of the
performance of all mutual funds in a category that it monitors and averages
of the performance of the funds in particular categories.
|X| Morningstar Rankings. From time to time the Fund may publish the
star ranking of the performance of its classes shares by Morningstar, Inc.,
an independent mutual fund monitoring service. Morningstar ranks mutual funds
in broad investment categories: domestic stock funds, international stock
funds, taxable bond funds and municipal bond funds. The Fund is ranked among
domestic stock funds.
Morningstar star rankings are based on risk-adjusted total investment
return. Investment return measures a fund's (or class's) one-, three-, five-
and ten-year average annual total returns (depending on the inception of the
fund or class) in excess of 90-day U.S. Treasury bill returns after
considering the fund's sales charges and expenses. Risk measures a fund's (or
class's) performance below 90-day U.S. Treasury bill returns. Risk and
investment return are combined to produce star rankings reflecting
performance relative to the average fund in a fund's category. Five stars is
the "highest" ranking (top 10% of funds in a category), four stars is "above
average" (next 22.5%), three stars is "average" (next 35%), two stars is
"below average" (next 22.5%) and one star is "lowest" (bottom 10%). The
current star ranking is the fund's (or class's) 3-year ranking or its
combined 3- and 5-year ranking (weighted 60%/40% respectively), or its
combined 3-, 5-, and 10-year ranking (weighted 40%, 30% and 30%,
respectively), depending on the inception date of the fund (or class).
Rankings are subject to change monthly.
The Fund may also compare its performance to that of other funds in its
Morningstar category. In addition to its star rankings, Morningstar also
categorizes and compares a fund's 3-year performance based on Morningstar's
classification of the fund's investments and investment style, rather than
how a fund defines its investment objective. Morningstar's four broad
categories (domestic equity, international equity, municipal bond and taxable
bond) are each further subdivided into categories based on types of
investments and investment styles. Those comparisons by Morningstar are based
on the same risk and return measurements as its star rankings but do not
consider the effect of sales charges.
|X| Performance Rankings and Comparisons by Other Entities and
Publications. From time to time the Fund may include in its advertisements
and sales literature performance information about the Fund cited in
newspapers and other periodicals such as The New York Times, The Wall Street
Journal, Barron's, or similar publications. That information may include
performance quotations from other sources, including Lipper and Morningstar.
The performance of the Fund's classes of shares may be compared in
publications to the performance of various market indices or other
investments, and averages, performance rankings or other benchmarks prepared
by recognized mutual fund statistical services.
Investors may also wish to compare the returns on the Fund's share
classes to the return on fixed-income investments available from banks and
thrift institutions. Those include certificates of deposit, ordinary
interest-paying checking and savings accounts, and other forms of fixed or
variable time deposits, and various other instruments such as Treasury bills.
However, the Fund's returns and share price are not guaranteed or insured by
the FDIC or any other agency and will fluctuate daily, while bank depository
obligations may be insured by the FDIC and may provide fixed rates of return.
Repayment of principal and payment of interest on Treasury securities is
backed by the full faith and credit of the U.S. government.
From time to time, the Fund may publish rankings or ratings of the
Manager or Transfer Agent, and of 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 and
investor services by third parties may include comparisons of their services
to those provided by other mutual fund families selected by the rating or
ranking services. They may be based upon the opinions of the rating or
ranking service itself, using its research or judgment, or based upon surveys
of investors, brokers, shareholders or others.
- ------------------------------------------------------------------------------
ABOUT YOUR ACCOUNT
- ------------------------------------------------------------------------------
How to Buy Shares
- ------------------------------------------------------------------------------
Additional information is presented below about the methods that can be
used to buy shares of the Fund. Appendix C contains more information about
the special sales charge arrangements offered by the Fund, and the
circumstances in which sales charges may be reduced or waived for certain
classes of investors.
AccountLink. When shares are purchased through AccountLink, each purchase
must be at least $25. 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 with the proceeds of ACH transfers on the business day the Fund
receives Federal Funds for the purchase through the ACH system before the
close of The New York Stock Exchange. The Exchange normally closes at 4:00
P.M., but may close earlier on certain days. If Federal Funds are received on
a business day after the close of the Exchange, the shares will be purchased
and dividends will begin to accrue on the next regular business day. The
proceeds of ACH transfers are normally received by the Fund 3 days after the
transfers are initiated. The Distributor and the Fund are not responsible for
any delays in purchasing shares resulting from delays in ACH transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced sales charge
rate may be obtained for Class A shares under Right of Accumulation and
Letters of Intent because of the economies of sales efforts and reduction in
expenses realized by the Distributor, dealers and brokers making such sales.
No sales charge is imposed in certain other circumstances described in
Appendix C to this Statement of Additional Information because the
Distributor or dealer or broker incurs little or no selling expenses.
|X| 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 for your joint accounts, or for trust or custodial
accounts on behalf of your children who are minors, and
|_| 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, and
|_| 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.
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. The Distributor will add the value, at
current offering price, of the shares you previously purchased and currently
own to the value of current purchases to determine the sales charge rate that
applies. The reduced sales charge will apply only to current purchases. You
must request it when you buy shares.
n The Oppenheimer Funds. The Oppenheimer funds are those mutual funds
for which the Distributor acts as the distributor or the sub-distributor and
currently include the following:
Oppenheimer Bond Fund Oppenheimer Limited-Term Government Fund
Oppenheimer Capital Appreciation Fund Oppenheimer Main Street California
Municipal Fund
Oppenheimer California Municipal Fund Oppenheimer Main Street Growth & Income
Fund
Oppenheimer Champion Income Fund Oppenheimer MidCap Fund
Oppenheimer Convertible Securities Fund Oppenheimer Multiple Strategies Fund
Oppenheimer Developing Markets Fund Oppenheimer Municipal Bond Fund
Oppenheimer Disciplined Allocation Fund Oppenheimer New York Municipal Fund
Oppenheimer Disciplined Value Fund Oppenheimer New Jersey Municipal Fund
Oppenheimer Discovery Fund Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Enterprise Fund Oppenheimer Quest Balanced Value Fund
Oppenheimer Equity Income Fund Oppenheimer Quest Capital Value Fund,
Inc.
Oppenheimer Florida Municipal Fund Oppenheimer Quest Global Value Fund,
Inc.
Oppenheimer Global Fund Oppenheimer Quest Opportunity Value Fund
Oppenheimer Global Growth & Income Fund Oppenheimer Quest Small Cap Value Fund
Oppenheimer Gold & Special Minerals Oppenheimer Quest Value Fund, Inc.
Fund
Oppenheimer Growth Fund Oppenheimer Real Asset Fund
Oppenheimer High Yield Fund Oppenheimer Strategic Income Fund
Oppenheimer Insured Municipal Fund Oppenheimer Total Return Fund, Inc.
Oppenheimer Intermediate Municipal Fund Oppenheimer U.S. Government Trust
Oppenheimer International Bond Fund Oppenheimer World Bond Fund
Oppenheimer International Growth Fund Limited-Term New York Municipal Fund
Oppenheimer International Small Rochester Fund Municipals
Company Fund
Oppenheimer Large Cap Growth Fund
and the following money market funds:
Centennial America Fund, L. P. Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust Centennial Tax Exempt Trust
Centennial Government Trust Oppenheimer Cash Reserves
Centennial Money Market Trust Oppenheimer Money Market Fund, Inc.
There is an initial sales charge on the purchase of Class A shares of
each of the Oppenheimer funds except the money market funds. Under certain
circumstances described in this Statement of Additional Information,
redemption proceeds of certain money market fund shares may be subject to a
contingent deferred sales charge.
Letters of Intent. Under a Letter of Intent, if you purchase Class A shares
or Class A and Class B shares of the Fund and other Oppenheimer funds during
a 13-month period, you can reduce the sales charge rate that applies to your
purchases of Class A shares. The total amount of your intended purchases of
both Class A and Class B shares will determine the reduced sales charge rate
for the Class A shares purchased during that period. You can include
purchases made up to 90 days before the date of the Letter.
A Letter of Intent is an investor's statement in writing to the
Distributor of the intention to purchase Class A shares or Class A and Class
B shares of the Fund (and other Oppenheimer funds) during a 13-month period
(the "Letter of Intent period"). At the investor's request, this may 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
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. However, 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. That amount is described in "Terms
of Escrow," below (those terms may be amended by the Distributor 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 a Letter of Intent. If those terms are amended, as they may be from time
to time by the Fund, the investor agrees to be bound by the amended terms and
that those amendments will apply automatically to existing Letters of Intent.
If the total eligible purchases made during the Letter of Intent period
do not equal or exceed the intended purchase amount, the commissions
previously paid to the dealer of record for the account and the amount of
sales charge retained by the Distributor will be adjusted to the rates
applicable to actual total purchases. If total eligible purchases during the
Letter of Intent period exceed the intended purchase amount and exceed the
amount needed to qualify for the next sales charge rate reduction set forth
in the Prospectus, the sales charges paid will be adjusted to the lower rate.
That adjustment will be made 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.
The Transfer Agent will not hold shares in escrow for purchases of
shares of the Fund and other Oppenheimer funds by OppenheimerFunds prototype
401(k) plans under a Letter of Intent. If the intended purchase amount under
a Letter of Intent 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.
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.
|X| Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if necessary)
made pursuant to a Letter, shares of the Fund equal in value up to 5% of the
intended purchase amount specified in the Letter shall be held in escrow by
the Transfer Agent. For example, if the intended purchase amount is $50,000,
the escrow shall be shares valued in the amount of $2,500 (computed at the
offering price adjusted for a $50,000 purchase). Any dividends and capital
gains distributions on the escrowed shares will be credited to the investor's
account.
2. If the total minimum investment specified under the Letter is
completed within the thirteen-month Letter of Intent period, the escrowed
shares will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period the
total purchases pursuant to the Letter are less than the intended 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. That sales charge
adjustment will apply to any shares redeemed prior to the completion of the
Letter. If the difference in sales charges is not paid within twenty days
after a request from the Distributor or the dealer, the Distributor will,
within sixty days of the expiration of the Letter, redeem the number of
escrowed shares necessary to realize such difference in sales charges. Full
and fractional shares remaining after such redemption will be released from
escrow. If a request is received to redeem escrowed shares prior to the
payment of such additional sales charge, the sales charge will be withheld
from the redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes and
appoints the Transfer Agent as attorney-in-fact to surrender for redemption
any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the holding of
which may be counted toward completion of a Letter) include:
(a) Class A shares sold with a front-end sales charge or subject to a Class
A contingent deferred sales charge,
(b) Class B shares of other Oppenheimer funds acquired subject to a
contingent deferred sales charge, and
(c) Class A or Class B shares acquired by exchange of either (1) 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 (2) Class B shares of one of the other Oppenheimer funds that
were acquired subject to a contingent deferred sales charge.
6. Shares held in escrow hereunder will automatically be exchanged for
shares of another fund to which an exchange is requested, as described in the
section of the Prospectus entitled "How to Exchange Shares" and the escrow
will be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan to buy shares
directly from a bank account, you must enclose a check (minimum $25) for the
initial purchase with your application. Shares purchased by Asset Builder
Plan payments from bank accounts are subject to the redemption restrictions
for recent purchases described in the Prospectus. Asset Builder Plans also
enable shareholders of Oppenheimer Cash Reserves to use their fund account to
make monthly automatic purchases of shares of up to four other Oppenheimer
funds.
If you make payments from your bank account to purchase shares of the
Fund, your bank account will be automatically debited, normally four to five
business days prior to the investment dates selected in the Application.
Neither the Distributor, the Transfer Agent nor the Fund shall be responsible
for any delays in purchasing shares resulting from delays in ACH
transmissions.
Before initiating Asset Builder payments, obtain a prospectus of the
selected fund(s) from the Distributor or your financial advisor and request
an application from the Distributor, complete it and return it. 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. The Transfer
Agent requires a reasonable period (approximately 15 days) after receipt of
such instructions to implement them. The Fund reserves the right to amend,
suspend, or discontinue offering Asset Builder plans at any time without
prior notice.
Retirement Plans. Certain types of retirement plans are entitled to purchase
shares of the Fund without sales charge or at reduced sales charge rates, as
described in Appendix C to this Statement of Additional Information. Certain
special sales charge arrangements described in that Appendix apply to
retirement plans whose records are maintained on a daily valuation basis by
Merrill Lynch Pierce Fenner & Smith, Inc. or an independent record keeper
that has a contract or special arrangement with Merrill Lynch. If on the date
the plan sponsor signed the Merrill Lynch record keeping service agreement
the plan has less than $3 million in assets (other than assets invested in
money market funds) invested in applicable investments, then the retirement
plan may purchase only Class B shares of the Oppenheimer funds. Any
retirement plans in that category that currently invest in Class B shares of
the Fund will have their Class B shares converted to Class A shares of the
Fund when the plan's applicable investments reach $5 million.
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.
Classes of Shares. Each class of shares of the Fund represents an interest in
the same portfolio of investments of the Fund. However, each class has
different shareholder privileges and features. The net income attributable to
Class B or Class C shares and the dividends payable on Class B or Class C
shares will be reduced by incremental expenses borne solely by that class.
Those expenses include the asset-based sales charges to which Class B and
Class C are subject.
The availability of different classes of shares permits an investor to
choose the method of purchasing shares that is more appropriate for the
investor. That may depend on the amount of the purchase, the length of time
the investor expects to hold shares, and other relevant circumstances. Class
A shares normally are sold subject to an initial sales charge. While Class B
and Class C shares have no initial sales charge, the purpose of the deferred
sales charge and asset-based sales charge on Class B and Class C shares is
the same as that of the initial sales charge on Class A shares - to
compensate the Distributor and brokers, dealers and financial institutions
that sell shares of the Fund. A salesperson who is entitled to receive
compensation from his or her firm for selling Fund shares may receive
different levels of compensation for selling one class of shares than
another.
The Distributor will not accept any order in the amount of $500,000 or
more for Class B shares or $1 million or more for Class C shares on behalf of
a single investor (not including dealer "street name" or omnibus accounts).
That is because generally it will be more advantageous for that investor to
purchase Class A shares of the Fund.
|X| Class B Conversion. The conversion of Class B shares to Class A
shares after six years is subject to the continuing availability of a private
letter ruling from the Internal Revenue Service, or an opinion of counsel or
tax adviser, to the effect that the conversion of Class B shares does not
constitute a taxable event for the shareholder 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
shareholder, and absent such exchange, Class B shares might continue to be
subject to the asset-based sales charge for longer than six years.
|X| Allocation of Expenses. The Fund pays expenses related to its daily
operations, such as custodian fees, Trustees' fees, transfer agency fees,
legal fees and auditing costs. Those expenses are paid out of the Fund's
assets and are not paid directly by shareholders. However, those expenses
reduce the net asset value of shares, and therefore are indirectly borne by
shareholders through their investment.
The methodology for calculating the net asset value, dividends and
distributions of the Fund's share classes recognizes two types of expenses.
General expenses that do not pertain specifically to any one class are
allocated pro rata to the shares of all classes. The allocation is based on
the percentage of the Fund's total assets that is represented by the assets
of each class, and then equally to each outstanding share within a given
class. Such general expenses include management fees, legal, bookkeeping and
audit fees, printing and mailing costs of shareholder reports, Prospectuses,
Statements of Additional Information and other materials for current
shareholders, fees to unaffiliated Trustees, custodian expenses, share
issuance costs, organization and start-up costs, interest, taxes and
brokerage commissions, and non-recurring expenses, such as litigation costs.
Other expenses that are directly attributable to a particular class are
allocated equally to each outstanding share within that class. Examples of
such expenses include distribution and service plan (12b-1) fees, transfer
and shareholder servicing agent fees and expenses, and shareholder meeting
expenses (to the extent that such expenses pertain only to a specific class).
Determination of Net Asset Values Per Share. The net asset values per share
of each class of shares of the Fund are determined as of the close of
business of The New York Stock Exchange on each day that the Exchange is
open. The calculation is done 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 Exchange normally closes at 4:00 P.M., New York time, but
may close earlier on some other days (for example, in case of weather
emergencies or on days falling before a holiday). The Exchange's most recent
annual announcement (which is subject to change) states that it will close on
New Year's Day, Presidents' Day, Martin Luther King, Jr. Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day. It may also close on other days.
Dealers other than Exchange members may conduct trading in certain
securities on days on which the Exchange is closed (including weekends and
holidays) or after 4:00 P.M. on a regular business day. The Fund's net asset
values will not be calculated on those days, and the values of some of the
Fund's portfolio securities may change significantly on those days when
shareholders may not purchase or redeem shares. Additionally, trading on
European and Asian stock exchanges and over-the-counter markets normally is
completed before the close of The New York Stock Exchange.
Changes in the values of securities traded on foreign exchanges or
markets as a result of events that occur after the prices of those securities
are determined, but before the close of The New York Stock Exchange, will not
be reflected in the Fund's calculation of its net asset values that day
unless the Board of Trustees determines that the event is likely to effect a
material change in the value of the security. The Manager may make that
determination, under procedures established by the Board.
n Securities Valuation. The Fund's Board of Trustees has established
procedures for the valuation of the Fund's securities. In general those
procedures are as follows:
|_| Equity securities traded on a U.S. securities exchange or on NASDAQ
are valued as follows:
(1) if last sale information is regularly reported, they are valued at the
last reported sale price on the principal exchange on which they
are traded or on NASDAQ, as applicable, on that day, or
(2) if last sale information is not available on a valuation date, they are
valued at the last reported sale price preceding the valuation
date if it is within the spread of the closing "bid" and "asked"
prices on the valuation date or, if not, at the closing "bid"
price on the valuation date.
|_| Equity securities traded on a foreign securities exchange generally
are valued in one of the following ways:
(1) at the last sale price available to the pricing service approved by the
Board of Trustees, or
(2) at the last sale price obtained by the Manager from the report of the
principal exchange on which the security is traded at its last
trading session on or immediately before the valuation date, or
(3) at the mean between the "bid" and "asked" prices obtained from the
principal exchange on which the security is traded or, on the
basis of reasonable inquiry, from two market makers in the
security.
|_| 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.
|_| The following securities are valued at the mean between the "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:
(1) debt instruments that have a maturity of more than 397 days when
issued,
(2) debt instruments that had a maturity of 397 days or less when issued
and have a remaining maturity of more than 60 days, and
(3) non-money market debt instruments that had a maturity of 397 days or
less when issued and which have a remaining maturity of 60 days or
less.
|_| The following securities are valued at cost, adjusted for
amortization of premiums and accretion of discounts:
(1) money market debt securities held by a non-money market fund that had a
maturity of less than 397 days when issued that have a remaining
maturity of 60 days or less, and
(2) debt instruments held by a money market fund that have a remaining
maturity of 397 days or less.
|_| 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, a security may be priced at the mean between the
"bid" and "asked" prices provided by a single active market maker (which in
certain cases may be the "bid" price if no "asked" price is available).
In the case of U.S. government securities, mortgage-backed securities,
corporate bonds and foreign government securities, when last sale information
is not generally available, the Manager may use pricing services approved by
the Board of Trustees. The pricing service may use "matrix" comparisons to
the prices for comparable instruments on the basis of quality, yield, and
maturity. Other special factors may be involved (such as the tax-exempt
status of the interest paid by municipal securities). The Manager will
monitor the accuracy of the pricing services. That monitoring may include
comparing prices used for portfolio valuation to actual sales prices of
selected securities.
The closing prices in the London foreign exchange market on a
particular business day that are provided to the Manager by a bank, dealer or
pricing service that the Manager has determined to be reliable are used to
value foreign currency, including forward contracts, and to convert to U.S.
dollars securities that are denominated in foreign currency.
Puts, calls, and futures are valued at the last sale 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, they shall be valued at 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. If not, the value shall be the closing bid price on the
principal exchange or on NASDAQ on the valuation date. If the put, call or
future is not traded on an exchange or on NASDAQ, it shall be valued by the
mean between "bid" and "asked" prices obtained by the Manager from two active
market makers. In certain cases that may be at the "bid" price if no "asked"
price is available.
When the Fund writes an option, an amount equal to the premium received
is included in the Fund's Statement of Assets and Liabilities as an asset. An
equivalent credit is included in the liability section. The credit is
adjusted ("marked-to-market") to reflect the current market value of the
option. In determining the Fund's gain on investments, if a call or put
written by the Fund is exercised, the proceeds are increased by the premium
received. If a call or put written by the Fund expires, the Fund has a gain
in the amount of the premium. If the Fund enters into a closing purchase
transaction, it will have a gain or loss, depending on whether the premium
received was more or less than the cost of the closing transaction. If the
Fund exercises a put it holds, the amount the Fund receives on its sale of
the underlying investment is reduced by the amount of premium paid by the
Fund.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below provides additional information about the
procedures and conditions for redeeming shares.
Reinvestment Privilege. Within six months of a redemption, a shareholder may
reinvest all or part of the redemption proceeds of:
|_| Class A shares purchased subject to an initial sales charge or
Class A shares on which a contingent deferred sales charge was paid, or
|_| Class B shares that were subject to the Class B contingent deferred
sales charge when redeemed.
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 in "How to Exchange Shares" below.
Reinvestment will be at the net asset value next computed after the Transfer
Agent receives the reinvestment order. The shareholder must ask the Transfer
Agent for that privilege at the time of reinvestment. This privilege does not
apply to Class C shares. 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.
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.
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.
The Fund has elected to be governed by Rule 18f-1 under the Investment
Company Act. Under that rule, 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 Fund will value securities used to pay
redemptions in kind using the same method the Fund uses to value its
portfolio securities described above under "Determination of Net Asset Values
Per Share." That valuation will be made as of the time the redemption price
is determined.
Involuntary Redemptions. The Fund's Board of Trustees has the right to cause
the involuntary redemption of the shares held in any account if the aggregate
net asset value of those shares is less than $500 or such lesser amount as
the Board may fix. The Board will not cause the involuntary redemption of
shares in an account if the aggregate net asset value of such shares has
fallen below the stated minimum solely as a result of market fluctuations. If
the Board exercises this right, it may also fix the requirements for any
notice to be given to the shareholders in question (not less than 30 days).
The Board may alternatively set requirements for the shareholder to increase
the investment, or set other terms and conditions so that the shares would
not be involuntarily redeemed.
Transfers of Shares. A transfer of shares to a different registration is not
an event that triggers the payment of sales charges. Therefore, shares are
not subject to the payment of a contingent deferred sales charge of any class
at the time of transfer to the name of another person or entity. It does not
matter whether the transfer occurs by absolute assignment, gift or bequest,
as long as it does not involve, directly or indirectly, a public sale of the
shares. When shares subject to a contingent deferred sales charge are
transferred, the transferred shares will remain subject to the contingent
deferred sales charge. It will be calculated as if the transferee shareholder
had acquired the transferred shares in the same manner and at the same time
as the transferring shareholder.
If less than all shares held in an account are transferred, and some
but not all shares in the account would be subject to a contingent deferred
sales charge if redeemed at the time of transfer, the priorities described in
the Prospectus under "How to Buy Shares" for the imposition of the Class B or
Class C contingent deferred sales charge will be followed in determining the
order in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, 401(k) plans or
pension or profit-sharing plans should be addressed to "Trustee,
OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its address
listed in "How To Sell Shares" in the Prospectus or on the back cover of this
Statement of Additional Information. The request must:
(1) state the reason for the distribution;
(2) state the owner's awareness of tax penalties if the distribution is
premature; and
(3) conform to the requirements of the plan and the Fund's other redemption
requirements.
Participants (other than self-employed persons) in
OppenheimerFunds-sponsored pension or profit-sharing plans with shares of the
Fund held in the name of the plan or its fiduciary may not directly request
redemption of their accounts. The plan administrator or fiduciary 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 and submitted to the
Transfer Agent 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, 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. Shareholders should contact
their 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. However, if the
Distributor receives a repurchase order from a dealer or broker after the
close of The New York Stock Exchange on a regular business day, it will be
processed at that day's net asset value if the order was received by the
dealer or broker from its customers prior to the time the Exchange closes.
Normally, the Exchange closes at 4:00 P.M., but may do so earlier on some
days. Additionally, the order must have been 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. The signature(s) of the registered owners on the
redemption documents must be guaranteed 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
(having a value of at least $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. Payments must also be sent to the
address of record for the account and the address must not have 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 Account Application or by signature-guaranteed instructions sent to
the Transfer Agent. Shares are normally redeemed pursuant to an Automatic
Withdrawal Plan three business days before the payment transmittal date you
select in the Account Application. If a contingent deferred sales charge
applies to the redemption, the amount of the check or payment will be reduced
accordingly.
The Fund cannot guarantee receipt of a payment on the date requested.
The Fund reserves the right to amend, suspend or discontinue offering these
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 contingent deferred sales charge is waived as
described in Appendix C below).
By requesting an Automatic Withdrawal or Exchange Plan, the shareholder
agrees to the terms and conditions that apply to such plans, as stated below.
These provisions may be amended from time to time by the Fund and/or the
Distributor. When adopted, any amendments will automatically apply to
existing Plans.
|X| Automatic Exchange Plans. Shareholders can authorize the Transfer
Agent 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.
Instructions should be provided on the OppenheimerFunds Application or
signature-guaranteed instructions. 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.
|X| Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a sales charge
will be redeemed first. 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 these plans should not be considered as a yield or income on your
investment.
The Transfer Agent will administer the investor's Automatic Withdrawal
Plan as agent for the shareholder(s) (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 not taken by the Transfer Agent in good faith to
administer the Plan. Share 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.
Shares will be redeemed to make withdrawal payments at the net asset
value per share determined on the redemption date. Checks or AccountLink
payments representing the proceeds of Plan withdrawals will normally be
transmitted three business days prior to the date selected for receipt of the
payment, according to the choice specified in writing by the Planholder.
Receipt of payment on the date selected cannot be guaranteed.
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 after 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 to redeem
all, or any part of, the shares held under the Plan. That notice must be in
proper form in accordance with the requirements of the then-current
Prospectus of the Fund. In that case, the Transfer Agent will redeem the
number of shares requested at the net asset value per share in effect and
will mail a check for the proceeds to the Planholder.
The Planholder may terminate a Plan at any time by writing to the
Transfer Agent. The Fund may also give directions to the Transfer Agent to
terminate a Plan. The Transfer Agent will also terminate a Plan upon its
receipt of evidence satisfactory to it that the Planholder has died or is
legally incapacitated. Upon termination of a Plan by the Transfer Agent or
the Fund, shares that have not been redeemed will be held in uncertificated
form in the name of the Planholder. The account will continue as a
dividend-reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder, his or her executor or
guardian, or another authorized person.
To use shares held under the Plan as collateral for a debt, the
Planholder may request issuance of a portion of the shares in certificated
form. Upon written request from the Planholder, the Transfer Agent will
determine the number of shares for which a certificate may be issued without
causing the withdrawal checks to stop. 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. You can obtain a current list
showing which funds offer which classes by calling the Distributor at
1-800-525-7048.
|_| All of the Oppenheimer funds currently offer Class A, B and C
shares except Oppenheimer Money Market Fund, Inc., Centennial Money Market
Trust, Centennial Tax Exempt Trust, Centennial Government Trust, Centennial
New York Tax Exempt Trust, Centennial California Tax Exempt Trust, and
Centennial America Fund, L.P., which only offer Class A shares.
|_| Oppenheimer Main Street California Municipal Fund currently offers
only 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.
|_| Class Y shares of Oppenheimer Real Asset Fund may not be exchanged
for shares of any other Fund.
Class A shares of Oppenheimer funds may be exchanged at net asset value
for shares of any money market fund offered by the Distributor. 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. They may also be used to purchase shares of Oppenheimer funds
subject to a contingent deferred sales charge.
Shares of Oppenheimer Money Market Fund, Inc. purchased with the
redemption proceeds of shares of other mutual funds (other than funds managed
by the Manager or its subsidiaries) redeemed within the 30 days prior to that
purchase may subsequently be exchanged for shares of other Oppenheimer funds
without being subject to an initial or contingent deferred sales charge. 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. If requested, they must
supply proof of entitlement to this privilege.
For accounts established on or before March 8, 1996 holding Class M
shares of Oppenheimer Convertible Securities Fund, Class M shares can be
exchanged only for Class A shares of other Oppenheimer funds. Exchanges to
Class M shares of Oppenheimer Convertible Securities Fund are permitted from
Class A shares of Oppenheimer Money Market Fund, Inc. or Oppenheimer Cash
Reserves that were acquired by exchange of Class M shares. No other exchanges
may be made to Class M shares.
Shares of the Fund acquired by reinvestment of dividends or
distributions from any of the other Oppenheimer funds or from any unit
investment trust for which reinvestment arrangements have been made with the
Distributor may be exchanged at net asset value for shares of any of the
Oppenheimer funds.
|X| How Exchanges Affect Contingent Deferred Sales Charges. No
contingent deferred sales charge is imposed on exchanges of shares of any
class purchased subject to a contingent deferred sales charge. However, when
Class A shares acquired by exchange of Class A shares of other Oppenheimer
funds purchased subject to a Class A contingent deferred sales charge are
redeemed within 18 months of the end of the calendar month of the initial
purchase of the exchanged Class A shares, the Class A contingent deferred
sales charge is imposed on the redeemed shares. The Class B contingent
deferred sales charge is imposed on Class B shares acquired by exchange if
they are redeemed within 6 years of the initial purchase of the exchanged
Class B shares. The Class C contingent deferred sales charge is imposed on
Class C shares acquired by exchange if they are redeemed within 12 months of
the initial purchase of the exchanged Class C shares.
When Class B or Class C shares are redeemed to effect an exchange, the
priorities described in "How To Buy Shares" in the Prospectus for the
imposition of the Class B or the Class C contingent deferred sales charge
will be followed in determining the order in which the shares are exchanged.
Before exchanging shares, shareholders should take into account how the
exchange may affect 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 which class of shares they wish to
exchange.
|X| Limits on Multiple Exchange Orders. 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.
|X| Telephone Exchange Requests. When exchanging shares by telephone, a
shareholder must have an existing account in the fund to which the exchange
is to be made. Otherwise, the investors must obtain a Prospectus of that fund
before the exchange request may be submitted. For full or partial exchanges
of an account made by telephone, any special account features such as Asset
Builder Plans and Automatic Withdrawal Plans 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.
|X| Processing 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 Fund may refuse the request.
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.
The different Oppenheimer funds available for exchange have different
investment objectives, policies and risks. 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. The Fund has no fixed dividend rate and
there can be no assurance as to the payment of any dividends or the
realization of any capital gains. The dividends and distributions paid by a
class of shares will vary from time to time depending on market conditions,
the composition of the Fund's portfolio, and expenses borne by the Fund or
borne separately by a class. Dividends are calculated in the same manner, at
the same time, and on the same day for each class of shares. However,
dividends on Class B and Class C shares are expected to be lower than
dividends on Class A shares. That is because of the effect of the asset-based
sales charge on Class B and Class C shares. Those dividends will also differ
in amount as a consequence of any difference in the net asset values of the
different classes of shares.
Dividends, distributions and 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. Reinvestment will be made 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. Unclaimed accounts may be subject to state escheatment
laws, and the Fund and the Transfer Agent will not be liable to shareholders
or their representatives for compliance with those laws in good faith.
Tax Status of the Fund's Dividends and Distributions. The Federal tax
treatment of the Fund's dividends and capital gains distributions is briefly
highlighted in the Prospectus.
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. The amount of dividends paid by the Fund that may
qualify for the deduction is limited to the aggregate amount of qualifying
dividends that the Fund derives from 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. If it does not, the Fund must pay an excise tax on the amounts not
distributed. It is presently anticipated that the Fund will meet those
requirements. However, the Board of Trustees and the Manager might determine
in a particular year that it would be in the best interests 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.
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). If the Fund qualifies as a "regulated
investment company" under the Internal Revenue Code, it will not be liable
for Federal income taxes on amounts paid by it as dividends and
distributions. The Fund qualified as a regulated investment company in its
last fiscal year. The Internal Revenue Code contains a number of complex
tests relating to qualification which the Fund might not meet in any
particular year. If it did not so qualify, the Fund would be treated for tax
purposes as an ordinary corporation and receive no tax deduction for payments
made to shareholders.
If prior distributions made by the Fund must be re-characterized as a
non-taxable return of capital at the end of the fiscal year as a result of
the effect of the Fund's investment policies, they will be identified as such
in notices sent to shareholders.
Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect to
reinvest all dividends and/or capital gains distributions in shares of the
same class of any of the other Oppenheimer funds listed above. Reinvestment
will be made without sales charge at the net asset value per share in effect
at the close of business on the payable date of the dividend or distribution.
To elect this option, the shareholder must notify the Transfer Agent in
writing and must have an existing account in the fund selected for
reinvestment. Otherwise the shareholder first must obtain a prospectus for
that fund and an application from the Distributor to establish an account.
Dividends and/or distributions from shares of certain other Oppenheimer funds
(other than Oppenheimer Cash Reserves) may be invested in shares of this Fund
on the same basis.
Additional Information About the Fund
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 shares of the other
Oppenheimer funds and is sub-distributor for funds managed by a subsidiary of
the Manager.
The Transfer Agent. OppenheimerFunds Services, the Fund's Transfer Agent, is
a division of the Manager. It is responsible for maintaining the Fund's
shareholder registry and shareholder accounting records, and for paying
dividends and distributions to shareholders. It also handles shareholder
servicing and administrative functions. It acts on an "at-cost" basis. It
also acts as shareholder servicing agent for the other Oppenheimer funds.
Shareholders should direct inquiries about their accounts to the Transfer
Agent at the address and toll-free numbers shown on the back cover.
The Custodian. The Bank of New York is the Custodian of the Fund's assets.
The Custodian's responsibilities include safeguarding and controlling the
Fund's portfolio securities and handling the delivery of such securities to
and from the Fund. It will be the practice of the Fund to deal with the
Custodian in a manner uninfluenced by any banking relationship the Custodian
may have with the Manager and its affiliates. The Fund's cash balances with
the custodian in excess of $100,000 are not protected by Federal deposit
insurance. Those uninsured balances at times may be substantial.
Independent Auditors. KPMG LLP are the independent auditors of the Fund. They
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>
================================================================================
Independent Auditors' Report
================================================================================
================================================================================
The Board of Trustees and Shareholders of
Oppenheimer Multiple Strategies Fund:
We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer Multiple Strategies Fund as of September 30, 1998,
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 two-year period
then ended, the nine-month period ended September 30, 1996, and each of the
years in the three-year period ended December 31, 1995. 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 September 30, 1998, 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 Multiple Strategies Fund as of September 30, 1998, 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 two-year period then ended, the
nine-month period ended September 30, 1996, and each of the years in the
three-year period ended December 31, 1995, in conformity with generally accepted
accounting principles.
/s/ KPMG LLP
KPMG LLP
Denver, Colorado
October 21, 1998
<PAGE>
Financials
----------------------------------------
12 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
Statement of Investments September 30, 1998
================================================================================
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
================================================================================
<S> <C> <C>
Common Stocks--50.2%
- --------------------------------------------------------------------------------
Basic Materials--2.1%
- --------------------------------------------------------------------------------
Chemicals--1.4%
Bayer AG, Sponsored ADR 115,000 $ 4,341,687
- --------------------------------------------------------------------------------
Du Pont (E.I.) De Nemours & Co. 36,000 2,020,500
- --------------------------------------------------------------------------------
Potash Corp. of Saskatchewan,Inc. 80,000 4,210,000
-----------
10,572,187
- --------------------------------------------------------------------------------
Metals--0.2%
De Beers Consolidated Mines Ltd., ADR 126,000 1,582,875
- --------------------------------------------------------------------------------
Paper--0.5%
MacMillan Bloedel Ltd. 244,561 2,290,910
- --------------------------------------------------------------------------------
Wausau-Mosinee Paper Corp. 124,000 1,782,500
-----------
4,073,410
- --------------------------------------------------------------------------------
Consumer Cyclicals--7.9%
- --------------------------------------------------------------------------------
Autos & Housing--0.9%
Dana Corp. 55,000 2,052,187
- --------------------------------------------------------------------------------
IRSA Inversiones y Representaciones SA 679,270 1,483,701
- --------------------------------------------------------------------------------
Lear Corp.(1) 70,000 3,062,500
-----------
6,598,388
- --------------------------------------------------------------------------------
Leisure & Entertainment--4.1%
Alaska Air Group,Inc.(1)(2) 37,500 1,277,344
- --------------------------------------------------------------------------------
AMR Corp.(1) 42,500 2,356,094
- --------------------------------------------------------------------------------
Berjaya Sports Toto Berhad(3) 410,000 258,947
- --------------------------------------------------------------------------------
Brunswick Corp. 90,000 1,164,375
- --------------------------------------------------------------------------------
Callaway Golf Co. 120,000 1,297,500
- --------------------------------------------------------------------------------
Carnival Corp. 10,000 318,125
- --------------------------------------------------------------------------------
Cracker Barrel Old Country Store, Inc. 96,000 2,184,000
- --------------------------------------------------------------------------------
Host Marriott Corp.(1) 175,000 2,220,312
- --------------------------------------------------------------------------------
International Game Technology(2) 165,000 3,062,812
- --------------------------------------------------------------------------------
Mattel,Inc. 1 42
- --------------------------------------------------------------------------------
Mirage Resorts, Inc.(1) 230,000 3,852,500
- --------------------------------------------------------------------------------
Nintendo Co. Ltd. 53,500 5,030,685
- --------------------------------------------------------------------------------
Outback Steakhouse, Inc.(1)(2) 10,900 287,487
- --------------------------------------------------------------------------------
Shimano, Inc. 165,000 3,733,797
- --------------------------------------------------------------------------------
Time Warner, Inc. 36,500 3,196,031
-----------
30,240,051
</TABLE>
13 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
Statement of Investments (Continued)
================================================================================
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
<S> <C> <C>
Media--1.2%
CBS Corp.(2) 181,700 $ 4,406,225
- --------------------------------------------------------------------------------
MediaOne Group, Inc.(1) 76,000 3,377,250
- --------------------------------------------------------------------------------
South China Morning Post Holdings Ltd. 3,306,000 1,301,323
-----------
9,084,798
- --------------------------------------------------------------------------------
Retail: General--0.8%
Dayton Hudson Corp. 38,200 1,365,650
- --------------------------------------------------------------------------------
Federated Department Stores, Inc.(1)(2) 60,000 2,182,500
- --------------------------------------------------------------------------------
Neiman Marcus Group, Inc.(1) 95,000 2,054,375
-----------
5,602,525
- --------------------------------------------------------------------------------
Retail: Specialty--0.9%
AutoZone, Inc.(1) 105,000 2,585,625
- --------------------------------------------------------------------------------
General Nutrition Cos., Inc.(1) 138,000 1,492,125
- --------------------------------------------------------------------------------
Gymboree Corp.(1) 40,000 300,000
- --------------------------------------------------------------------------------
Petco Animal Supplies, Inc.(1)(2) 90,000 810,000
- --------------------------------------------------------------------------------
Saks, Inc.(1) 76,260 1,711,084
-----------
6,898,834
- --------------------------------------------------------------------------------
Consumer Non-Cyclicals--8.5%
- --------------------------------------------------------------------------------
Beverages--0.5%
Coca-Cola Beverages plc(1) 55,000 125,713
- --------------------------------------------------------------------------------
Diageo plc 240,840 2,218,320
- --------------------------------------------------------------------------------
Whitman Corp. 93,000 1,482,187
-----------
3,826,220
- --------------------------------------------------------------------------------
Food--1.0%
Groupe Danone 16,948 4,454,111
- --------------------------------------------------------------------------------
Nestle SA, Sponsored ADR 33,500 3,332,305
-----------
7,786,416
- --------------------------------------------------------------------------------
Healthcare/Drugs--4.2%
Abbott Laboratories 82,000 3,561,875
- --------------------------------------------------------------------------------
American Home Products Corp. 88,000 4,609,000
- --------------------------------------------------------------------------------
Astra AB Free, Series A 180,000 3,078,679
- --------------------------------------------------------------------------------
Biogen, Inc.(1) 15,000 987,187
- --------------------------------------------------------------------------------
Centocor, Inc.(1) 77,500 3,070,937
- --------------------------------------------------------------------------------
Genzyme Corp.(General Division)(1)(2) 55,000 1,986,875
- --------------------------------------------------------------------------------
Johnson & Johnson 41,000 3,208,250
- --------------------------------------------------------------------------------
Mylan Laboratories, Inc. 89,000 2,625,500
- --------------------------------------------------------------------------------
Novartis AG 3,000 4,808,887
- --------------------------------------------------------------------------------
SmithKline Beecham plc, Sponsored ADR, Cl.A 62,000 3,394,500
-----------
31,331,690
</TABLE>
14 Oppenheimer Multiple Strategies Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
- ---------------------------------------------------------------------------------
<S> <C> <C>
Healthcare/Supplies & Services--0.7%
Acuson Corp.(1) 92,000 1,569,750
- --------------------------------------------------------------------------------
Alternative Living Services, Inc.(1) 73,000 1,952,750
- --------------------------------------------------------------------------------
United Healthcare Corp.(2) 45,400 1,589,000
----------
5,111,500
- --------------------------------------------------------------------------------
Household Goods--0.7%
Fort James Corp. 83,500 2,739,844
- --------------------------------------------------------------------------------
Wella AG 3,585 2,155,692
- --------------------------------------------------------------------------------
Wella AG, Preference 350 254,016
----------
5,149,552
- --------------------------------------------------------------------------------
Tobacco--1.4%
Imperial Tobacco Group plc 400,000 4,231,513
- --------------------------------------------------------------------------------
Philip Morris Cos., Inc. 135,000 6,218,437
----------
10,449,950
- --------------------------------------------------------------------------------
Energy--3.6%
- --------------------------------------------------------------------------------
Energy Services & Producers--1.6%
Baker Hughes, Inc.(2) 40,500 847,969
- --------------------------------------------------------------------------------
Coflexip SA, Sponsored ADR 50,000 1,981,250
- --------------------------------------------------------------------------------
Input/Output, Inc.(1)(2) 223,000 1,770,062
- --------------------------------------------------------------------------------
Santa Fe International Corp.(2) 137,000 2,106,375
- --------------------------------------------------------------------------------
Schlumberger Ltd. 40,000 2,012,500
- --------------------------------------------------------------------------------
Transocean Offshore, Inc. 85,000 2,948,437
----------
11,666,593
- --------------------------------------------------------------------------------
Oil-Integrated--2.0%
Enron Corp. 42,000 2,218,125
- --------------------------------------------------------------------------------
Kerr-McGee Corp. 47,000 2,138,500
- --------------------------------------------------------------------------------
Petroleo Brasileiro SA, Preference 3,330,000 341,286
- --------------------------------------------------------------------------------
Talisman Energy, Inc.(1) 100,090 2,140,858
- --------------------------------------------------------------------------------
Total SA, Sponsored ADR 38,200 2,399,437
- --------------------------------------------------------------------------------
Unocal Corp. 105,000 3,806,250
- --------------------------------------------------------------------------------
YPF SA, Cl.D, ADR 75,000 1,950,000
----------
14,994,456
- --------------------------------------------------------------------------------
Financial--12.2%
- --------------------------------------------------------------------------------
Banks--6.0%
ABN Amro Holding NV 77,000 1,311,193
- --------------------------------------------------------------------------------
Banc One Corp. 29,000 1,236,125
- --------------------------------------------------------------------------------
Banco Frances del Rio de la Plata SA 150,000 975,115
- --------------------------------------------------------------------------------
BankAmerica Corp.(New) 235,000 12,572,500
</TABLE>
15 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
Statement of Investments (Continued)
================================================================================
<TABLE>
<CAPTION>
Shares Market Value
See Note 1
- ------------------------------------------------------------------------------
<S> <C> <C>
Banks (continued)
Chase Manhattan Corp. (New) 255,000 $11,028,750
- ------------------------------------------------------------------------------
Credit Suisse Group 5,225 577,489
- ------------------------------------------------------------------------------
Credito Italiano SpA 688,800 2,867,829
- ------------------------------------------------------------------------------
Deutsche Bank AG 11,400 605,006
- ------------------------------------------------------------------------------
First Chicago NBD Corp. 15,000 1,027,500
- ------------------------------------------------------------------------------
Fleet Financial Group, Inc.(2) 30,000 2,203,125
- ------------------------------------------------------------------------------
Morgan J.P.& Co., Inc. 25,000 2,115,625
- ------------------------------------------------------------------------------
Societe Generale 37,800 4,181,415
- ------------------------------------------------------------------------------
UBS AG(1) 5,600 1,092,239
- ------------------------------------------------------------------------------
Wells Fargo & Co. 9,000 3,195,000
----------
44,988,911
- ------------------------------------------------------------------------------
Diversified Financial--1.1%
American Express Co.(2) 32,500 2,522,812
- ------------------------------------------------------------------------------
Merrill Lynch & Co., Inc.(2) 50,000 2,368,750
- ------------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co.(2) 70,000 3,014,375
-----------
7,905,937
- ------------------------------------------------------------------------------
Insurance--2.0%
ACE Ltd. 72,000 2,160,000
- ------------------------------------------------------------------------------
Cigna Corp.(2) 45,000 2,975,625
- ------------------------------------------------------------------------------
Everest Reinsurance Holdings, Inc. 92,500 3,451,406
- ------------------------------------------------------------------------------
Skandia Forsakrings AB 241,000 3,137,649
- ------------------------------------------------------------------------------
UNUM Corp. 65,400 3,249,563
-----------
14,974,243
- ------------------------------------------------------------------------------
Real Estate Investment Trusts--3.1%
Archstone Communities Trust 95,000 1,935,625
- ------------------------------------------------------------------------------
Avalon Bay Communities, Inc. 60,000 2,043,750
- ------------------------------------------------------------------------------
Brandywine Realty Trust 105,000 2,008,125
- ------------------------------------------------------------------------------
Camden Property Trust 65,000 1,815,938
- ------------------------------------------------------------------------------
CarrAmerica Realty Corp. 75,000 1,710,938
- ------------------------------------------------------------------------------
Chastain Capital Corp. 184,000 1,978,000
- ------------------------------------------------------------------------------
Chelsea GCA Realty, Inc. 65,000 2,226,250
- ------------------------------------------------------------------------------
Cornerstone Properties, Inc. 102,000 1,542,750
- ------------------------------------------------------------------------------
CRIIMI MAE, Inc. 170,000 1,498,125
- ------------------------------------------------------------------------------
Developers Diversified Realty Corp. 100,000 1,825,000
- ------------------------------------------------------------------------------
Horizon Group Properties, Inc.(1) 717 1,703
- ------------------------------------------------------------------------------
JDN Realty Corp. 100,000 2,300,000
- ------------------------------------------------------------------------------
Post Properties, Inc. 50,000 1,928,125
-----------
22,814,329
</TABLE>
16 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
================================================================================
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
- --------------------------------------------------------------------------
Industrial--3.2%
- --------------------------------------------------------------------------
<S> <C> <C>
Electrical Equipment--0.6%
Methode Electronics, Inc., Cl.A 143,000 $ 2,145,000
- --------------------------------------------------------------------------
Rockwell International Corp. 60,000 2,167,500
------------
4,312,500
- --------------------------------------------------------------------------
Industrial Materials--0.4%
Equitable Bag, Inc.(1)(3) 1,861 2,792
- --------------------------------------------------------------------------
Owens Corning 98,000 3,191,125
------------
3,193,917
- --------------------------------------------------------------------------
Manufacturing--1.4%
American Standard Cos., Inc.(1) 30,000 791,250
- --------------------------------------------------------------------------
ASM Lithography Holding NV(1) 40,000 627,500
- --------------------------------------------------------------------------
Case Corp. 5,000 108,750
- --------------------------------------------------------------------------
Deere & Co. 12,500 378,125
- --------------------------------------------------------------------------
Hexcel Corp.(1) 190,000 2,042,500
- --------------------------------------------------------------------------
Pall Corp. 150,000 3,328,125
- --------------------------------------------------------------------------
Tenneco, Inc.(New) 99,000 3,254,625
------------
10,530,875
- --------------------------------------------------------------------------
Transportation--0.8%
Burlington Northern Santa Fe Corp. 102,000 3,264,000
- --------------------------------------------------------------------------
Stolt-Nielsen SA 174,000 2,066,250
- --------------------------------------------------------------------------
Stolt-Nielsen SA, Sponsored ADR 67,050 787,838
------------
6,118,088
- --------------------------------------------------------------------------
Technology--10.9%
- --------------------------------------------------------------------------
Computer Hardware--2.9%
Canon, Inc. 81,000 1,643,134
- --------------------------------------------------------------------------
Hewlett-Packard Co.(2) 61,000 3,229,188
- --------------------------------------------------------------------------
International Business Machines Corp. 97,000 12,416,000
- --------------------------------------------------------------------------
Xerox Corp.(2) 52,000 4,407,000
------------
21,695,322
- --------------------------------------------------------------------------
Computer Software/Services--3.3%
America Online, Inc.(2) 37,000 4,116,250
- --------------------------------------------------------------------------
Computer Associates International, Inc. 95,000 3,515,000
- --------------------------------------------------------------------------
Electronic Arts, Inc.(1)(2) 35,000 1,535,625
- --------------------------------------------------------------------------
First Data Corp. 125,000 2,937,500
- --------------------------------------------------------------------------
Novell, Inc.(1) 231,000 2,829,750
- --------------------------------------------------------------------------
PLATINUM Technology, Inc.(1) 60,000 1,080,000
- --------------------------------------------------------------------------
Rational Software Corp.(1)(2) 197,000 3,312,063
</TABLE>
17 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
Statement of Investments (Continued)
================================================================================
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
- ------------------------------------------------------------------------------
<S> <C> <C>
Computer SoftwareServices (continued)
Sabre Group Holdings, Inc.(1) 87,900 $ 2,637,000
- ------------------------------------------------------------------------------
Symantec Corp.(1)(2) 66,842 881,479
- ------------------------------------------------------------------------------
Synopsys, Inc.(1) 46,000 1,532,375
---------
24,377,042
- ------------------------------------------------------------------------------
Electronics--3.1%
Analog Devices, Inc.(1) 140,000 2,248,750
- ------------------------------------------------------------------------------
CAE, Inc. 165,390 973,646
- ------------------------------------------------------------------------------
General Motors Corp., Cl.H(2) 67,800 2,495,888
- ------------------------------------------------------------------------------
Intel Corp.(2) 140,000 12,005,000
- ------------------------------------------------------------------------------
Keyence Corp. 14,800 1,416,595
- ------------------------------------------------------------------------------
STMicroelectronics NV(1)(2) 27,000 1,213,313
- ------------------------------------------------------------------------------
Teradyne, Inc.(1)(2) 47,000 857,750
- ------------------------------------------------------------------------------
Xilinx, Inc.(1)(2) 50,000 1,750,000
----------
22,960,942
- ------------------------------------------------------------------------------
TelecommunicationsTechnology--1.6%
3Com Corp.(1) 45,000 1,352,813
- ------------------------------------------------------------------------------
Airtouch Communications, Inc.(1) 57,000 3,249,000
- ------------------------------------------------------------------------------
Cisco Systems, Inc.(1)(2) 66,000 4,079,625
- ------------------------------------------------------------------------------
ECI Telecommunications Ltd. 22,000 539,000
- ------------------------------------------------------------------------------
Embratel Participacoes SA(1) 10,200,000 85,179
- ------------------------------------------------------------------------------
RCN Corp.(1) 200,000 2,600,000
- ------------------------------------------------------------------------------
Tele Celular Sul Participacoes SA(1) 10,200,000 7,744
- ------------------------------------------------------------------------------
Tele Centro Oeste Celular Participacoes SA(1) 10,200,000 5,162
- ------------------------------------------------------------------------------
Tele Centro Sul Participacoes SA(1) 10,200,000 64,960
- ------------------------------------------------------------------------------
Tele Leste Celular Participacoes SA(1) 10,200,000 3,011
- ------------------------------------------------------------------------------
Tele Nordeste Celular Participacoes SA(1) 10,200,000 5,162
- ------------------------------------------------------------------------------
Tele Norte Celular Participacoes SA(1) 10,200,000 2,581
- ------------------------------------------------------------------------------
Tele Norte Leste Participacoes SA(1) 10,200,000 64,487
- ------------------------------------------------------------------------------
Tele Sudeste Celular Participacoes SA(1) 10,200,000 20,650
- ------------------------------------------------------------------------------
Telemig Celular Participacoes SA(1) 10,200,000 8,604
- ------------------------------------------------------------------------------
Telesp Celular Participacoes SA(1) 10,200,000 51,624
- ------------------------------------------------------------------------------
Telesp Participacoes SA(1) 10,200,000 160,034
-----------
12,299,636
</TABLE>
18 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
================================================================================
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
- -------------------------------------------------------------------------------
<S> <C> <C>
Utilities--1.8%
- -------------------------------------------------------------------------------
Electric Utilities--1.0%
Allegheny Energy, Inc. 48,000 $ 1,515,000
- -------------------------------------------------------------------------------
Houston Industries, Inc. 85,500 2,661,188
- -------------------------------------------------------------------------------
Southern Co. 114,000 3,355,875
-----------
7,532,063
- -------------------------------------------------------------------------------
Telephone Utilities--0.8%
MCI WorldCom, Inc.(1) 37,500 1,832,813
- -------------------------------------------------------------------------------
SBC Communications, Inc. 64,000 2,844,000
- -------------------------------------------------------------------------------
Telecomunicacoes Brasileiras SA 10,200,000 3,011
- -------------------------------------------------------------------------------
U S West, Inc.(2) 26,075 1,367,308
-----------
6,047,132
-----------
Total Common Stocks (Cost $294,697,795) 374,720,382
- -------------------------------------------------------------------------------
Preferred Stocks--0.3%
- -------------------------------------------------------------------------------
Budget Group, Inc., 6.25% Cv.(5) 40,000 1,875,000
- -------------------------------------------------------------------------------
Spanish Broadcasting Systems, Inc., 14.25% Cum.
Exchangeable, Non-Vtg.(3)(4) 488 479,460
-----------
Total Preferred Stocks (Cost $2,525,414) 2,354,460
Units
- -------------------------------------------------------------------------------
Rights, Warrants and Certificates--0.0%
- -------------------------------------------------------------------------------
American Telecasting, Inc. Wts., Exp. 6/99(3) 2,000 20
- -------------------------------------------------------------------------------
Comunicacion Celular SA Wts., Exp. 11/03 300 19,537
- -------------------------------------------------------------------------------
Hyperion Telecommunications, Inc. Wts., Exp. 4/01 550 49,569
- -------------------------------------------------------------------------------
In-Flight Phone Corp. Wts., Exp. 8/02 300 --
-----------
Total Rights, Warrants and Certificates (Cost $0) 69,126
Face
Amount(6)
- -------------------------------------------------------------------------------
Mortgage-Backed Obligations--5.0%
- -------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
Collateralized Mtg. Obligations,
Gtd. Multi class Mtg.
Participation Certificates, Series 151,
Cl. F, 9%, 5/15/21 $ 969,196 1,046,732
Interest-Only Stripped Mtg.-Backed
Security, Series 177,
Cl.B, 5.489%, 7/1/26(7) 1,285,429 162,888
- -------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6.50%, 12/1/27--2/1/28 9,697,610 9,863,052
11.50%, 7/1/11 113,222 124,480
- -------------------------------------------------------------------------------
Government National Mortgage Assn.:
7%, 3/20/26--4/15/26 4,586,469 4,726,382
7.50%, 5/15/27 17,991,775 18,658,551
9%, 11/15/08--5/15/09 335,685 358,247
</TABLE>
19 Oppenheimer Multiple Strategies Fund
<PAGE>
===============================================================================
Statement of Investments (Continued)
===============================================================================
<TABLE>
<CAPTION>
Face Market Value
Amount(6) See Note 1
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mortgage-Backed Obligations (continued)
Morgan Stanley Capital I, Inc., Commercial Mtg.
Pass-Through Certificates, Series 1996-C1, Cl. F,
7.436%, 2/15/28(3)(5)(8) $ 97,137 $ 87,818
- -------------------------------------------------------------------------------------------------------------
Mortgage Capital Funding, Inc., Multifamily Mtg.
Pass-Through Certificates, Series 1996-MC1, Cl. G,
7.15%, 6/15/06(5) 400,000 355,250
- -------------------------------------------------------------------------------------------------------------
Resolution Trust Corp., Commercial Mtg. Pass-Through
Certificates:
Series 1992-CHF, C1. D, 8.25%, 12/25/20 215,706 215,909
Series 1993-C1, C1. D, 9.45%, 5/25/24 252,980 251,538
Series 1994-C2, C1. E, 8%, 4/25/25 753,909 759,918
Series 1994-C2, C1. G, 8%, 4/25/25 178,543 178,822
- -------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII:
Series 1996-CL, C1. F, 9.175%, 1/20/28(8) 250,000 210,859
Series 1996-B, Cl. 1, 7.132%, 4/25/26(5) 291,711 225,529
- -------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Multiclass Pass-Through
Certificates, Series 1995-C4, Cl. E, 8.734%, 6/25/26(3)(8) 27,688 28,700
----------
Total Mortgage-Backed Obligations (Cost $36,283,965) 37,254,675
- -------------------------------------------------------------------------------------------------------------
U.S. Government Obligations--12.3%
- -------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
6%, 2/15/26 500,000 559,688
6.50%, 11/15/26 360,000 429,300
8.875%, 8/15/17 3,650,000 5,279,955
STRIPS, 7.10%, 11/15/18(9) 17,000,000 5,784,352
STRIPS, 7.31%, 8/15/19(9) 18,700,000 6,099,352
- -------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
5.875%, 9/30/02-2/15/04 30,000,000 31,926,585
6.125%, 12/31/01 15,000,000 15,782,820
6.25%, 2/15/03-2/15/07 12,130,000 13,326,296
6.50%, 10/15/06 4,640,000 5,272,205
7.50%, 5/15/02 327,000 360,824
8.50%, 2/15/00 5,500,000 5,788,756
10.75%, 5/15/03 1,190,000 1,502,004
----------
Total U.S. Government Obligations (Cost $84,039,725) 92,112,389
</TABLE>
20 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
================================================================================
<TABLE>
<CAPTION>
Face Market Value
Amount/(6)/ See Note 1
- -------------------------------------------------------------------------------------------------------------
Foreign Government Obligations--18.7%
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Argentina--4.5%
Argentina (Republic of):
Bonds, Bonos de Consolidacion de Deudas, Series I,
5.646%, 4/1/01(8) $ 341,701 $ 293,814
Bonds, Series L, 6.188%, 3/31/05(8) 11,932,000 9,500,855
Nts., 11.75%, 2/12/07(5)(ARP) 150,000 109,138
Nts., 9.15%, 11/30/02(8) 15,000,000 13,237,500
Par Bonds, 5.75%, 3/31/23(10) 16,000,000 10,760,000
-----------
33,901,307
- -------------------------------------------------------------------------------------------------------------
Australia--0.4%
New South Wales Treasury Corp. Gtd. Bonds, 7%, 4/1/04(AUD) 1,570,000 1,012,824
- -------------------------------------------------------------------------------------------------------------
Queensland Treasury Corp.Exchangeable Gtd.Nts :
10.50%, 5/15/03(AUD) 2,590,000 1,883,988
8%, 8/14/01(AUD) 615,000 396,571
-----------
3,293,383
- -------------------------------------------------------------------------------------------------------------
Brazil--3.0%
Brazil (Federal Republic of):
Capitalization Bonds, 8%, 4/15/14 25,756,662 15,518,389
Eligible Interest Bonds, 6.625%, 4/15/06(8) 11,318,500 6,593,026
- -------------------------------------------------------------------------------------------------------------
Telecomunicacoes Brasileiras SA
Medium-Term Nts., 11.25%, 12/9/99(3)(8) 10,000 8,825
-----------
22,120,240
- -------------------------------------------------------------------------------------------------------------
Bulgaria--0.0%
Bulgaria (Republic of) Interest Arrears Bonds, 6.688% 7/28/11(8) 170,000 101,150
- -------------------------------------------------------------------------------------------------------------
Canada--3.0%
Canada (Government of) Bonds:
6.50%,6/1/04(CAD) 13,320,000 9,437,352
7%, 12/1/06(CAD) 60,000 44,666
8.75%, 12/1/05(CAD) 495,000 398,441
9.75%, 12/1/01(CAD) 6,260,000 4,687,466
9.75%, 6/1/01(CAD) 3,270,000 2,403,091
11.75%, 2/1/03(CAD) 290,000 240,663
Series A-33, 11.50%, 9/1/00(CAD) 585,000 429,199
Series WL43, 5.75%, 6/1/29(CAD) 7,130,000 5,013,106
-----------
22,653,984
</TABLE>
21 Oppenheimer Multiple Strategies Fund
<PAGE>
===============================================================================
Statement of Investments (Continued)
===============================================================================
<TABLE>
<CAPTION>
Face Market Value
Amount(6) See Note 1
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Denmark--0.6%
Denmark (Kingdom of) Bonds, 8%, 3/15/06(DKK) 21,900,000 $ 4,172,540
- ---------------------------------------------------------------------------------------------------------------------------
Finland--0.1%
Finland (Republic of) Bonds, 9.50%, 3/15/04(FIM) 4,000,000 998,420
- ---------------------------------------------------------------------------------------------------------------------------
Germany--0.3%
Germany (Republic of) Bonds, Series 94, 6.25%, 1/4/24(DEM) 2,665,000 1,919,797
- ---------------------------------------------------------------------------------------------------------------------------
Great Britain--1.6%
United Kingdom Treasury Bonds:
7%, 6/7/02(GBP) 2,415,000 4,336,194
7.25%, 12/7/07(GBP) 2,400,000 4,796,140
10%, 9/8/03(GBP) 325,000 666,737
- ---------------------------------------------------------------------------------------------------------------------------
United Kingdom Treasury Nts.:
9.75%, 8/27/02(GBP) 55,000 107,779
12.50%, 11/21/05(GBP) 62,000 140,001
13%, 7/14/00(GBP) 1,050,000 1,994,594
----------
12,041,445
- ---------------------------------------------------------------------------------------------------------------------------
Italy--0.2%
Italy (Republic of) Treasury Bonds, Buoni del Tesoro Poliennali:
9%, 10/1/03(ITL) 195,000,000 144,228
9.50%, 2/1/01(ITL) 405,000,000 275,384
9.50%, 5/1/01(ITL) 195,000,000 134,091
10.50%, 4/1/00(ITL) 200,000,000 132,119
10.50%, 7/15/00(ITL) 1,270,000,000 854,403
----------
1,540,225
- ---------------------------------------------------------------------------------------------------------------------------
Mexico--0.5%
Banco Nacional de Comercio Exterior SNC International
Finance BV Gtd. Registered Bonds, 11.25%, 5/30/06 110,000 99,550
- ---------------------------------------------------------------------------------------------------------------------------
United Mexican States Bonds:
10.375%, 1/29/03(DEM) 150,000 87,280
16.50%, 9/1/08(3)(GBP) 35,000 71,375
- ---------------------------------------------------------------------------------------------------------------------------
United Mexican States Collateralized Fixed Rate Par Bonds:
Series B, 6.25%, 12/31/19 250,000 186,250
Series W-A, 6.25%, 12/31/19 4,450,000 3,315,250
-----------
3,759,705
</TABLE>
22 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
================================================================================
<TABLE>
<CAPTION>
Face Market Value
Amount(6) See Note 1
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
New Zealand--3.2%
New Zealand (Government of) Bonds:
8%, 11/15/06(NZD) 345,000 $ 198,685
8%, 2/15/01(NZD) 43,360,000 22,851,383
10%, 3/15/02(NZD) 1,085,000 616,535
-----------
23,666,603
- ------------------------------------------------------------------------------------------------------------------
Norway--0.0%
Norway (Government of) Bonds, 9.50%, 10/31/02(NOK) 880,000 135,200
- ------------------------------------------------------------------------------------------------------------------
Philippines--0.3%
Philippines (Republic of):
Bonds, 8.60%, 6/15/27 1,500,000 997,500
Par Bonds, Series B, 6.50%, 12/1/17(3)(10) 1,675,000 1,191,344
-----------
2,188,844
- ------------------------------------------------------------------------------------------------------------------
Poland--0.7%
Poland (Republic of) Bonds:
12%, 6/12/01(PLZ) 18,000,000 4,642,764
16%, 2/12/99(PLZ) 940,000 261,609
-----------
4,904,373
- ------------------------------------------------------------------------------------------------------------------
South Africa--0.2%
Eskom Depositary Receipts, Series E168, 11%, 6/1/08(ZAR) 6,430,000 750,150
- ------------------------------------------------------------------------------------------------------------------
Eskom Sec.Bonds, 11%, 6/1/08(ZAR) 3,000,000 349,992
- ------------------------------------------------------------------------------------------------------------------
South Africa (Republic of) Bonds, 12.50%, 12/21/06(ZAR) 800,000 106,083
-----------
1,206,225
- ------------------------------------------------------------------------------------------------------------------
Spain--0.1%
Spain (Kingdom of) Gtd. Bonds, Bonos y Obligacion
del Estado:
10.25%, 11/30/98(ESP) 25,800,000 183,132
10.30%, 6/15/02(ESP) 39,150,000 337,087
10.50%, 10/30/03(ESP) 22,100,000 202,262
12.25%, 3/25/00(ESP) 31,600,000 249,476
-----------
971,957
-----------
Total Foreign Government Obligations (Cost $146,503,187) 139,575,398
</TABLE>
23 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
Statement of Investments (Continued)
================================================================================
<TABLE>
<CAPTION>
Face Market Value
Amount (6) See Note 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Loan Participations--0.1%
- ------------------------------------------------------------------------------------------------------------------------------------
Colombia (Republic of) 1989-1990 Integrated Loan
Facility Bonds, 6.688%, 7/1/01/(3)(8) $ 185,660 $ 167,095
- ------------------------------------------------------------------------------------------------------------------------------------
Morocco (Kingdom of) Loan Participation Agreement,
Tranche A, 6.563%, 1/1/09 (3)(8) 665,000 483,787
------------
Total Loan Participations (Cost $777,805) 650,882
- ------------------------------------------------------------------------------------------------------------------------------------
Non-Convertible Corporate Bonds and Notes--6.3%
- ------------------------------------------------------------------------------------------------------------------------------------
Adelphia Communications Corp., 10.50% Sr. Unsec. Nts.,
Series B, 7/15/04 500,000 550,000
- ------------------------------------------------------------------------------------------------------------------------------------
AK Steel Corp., 9.125% Sr. Nts., 12/15/06 1,150,000 1,158,625
- ------------------------------------------------------------------------------------------------------------------------------------
Allied Waste North America, Inc., 10.25% Sr. Sub. Nts. 12/1/06 425,000 465,375
- ------------------------------------------------------------------------------------------------------------------------------------
American International Group, Inc., 11.70% Unsec.
Unsub.Bonds, 12/4/01(ITL) 95,000,000 70,426
- ------------------------------------------------------------------------------------------------------------------------------------
Ameriking, Inc., 10.75% Sr. Nts., 12/1/06 360,000 370,800
- ------------------------------------------------------------------------------------------------------------------------------------
AMRESCO,Inc., 10% Sr. Sub. Nts., Series 97-A, 3/15/04 200,000 161,000
- ------------------------------------------------------------------------------------------------------------------------------------
Amtran, Inc., 10.50% Sr. Nts., 8/1/04 500,000 502,500
- ------------------------------------------------------------------------------------------------------------------------------------
Aracruz Celulose SA, 10.375% Debs., 1/31/02(5) 320,000 267,200
- ------------------------------------------------------------------------------------------------------------------------------------
Banco del Atlantico SA, 7.875% Eurobonds, 11/5/98(3) 50,000 49,750
- ------------------------------------------------------------------------------------------------------------------------------------
Bar Technologies, Inc., 13.50% Sr. Sec. Nts., 4/1/01 135,000 145,125
- ------------------------------------------------------------------------------------------------------------------------------------
Belden & Blake Corp., 9.875% Sr. Sub. Nts., 6/15/07 480,000 400,800
- ------------------------------------------------------------------------------------------------------------------------------------
Building Materials Corp. of America, 8.625% Sr. Nts.,
Series B, 12/15/06 50,000 50,500
- ------------------------------------------------------------------------------------------------------------------------------------
California Energy, Inc., 10.25% Sr. Disc. Nts., 1/15/04 400,000 425,000
- ------------------------------------------------------------------------------------------------------------------------------------
Call-Net Enterprises, Inc., 0%/13.25% Sr. Disc. Nts., 12/1/04(11) 140,000 134,225
- ------------------------------------------------------------------------------------------------------------------------------------
Calpine Corp.:
8.75% Sr. Nts., 7/15/07 650,000 666,250
10.50% Sr. Nts., 5/15/06 225,000 241,875
- ------------------------------------------------------------------------------------------------------------------------------------
Cambridge Industries, Inc., 10.25% Sr. Sub. Nts., Series B, 7/15/07 500,000 462,500
- ------------------------------------------------------------------------------------------------------------------------------------
Capstar Broadcasting Partners, Inc., 9.25% Sr. Sub. Nts., 7/1/07 400,000 406,000
- ------------------------------------------------------------------------------------------------------------------------------------
Casino America, Inc., 12.50% Sr. Nts., 8/1/03 250,000 271,250
- ------------------------------------------------------------------------------------------------------------------------------------
Celcaribe SA, 13.50% Sr. Sec. Nts., 3/15/04 350,000 358,750
- ------------------------------------------------------------------------------------------------------------------------------------
Collins & Aikman Products Co., 11.50% Sr.
Unsec. Sub. Nts., 4/15/06 200,000 210,000
- ------------------------------------------------------------------------------------------------------------------------------------
Comcast UK Cable Partner Ltd., 0%/11.20% Sr. Disc. Debs 11/15/07(11) 850,000 692,750
- ------------------------------------------------------------------------------------------------------------------------------------
Communications & Power Industries, Inc., 12% Sr. Sub. Nts.,
Series B, 8/1/05 1,300,000 1,413,750
</TABLE>
24 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
================================================================================
<TABLE>
<CAPTION>
Face Market Value
Amount(6) See Note 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Non-Convertible Corporate Bonds and Notes (continued)
Comunicacion Celular SA, 0%/13.125% Sr. Deferred
Coupon Bonds, 11/15/03(11) $ 300,000 $ 204,000
- ------------------------------------------------------------------------------------------------------------------------------------
Convergent Communications, Inc., Units (each unit consists
of $1,000 principal amount of 13% sr. nts., 4/1/08 and four
warrants to purchase 10.8 shares of common stock)(5)(12) 500 402,500
- ------------------------------------------------------------------------------------------------------------------------------------
CSC Holdings, Inc.:
9.875% Sr. Sub. Debs., 2/15/13 250,000 275,000
10.50% Sr. Sub. Debs., 5/15/16 250,000 286,250
- ------------------------------------------------------------------------------------------------------------------------------------
Diamond Cable Communications plc, 0%/11.75%
Sr. Disc. Nts., 12/15/05 (11) 300,000 240,000
- ------------------------------------------------------------------------------------------------------------------------------------
Dyncorp, Inc., 9.50% Sr. Sub. Nts., 3/1/07 100,000 92,500
- ------------------------------------------------------------------------------------------------------------------------------------
EchoStar Communications Corp., 0%/12.875%
Sr. Disc. Nts., 6/1/04(11) 50,000 48,750
- ------------------------------------------------------------------------------------------------------------------------------------
EchoStar Satellite Broadcasting Corp., 0%/13.125%
Sr. Sec. Disc. Nts., 3/15/04(11) 500,000 445,000
- ------------------------------------------------------------------------------------------------------------------------------------
El Paso Electric Co., 9.40% First Mtg. Sec. Nts , Series E, 5/1/11 250,000 288,437
- ------------------------------------------------------------------------------------------------------------------------------------
Empresas ICA Sociedad Controladora SA de CV,
11.875% Nts., 5/30/01 30,000 28,425
- ------------------------------------------------------------------------------------------------------------------------------------
FaciliCom International, Inc., 10.50% Sr. Nts., Series B, 1/15/08 215,000 188,125
- ------------------------------------------------------------------------------------------------------------------------------------
Falcon Holding Group LP, 0%/9.285% Sr. Disc. Debs., 4/15/10(11) 600,000 411,000
- ------------------------------------------------------------------------------------------------------------------------------------
Fleming Cos., Inc., 10.625% Sr. Sub. Nts., Series B, 7/31/07 1,150,000 1,144,250
- ------------------------------------------------------------------------------------------------------------------------------------
Fletcher Challenge Finance U.S.A., Inc., 8.05% Debs. 6/15/03 (NZD) 35,000 18,040
- ------------------------------------------------------------------------------------------------------------------------------------
Fletcher Challenge Ltd.:
10% Cv. Unsec. Sub. Nts., 4/30/05(NZD) 35,000 19,629
14.50% Cv.Sub. Nts., 9/30/00(NZD) 35,000 19,812
- ------------------------------------------------------------------------------------------------------------------------------------
Global Crossing Holdings Ltd., 9.625% Sr. Nts., 5/15/08(5) 750,000 729,375
- ------------------------------------------------------------------------------------------------------------------------------------
Gothic Production Corp., 11.125% Sr. Sec. Nts., Series B, 5/1/05(5) 950,000 688,750
- ------------------------------------------------------------------------------------------------------------------------------------
Grand Casinos, Inc., 10.125% First Mtg. Sec. Nts., 12/1/03 500,000 527,500
- ------------------------------------------------------------------------------------------------------------------------------------
Grey Wolf, Inc., 8.875% Sr. Unsec. Nts., Series C, 7/1/07 750,000 573,750
- ------------------------------------------------------------------------------------------------------------------------------------
Grupo Posadas SA de CV, 10.375% Bonds, 2/13/02 25,000 19,094
- ------------------------------------------------------------------------------------------------------------------------------------
GST USA, Inc., 0%/13.875% Gtd. Sr. Disc. Nts., 12/15/05(11) 465,000 337,125
- ------------------------------------------------------------------------------------------------------------------------------------
Hard Rock Hotel, Inc., 9.25% Sr. Sub. Nts., 4/1/05(5) 500,000 497,500
- ------------------------------------------------------------------------------------------------------------------------------------
Harris Chemical North America, Inc., 10.75% Sr. Sub. Nts., 10/15/03 100,000 104,050
- ------------------------------------------------------------------------------------------------------------------------------------
Hayes Wheels International, Inc., 11% Sr. Sub. Nts., 7/15/06 200,000 220,250
- ------------------------------------------------------------------------------------------------------------------------------------
Helicon Group LP/Helicon Capital Corp., 11% Sr. Sec. Nts.,
Series B, 11/1/03(8) 200,000 209,000
- ------------------------------------------------------------------------------------------------------------------------------------
Hovnanian K. Enterprises, Inc., 11.25% Gtd. Sub. Nts. 4/15/02 725,000 723,187
</TABLE>
25 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
Statement of Investments (Continued)
================================================================================
<TABLE>
<CAPTION>
Face Market Value
Amount(6) See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Non-Convertible Corporate Bonds and Notes (continued)
ICG Holdings, Inc.:
0%/12.50% Sr. Sec. Disc. Nts., 5/1/06(11) $ 470,000 $ 336,050
0%/13.50% Sr. Disc. Nts., 9/15/05(11) 240,000 190,800
- -----------------------------------------------------------------------------------------------------------------------------------
Imax Corp., 10% Sr. Nts., 3/1/01(8) 320,000 331,200
- -----------------------------------------------------------------------------------------------------------------------------------
Integrated Health Services, Inc., 9.50% Sr. Sub. Nts., 9/15/07 75,000 70,125
- -----------------------------------------------------------------------------------------------------------------------------------
Intermedia Communications, Inc., 8.50% Sr. Nts., Series B, 1/15/08 500,0000 496,250
- -----------------------------------------------------------------------------------------------------------------------------------
International Wire Group, Inc., 11.75% Sr. Sub. Nts.,
Series B, 6/1/05 500,000 515,000
- -----------------------------------------------------------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corp., 12.75% Sr. Sub. Nts., 2/1/03 500,000 492,500
- -----------------------------------------------------------------------------------------------------------------------------------
Kaufman & Broad Home Corp., 7.75% Sr. Nts., 10/15/04 400,000 402,000
- -----------------------------------------------------------------------------------------------------------------------------------
Key Plastics, Inc., 10.25% Sr. Sub. Nts., Series B, 3/15/07 1,000,000 960,000
- -----------------------------------------------------------------------------------------------------------------------------------
Lamar Advertising Co., 9.625% Sr. Sub. Nts., 12/1/06 100,000 106,500
- -----------------------------------------------------------------------------------------------------------------------------------
Laroche Industries, Inc., 9.50% Sr. Sub. Nts., Series B, 9/15/07 500,000 437,500
- -----------------------------------------------------------------------------------------------------------------------------------
Lear Corp., 9.50% Sub. Nts., 7/15/06 900,000 967,500
- -----------------------------------------------------------------------------------------------------------------------------------
McLeodUSA, Inc., 0%/10.50% Sr. Disc. Nts., 3/1/07(11) 500,000 365,000
- -----------------------------------------------------------------------------------------------------------------------------------
Mechala Group Jamaica Ltd., 12.75% Gtd. Sr. Sec. Sub. Nts.,
Series B, 12/30/99 38,000 27,075
- -----------------------------------------------------------------------------------------------------------------------------------
Millicom International Cellular SA, 0%/13.50%
Sr. Disc. Nts., 6/1/06(11) 750,000 476,250
- -----------------------------------------------------------------------------------------------------------------------------------
Navigator Gas Transport plc, 10.50% First Priority
Ship Mtg. Nts., 6/30/07(5) 500,000 475,000
- -----------------------------------------------------------------------------------------------------------------------------------
News America Holdings, Inc., 8.50% Sr. Nts., 2/15/05 1,000,000 1,139,102
- -----------------------------------------------------------------------------------------------------------------------------------
NL Industries, Inc., 11.75% Sr. Sec. Nts., 10/15/03 183,000 197,640
- -----------------------------------------------------------------------------------------------------------------------------------
NTL, Inc., 0%/9.75% Sr. Nts., 4/1/08(5)(11) 500,000 305,000
- -----------------------------------------------------------------------------------------------------------------------------------
Ocwen Financial Corp., 11.875% Nts., 10/1/03 500,000 490,000
- -----------------------------------------------------------------------------------------------------------------------------------
Omnipoint Corp.:
11.625% Sr. Nts., 8/15/06 300,000 208,500
11.625% Sr. Nts., Series A, 8/15/06 400,000 278,000
- -----------------------------------------------------------------------------------------------------------------------------------
ORBCOMM Global LP/ORBCOMM Capital Corp.,
14% Sr. Nts., 8/15/04 155,000 137,175
- -----------------------------------------------------------------------------------------------------------------------------------
Oxford Automotive, Inc., 10.125% Sr. Unsec. Sub. Nts., 6/15/07 900,000 877,500
- -----------------------------------------------------------------------------------------------------------------------------------
Polymer Group, Inc., 9% Sr. Sub. Nts., 7/1/07 1,000,000 960,000
- -----------------------------------------------------------------------------------------------------------------------------------
PSINet, Inc., 10% Sr. Unsec. Nts., Series B, 2/15/05 1,250,000 1,259,375
- -----------------------------------------------------------------------------------------------------------------------------------
Randall's Food Markets, Inc., 9.375% Sr. Sub. Nts., Series B, 7/1/07 1,315,000 1,361,025
- -----------------------------------------------------------------------------------------------------------------------------------
Revlon Consumer Products Corp., 8.625% Sr. Unsec.
Sub. Nts., 2/1/08 500,000 491,250
- -----------------------------------------------------------------------------------------------------------------------------------
Revlon Worldwide Corp., Zero Coupon Sr. Sec. Disc. Nts.,
Series B, 10.085%, 3/15/01(9) 1,000,000 770,000
- -----------------------------------------------------------------------------------------------------------------------------------
Rio Hotel & Casino, Inc., 9.50% Sr. Sub. Nts., 4/15/07 250,000 272,500
- -----------------------------------------------------------------------------------------------------------------------------------
Riverwood International Corp., 10.625% Sr. Unsec. Nts., 8/1/07 500,000 462,500
</TABLE>
26 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
================================================================================
<TABLE>
<CAPTION>
Face Market Value
Amount(6) See Note 1
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Non-Convertible Corporate Bonds and Notes (continued)
Rogers Cablesystems Ltd., 10% Second Priority Sr.
Sec. Debs., 12/1/07 $ 1,300,000 $ 1,426,750
- ------------------------------------------------------------------------------------------------------------------------------
Rural Cellular Corp., 9.625% Sr. Sub. Nts., Series B, 5/15/08 750,000 720,000
- ------------------------------------------------------------------------------------------------------------------------------
SD Warren Co., 12% Sr. Sub. Nts., Series B, 12/15/04 1,000,000 1,095,000
- ------------------------------------------------------------------------------------------------------------------------------
Showboat Marina Casino Partnership/Showboat Marina
Finance Corp., 13.50% First Mtg. Nts., Series B, 3/15/03 400,000 452,000
- ------------------------------------------------------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc.:
8.75% Sr. Sub. Nts., 12/15/07 500,000 492,500
9% Sr. Unsec. Sub.Nts., 7/15/07 450,000 450,000
- ------------------------------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc., 11.75% Sr.Unsec.Sub Nts., 8/15/06 1,055,000 917,850
- ------------------------------------------------------------------------------------------------------------------------------
Subic Power Corp.:
9.50% Sr. Sec. Nts., 12/28/08 362,069 303,439
9.50% Sr. Sec. Nts., 12/28/08(5) 72,413 60,688
- ------------------------------------------------------------------------------------------------------------------------------
Sun Healthcare Group, Inc.:
9.375% Sr. Sub.Nts., 5/1/08(5) 500,000 452,500
9.50% Sr. Sub. Nts., 7/1/07 525,000 480,375
- ------------------------------------------------------------------------------------------------------------------------------
TCI Satellite Entertainment, Inc., 10.875% Sr Sub. Nts., 2/15/07 195,000 181,350
- ------------------------------------------------------------------------------------------------------------------------------
TeleWest Communications plc, 0%/11% Sr. Disc Debs., 10/1/07(11) 1,000,000 825,000
- ------------------------------------------------------------------------------------------------------------------------------
TKR Cable I, Inc., 10.50% Sr. Debs., 10/30/07 1,400,000 1,541,324
- ------------------------------------------------------------------------------------------------------------------------------
Trans World Airlines, Inc., 11.50% Sr. Sec. Nts., 12/15/04 950,000 907,250
- ------------------------------------------------------------------------------------------------------------------------------
Transtar Holdings LP/Transtar Capital Corp.,
0%/13.375% Sr.Disc. Nts., Series B, 12/15/03(11) 1,000,000 875,000
- ------------------------------------------------------------------------------------------------------------------------------
TV Azteca SA de CV, 10.50% Sr. Nts., Series B, 2/15/07 200,000 140,000
- ------------------------------------------------------------------------------------------------------------------------------
Unifrax Investment Corp., 10.50% Sr.Nts., 11/1/03(3) 500,000 502,500
- ------------------------------------------------------------------------------------------------------------------------------
Young Broadcasting, Inc., 8.75% Sr. Sub. Debs, 6/15/07 900,000 897,750
-----------
Total Non-Convertible Corporate Bonds and Notes
(Cost $48,411,067) 46,795,343
==============================================================================================================================
Repurchase Agreements--6.4%
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with J.P.Morgan Securities, Inc., 5.40%,
dated 9/30/98, to be repurchased at $47,357,103 on 10/1/98,
collateralized by U.S.Treasury Bonds,6.25%--10.625%,
8/15/15--8/15/25, with a value of $44,994,718, and U.S. Treasury Nts.,
5.625%, 5/15/08, with a value of $3,762,459 (Cost $47,350,000) 47,350,000 47,350,000
- ------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $660,588,958) 99.3% 740,882,655
- ------------------------------------------------------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.7 5,465,129
--------- ------------
Net Assets 100.0% $746,347,784
========= ============
</TABLE>
27 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
Statement of Investments (Continued)
================================================================================
- --------------------------------------------------------------------------------
1. Non-income producing security.
2. A sufficient amount of liquid assets has been designated to cover outstanding
written call options, as follows:
<TABLE>
<CAPTION>
Shares Expiration Exercise Premium Market Value
Subject to Call Date Price Received See Note 1
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alaska Air Group, Inc. 10,000 10/98 $60.000 $ 65,948 $ 1,875
Alaska Air Group, Inc. 7,000 10/98 65.000 32,164 437
America Online, Inc. 10,000 10/98 100.000 95,947 140,000
America Online,Inc 7,500 10/98 135.000 30,711 4,687
America Online, Inc. 16,000 10/98 70.000 113,756 658,000
American Express Co. 7,500 10/98 115.000 50,711 469
Baker Hughes, Inc. 4,000 12/98 85.000 43,379 250
CBS Corp. 32,000 1/99 40.000 47,038 4,000
Cigna Corp. 9,000 10/98 73.625 41,159 563
Cisco Systems, Inc. 10,000 10/98 66.625 53,448 14,063
Cisco Systems, Inc. 19,800 10/98 53.375 71,179 259,875
Electronic Arts, Inc. 12,000 12/98 50.000 74,808 33,000
Federated Department Stores, Inc. 10,000 11/98 55.000 25,324 625
Fleet Financial Group, Inc. 5,400 10/98 95.000 22,112 675
General Motors Corp., Cl.H 14,000 12/98 60.000 73,078 875
Genzyme Corp.(General Division) 22,200 10/98 35.000 49,282 49,950
Hewlett-Packard Co. 12,000 11/98 85.000 47,638 1,500
Input/Output, Inc. 25,000 11/98 30.000 47,686 3,125
Intel Corp. 50,000 10/98 90.000 229,742 75,000
Intel Corp. 5,000 10/98 95.000 4,850 2,500
International Game Technology 40,000 10/98 30.000 88,797 5,000
Merrill Lynch & Co., Inc. 8,000 10/98 105.000 26,759 500
Morgan Stanley Dean Witter & Co. 12,000 1/99 90.000 38,639 750
Outback Steakhouse, Inc. 10,900 11/98 45.000 11,447 1,363
Petco Animal Supplies, Inc. 6,000 12/98 22.500 14,070 375
Rational Software Corp. 40,000 10/98 20.000 61,298 7,500
STMicroelectronics NV 2,500 10/98 95.000 17,424 156
STMicroelectronics NV 2,500 1/99 85.000 7,112 156
Santa Fe International Corp. 13,500 10/98 45.000 38,406 844
Symantec Corp. 33,400 10/98 25.000 199,391 2,088
Teradyne, Inc. 6,500 10/98 50.000 52,616 406
U S West Communications Group 15,200 10/98 40.000 28,993 91,200
United Healthcare Corp. 400 12/98 75.000 1,738 50
Xerox Corp. 12,000 10/98 120.000 37,139 750
Xilinx, Inc. 11,000 1/99 55.000 21,669 4,125
Xilinx, Inc. 10,000 12/98 45.000 26,574 10,000
Xilinx, Inc. 11,000 12/98 50.000 75,292 4,812
---------- ----------
$1,967,325 $1,381,544
========== ==========
</TABLE>
28 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
================================================================================
- --------------------------------------------------------------------------------
3. Identifies issues considered to be illiquid or restricted See Note 7 of Notes
to Financial Statements.
4. Interest or dividend is paid-in-kind.
5. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $6,531,248 or 0.88% of the Fund's net
assets as of September 30, 1998.
6. Face amount is reported in U.S. Dollars, except for those denoted in the
following currencies:
ARP--Argentine Peso GBP--British Pound Sterling
AUD--Australian Dollar ITL--Italian Lira
CAD--Canadian Dollar NOK--Norwegian Krone
DEM--German Mark NZD--New Zealand Dollar
DKK--Danish Krone PLZ--Polish Zloty
ESP--Spanish Peseta ZAR--South African Rand
FIM--Finnish Markka
7. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these Securities is typically more sensitive to changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows.
8. Represents the current interest rate for a variable rate security.
9. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
10. Represents the current interest rate for an increasing rate security.
11. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.
12. Units may be comprised of several components, such as debt and equity
and/or warrants to equity at some point in the future. For units which represent
debt securities, face amount disclosed represents total underlying principal.
See accompanying Notes to Financial Statements.
29 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
Statement of Assets and Liabilities September 30, 1998
================================================================================
<TABLE>
======================================================================================
<S> <C>
Assets
Investments, at value (cost $660,588,958)--see accompanying statement $740,882,655
- --------------------------------------------------------------------------------------
Cash 623,080
- --------------------------------------------------------------------------------------
Receivables:
Interest and dividends 6,576,673
Investments sold 1,627,220
Shares of beneficial interest sold 120,513
- --------------------------------------------------------------------------------------
Other 34,011
------------
Total assets 749,864,152
======================================================================================
Liabilities
Unrealized depreciation on forward foreign currency
exchange contracts--Note 5 1,910
- --------------------------------------------------------------------------------------
Options written, at value (premiums received $1,967,325)--
see accompanying statement--Note 6 1,381,544
- --------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 603,382
Shares of beneficial interest redeemed 534,580
Distribution and service plan fees 401,493
Trustees' fees--Note 1 202,842
Shareholder reports 189,802
Transfer and shareholder servicing agent fees 141,924
Custodian fees 36,107
Other 22,784
------------
Total liabilities 3,516,368
======================================================================================
Net Assets $746,347,784
============
======================================================================================
Composition of Net Assets
Paid-in capital $610,489,813
- --------------------------------------------------------------------------------------
Undistributed net investment income 2,205,024
- --------------------------------------------------------------------------------------
Accumulated net realized gain on investments
and foreign currency transactions 52,757,152
- --------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation
of assets and liabilities denominated in foreign currencies 80,895,795
------------
Net assets $746,347,784
============
</TABLE>
30 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
================================================================================
<TABLE>
==============================================================================================
Net Asset Value Per Share
<S> <C>
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $624,894,508 and 45,631,441 shares of beneficial interest outstanding) $13.69
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $14.53
- ----------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $73,036,251
and 5,380,966 shares of beneficial interest outstanding) $13.57
- ----------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $48,417,025
and 3,558,635 shares of beneficial interest outstanding) $13.61
</TABLE>
See accompanying Notes to Financial Statements.
31 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
Statement of Operations For the Year Ended September 30, 1998
================================================================================
<TABLE>
<S> <C>
==========================================================================================================
Investment Income
Interest $ 30,123,773
- ----------------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $132,309) 6,381,938
--------------
Total income 36,505,711
==========================================================================================================
Expenses
Management fees--Note 4 5,796,545
- ----------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 1,166,276
Class B 744,275
Class C 523,274
- ----------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 1,033,666
- ----------------------------------------------------------------------------------------------------------
Shareholder reports 364,676
- ----------------------------------------------------------------------------------------------------------
Custodian fees and expenses 121,573
- ----------------------------------------------------------------------------------------------------------
Legal, auditing and other professional fees 90,640
- ----------------------------------------------------------------------------------------------------------
Insurance expenses 16,305
- ----------------------------------------------------------------------------------------------------------
Registration and filing fees 17,971
- ----------------------------------------------------------------------------------------------------------
Other 92,258
----------
Total expenses 9,967,459
==========================================================================================================
Net Investment Income 26,538,252
==========================================================================================================
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments (including premiums on options exercised) 64,859,859
Closing and expiration of option contracts written--Note 6 2,458,718
Foreign currency transactions (2,055,189)
-----------
Net realized gain 65,263,388
- ----------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments (123,411,754)
Translation of assets and liabilities denominated in foreign currencies (5,181,795)
-------------
Net change (128,593,549)
-------------
Net realized and unrealized loss (63,330,161)
==========================================================================================================
Net Decrease in Net Assets Resulting from Operations $(36,791,909)
=============
</TABLE>
See accompanying Notes to Financial Statements.
32 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
Statements of Changes in Net Assets
================================================================================
<TABLE>
<CAPTION>
Year Ended September 30,
1998 1997
====================================================================================================================
<S> <C> <C>
Operations
Net investment income $ 26,538,252 $ 14,511,782
- --------------------------------------------------------------------------------------------------------------------
Net realized gain 65,263,388 54,497,060
- --------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (128,593,549) 37,676,936
Net increase (decrease) in net assets Resulting from operations (36,791,909) 106,685,778
====================================================================================================================
Dividends and Distributions to Shareholders
Dividends from net investment income:
Class A (22,551,335) (12,706,372)
Class B (1,840,926) (600,770)
Class C (1,269,307) (936,710)
- --------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (55,838,257) (14,621,660)
Class B (5,628,562) (435,849)
Class C (4,059,155) (1,359,035)
====================================================================================================================
Beneficial Interest Transactions
Net increase in net assets resulting from
beneficial interest transactions--Note 2:
Class A 20,258,200 382,443,207
Class B 17,065,629 56,924,508
Class C 7,078,031 23,090,531
====================================================================================================================
Net Assets
Total increase (decrease) (83,577,591) 538,483,628
Beginning of period 829,925,375 291,441,747
---------- -----------
End of period (including undistributed net investment
income of $2,205,024 and $1,488,298, respectively) $ 746,347,784 $829,925,375
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
33 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
Financial Highlights
================================================================================
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------
Year Ended September 30, Year Ended December 31,
1998 1997 1996(2) 1995 1994 1993
===================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $16.17 $14.09 $13.07 $11.52 $13.05 $11.63
- -------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .51 .50 .49 .52 .54 .44
Net realized and unrealized gain (loss) (1.22) 2.88 .96 2.08 (.75) 1.43
------ ------ ------ ------ ------ -----
Total income (loss) from investment
operations (.71) 3.38 1.45 2.60 (.21) 1.87
- -------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.49) (.51) (.43) (.49) (.53) (.44)
Distributions from net realized gain (1.28) (.79) (.56) -- (.79) (.01)
------ ------ ------ ------ ------ -----
Total dividends and distributions
to shareholders (1.77) (1.30) (.43) (1.05) (1.32) (.45)
- -------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.69 $16.17 $14.09 $13.07 $11.52 $13.05
====== ====== ====== ====== ====== ======
===================================================================================================================
Total Return, at Net Asset Value(4) (4.71)% 25.46% 11.22% 22.79% (1.59)% 16.30%
===================================================================================================================
Ratios/Supplemental Data
Net assets,end of period
(in thousands) $624,895 $712,470 $264,359 $251,353 $237,771 $277,914
- -------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $699,665 $395,436 $256,765 $249,660 $260,767 $272,303
- -------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 3.34% 3.30% 4.73%(5) 3.97% 4.10% 3.58%
Expenses 1.08% 1.16% 1.21%(5) 1.15% 1.09% 1.14%
- -------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(6) 58.5% 51.0% 31.7% 28.5% 31.5% 32.7%
</TABLE>
1. For the period from December 1, 1993 (inception of offering) to December
31, 1993.
2. For the nine months ended September 30, 1996. The Fund changed its fiscal
year end from December 31 to September 30.
3. For the period from August 29, 1995 (inception of offering) to December
31, 1995.
4. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
34 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
================================================================================
<TABLE>
<CAPTION>
Class B Class C
- -------------------------------------------------------- ---------------------------------------------------------------------
Period
Ended
Year Ended September 30, Dec. 31, Year Ended September 30, Year Ended December 31,
1998 1997 1996(2) 1995(3) 1998 1997 1996(2) 1995 1994 1993(1)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$16.04 $14.01 $13.03 $13.28 $16.07 $14.02 $13.01 $11.49 $13.05 $12.86
- ------------------------------------------------------------------------------------------------------------------------------------
.38 .45 .41 .17 .38 .41 .40 .40 .44 (.97)
(1.20) 2.78 .93 .41 (1.20) 2.83 .96 2.07 (.77) 1.29
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
(.82) 3.23 1.34 .58 (.82) 3.24 1.36 2.47 (.33) .32
- ------------------------------------------------------------------------------------------------------------------------------------
(.37) (.41) (.36) (.27) (.36) (.40) (.35) (.39) (.44) (.12)
(1.28) (.79) -- (.56) (1.28) (.79) -- (.56) (.79) (.01)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
(1.65) (1.20) (.36) (.83) (1.64) (1.19) (.35) (.95) (1.23) (.13)
- ------------------------------------------------------------------------------------------------------------------------------------
$13.57 $16.04 $14.01 $13.03 $13.61 $16.07 $14.02 $13.01 $11.49 $13.05
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
====================================================================================================================================
(5.49)% 24.34% 10.37% 4.44% (5.43)% 24.42% 10.55% 21.69% (2.50)% 2.51%
====================================================================================================================================
$73,036 $67,916 $5,996 $1,265 $48,417 $49,539 $21,087 $15,405 $9,182 $396
- ------------------------------------------------------------------------------------------------------------------------------------
$74,442 $25,113 $3,546 $ 520 $52,325 $33,813 $17,898 $11,827 $5,601 $194
- ------------------------------------------------------------------------------------------------------------------------------------
2.53% 2.26% 3.69% (5) 2.62% (5) 2.51% 2.61% 3.84%(5) 3.08% 3.30% 2.19%(3)
1.91% 1.96% 2.12% (5) 2.27% (5) 1.91% 1.97% 2.07%(5) 1.99% 2.00% 2.50%(5)
- ------------------------------------------------------------------------------------------------------------------------------------
58.5% 51.0% 31.7% 28.5% 58.5% 51.0% 31.7% 28.5% 31.5% 32.7%
</TABLE>
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
September 30, 1998, were $446,088,367 and $426,392,607, respectively.
See accompanying Notes to Financial Statements.
35 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
Notes to Financial Statements
================================================================================
================================================================================
1. Significant Accounting Policies
Oppenheimer Multiple Strategies 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 high
total investment return consistent with preservation of principal. 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 that class and exclusive voting
rights with respect to matters affecting that class. Class B shares will
automatically convert to Class A shares six years after the date of purchase.
The following is a summary of significant accounting policies consistently
followed by the Fund.
- --------------------------------------------------------------------------------
Investment Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term "non-
money market" debt securities are valued by a portfolio pricing service approved
by the Board of Trustees. Such securities which cannot be valued by an approved
portfolio pricing service are valued using dealer-supplied valuations provided
the Manager is satisfied that the firm rendering the quotes is reliable and that
the quotes reflect current market value, or are valued under consistently
applied procedures established by the Board of Trustees to determine fair value
in good faith. Short-term "money market type" debt securities having a remaining
maturity of 60 days or less are valued at cost (or last determined market value)
adjusted for amortization to maturity of any premium or discount. Forward
foreign currency exchange contracts are valued based on the closing prices of
the forward currency contract rates in the London foreign exchange markets on a
daily basis as provided by a reliable bank or dealer. Options are valued based
upon the last sale price on the principal exchange on which the option is traded
or, in the absence of any transactions that day, the value is based upon the
last sale price on the prior trading date if it is within the spread between the
closing bid and asked prices. If the last sale price is outside the spread, the
closing bid is used.
- --------------------------------------------------------------------------------
Foreign Currency Translation. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of foreign securities and investment income are
translated at the rate of exchange prevailing on the respective dates of such
transactions.
36 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
================================================================================
================================================================================
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, Gains and Losses. Income, expenses (other than
those attributable to a specific class), 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.
- --------------------------------------------------------------------------------
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
September 30, 1998, a credit of $64,022 was made for the Fund's projected
benefit obligations, and payments of $9,051 were made to retired Trustees,
resulting in an accumulated liability of $189,122 as of September 30, 1998.
The Board of Trustees has adopted a deferred compensation plan for
independent Trustees that enables Trustees to elect to defer receipt of all or a
portion of annual fees they are entitled to receive from the Fund. Under the
plan, the compensation deferred is periodically adjusted as though an equivalent
amount had been invested for the Trustee in shares of one or more Oppenheimer
funds selected by the Trustee. The amount paid to the Trustee under the plan
will be determined based upon the performance of the selected funds. Deferral of
Trustees' fees under the plan will not affect the net assets of the Fund, and
will not materially affect the Fund's assets, liabilities or net income per
share.
37 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
Notes to Financial Statements (Continued)
================================================================================
================================================================================
1. Significant Accounting Policies (continued)
Distributions to Shareholders. Dividends and distributions to shareholders are
recorded on the ex-dividend date.
- --------------------------------------------------------------------------------
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
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
its ultimate characterization for federal income tax purposes. Also, due to
timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the fiscal year in which the income or realized gain
was recorded by the Fund.
The Fund adjusts the classification of distributions to shareholders
to reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended September 30, 1998, amounts have been reclassified to reflect an
increase in paid-in capital of $591,836, a decrease in undistributed net
investment income of $159,958, and a decrease in accumulated net realized gain
on investments of $431,878.
- --------------------------------------------------------------------------------
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 options written and unrealized
appreciation and depreciation are determined on an identified cost basis, which
is the same basis used for federal income tax purposes. Dividends-in-kind are
recognized as income on the ex-dividend date, at the current market value of the
underlying security. Interest on payment-in-kind debt instruments is accrued as
income at the coupon rate and a market adjustment is made periodically.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
38 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
================================================================================
================================================================================
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of beneficial
interest for each class. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Year Ended September 30, 1998 Year Ended September 30, 1997
------------------------------- ---------------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 2,733,445 $ 41,795,382 2,219,229 $ 32,694,783
Dividends reinvested 4,959,787 71,625,634 1,707,937 24,639,919
Issued in connection with
the acquisition of:
Oppenheimer Fund--Note 8 -- -- 21,161,450 321,019,207
Oppenheimer Strategic
Income & Growth Fund--Note 8 -- -- 3,530,859 53,563,143
Redeemed (6,121,146) (93,162,816) (3,316,554) (49,473,845)
---------- ------------ ----------- -------------
Net increase 1,572,086 $ 20,258,200 25,302,921 $382,443,207
========== ============ =========== =============
- -------------------------------------------------------------------------------------------------
Class B:
Sold 1,763,004 $ 26,611,307 1,162,177 $ 17,259,750
Dividends reinvested 459,723 6,577,938 60,758 888,166
Issued in connection with
the acquisition of:
Oppenheimer Fund--Note 8 -- -- 233,975 3,521,330
Oppenheimer Strategic
Income & Growth Fund--Note 8 -- -- 2,758,332 41,512,900
Redeemed (1,076,399) (16,123,616) (408,734) (6,257,638)
---------- ------------ ----------- -------------
Net increase 1,146,328 $ 17,065,629 3,806,508 $ 56,924,508
========== ============ =========== =============
- -------------------------------------------------------------------------------------------------
Class C:
Sold 981,223 $ 14,888,603 1,211,432 $ 17,627,875
Dividends reinvested 345,067 4,948,258 151,633 2,159,025
Issued in connection with
the acquisition of:
Oppenheimer Fund--Note 8 -- -- 350,467 5,285,049
Oppenheimer Strategic
Income & Growth Fund--Note 8 -- -- 246,193 3,712,604
Redeemed (849,738) (12,758,830) (381,455) (5,694,022)
---------- ------------ ----------- -------------
Net increase 476,552 7,078,031 1,578,270 $ 23,090,531
========== ============ =========== =============
=================================================================================================
</TABLE>
3. Unrealized Gains and Losses on Investments
As of September 30, 1998, net unrealized appreciation on investments and options
written of $80,879,478 was composed of gross appreciation of $130,299,440,
and gross depreciation of $49,419,962.
39 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
Notes to Financial Statements (Continued)
================================================================================
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management fees paid to the Manager are 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%
of the next $200 million, 0.66% of the next $200 million, 0.60% of the next $700
million, and 0.58% of average annual net assets in excess of $1.5 billion. The
agreement was amended per resolutions adopted by the Board of Trustees on
December 11, 1997 to add the final breakpoint of 0.58% on average annual net
assets in excess of $1.5 billion.
For the year ended September 30, 1998, commissions (sales charges
paid by investors) on sales of Class A shares totaled $910,294, of which
$288,141 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 $878,710 and $134,394, respectively, of which $47,196
and $3,702, respectively, was paid to an affiliated broker/dealer. During the
year ended September 30, 1998, OFDI received contingent deferred sales charges
of $164,466 and $11,263, 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 other Oppenheimer
funds. OFS's total costs of providing such services are allocated ratably to
these funds.
The Fund has adopted a Service Plan for Class A shares to reimburse
OFDI for a portion of its costs incurred in connection with the personal service
and maintenance of shareholder accounts that hold Class A shares. Reimbursement
is made quarterly at an annual rate that may not exceed 0.25% of the average
annual net assets of Class A shares of the Fund. OFDI uses the service fee to
reimburse brokers, dealers, banks and other financial institutions quarterly for
providing personal service and maintenance of accounts of their customers that
hold Class A shares. During the year ended September 30, 1998, OFDI paid
$83,283 to an affiliated broker/dealer as reimbursement for Class A personal
service and maintenance expenses.
The Fund has adopted Distribution and Service Plans for Class B and
Class C shares to compensate OFDI for its costs in distributing Class B and
Class C shares and servicing accounts. Under the Plans, the Fund pays OFDI an
annual asset-based sales charge of 0.75% per year on Class B and Class C shares
for its services rendered in distributing Class B and Class C shares. OFDI also
receives a service fee of 0.25% per year to compensate dealers for providing
personal services for accounts that hold Class B and C shares. Each fee is
computed on the average annual net assets of Class B or Class C shares,
determined as of the close of each regular business day. During the
40 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
================================================================================
================================================================================
year ended September 30, 1998, OFDI paid $7,327 and $14,113, respectively, to an
affiliated broker/dealer as compensation for Class B and Class C personal
service and maintenance expenses and retained $618,987 and $227,791,
respectively, as compensation for Class B and Class C sales commissions and
service fee advances, as well as financing costs. If either Plan is terminated
by the Fund, the Board of Trustees may allow the Fund to continue payments of
the asset-based sales charge to OFDI for distributing shares before the Plan was
terminated. As of September 30, 1998, OFDI had incurred excess distribution and
servicing costs of $2,811,387 for Class B and $576,876 for Class C.
- --------------------------------------------------------------------------------
5. Forward Contracts
A forward foreign currency exchange contract (forward contract) is a commitment
to purchase or sell a foreign currency at a future date, at a negotiated rate.
The Fund uses forward contracts to seek to manage foreign currency
risks. They may also be used to tactically shift portfolio currency risk. The
Fund generally enters into forward contracts as a hedge upon the purchase or
sale of a security denominated in a foreign currency. In addition, the Fund may
enter into such contracts as a hedge against changes in foreign currency
exchange rates on portfolio positions.
Forward contracts are valued based on the closing prices of the
forward currency contract rates in the London foreign exchange markets on a
daily basis as provided by a reliable bank or dealer. The Fund will realize a
gain or loss upon the closing or settlement of the forward transaction.
Securities held in segregated accounts to cover net exposure on
outstanding forward contracts are noted in the Statement of Investments where
applicable. Unrealized appreciation or depreciation on forward contracts is
reported in the Statement of Assets and Liabilities. Realized gains and losses
are reported with all other foreign currency gains and losses in the Fund's
Statement of Operations.
Risks include the potential inability of the counterparty to meet the
terms of the contract and unanticipated movements in the value of a foreign
currency relative to the U.S.dollar.
As of September 30, 1998, the Fund had outstanding forward contracts as follows:
<TABLE>
<CAPTION>
Contract Valuation as of Unrealized
Expiration Date Amount (000s) September 30, 1998 Depreciation
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Contracts to Sell
Australian Dollar (AUD) 10/2/98 239 AUD $142,095 $1,910
</TABLE>
41 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
Notes to Financial Statements (Continued)
================================================================================
================================================================================
6. Option Activity
The Fund may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.
The Fund generally purchases put options or writes covered call
options to hedge against adverse movements in the value of portfolio
holdings. When an option is written, the Fund receives a premium and becomes
obligated to sell or purchase the underlying security at a fixed price, upon
exercise of the option.
Options are valued daily based upon the last sale price on the
principal exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call options are noted
in the Statement of Investments where applicable. Shares subject to call,
expiration date, exercise price, premium received and market value are detailed
in a footnote to the Statement of Investments. Options written are reported as a
liability in the Statement of Assets and Liabilities. Gains and losses are
reported in the Statement of Operations.
The risk in writing a call option is that the Fund gives up the
opportunity for profit if the market price of the security increases and the
option is exercised. The risk in writing a put option is that the Fund may incur
a loss if the market price of the security decreases and the option is
exercised. The risk in buying an option is that the Fund pays a premium whether
or not the option is exercised. The Fund also has the additional risk of not
being able to enter into a closing transaction if a liquid secondary market does
not exist.
Written option activity for the year ended September 30, 1998 was as follows:
<TABLE>
<CAPTION>
Call Options
-------------------------------
Number Amount
of Options of Premiums
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Options outstanding at September 30, 1997 10,978 $ 2,931,225
Options written 14,372 5,747,199
Options closed or expired (12,063) (4,462,852)
Options exercised (8,054) (2,248,247)
------- ------------
Options outstanding at September 30, 1998 5,233 $ 1,967,325
======= ============
=================================================================================================
</TABLE>
7. Illiquid and Restricted Securities
As of September 30, 1998, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933, may
have contractual restrictions on resale, and are valued under methods approved
by the Board of Trustees as reflecting fair value.
42 Oppenheimer Multiple Strategies Fund
<PAGE>
================================================================================
================================================================================
================================================================================
A security may be considered illiquid if it lacks a readily available market or
if its valuation has not changed for a certain period of time. The Fund intends
to invest no more than 10% of its net assets (determined at the time of purchase
and reviewed periodically) in illiquid or restricted securities. Certain
restricted securities, eligible for resale to qualified institutional investors,
are not subject to that limit. The aggregate value of illiquid or restricted
securities subject to this limitation as of September 30, 1998 was $3,332,413,
which represents 0.45% of the Fund's net assets.
================================================================================
8. Acquisition of Oppenheimer Fund and Oppenheimer Strategic Income & Growth
Fund
On June 20, 1997, the Fund acquired all the net assets of Oppenheimer Fund,
pursuant to an agreement and plan of reorganization approved by the Oppenheimer
Fund shareholders on October 10, 1996. The Fund issued 21,161,450, 233,975
and 350,467 shares of beneficial interest for Class A, Class B, and Class C,
respectively, valued at $321,019,207, $3,521,330, and $5,285,049, in
exchange for the net assets, resulting in combined Class A net assets of
$675,300,917, Class B net assets of $60,510,384 and Class C net assets of
$45,364,088 on June 20, 1997. The net assets acquired included net unrealized
appreciation of $114,271,242. The exchange qualified as a tax-free
reorganization for federal income tax purposes.
On June 20, 1997, the Fund acquired all the net assets of
Oppenheimer Strategic Income & Growth Fund, pursuant to an agreement and plan of
reorganization approved by the Oppenheimer Strategic Income & Growth Fund
shareholders on March 10, 1997. The Fund issued 3,530,859, 2,758,332 and
246,193 shares of beneficial interest for Class A, Class B, and Class C,
respectively, valued at $53,563,143, $41,512,900, and $3,712,604, in
exchange for the net assets, resulting in combined Class A net assets of
$675,300,917, Class B net assets of $60,510,384 and Class C net assets of
$45,364,088 on June 20,1997. The net assets acquired included net unrealized
appreciation of $8,093,961. The exchange qualified as a tax-free reorganization
for federal income tax purposes.
================================================================================
9. Bank Borrowings
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.
The Fund had no borrowings outstanding during the year ended
September 30, 1998.
<PAGE>
<PAGE>
A-6
Appendix A
- ------------------------------------------------------------------------------
RATINGS DEFINITIONS
- ------------------------------------------------------------------------------
Below are summaries of the rating definitions used by the
nationally-recognized rating agencies listed below. Those ratings represent
the opinion of the agency as to the credit quality of issues that they rate.
The summaries below are based upon publicly-available information provided by
the rating organizations.
Moody's Investors Service, Inc.
- ------------------------------------------------------------------------------
Long-Term (Taxable) Bond Ratings
Aaa: Bonds rated Aaa are judged to be the best quality. They carry the
smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure. While
the various protective elements are likely to change, the changes that can be
expected are most unlikely to impair the fundamentally strong position of
such issues.
Aa: Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as with Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
those of Aaa securities.
A: Bonds rated A possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds rated Baa are considered medium grade obligations; that is, they
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment characteristics
and have speculative characteristics as well.
Ba: Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered well-assured. Often the protection of interest and
principal payments may be very moderate and not well safeguarded during both
good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B: Bonds rated B generally lack characteristics of desirable investment.
Assurance of interest and principal payments or of maintenance of other terms
of the contract over any long period of time may be small.
Caa: Bonds rated Caa are of poor standing and may be in default or there may
be present elements of danger with respect to principal or interest.
Ca: Bonds rated Ca represent obligations which are speculative in a high
degree and are often in default or have other marked shortcomings.
C: Bonds rated C are the lowest class of rated bonds and can be regarded as
having extremely poor prospects of ever attaining any real investment
standing.
Moody's applies numerical modifiers 1, 2, and 3 in each generic rating
classification from Aa through Caa. The modifier "1" indicates that the
obligation ranks in the higher end of its category; the modifier "2"
indicates a mid-range ranking and the modifier "3" indicates a ranking in the
lower end of the category.
Short-Term Ratings - Taxable Debt
These ratings apply to the ability of issuers to repay punctually senior debt
obligations having an original maturity not exceeding one year:
Prime-1: Issuer has a superior ability for repayment of senior short-term
debt obligations.
Prime-2: Issuer has a strong ability for repayment of senior short-term debt
obligations. Earnings trends and coverage, while sound, may be subject to
variation. Capitalization characteristics, while appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Prime-3: Issuer has an acceptable ability for repayment of senior short-term
obligations. The effect of industry characteristics and market compositions
may be more pronounced. Variability in earnings and profitability may result
in changes in the level of debt protection measurements and may require
relatively high financial leverage. Adequate alternate liquidity is
maintained.
Not Prime: Issuer does not fall within any Prime rating category.
Standard & Poor's Rating Services
- ------------------------------------------------------------------------------
Long-Term Credit Ratings
AAA: Bonds rated "AAA" have the highest rating assigned by Standard & Poor's.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA: Bonds rated "AA" differ from the highest rated obligations only in small
degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A: Bonds rated "A" are somewhat more susceptible to adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its
financial commitment on the obligation is still strong.
BBB: Bonds rated BBB exhibit adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity of the obligor to meet its financial commitment on the
obligation.
Bonds rated BB, B, CCC, CC and C are regarded as having significant
speculative characteristics. BB indicates the least degree of speculation and
C the highest. While such obligations will likely have some quality and
protective characteristics, these may be outweighed by large uncertainties or
major exposures to adverse conditions.
BB: Bonds rated BB are less vulnerable to nonpayment than other speculative
issues. However, these face major uncertainties or exposure to adverse
business, financial, or economic conditions which could lead to the obligor's
inadequate capacity to meet its financial commitment on the obligation.
B: A bond rated B is more vulnerable to nonpayment than an obligation rated
BB, but the obligor currently has the capacity to meet its financial
commitment on the obligation.
CCC: A bond rated CCC is currently vulnerable to nonpayment, and is dependent
upon favorable business, financial, and economic conditions for the obligor
to meet its financial commitment on the obligation. In the event of adverse
business, financial or economic conditions, the obligor is not likely to have
the capacity to meet its financial commitment on the obligation.
CC: An obligation rated CC is currently highly vulnerable to nonpayment.
C: The C rating may used where a bankruptcy petition has been filed or
similar action has been taken, but payments on this obligation are being
continued.
D: Bonds rated D are in default. Payments on the obligation are not being
made on the date due.
The ratings from AA to CCC may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the major rating categories.
The "r" symbol is attached to the ratings of instruments with significant
noncredit risks.
Short-Term Issue Credit Ratings
A-1: Rated in the highest category. The obligor's capacity to meet its
financial commitment on the obligation is strong. Within this category, a
plus (+) sign designation indicates the issuer's capacity to meet its
financial obligation is very strong.
A-2: Obligation is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in higher
rating categories. However, the obligor's capacity to meet its financial
commitment on the obligation is satisfactory.
A-3: Exhibits adequate protection parameters. However, adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity of the obligor to meet its financial commitment on the obligation.
B: Regarded as having significant speculative characteristics. The obligor
currently has the capacity to meet its financial commitment on the
obligation. However, it faces major ongoing uncertainties which could lead to
the obligor's inadequate capacity to meet its financial commitment on the
obligation.
C: Currently vulnerable to nonpayment and is dependent upon favorable
business, financial, and economic conditions for the obligor to meet its
financial commitment on the obligation.
D: In payment default. Payments on the obligation have not been made on the
due date. The rating may also be used if a bankruptcy petition has been filed
or similar actions jeopardize payments on the obligation.
Fitch IBCA, Inc.
- ------------------------------------------------------------------------------
International Long-Term Credit Ratings
Investment Grade:
AAA: Highest Credit Quality. "AAA" ratings denote the lowest expectation of
credit risk. They are assigned only in the case of exceptionally strong
capacity for timely payment of financial commitments. This capacity is highly
unlikely to be adversely affected by foreseeable events.
AA: Very High Credit Quality. "AA" ratings denote a very low expectation of
credit risk. They indicate a very strong capacity for timely payment of
financial commitments. This capacity is not significantly vulnerable to
foreseeable events.
A: High Credit Quality. "A" ratings denote a low expectation of credit risk.
The capacity for timely payment of financial commitments is considered
strong. This capacity may, nevertheless, be more vulnerable to changes in
circumstances or in economic conditions than is the case for higher ratings.
BBB: Good Credit Quality. "BBB" ratings indicate that there is currently a
low expectation of credit risk. The capacity for timely payment of financial
commitments is considered adequate, but adverse changes in circumstances and
in economic conditions are more likely to impair this capacity. This is the
lowest investment-grade category.
Speculative Grade:
BB: Speculative. "BB" ratings indicate that there is a possibility of credit
risk developing, particularly as the result of adverse economic change over
time. However, business or financial alternatives may be available to allow
financial commitments to be met.
B: Highly Speculative. "B" ratings indicate that significant credit risk is
present, but a limited margin of safety remains. Financial commitments are
currently being met. However, capacity for continued payment is contingent
upon a sustained, favorable business and economic environment.
CCC, CC C: High Default Risk. Default is a real possibility. Capacity for
meeting financial commitments is solely reliant upon sustained, favorable
business or economic developments. A "CC" rating indicates that default of
some kind appears probable. "C" ratings signal imminent default.
DDD, DD, and D: Default. Securities are not meeting current obligations and
are extremely speculative. "DDD" designates the highest potential for
recovery of amounts outstanding on any securities involved.
Plus (+) and minus (-) signs may be appended to a rating symbol to denote
relative status within the rating category. Plus and minus signs are not
added to the "AAA" category or to categories below "CCC."
International Short-Term Credit Ratings
F1: Highest credit quality. Strongest capacity for timely payment. May have
an added "+" to denote exceptionally strong credit feature.
F2: Good credit quality. A satisfactory capacity for timely payment, but
the margin of safety is not as great as in higher ratings.
F3: Fair credit quality. Capacity for timely payment is adequate. However,
near-term adverse changes could result in a reduction to non-investment grade.
B: Speculative. Minimal capacity for timely payment, plus vulnerability to
near-term adverse changes in financial and economic conditions.
C: High default risk. Default is a real possibility, Capacity for
meeting financial commitments is solely reliant upon a sustained, favorable
business and economic environment.
D: Default. Denotes actual or imminent payment default.
Duff & Phelps Credit Rating Co. Ratings
- ------------------------------------------------------------------------------
Long-Term Debt and Preferred Stock
AAA: Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA+, AA, AA-: High credit quality. Protection factors are strong. Risk is
modest but may vary slightly from time to time because of economic conditions.
A+, A & A-: Protection factors are average but adequate. However, risk
factors are more variable in periods of greater economic stress.
BBB+, BBB & BBB-: Below average protection factors but still considered
sufficient for prudent investment. Considerable variability in risk during
economic cycles.
BB+, BB & BB-: Below investment grade but deemed likely to meet obligations
when due. Present or prospective financial protection factors fluctuate
according to industry conditions. Overall quality may move up or down
frequently within the category.
B+, B & B-: Below investment grade and possessing risk that obligations will
not be met when due. Financial protection factors will fluctuate widely
according to economic cycles, industry conditions and/or company fortunes.
Potential exists for frequent changes in the rating within this category or
into a higher of lower rating grade.
CCC: Well below investment-grade securities. Considerable uncertainty
exists as to timely payment of principal, interest or preferred dividends.
Protection factors are narrow and risk can be substantial with unfavorable
economic/industry conditions, and/or with unfavorable company developments.
DD: Defaulted debt obligations. Issuer failed to meet scheduled principal
and/or interest payments.
DP: Preferred stock with dividend arrearages.
Short-Term Debt:
High Grade:
- ------------------------------------------------------------------------------
D-1+: Highest certainty of timely payment. Safety is just below risk-free
U.S. Treasury short-term debt.
D-1: Very high certainty of timely payment. Risk factors are minor.
D-1-: High certainty of timely payment. Risk factors are very small.
Good Grade:
D-2: Good certainty of timely payment. Risk factors are small.
Satisfactory Grade:
D-3: Satisfactory liquidity and other protection factors qualify issues as to
investment grade. Risk factors are larger and subject to more variation.
Nevertheless, timely payment is expected.
Non-Investment Grade:
D-4: Speculative investment characteristics. Liquidity is not sufficient to
insure against disruption in debt service.
Default:
D-5: Issuer failed to meet scheduled principal and/or interest payments.
<PAGE>
B-1
Appendix B
- ------------------------------------------------------------------------------
Industry Classifications
- ------------------------------------------------------------------------------
Aerospace/Defense Food and Drug Retailers
Air Transportation Gas Utilities
Asset-Backed Health Care/Drugs
Auto Parts and Equipment Health Care/Supplies & Services
Automotive Homebuilders/Real Estate
Bank Holding Companies Hotel/Gaming
Banks Industrial Services
Beverages Information Technology
Broadcasting Insurance
Broker-Dealers Leasing & Factoring
Building Materials Leisure
Cable Television Manufacturing
Chemicals Metals/Mining
Commercial Finance Nondurable Household Goods
Communication Equipment Office Equipment
Computer Hardware Oil - Domestic
Computer Software Oil - International
Conglomerates Paper
Consumer Finance Photography
Consumer Services Publishing
Containers Railroads
Convenience Stores Restaurants
Department Stores Savings & Loans
Diversified Financial Shipping
Diversified Media Special Purpose Financial
Drug Wholesalers Specialty Printing
Durable Household Goods Specialty Retailing
Education Steel
Electric Utilities Telecommunications - Technology
Electrical Equipment Telephone - Utility
Electronics Textile/Apparel
Energy Services & Producers Tobacco
Entertainment/Film Trucks and Parts
Environmental Wireless Services
Food
<PAGE>
C-11
Appendix C
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OppenheimerFunds Special Sales Charge Arrangements and Waivers
- ------------------------------------------------------------------------------
In certain cases, the initial sales charge that applies to purchases of
Class A shares of the Oppenheimer funds or the contingent deferred sales
charge that may apply to Class A, Class B or Class C shares may be waived.
That is because of the economies of sales efforts realized by the Distributor
or the dealers or other financial institutions offering those shares to
certain classes of investors or in certain transactions.
Not all waivers apply to all funds. For example, waivers relating to
Retirement Plans do not apply to Oppenheimer municipal funds, because shares
of those funds are not available for purchase by or on behalf of retirement
plans. Other waivers apply only to shareholders of certain funds that were
merged into or became Oppenheimer funds.
For the purposes of some of the waivers described below and in the
Prospectus and Statement of Additional Information of the applicable
Oppenheimer funds, the term "Retirement Plan" refers to the following types
of plans:
(1) plans qualified under Sections 401(a) or 401(k) of the Internal
Revenue Code,
(2) non-qualified deferred compensation plans,
(3) employee benefit plans1
(4) Group Retirement Plans2
(5) 403(b)(7) custodial plan accounts
(6) SEP-IRAs, SARSEPs or SIMPLE plans
The interpretation of these provisions as to the applicability of a
waiver in a particular case is determined solely by the Distributor or the
Transfer Agent of the fund. These waivers and special arrangements may be
amended or terminated at any time by the applicable Fund and/or the
Distributor. Waivers that apply at the time shares are redeemed must be
requested by the shareholder and/or dealer in the redemption request.
- --------------
1. An "employee benefit plan" means any plan or arrangement, whether or
not it is "qualified" under the Internal Revenue Code, under which Class A
shares of an Oppenheimer fund or funds are purchased by a fiduciary or
other administrator for the account of participants who are employees of a
single employer or of affiliated employers. These may include, for
example, medical savings accounts, payroll deduction plans or similar
plans. The fund accounts must be registered in the name of the fiduciary
or administrator purchasing the shares for the benefit of participants in
the plan.
2. The term "Group Retirement Plan" means any qualified or non-qualified
retirement plan for employees of a corporation or 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 (or who are eligible to participate in) the
plan purchase Class A shares of an Oppenheimer fund or funds through a
single investment dealer, broker or other financial institution designated
by the group. Such plans include 457 plans, SEP-IRAs, SARSEPs, SIMPLE
plans and 403(b) plans other than plans for public school employees. The
term "Group Retirement Plan" also includes qualified retirement plans and
non-qualified deferred compensation plans and IRAs that purchase Class A
shares of an Oppenheimer fund or funds through a single investment dealer,
broker or other financial institution that has made special arrangements
with the Distributor enabling those plans to purchase Class A shares at
net asset value but subject to the Class A contingent deferred sales
charge.
<PAGE>
Applicability of Class A Contingent Deferred Sales Charges in Certain Cases
Purchases of Class A Shares of Oppenheimer Funds That Are Not Subject to
Initial Sales Charge but May Be Subject to the Class A Contingent Deferred
Sales Charge (unless a waiver applies).
There is no initial sales charge on purchases of Class A shares of any
of the Oppenheimer funds in the cases listed below. However, these purchases
may be subject to the Class A contingent deferred sales charge if redeemed
within 18 months of the end of the calendar month of their purchase, as
described in the Prospectus (unless a waiver described elsewhere in this
Appendix applies to the redemption). Additionally, on these purchases the
Distributor will pay the applicable commission described in the Prospectus
under "Class A Contingent Deferred Sales Charge":
o Purchases of Class A shares aggregating $1 million or more.
o Purchases by a Retirement Plan that:
(1) buys shares costing $500,000 or more, or
(2) has, at the time of purchase, 100 or more eligible participants or
total plan assets of $500,000 or more, or
(3) certifies to the Distributor that it projects to have annual plan
purchases of $200,000 or more.
o Purchases by an OppenheimerFunds-sponsored Rollover IRA, if the
purchases are made:
(1) through a broker, dealer, bank or registered investment adviser that
has made special arrangements with the Distributor for those
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.
|_| Purchases of Class A shares by Retirement Plans that have any of
the following record-keeping arrangements:
(1) The record keeping is performed by Merrill Lynch Pierce Fenner & Smith,
Inc. ("Merrill Lynch") on a daily valuation basis for the
Retirement Plan. On the date the plan sponsor signs the
record-keeping service agreement with Merrill Lynch, the Plan
must have $3 million or more of its assets invested in (a) mutual
funds, other than those advised or managed by Merrill Lynch Asset
Management, L.P. ("MLAM"), that are made available under a
Service Agreement between Merrill Lynch and the mutual fund's
principal underwriter or distributor, and (b) funds advised or
managed by MLAM (the funds described in (a) and (b) are referred
to as "Applicable Investments").
(2) The record keeping for the Retirement Plan is performed on a daily
valuation basis by a record keeper whose services are provided
under a contract or arrangement between the Retirement Plan and
Merrill Lynch. On the date the plan sponsor signs the record
keeping service agreement with Merrill Lynch, the Plan must have
$3 million or more of its assets (excluding assets invested in
money market funds) invested in Applicable Investments.
(3) The record keeping for a Retirement Plan is handled under a service
agreement with Merrill Lynch and on the date the plan sponsor
signs that agreement, the Plan has 500 or more eligible employees
(as determined by the Merrill Lynch plan conversion manager).
- ------------------------------------------------------------------------------
Waivers of Class A Sales Charges of Oppenheimer Funds
- ------------------------------------------------------------------------------
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 (and no commissions are paid by the Distributor on such
purchases):
|_| The Manager or its affiliates.
|_| Present or former officers, directors, trustees and employees (and
their "immediate families") of the Fund, the Manager and its affiliates, and
retirement plans established by them for their employees. The term "immediate
family" refers to one's spouse, children, grandchildren, grandparents,
parents, parents-in-law, brothers and sisters, sons- and daughters-in-law, a
sibling's spouse, a spouse's siblings, aunts, uncles, nieces and nephews;
relatives by virtue of a remarriage (step-children, step-parents, etc.) are
included.
|_| 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 which are
identified as such 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 advisors that
have entered into an agreement with the Distributor providing specifically
for the use of shares of the Fund in particular investment products made
available to their clients. Those clients may be charged a transaction fee by
their dealer, broker, bank or advisor for the purchase or sale of Fund shares.
|_| Investment advisors and financial planners who have entered into
an agreement for this purpose with the Distributor and who charge an
advisory, consulting or other fee for their services and buy shares for their
own accounts or the accounts of their clients.
|_| "Rabbi trusts" that buy shares for their own accounts, if the
purchases are made through a broker or agent or other financial intermediary
that has made special arrangements with the Distributor for those purchases.
|_| Clients of investment advisors or financial planners (that have
entered into an agreement for this purpose with the Distributor) who buy
shares for their own accounts may also purchase shares without sales charge
but only if their accounts are linked to a master account of their investment
advisor or financial planner on the books and records of the broker, agent or
financial intermediary with which the Distributor has made such special
arrangements . Each of these investors may be charged a fee by the broker,
agent or financial intermediary for purchasing shares.
|_| 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 (or its successor) is the
investment advisor (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.
|_| A unit investment trust that has entered into an appropriate
agreement with the Distributor.
|_| Dealers, brokers, banks, or registered investment advisers
that have entered into an agreement with the Distributor to sell shares to
defined contribution employee retirement plans for which the dealer, broker
or investment adviser provides administration services.
|_| Retirement plans and deferred compensation plans and trusts
used to fund those plans (including, for example, plans qualified or created
under sections 401(a), 401(k), 403(b) or 457 of the Internal Revenue Code),
in each case if those purchases are made through a broker, agent or other
financial intermediary that has made special arrangements with the
Distributor for those purchases.
|_| A TRAC-2000 401(k) plan (sponsored by the former Quest for
Value Advisors) whose Class B or Class C shares of a Former Quest for Value
Fund were exchanged for Class A shares of that Fund due to the termination of
the Class B and Class C TRAC-2000 program on November 24, 1995.
|_| A qualified Retirement Plan 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, if that
arrangement was consummated and share purchases commenced by December 31,
1996.
Waivers of Initial and Contingent Deferred Sales Charges in Certain
Transactions.
Class A shares issued or purchased in the following transactions are not
subject to sales charges (and no commissions are paid by the Distributor on
such purchases):
|_| 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 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 prior 30 days from a mutual fund (other than a fund managed by the
Manager or any of its subsidiaries) on which an initial sales charge or
contingent deferred sales charge was paid. This waiver also applies to shares
purchased by exchange of shares of Oppenheimer Money Market Fund, Inc. that
were purchased and paid for in this manner. This waiver must be requested
when the purchase order is placed for shares of the Fund, and the Distributor
may require evidence of qualification for this waiver.
|_| Shares purchased with the proceeds of maturing principal units of
any Qualified Unit Investment Liquid Trust Series.
|_| Shares purchased by the reinvestment of loan repayments by
a participant in a Retirement Plan for which the Manager or an affiliate acts
as sponsor.
Waivers of the Class A Contingent Deferred Sales Charge for Certain
Redemptions.
The Class A contingent deferred sales charge is also waived if shares that
would otherwise be subject to the contingent deferred sales charge are
redeemed in the following cases:
|_| To make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the original account value.
|_| Involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see "Shareholder Account Rules and
Policies," in the Prospectus).
|_| 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 a subsidiary.
The fund must be one that is 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.
(11) Plan termination or "in-service distributions," if the
redemption proceeds are rolled over directly to an
OppenheimerFunds-sponsored IRA.
|_| For distributions from Retirement Plans having 500 or more
eligible participants, except distributions due to termination of all of the
Oppenheimer funds as an investment option under the Plan.
|_| For distributions from 401(k) plans sponsored by
broker-dealers that have entered into a special agreement with the
Distributor allowing this waiver.
- ------------------------------------------------------------------------------
Waivers of Class B and Class C Sales Charges of Oppenheimer Funds
- ------------------------------------------------------------------------------
The Class B and Class C contingent deferred sales charges will not be
applied to shares purchased in certain types of transactions or redeemed in
certain circumstances described below.
Waivers for Redemptions in Certain Cases.
The Class B and Class C contingent deferred sales charges will be waived for
redemptions of shares in the following cases:
|_| Shares redeemed involuntarily, as described in "Shareholder
Account Rules and Policies,"
in the applicable Prospectus.
|_| 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.
|_| Distributions from OppenheimerFunds prototype 401(k) plans and from
certain Massachusetts Mutual Life Insurance Company prototype 401(k) plans:
(1) for hardship withdrawals;
(2) under a Qualified Domestic Relations Order, as defined in the Internal
Revenue Code;
(3) to meet minimum distribution requirements as defined in the Internal
Revenue Code;
(4) to make "substantially equal periodic payments" as described in Section
72(t) of the Internal Revenue Code;
(5) for separation from service; or
(6) for loans to participants or beneficiaries.
|_| Distributions from 401(k) plans sponsored by broker-dealers that
have entered into a special agreement with the Distributor allowing this
waiver.
|_| Redemptions of Class B shares held by Retirement Plans whose
records are maintained on a daily valuation basis by Merrill Lynch or an
independent record keeper under a contract with Merrill Lynch.
|_| Redemptions of Class C shares of Oppenheimer U.S. Government Trust
from accounts of clients of financial institutions that have entered into a
special arrangement with the Distributor for this purpose.
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.
|_| Shares issued in plans of reorganization to which the
Fund is a party.
- ------------------------------------------------------------------------------
Special Sales Charge Arrangements for Shareholders of Certain Oppenheimer
Funds Who Were Shareholders of the Former Quest for Value Funds
- ------------------------------------------------------------------------------
The initial and contingent deferred sales charge rates and waivers for
Class A, Class B and Class C shares described in the Prospectus or Statement
of Additional Information of the Oppenheimer funds are modified as described
below for certain persons who were shareholders of the former Quest for Value
Funds. To be eligible, those persons must have been shareholders on November
24, 1995, when OppenheimerFunds, Inc. became the investment advisor to those
former Quest for Value Funds. Those funds include:
Oppenheimer Quest Value Fund, Inc.,
Oppenheimer Quest Balanced Value Fund,
Oppenheimer Quest Opportunity Value Fund,
Oppenheimer Quest Small Cap Value Fund and
Oppenheimer Quest Global Value Fund, Inc.
These arrangements also apply to shareholders of the following funds
when they merged into various Oppenheimer funds on November 24, 1995:
Quest for Value U.S. Government Income Fund,
Quest for Value Investment Quality Income Fund,
Quest for Value Global Income Fund,
Quest for Value New York Tax-Exempt Fund,
Quest for Value National Tax-Exempt Fund and
Quest for Value California Tax-Exempt Fund
All of the funds listed above are referred to in this Appendix as the
"Former Quest for Value Funds." The waivers of initial and contingent
deferred sales charges described in this Appendix apply to shares of an
Oppenheimer fund that are either:
|_| acquired by such shareholder pursuant to an exchange of shares
of an Oppenheimer fund that was one of the Former Quest for Value Funds or
|_| purchased by such shareholder by exchange of shares of another
Oppenheimer fund that were acquired pursuant to the merger of any of the
Former Quest for Value Funds into that other Oppenheimer fund on November 24,
1995.
Reductions or Waivers of Class A Sales Charges.
|X| Reduced Class A Initial Sales Charge Rates for Certain Former Quest
for Value Funds Shareholders
Purchases by Groups and Associations. The following table sets forth the
initial sales charge rates for Class A shares purchased by members of
"Associations" formed for any purpose other than the purchase of securities.
The rates in the table apply if 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.
- -------------------------------------------------------------------------------
Number of Initial Sales
Eligible Initial Sales Charge as a % Commission
Employees or Charge as a % of of Net Amount as % of
Members Offering Price Invested Offering Price
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
9 or Fewer 2.50% 2.56% 2.00%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
At least 10 but not
more than 49 2.00% 2.04% 1.60%
- -------------------------------------------------------------------------------
For purchases by 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 in the applicable fund's Prospectus.
Purchases made under this arrangement qualify for the lower of either
the sales charge rate in the table based on the number of members of an
Association, or the sales charge rate that applies under the Right of
Accumulation described in the applicable fund's Prospectus and Statement of
Additional Information. Individuals who qualify under this arrangement for
reduced sales charge rates as members of Associations also may purchase
shares for their individual or custodial accounts at these reduced sales
charge rates, upon request to the Distributor.
|X| Waiver of Class A Sales Charges for Certain Shareholders. Class A
shares purchased by the following investors are not subject to any Class A
initial or contingent deferred sales charges:
|_| Shareholders 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 who acquired shares of any Former Quest for Value Fund
by merger of any of the portfolios of the Unified Funds.
|X| 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 purchased by the following investors who were
shareholders of any Former Quest for Value Fund:
Investors who purchased Class A shares from a dealer that is or was not
permitted to receive a sales load or redemption fee imposed on a shareholder
with whom that dealer has a fiduciary relationship, under the Employee
Retirement Income Security Act of 1974 and regulations adopted under that law.
Class A, Class B and Class C Contingent Deferred Sales Charge Waivers
|X| 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, Class B or Class C shares of an
Oppenheimer fund. The shares must have been acquired by the 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.
Those shares must have been purchased prior to March 6, 1995 in connection
with:
|_| withdrawals under an automatic withdrawal plan holding only either
Class B or Class C shares if the annual withdrawal does not exceed 10% of the
initial value of the account, and
|_| 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.
|X| 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, Class B or
Class C shares of an Oppenheimer fund. The shares must have been acquired by
the 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
Former Quest for Value Fund merged. Those shares must have been purchased on
or after March 6, 1995, but prior to November 24, 1995:
|_| redemptions following the death or disability of the
shareholder(s) (as evidenced by a determination of total disability by the
U.S. Social Security Administration);
|_| withdrawals under an automatic withdrawal plan (but only for Class
B or Class C shares) where the annual withdrawals do not exceed 10% of the
initial value of the account; and
|_| 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, Class
B or Class C shares of the Oppenheimer fund described in this section if the
proceeds are invested in the same Class of shares in that fund or another
Oppenheimer fund within 90 days after redemption.
- ------------------------------------------------------------------------------
Special Sales Charge Arrangements for Shareholders of Certain Oppenheimer
Funds Who Were Shareholders of Connecticut Mutual Investment Accounts, Inc.
- ------------------------------------------------------------------------------
The initial and contingent deferred sale charge rates and waivers
for Class A and Class B shares described in the Prospectus or this Appendix
for Oppenheimer U. S. Government Trust, Oppenheimer Bond Fund, Oppenheimer
Disciplined Value Fund and Oppenheimer Disciplined Allocation Fund (each is
included in the reference to "Fund" below) are modified as described below
for those shareholders who were shareholders of Connecticut Mutual Liquid
Account, Connecticut Mutual Government Securities Account, Connecticut Mutual
Income Account, Connecticut Mutual Growth Account, Connecticut Mutual Total
Return Account, CMIA LifeSpan Capital Appreciation Account, CMIA LifeSpan
Balanced Account and CMIA Diversified Income Account (the "Former Connecticut
Mutual Funds") on March 1, 1996, when OppenheimerFunds, Inc. became the
investment adviser to the Former Connecticut Mutual Funds.
Prior Class A CDSC and Class A Sales Charge Waivers
|_| Class A Contingent Deferred Sales Charge. Certain shareholders of
a Fund and the other Former Connecticut Mutual Funds are entitled to continue
to make additional purchases of Class A shares at net asset value without a
Class A initial sales charge, but subject to the Class A contingent deferred
sales charge that was in effect prior to March 18, 1996 (the "prior Class A
CDSC"). Under the prior Class A CDSC, if any of those shares are redeemed
within one year of purchase, they will be assessed a 1% contingent deferred
sales charge on an amount equal to the current market value or the original
purchase price of the shares sold, whichever is smaller (in such redemptions,
any shares not subject to the prior Class A CDSC will be redeemed first).
Those shareholders who are eligible for the prior Class A CDSC are:
(1) persons whose purchases of Class A shares of a Fund and other Former
Connecticut Mutual Funds were $500,000 prior to March 18, 1996, as a
result of direct purchases or purchases pursuant to the Fund's
policies on Combined Purchases or Rights of Accumulation, who still
hold those shares in that Fund or other Former Connecticut Mutual
Funds, and
(2) persons whose intended purchases under a Statement of Intention entered
into prior to March 18, 1996, with the former general distributor of
the Former Connecticut Mutual Funds to purchase shares valued at
$500,000 or more over a 13-month period entitled those persons to
purchase shares at net asset value without being subject to the
Class A initial sales charge.
Any of the Class A shares of a Fund and the other Former Connecticut
Mutual Funds that were purchased at net asset value prior to March 18, 1996,
remain subject to the prior Class A CDSC, or if any additional shares are
purchased by those shareholders at net asset value pursuant to this
arrangement they will be subject to the prior Class A CDSC.
|_| Class A Sales Charge Waivers. Additional Class A shares of a Fund
may be purchased without a sales charge, by a person who was in one (or more)
of the categories below and acquired Class A shares prior to March 18, 1996,
and still holds Class A shares:
(1) any purchaser, provided the total initial amount invested in the Fund
or any one or more of the Former Connecticut Mutual Funds totaled
$500,000 or more, including investments made pursuant to the
Combined Purchases, Statement of Intention and Rights of
Accumulation features available at the time of the initial purchase
and such investment is still held in one or more of the Former
Connecticut Mutual Funds or a Fund into which such Fund merged;
(2) any participant in a qualified plan, provided that the total initial
amount invested by the plan in the Fund or any one or more of the
Former Connecticut Mutual Funds totaled $500,000 or more;
(3) Directors of the Fund or any one or more of the Former Connecticut
Mutual Funds and members of their immediate families;
(4) employee benefit plans sponsored by Connecticut Mutual Financial
Services, L.L.C. ("CMFS"), the prior distributor of the Former
Connecticut Mutual Funds, and its affiliated companies;
(5) one or more members of a group of at least 1,000 persons (and persons
who are retirees from such group) engaged in a common business,
profession, civic or charitable endeavor or other activity, and the
spouses and minor dependent children of such persons, pursuant to a
marketing program between CMFS and such group; and
(6) an institution acting as a fiduciary on behalf of an individual or
individuals, if such institution was directly compensated by the
individual(s) for recommending the purchase of the shares of the
Fund or any one or more of the Former Connecticut Mutual Funds,
provided the institution had an agreement with CMFS.
Purchases of Class A shares made pursuant to (1) and (2) above may be
subject to the Class A CDSC of the Former Connecticut Mutual Funds described
above.
Additionally, Class A shares of a Fund may be purchased without a sales
charge by any holder of a variable annuity contract issued in New York State
by Connecticut Mutual Life Insurance Company through the Panorama Separate
Account which is beyond the applicable surrender charge period and which was
used to fund a qualified plan, if that holder exchanges the variable annuity
contract proceeds to buy Class A shares of the Fund.
Class A and Class B Contingent Deferred Sales Charge Waivers
In addition to the waivers set forth in the Prospectus and in this Appendix,
above, the contingent deferred sales charge will be waived for redemptions of
Class A and Class B shares of a Fund and exchanges of Class A or Class B
shares of a Fund into Class A or Class B shares of a Former Connecticut
Mutual Fund provided that the Class A or Class B shares of the Fund to be
redeemed or exchanged were (i) acquired prior to March 18, 1996 or (ii) were
acquired by exchange from an Oppenheimer fund that was a Former Connecticut
Mutual Fund. Additionally, the shares of such Former Connecticut Mutual Fund
must have been purchased prior to March 18, 1996:
(1) by the estate of a deceased shareholder;
(2) upon the disability of a shareholder, as defined in Section 72(m)(7) of
the Internal Revenue Code;
(3) for retirement distributions (or loans) to participants or
beneficiaries from retirement plans qualified under Sections 401(a)
or 403(b)(7)of the Code, or from IRAs, deferred compensation plans
created under Section 457 of the Code, or other employee benefit
plans;
(4) as tax-free returns of excess contributions to such retirement or
employee benefit plans;
(5) in whole or in part, in connection with shares sold to any state,
county, or city, or any instrumentality, department, authority, or
agency thereof, that is prohibited by applicable investment laws
from paying a sales charge or commission in connection with the
purchase of shares of any registered investment management company;
(6) in connection with the redemption of shares of the Fund due to a
combination with another investment company by virtue of a merger,
acquisition or similar reorganization transaction;
(7) in connection with the Fund's right to involuntarily redeem or
liquidate the Fund;
(8) in connection with automatic redemptions of Class A shares and Class B
shares in certain retirement plan accounts pursuant to an Automatic
Withdrawal Plan but limited to no more than 12% of the original
value annually; or
(9) as involuntary redemptions of shares by operation of law, or under
procedures set forth in the Fund's Articles of Incorporation, or as
adopted by the Board of Directors of the Fund.
- ------------------------------------------------------------------------------
Special Reduced Sales Charge for Former Shareholders of Advance America
Funds, Inc.
- ------------------------------------------------------------------------------
Shareholders of Oppenheimer Municipal Bond Fund, Oppenheimer U.S.
Government Trust, Oppenheimer Strategic Income Fund and Oppenheimer Equity
Income Fund who acquired (and still hold) shares of those funds as a result
of the reorganization of series of Advance America Funds, Inc. into those
Oppenheimer funds on October 18, 1991, and who held shares of Advance America
Funds, Inc. on March 30, 1990, may purchase Class A shares of those four
Oppenheimer funds at a maximum sales charge rate of 4.50%.
<PAGE>
C-39
- ------------------------------------------------------------------------------
Oppenheimer Multiple Strategies Fund
- ------------------------------------------------------------------------------
Internet Web Site:
www.oppenheimerfunds.com
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 Bank
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
67890
PX240.0199
<PAGE>
OPPENHEIMER MULTIPLE STRATEGIES FUND
FORM N-1A
- ------------------------------------------------------------------------------
PART C
OTHER INFORMATION
Item 23. Exhibits
(a) Amended and Restated Declaration of Trust dated 3/6/97: Previously
filed with Registrant's Post-Effective Amendment No. 29, 11/24/97, and
incorporated herein by reference.
(b) Amended and RestatedBy-Laws dated 6/4/98: Filed herewith.
(c) (i) Specimen Class A Share Certificate: Previously filed with
Registrant's Post-Effective Amendment No. 29, 11/24/97, and incorporated
herein by reference.
(ii) Specimen Class B Share Certificate: Previously filed with
Registrant's Post-Effective Amendment No. 29, 11/24/97, and incorporated
herein by reference.
(iii) Specimen Class C Share Certificate: Previously filed with
Registrant's Post-Effective Amendment No. 29, 11/24/97, and incorporated
herein by reference.
(d) Amended and Restated Investment Advisory Agreement dated 12/11/97:
Previously filed with Post-Effective Amendment No. 30, 1/22/98, and
incorporated herein by reference.
(e) (i) General Distributor's Agreement dated 12/10/92: Previously filed
with Registrant's Post-Effective Amendment No. 15, 4/19/93, refiled with
Registrant's Post-Effective Amendment No. 20, 3/2/95, pursuant to Item 102 of
Regulation S-T and incorporated herein by reference.
(ii) Form of Dealer Agreement of OppenheimerFunds Distributor, Inc.:
Filed with Post-Effective Amendment No. 14 of Oppenheimer Main Street Funds,
Inc. (Reg. No. 33-17850), 9/30/94, and incorporated herein by reference.
(iii) Form of OppenheimerFunds Distributor, Inc. Broker Agreement:
Filed with Post-Effective Amendment No. 14 of Oppenheimer Main Street Funds,
Inc. (Reg. No. 33-17850), 9/30/94, and incorporated herein by reference.
(iv) Form of OppenheimerFunds 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.
(f) (i) Retirement Plan for Non-Interested Trustees or Directors dated
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.
(ii) Form of Deferred Compensation Agreement for Disinterested
Trustees: Filed with Post-Effective Amendment No.26 to the Registration
Statement of Oppenheimer Gold & Special Minerals Fund (Reg. No. 2-82590),
10/28/98, and incorporated by reference.
(g) Custody Agreement with the Bank of New York dated 11/12/92: Previously
filed with Registrant's Post-Effective Amendment No. 15, 4/19/93, refiled
with Registrant's Post-Effective Amendment No. 20, 3/2/95, pursuant to Item
102 of Regulation S-T and incorporated herein by reference.
(h) Not applicable.
(i) Opinion and Consent of Counsel dated 3/2/87: Previously filed with
Registrant's Post-Effective Amendment No. 7, 4/24/87, refiled with
Registrant's Post-Effective Amendment No. 20, 3/2/95, pursuant to Item 102 of
Regulation S-T and incorporated herein by reference.
(j) Independent Auditors Consent: Filed herewith.
(k) Not applicable.
(l) (i) Investment Letter from OppenheimerFunds, Inc. (formerly named
"Oppenheimer Management Corporation") to Registrant dated October 25, 1984:
Previously filed with Registrant's Post-Effective Amendment No. 31, 11/30/98,
and incorporated herein by reference.
(ii) Investment Letter from OppenheimerFunds, Inc. (formerly named
"Oppenheimer Management Corporation) to Registrant dated November 30, 1986:
Previously filed with Registrant's Post-Effective Amendment No. 31, 11/30/98,
and incorporated herein by reference.
(m) (i) Service Plan and Agreement for Class A shares dated 7/1/94:
Previously filed with Registrant's Post-Effective Amendment No. 20, 3/2/95,
and incorporated herein by reference.
(ii) Amended and Restated Distribution and Service Plan and Agreement
for Class B shares dated 2/12/98: Previously filed with Registrant's
Post-Effective Amendment No. 30, 1/22/98, and incorporated herein by
reference.
(iii) Amended and Restated Distribution and Service Plan and Agreement
for Class C shares dated 2/12/98: Previously filed with Registrant's
Post-Effective Amendment No. 30, 1/22/98, and incorporated herein by
reference.
(n) (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.
(o) Oppenheimer Funds Multiple Class Plan under Rule 18f-3 updated through
8/25/98: Previously filed with Post-Effective Amendment No. 70 to the
Registration Statement of Oppenheimer Global Fund (Reg. No. 2-31661),
9/14/98, and incorporated herein by reference.
- -- Powers of Attorney (including Certified Board resolutions) (Bridget A.
Macaskill): Previously filed with Registrant's Post-Effective Amendment No.
26, 3/28/96, (all other Trustees) previously filed with Registrant's
Post-Effective Amendment No. 17, 2/28/94, and incorporated herein by
reference.
Item 24. Persons Controlled by or Under Common Control with the Fund
None.
Item 25. Indemnification
Reference is made to the provisions of Article Seven of Registrant's
Amended and Restated Declaration of Trust filed as Exhibit 23(a) to this
Registration Statement, and incorporated herein by reference.
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 26. Business and Other Connections of the 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 26(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 and Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
Charles E. Albers,
Senior Vice President An officer and/or portfolio manager of certain
Oppenheimer funds (since April 1998);
a Chartered Financial Analyst;
formerly, a Vice President and
portfolio manager for Guardian
Investor Services, the investment
management subsidiary of The Guardian
Life Insurance Company (since 1972).
Edward Amberger,
Assistant Vice President Formerly Assistant Vice President,
Securities Analyst for Morgan Stanley
Dean Witter (May 1997 - April 1998); and
Research Analyst (July 1996 - May 1997),
Portfolio Manager (February 1992 - July
1996) and Department Manager (June 1988
to February 1992) for The Bank of New
York.
Mark J.P. Anson,
Vice President Vice President of Oppenheimer Real Asset
Management, Inc. ("ORAMI"); formerly,
Vice President of Equity Derivatives at
Salomon Brothers, Inc.
Peter M. Antos,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; a Chartered
Financial Analyst; Senior Vice President
of HarbourView Asset Management
Corporation ("HarbourView"); prior to
March, 1996 he was the senior equity
portfolio manager for the Panorama Series
Fund, Inc. (the "Company") and other
mutual funds and pension funds managed by
G.R. Phelps & Co. Inc. ("G.R. Phelps"),
the Company's former investment adviser,
which was a subsidiary of Connecticut
Mutual Life Insurance Company; he 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.
George Batejan,
Executive Vice President,
Chief Information Officer Formerly Senior Vice President, Group
Executive, and Senior Systems Officer for
American International Group (October
1994 - May, 1998).
John R. Blomfield,
Vice President Formerly Senior Product Manager
(November, 1995 - August, 1997) of
International Home Foods and American
Home Products (March, 1994 - October,
1996).
Connie Bechtolt,
Assistant Vice President None.
Kathleen Beichert,
Vice President None.
Rajeev Bhaman,
Vice President Formerly, Vice President (January 1992 -
February, 1996) of Asian Equities for
Barclays de Zoete Wedd, Inc.
Robert J. Bishop,
Vice President Vice President of Mutual Fund Accounting
(since May 1996); an officer of other
Oppenheimer funds; formerly, an
Assistant Vice President of OFI/Mutual
Fund Accounting (April 1994-May 1996),
and a Fund Controller for OFI.
Chad Boll,
Assistant Vice President None
George C. Bowen,
Senior Vice President, Treasurer
and Director Vice President (since June 1983) and
Treasurer (since March 1985) of
OppenheimerFunds Distributor, Inc. (the
"Distributor"); Vice President (since
October 1989) and Treasurer (since April
1986) of HarbourView; Senior Vice
President (since February 1992),
Treasurer (since July 1991)and a director
(since December 1991) of Centennial;
President, Treasurer and a director of
Centennial Capital Corporation (since
June 1989); Vice President and Treasurer
(since August 1978) and Secretary (since
April 1981) of Shareholder Services, Inc.
("SSI"); Vice President, Treasurer and
Secretary of Shareholder Financial
Services, Inc. ("SFSI") (since November
1989); Assistant Treasurer of Oppenheimer
Acquisition Corp. ("OAC") (since March,
1998); Treasurer of Oppenheimer
Partnership Holdings, Inc. (since
November 1989); Vice President and
Treasurer of ORAMI (since July 1996);
an officer of other Oppenheimer funds.
Scott Brooks,
Vice President None.
Kevin Brosmith,
Vice President None.
Nancy Bush,
Assistant Vice President
Adele Campbell,
Assistant Vice President & Assistant
Treasurer: Rochester Division Formerly, Assistant Vice President of
Rochester Fund Services, Inc.
Michael Carbuto,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice President
of Centennial.
John Cardillo,
Assistant Vice President None.
Mark Curry,
Assistant Vice President
H.C. Digby Clements,
Vice President:
Rochester Division None.
O. Leonard Darling,
Executive Vice President Chief Executive Officer and Senior
Manager of HarbourView Asset Management
Corporation; Trustee (1993 - present) of
Awhtolia College - Greece.
William DeJianne, None.
Assistant Vice President
Robert A. Densen,
Senior Vice President None.
Sheri Devereux,
Assistant Vice President None.
Craig P. Dinsell
Executive Vice President Formerly, Senior Vice President of Human
Resources for Fidelity Investments-Retail
Division (January, 1995 - January, 1996),
Fidelity Investments FMR Co. (January,
1996 - June, 1997) and Fidelity
Investments FTPG (June, 1997 - January,
1998).
Robert Doll, Jr.,
Executive Vice President and
Chief Investment Officer 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 Executive Vice President (since September
1993), and a director (since January 1992) of the Distributor; Executive
Vice President, General Counsel and a director of HarbourView, SSI, SFSI
and Oppenheimer Partnership Holdings, Inc. since (September 1995);
President and a director of Centennial (since September 1995); President
and a director of ORAMI (since July 1996); General Counsel (since May
1996) and Secretary (since April 1997) of OAC; Vice President and
Director of OppenheimerFunds International, Ltd. ("OFIL") and Oppenheimer
Millennium Funds plc (since October 1997); an officer of other
Oppenheimer funds.
Patrick Dougherty, None.
Assistant Vice President
Bruce Dunbar, None.
Vice President
Daniel Engstrom,
Assistant Vice President
George Evans,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Edward Everett,
Assistant Vice President None.
George Fahey,
Vice President None.
Scott Farrar,
Vice President Assistant Treasurer of Oppenheimer
Millennium Funds plc (since October
1997); an officer of other Oppenheimer
funds; formerly, an Assistant Vice
President of OFI/Mutual Fund Accounting
(April 1994-May 1996), and a Fund
Controller for OFI.
Leslie A. Falconio,
Assistant Vice President None.
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary of the
Distributor; Secretary of HarbourView,
and Centennial; Secretary, Vice President
and Director of Centennial Capital
Corporation; Vice President and Secretary
of ORAMI.
Ronald H. Fielding,
Senior Vice President; Chairman:
Rochester Division An officer, Director and/or portfolio
manager of certain Oppenheimer funds;
Presently he holds the following other
positions: Director (since 1995) of ICI
Mutual Insurance Company; Governor (since
1994) of St. John's College; Director
(since 1994 - present) of International
Museum of Photography at George Eastman
House. Formerly, he held the following
positions: formerly, Chairman of the
Board and Director of Rochester Fund
Distributors, Inc. ("RFD"); President and
Director of Fielding Management Company,
Inc. ("FMC"); President and Director of
Rochester Capital Advisors, Inc.
("RCAI"); Managing Partner of Rochester
Capital Advisors, L.P., President and
Director of Rochester Fund Services, Inc.
("RFS"); President and Director of
Rochester Tax Managed Fund, Inc.;
Director (1993 - 1997) of VehiCare Corp.;
Director (1993 - 1996) of VoiceMode.
Patricia Foster,
Vice President Formerly, she held the following
positions: An officer of certain former
Rochester funds (May, 1993 - January,
1996); Secretary of Rochester Capital
Advisors, Inc. and General Counsel (June,
1993 - January 1996) of Rochester Capital
Advisors, L.P.
David Foxhoven,
Assistant Vice President
Jennifer Foxson,
Vice President None.
Erin Gardiner,
Assistant Vice President None.
Linda Gardner,
Vice President None.
Alan Gilston,
Vice President Formerly, Vice President (1987-1997) for
Schroder Capital Management International.
Jill Glazerman,
Vice President None.
Robyn Goldstein-Liebler
Assistant Vice President None.
Mikhail Goldverg
Assistant Vice President None.
Jeremy Griffiths,
Executive Vice President and
Chief Financial Officer Chief Financial Officer and Treasurer
(since March, 1998) of Oppenheimer
Acquisition Corp.; a Member and Fellow of
the Institute of Chartered Accountants;
formerly, an accountant for Arthur Young
(London, U.K.).
Robert Grill,
Senior Vice President Formerly, Marketing Vice President for
Bankers Trust Company (1993-1996);
Steering Committee Member, Subcommittee
Chairman for American Savings Education
Council (1995-1996).
Caryn Halbrecht,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Elaine T. Hamann,
Vice President Formerly, Vice President (September, 1989
- January, 1997) of Bankers Trust Company.
Robert Haley
Assistant Vice President Formerly, Vice President of Information
Services for Bankers Trust Company
(January, 1991 - November, 1997).
Thomas B. Hayes,
Vice President None.
Barbara Hennigar,
Executive Vice President and
Chief Executive Officer of
OppenheimerFunds Services,
a division of the Manager President and Director of SFSI; President
and Chief executive Officer of SSI.
Dorothy Hirshman,
Assistant Vice President None.
Merryl Hoffman,
Vice President None.
Nicholas Horsley,
Vice President Formerly, a Senior Vice President and
Portfolio Manager for Warburg, Pincus
Counsellors, Inc. (1993-1997), Co-manager
of Warburg, Pincus Emerging Markets Fund
(12/94 - 10/97), Co-manager Warburg,
Pincus Institutional Emerging Markets
Fund - Emerging Markets Portfolio (8/96 -
10/97), Warburg Pincus Japan OTC Fund,
Associate Portfolio Manager of Warburg
Pincus International Equity Fund, Warburg
Pincus Institutional Fund - Intermediate
Equity Portfolio, and Warburg Pincus EAFE
Fund.
Scott T. Huebl,
Assistant Vice President None.
Richard Hymes,
Vice President None.
Jane Ingalls,
Vice President None.
Kathleen T. Ives,
Vice President None.
Christopher Jacobs,
Assistant Vice President None.
William Jaume,
Vice President
Frank Jennings,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Susan Katz,
Vice President
Thomas W. Keffer,
Senior Vice President None.
Erica Klein,
Assistant Vice President
Avram Kornberg,
Vice President None.
John Kowalik,
Senior Vice President An officer and/or portfolio manager for
certain OppenheimerFunds; formerly,
Managing Director and Senior Portfolio
Manager at Prudential Global Advisors
(1989 - 1998).
Joseph Krist,
Assistant Vice President None.
Michael Levine,
Vice President None.
Shanquan Li,
Vice President None.
Stephen F. Libera,
Vice President An officer and/or portfolio manager for
certain Oppenheimer funds; a Chartered
Financial Analyst; a Vice President of
HarbourView; prior to March 1996, the
senior bond portfolio manager for
Panorama Series Fund Inc., other mutual
funds and pension accounts managed by
G.R. Phelps; also responsible for
managing the public fixed-income
securities department at Connecticut
Mutual Life Insurance Co.
Mitchell J. Lindauer,
Vice President None.
Dan Loughran,
Assistant Vice President:
Rochester Division None.
David Mabry,
Assistant Vice President None.
Steve Macchia,
Vice President None.
Bridget Macaskill,
President, Chief Executive Officer
and Director Chief Executive Officer (since September
1995); President and director (since June
1991) of HarbourView; Chairman and a
director of SSI (since August 1994), and
SFSI (September 1995); President (since
September 1995) and a director (since
October 1990) of OAC; President (since
September 1995) and a director (since
November 1989) of Oppenheimer
Partnership Holdings, Inc., a holding
company subsidiary of OFI; a director of
ORAMI (since July 1996) ; President and a
director (since October 1997) of OFIL, an
offshore fund manager subsidiary of OFI
and Oppenheimer Millennium Funds plc
(since October 1997); President and a
director of other Oppenheimer funds; a
director of Hillsdown Holdings plc (a
U.K. food company); formerly, an
Executive Vice President of OFI.
Philip T. Masterson,
Vice President
Loretta McCarthy,
Executive Vice President None.
Kelley A. McCarthy-Kane
Assistant Vice President Formerly, Product Manager, Assistant Vice
President (June 1995- October, 1997) of
Merrill Lynch Pierce Fenner & Smith.
Beth Michnowski,
Assistant Vice President Formerly Senior Marketing Manager May,
1996 - June, 1997) and Director of
Product Marketing (August, 1992 - May,
1996) with Fidelity Investments.
Lisa Migan,
Assistant Vice President None.
Denis R. Molleur,
Vice President None.
Nikolaos Monoyios,
Vice President A Vice President and/or portfolio manager
of certain Oppenheimer funds (since April
1998); a Certified Financial Analyst;
formerly, a Vice President and portfolio
manager for Guardian Investor Services,
the management subsidiary of The Guardian
Life Insurance Company (since 1979).
Linda Moore,
Vice President Formerly, Marketing Manager (July
1995-November 1996) for Chase Investment
Services Corp.
Kenneth Nadler,
Vice President None.
David Negri,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Barbara Niederbrach,
Assistant Vice President None.
Robert A. Nowaczyk,
Vice President None.
Ray Olson,
Assistant Vice President None.
Richard M. O'Shaugnessy,
Assistant Vice President:
Rochester Division None.
Gina M. Palmieri,
Assistant Vice President None.
Robert E. Patterson,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
James Phillips
Assistant Vice President None.
Stephen Puckett,
Vice President None.
Jane Putnam,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Michael Quinn,
Assistant Vice President Formerly, Assistant Vice President
(April, 1995 - January, 1998) of Van
Kampen American Capital.
Julie Radtke,
Vice President
Russell Read,
Senior Vice President Vice President of Oppenheimer Real Asset
Management, Inc. (since March, 1995).
Thomas Reedy,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; formerly, a
Securities Analyst for the Manager.
John Reinhardt,
Vice President: Rochester Division None
Ruxandra Risko,
Vice President None.
Michael S. Rosen,
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.
Lawrence Rudnick,
Assistant Vice President None.
James Ruff,
Executive Vice President & Director None.
Valerie Sanders,
Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Martha Shapiro,
Assistant Vice President None
Stephanie Seminara,
Vice President None.
Michelle Simone,
Assistant Vice President None.
Richard Soper,
Vice President None.
Cathleen Stahl,
Vice President
Donald W. Spiro,
Chairman Emeritus and Director Vice Chairman and Trustee of the New
York-based Oppenheimer Funds; formerly,
Chairman of the Manager and the
Distributor.
Richard A. Stein,
Vice President: Rochester Division Assistant Vice President (since 1995) of
Rochester Capitol Advisors, L.P.
Arthur Steinmetz,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Ralph Stellmacher,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
John Stoma,
Senior Vice President None.
Michael C. Strathearn,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; a Chartered
Financial Analyst; a Vice President of
HarbourView.
Wayne Strauss,
Assistant Vice President: Rochester
Division
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee, Director or
Managing Partner of the Denver-based
Oppenheimer Funds; formerly, President
and Director of OAMC, CAMC and Chairman
of the Board of SSI.
Susan Switzer,
Assistant Vice President None.
Anthony A. Tanner,
Vice President: Rochester Division None.
James Tobin,
Vice President None.
Jay Tracey,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
James Turner,
Assistant Vice President None.
Maureen VanNorstrand,
Assistant Vice President None.
Ashwin Vasan,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Annette Von Brandis,
Assistant Vice President None.
Teresa Ward,
Assistant Vice President None.
Jerry Webman,
Senior Vice President Director of New York-based tax-exempt
fixed income Oppenheimer funds.
Christine Wells,
Vice President None.
Joseph Welsh,
Assistant Vice President None.
Kenneth B. White,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; a Chartered
Financial Analyst; Vice President of
HarbourView.
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; Point of Contact:
Finance Supporters of Children;
Member of the Oncology Advisory Board
of the Childrens Hospital.
Caleb Wong,
Assistant Vice President None.
Robert G. Zack,
Senior Vice President and
Assistant Secretary, Associate
General Counsel Assistant Secretary of SSI (since May
1985), SFSI (since November 1989), OFIL
(since 1998), Oppenheimer Millennium
Funds plc (since October 1997); an
officer of other Oppenheimer funds.
Jill Zachman,
Assistant Vice President:
Rochester Division None.
Arthur J. Zimmer,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice President
of Centennial.
The Oppenheimer Funds include the New York-based Oppenheimer Funds, the
Denver-based Oppenheimer Funds and the Oppenheimer Quest /Rochester Funds, as
set forth below:
New York-based Oppenheimer Funds
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Developing Markets Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer International Small Company Fund
Oppenheimer Large Cap Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Municipal Trust
Oppenheimer Multiple Strategies Fund
Oppenheimer Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer Series Fund, Inc.
Oppenheimer U.S. Government Trust
Oppenheimer World Bond Fund
Quest/Rochester Funds
Limited Term New York Municipal Fund
Oppenheimer Convertible Securities Fund
Oppenheimer MidCap Fund
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest For Value Funds
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Rochester Fund Municipals
Denver-based Oppenheimer Funds
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Municipal Fund
Oppenheimer Real Asset Fund
Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
The address of OppenheimerFunds, Inc., the New York-based Oppenheimer Funds,
the Quest Funds, OppenheimerFunds Distributor, Inc., HarbourView Asset
Management Corp., Oppenheimer Partnership Holdings, Inc., and Oppenheimer
Acquisition Corp. is Two World Trade Center, New York, New York 10048-0203.
The address of the Denver-based Oppenheimer Funds, Shareholder Financial
Services, Inc., Shareholder Services, Inc., OppenheimerFunds Services,
Centennial Asset Management Corporation, Centennial Capital Corp., and
Oppenheimer Real Asset Management, Inc. is 6803 South Tucson Way, Englewood,
Colorado 80112.
The address of the Rochester-based funds is 350 Linden Oaks, Rochester, New
York 14625-2807.
Item 27. Principal Underwriter
(a) OppenheimerFunds Distributor, Inc. is the Distributor of the
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 26(b) above (except Oppenheimer Multi-Sector
Income Trust and Panorama Series Fund, Inc.) and for MassMutual Institutional
Funds.
(b) The directors and officers of the Registrant's principal underwriter
are:
Name & Principal Positions & Offices Positions & Offices
Business Address with Underwriter with Registrant
Jason Bach Vice President None
31 Racquel Drive
Marietta, GA 30364
Peter Beebe Vice President None
876 Foxdale Avenue
Winnetka, IL 60093
Douglas S. Blankenship Vice President None
17011 Woodbank
Spring, TX 77379
George C. Bowen(1) Vice President and Vice President and
Treasurer Treasurer of the
Oppenheimer funds.
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Susan Burton(2) Vice President None
Erin Cawley(2) Assistant Vice President None
Robert Coli Vice President None
12 White Tail Lane
Bedminster, NJ 07921
William Coughlin Vice President None
542 West Surf - #2N
Chicago, IL 60657
Mary Crooks(1)
Daniel Deckman Vice President None
12252 Rockledge Circle
Boca Raton, FL 33428
Christopher DeSimone Vice President None
5105 Aldrich Avenue South
Minneapolis, MN 55403
Joseph DiMauro Vice President None
244 McKinley Avenue
Grosse Pointe Farms, MI 48236
Rhonda Dixon-Gunner(1) Assistant Vice President None
Andrew John Donohue(2) Executive Vice Secretary of the
President & Director Oppenheimer funds.
And General Counsel
John Donovan Vice President None
868 Washington Road
Woodbury, CT 06798
Kenneth Dorris Vice President None
4104 Harlanwood Drive
Fort Worth, TX 76109
Eric Edstrom(2) Vice President None
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
35 Crown Terrace
Yardley, PA 19067
Todd Ermenio Vice President None
11011 South Darlington
Tulsa, OK 74137
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
George Fahey Vice President None
412 Commons Way
Doylestown, PA 18901
Patrice Falagrady(1) Senior Vice President None
Eric Fallon Vice President None
10 Worth Circle
Newton, MA 02158
Katherine P. Feld(2) Vice President None
& Secretary
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding(3) Vice President None
John ("J") Fortuna(2) Vice President None
Ronald R. Foster Senior Vice President None
11339 Avant Lane
Cincinnati, OH 45249
Patricia Gadecki-Wells Vice President None
950 First St., S.
Suite 204
Winter Haven, FL 33880
Luiggino Galleto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Michelle Gans Vice President None
8327 Kimball Drive
Eden Prairie, MN 55347
L. Daniel Garrity Vice President None
2120 Brookhaven View, N.E.
Atlanta, GA 30319
Mark Giles Vice President None
5506 Bryn Mawr
Dallas, TX 75209
Ralph Grant(2) Vice President/National None
Sales Manager
Michael Guman Vice President None
3913 Pleasent Avenue
Allentown, PA 18103
Allen Hamilton Vice President None
5 Giovanni
Aliso Viejo, CA 92656
C. Webb Heidinger Vice President None
138 Gales Street
Portsmouth, NH 03801
Byron Ingram(1) Assistant Vice President None
Kathleen T. Ives(1) Vice President None
Eric K. Johnson Vice President None
3665 Clay Street
San Francisco, CA 94118
Mark D. Johnson Vice President None
409 Sundowner Ridge Court
Wildwood, MO 63011
Elyse Jurman Vice President None
1194 Hillsboro Mile, #51
Hillsboro Beach, FL 33062
Michael Keogh(2) Vice President None
Brian Kelly Vice President None
60 Larkspur Road
Fairfield, CT 06430
John Kennedy Vice President None
799 Paine Drive
Westchester, PA 19382
Richard Klein Vice President None
4820 Fremont Avenue So.
Minneapolis, MN 55409
Daniel Krause Vice President None
560 Beacon Hill Drive
Orange Village, OH 44022
Ilene Kutno(2) Vice President/ None
Director of Sales
Oren Lane Vice President None
5286 Timber Bend Drive
Brighton, MI 48116
Todd Lawson Vice President None
3333 E. Bayaud Avenue
Unit 714
Denver, CO 80209
Dawn Lind Vice President None
7 Maize Court
Melville, NY 11747
James Loehle Vice President None
2714 Orchard Terrace
Linden, NJ 07036
Steve Manns Vice President None
1941 W. Wolfram Street
Chicago, IL 60657
Todd Marion Vice President None
39 Coleman Avenue
Chatham, N.J. 07928
Marie Masters Vice President None
8384 Glen Eagle Drive
Manlius, NY 13104
LuAnn Mascia(2) Assistant Vice President None
Wesley Mayer(2) Vice President None
Theresa-Marie Maynier Vice President None
2421 Charlotte Drive
Charlotte, NC 28203
Anthony Mazzariello Vice President None
100 Anderson Street, #427
Pittsburgh, PA 15212
John McDonough Vice President None
3812 Leland Street
Chevey Chase, MD 20815
Wayne Meyer Vice President None
2617 Sun Meadow Drive
Chesterfield, MO 63005
Tanya Mrva(2) Assistant Vice President None
Laura Mulhall(2) Senior Vice President None
Charles Murray Vice President None
18 Spring Lake Drive
Far Hills, NJ 07931
Wendy Murray Vice President None
32 Carolin Road
Upper Montclair, NJ 07043
Denise-Marke Nakamura Vice President None
2870 White Ridge Place, #24
Thousand Oaks, CA 91362
Chad V. Noel Vice President None
2408 Eagleridge Dr.
Henderson, NV 89014
Joseph Norton Vice President None
2518 Fillmore Street
San Francisco, CA 94115
Kevin Parchinski Vice President None
8409 West 116th Terrace
Overland Park, KS 66210
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
130 E. 63rd Street, #10E
New York, NY 10021
Steve Puckett Vice President None
5297 Soledad Mountain Road
San Diego, CA 92109
Elaine Puleo(2) Senior Vice President None
Minnie Ra Vice President None
100 Delores Street, #203
Carmel, CA 93923
Dustin Raring Vice President None
378 Elm Street
Denver, CO 80220
Michael Raso Vice President None
16 N. Chatsworth Ave.
Apt. 301
Larchmont, NY 10538
John C. Reinhardt(3) Vice President None
Douglas Rentschler Vice President None
677 Middlesex Road
Grosse Pointe Park, MI 48230
Ruxandra Risko(2) Vice President None
Ian Robertson Vice President None
4204 Summit Wa
Marietta, GA 30066
Michael S. Rosen(2) Vice President None
Kenneth Rosenson Vice President None
3505 Malibu Country Drive
Malibu, CA 90265
James Ruff(2) President None
Alfredo Scalzo Vice President None
19401 Via Del Mar, #303
Tampa, FL 33647
Timothy Schoeffler Vice President None
1717 Fox Hall Road
Washington, DC 77479
Michael Sciortino Vice President None
785 Beau Chene Drive
Mandeville, LA 70471
Eric Sharp Vice President None
862 McNeill Circle
Woodland, CA 95695
Michelle Simone(2) Assistant Vice President None
Stuart Speckman(2) Vice President None
Timothy Stegner Vice President None
794 Jackson Street
Denver, CO 80206
Peter Sullivan Vice President None
21445 S. E 35th Street
Issaquah, WA 98029
David Sturgis Vice President None
44 Abington Road
Danvers, MA 0923
Scott Such(1) Senior Vice President None
Brian Summe Vice President None
239 N. Colony Drive
Edgewood, KY 41017
George Sweeney Vice President None
5 Smokehouse Lane
Hummelstown, PA 17036
Andrew Sweeny Vice President None
5967 Bayberry Drive
Cincinnati, OH 45242
Scott McGregor Tatum Vice President None
704 Inwood
Southlake, TX 76092
David G. Thomas Vice President None
7009 Metropolitan Place, #300
Falls Church, VA 22043
Susan Torrisi(2) Assistant Vice President None
Sarah Turpin Vice President None
2201 Wolf Street, #5202
Dallas, TX 75201
Mark Vandehey(1) Vice President None
Andrea Walsh(1) Vice President None
Suzanne Walters(1) Assistant Vice President None
James Wiaduck Vice President None
29900 Meridian Place
#22303
Farmington Hills, MI 48331
Marjorie Williams Vice President None
6930 East Ranch Road
Cave Creek, AZ 85331
Donn Weise Vice President None
3249 Earlmar Drive
Los Angeles, CA 90064
(1) 6803 South Tucson Way, Englewood, CO 80112
(2) Two World Trade Center, New York, NY 10048
(3) 350 Linden Oaks, Rochester, NY 14623
(c) Not applicable.
Item 28. 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 6803 South Tuscon Way, Englewood, Colorado 80112.
Item 29. Management Services
Not applicable
Item 30. Undertakings
Not applicable
- --------
1 No commission will be paid on sales of Class A shares purchased with the
redemption proceeds of shares of another 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 Oppenheimer funds are added as an
investment option under that plan.
2 Ms. Macaskill is not a Director of Oppenheimer Money Market Fund, Inc.
3. In accordance with Rule 12b-1 of the Investment Company Act, the term
"Independent Trustees" in this Statement of Additional Information refers to
those Trustees who are not "interested persons" of the Fund and who do not
have any direct or indirect financial interest in the operation of the
distribution plan or any agreement under the plan.
<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
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) of 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 28th day of January, 1999.
OPPENHEIMER MULTIPLE STRATEGIES 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:
Signatures Title Date
/s/ Leon Levy* Chairman of the January 28, 1999
- ------------------------------------- Board of Trustees
Leon Levy
/s/ Donald W. Spiro* Vice Chairman and January 28, 1999
- ------------------------------------- Trustee
Donald W. Spiro
/s/ George Bowen* Treasurer and January 28, 1999
- ------------------------------------- Principal Financial
George Bowen and Accounting
Officer
/s/ Robert G. Galli* Trustee January 28, 1999
- -------------------------------------
Robert G. Galli
/s/ Benjamin Lipstein* Trustee January 28, 1999
- -------------------------------------
Benjamin Lipstein
/s/ Bridget A. Macaskill* President, January 28, 1999
- ------------------------------------- Principal Executive
Bridget A. Macaskill Officer, Trustee
/s/ Elizabeth B. Moynihan* Trustee January 28, 1999
- -------------------------------------
Elizabeth B. Moynihan
/s/ Kenneth A. Randall* Trustee January 28, 1999
- -------------------------------------
Kenneth A. Randall
/s/ Edward V. Regan* Trustee January 28, 1999
- -------------------------------------
Edward V. Regan
/s/ Russell S. Reynolds, Jr.* Trustee January 28, 1999
- -------------------------------------
Russell S. Reynolds, Jr.
/s/ Pauline Trigere* Trustee January 28, 1999
- -------------------------------------
Pauline Trigere
/s/ Clayton K. Yeutter* Trustee January 28, 1999
- -------------------------------------
Clayton K. Yeutter
*By: /s/ Robert G. Zack
- ---------------------------------------------
Robert G. Zack, Attorney-in-Fact
<PAGE>
OPPENHEIMER MULTIPLE STRATEGIES FUND
Post-Effective Amendment No. 32
Registration No 2-86903
EXHIBIT INDEX
Exhibit No. Description
23(b) Amended and Restated By-Laws dated 6/4/98
23(j) Independent Auditors Consent
23(n)(i) Financial Data Schedule for Class A Shares
23(n)(ii) Financial Data Schedule for Class B Shares
23(n)(iii) Financial Data Schedule for Class C Shares
OPPENHEIMER MULTIPLE STRATEGIES FUND
BY-LAWS
Amended and Restated
as of 6/4/98
ARTICLE I
SHAREHOLDERS
Section 1. Place of Meeting. All meetings of the Shareholders (which
terms as used herein shall, together with all other terms defined in the
Declaration of Trust, have the same meaning as in the Declaration of Trust)
shall be held at the principal office of the Trust or at such other place as
may from time to time be designated by the Board of Trustees and stated in
the notice of meting.
Section 2. Shareholder Meetings. Meetings of the Shareholders for any
purpose or purposes may be called by the Chairman of the Board of Trustees,
if any, or by the President or by the Board of Trustees and shall be called
by the Secretary upon receipt of the request in writing signed by
Shareholders holding not less than one third in amount of the entire number
of Shares issued and outstanding and entitled to vote thereat. Such request
shall state the purpose or purposes of the proposed meeting. In addition,
meetings of the Shareholders shall be called by the Board of Trustees upon
receipt of the request in writing signed by Shareholders that have, for at
least six months prior to making such requests, held not less than ten
percent in amount of the entire number of Shares issued and outstanding and
entitled to vote thereat, stating that the purpose of the proposed meeting is
the removal of a Trustee.
Section 3. Notice of Meetings of Stockholders. Not less than ten days'
and not more than 120 days' written or printed notice of every meeting of
Shareholders, stating the time and place thereof (and the general nature of
the business proposed to be transacted at any special or extraordinary
meeting), shall be given to each Shareholder entitled to vote thereat by
leaving the same with him or at his residence or usual place of business or
by mailing it, postage prepaid and addressed to him at his address as it
appears upon the books of the Trust.
No notice of the time, place or purpose of any meeting of Shareholders
need by given to any Shareholder who attends in person or by proxy or to any
Shareholder who, in writing executed and filed with the records of the
meeting, either before or after the holding thereof, waives such notice.
Section 4. Record Dates. The Board of Trustees may fix, in advance, a
date, not exceeding 120 days and not less than ten days preceding the date of
any meeting of Shareholders, and not exceeding 120 days preceding any
dividend payment date or any date and entitled to receive such dividends or
rights for the allotment of rights, as a record date for the determination of
the Shareholders entitled to receive such dividend or rights, as the case may
be; and only Shareholders of record on such date and entitled to receive
such dividends or rights shall be entitled to notice of and to vote at such
meeting or to receive such dividends or rights, as the case may be.
Section 5. Access to Shareholder List. The Board of Trustees shall
make available a list of the names and addresses of all shareholders as
recorded on the books of the Trust, upon receipt of the request in writing
signed by not less than ten Shareholders holding Shares of the Trust valued
at $25,000 or more at current offering price (as defined in the Trust's
Prospectus), or holding not less than one percent in amount of the entire
number of shares of the Trust issued and outstanding; such request must state
that such Shareholders wish to communicate with other Shareholders with a
view to obtaining signatures to a request for a meeting pursuant to Section 2
of Article II of these By-Laws and accompanied by a form of communication to
the Shareholders. The Board of Trustees may, in its discretion, satisfy its
obligation under this Section 5 by either making available the Shareholder
List to such Shareholders at the principal offices of the Trust, or at the
offices of the Trust's transfer agents, during regular business hours, or by
mailing a copy of such Shareholders' proposed communication and form of
request, at their expense, to all other Shareholders.
Section 6. Quorum, Adjournment of Meetings. The presence in person or
by proxy of the holders of record of more than 50% of the Shares of the stock
of the Trust issued and outstanding and entitled to vote thereat, shall
constitute a quorum at all meetings of the Shareholders. If at any meeting
of the Shareholders there shall be less than a quorum present, the
Shareholders present at such meeting may, without further notice, adjourn the
same from time to time until a quorum shall attend, but no business shall be
transacted at any such adjourned meeting except such as might have been
lawfully transacted had the meeting not been adjourned.
Section 7. Voting and Inspectors. At all meetings of Shareholders,
every Shareholder of record entitled to vote thereat shall be entitled to
vote at such meeting either in person or by proxy appointed by instrument in
writing subscribed by such Shareholder or his duly authorized
attorney-in-fact.
All elections of Trustees shall be had by a plurality of the votes cast
and all questions shall be decided by a majority of the votes cast, in each
case at a duly constituted meeting, except as otherwise provided in the
Declaration of Trust or in these By-Laws or by specific statutory provision
superseding the restrictions and limitations contained in the Declaration of
Trust or in these By-Laws.
At any election of Trustees, the Board of Trustees prior thereto may,
or, if they have not so acted, the Chairman of the meeting may, and upon the
request of the holders of ten per cent (10%) of the Shares entitled to vote
at such election shall, appoint two inspectors of election who shall first
subscribe an oath or affirmation to execute faithfully the duties of
inspectors at such election with strick impartiality and according to the
best of their ability, and shall after the election make a certificate of the
result of the vote taken. No candidate for the office of Truste shall be
appointed such Inspector.
The Chairman of the meeting may cause a vote by ballot to be taken upon
any election of matter, and such vote shall be taken upon the request of the
holders of ten per cent (10%) of the Shares entitled to vote on such election
or matter.
Section 8. Conduct of Shareholders' Meetings. The meetings of the
Shareholders shall be presided over by the Chairman of the Board of Trustees,
if any, or if he shall not be present, by the President, or if he shall not
be present, by a Vice-President, or if neither the Chairman of the Board of
Trustees, the President nor any Vice-President is present, by a chairman to
be elected at the meeting. The Secretary of the Trust, if present, shall act
as Secretary of such meetings, or if he is not present, an Assistant
Secretary shall so act, if neither the Secretary nor an Assistant Secretary
is present, than the meeting meeting shall elect is secretary.
Section 9. Concerning Validity of Proxies, Ballots, Etc. At every
meeting of the
Shareholders, all proxies shall be received and taken in charge of and all
ballots shall be received and canvassed by the secretary of the meeting, who
shall decide all questions touching the qualification of voters, the validity
of the proxies, and the acceptance or rejection of votes, unless inspectors
of election shall have been appointed as provided in Section 7, in which
event such inspectors of election shall decide all such questions.
ARTICLE II
BOARD OF TRUSTEES
Section 1. Number and Tenure of Office. The business and property of
the Trust shall be conducted and managed by a Board of Trustees consisting of
the number of initial Trustees, which number may be increased or decreased as
provided in Section 2 of this Article. Each Trustee shall, except as
otherwise provided herein, hold office until the annual meeting of
Shareholders of the Trust next succeeding his election or until his successor
is duly elected and qualifies. Trustees need not be Shareholders.
Section 2. Increase of Decrease in Number of Trustees; Removal. A
Trustee at any time may be removed either with or without cause by resolution
duly adopted by the affirmative votes of the holders of two-thirds of the
outstanding Shares of the Trust, present in person or by proxy at any meeting
of Shareholders at which such vote may be taken, provided that a quorum is
present. Any Trustee at any time may be removed for cause by resolution duly
adopted at any meeting of the Board of Trustees provided that notice thereof
is contained in the notice of such meeting and that such resolution is
adopted by the vote of at least two thirds of the Trustees whose removal is
not proposed. As used herein, "for cause" shall mean any cause which under
Massachusetts law would permit the removal of a Trustee of a business trust.
Any Trustee may resign or retire as Trustee by written instrument
signed by him and delivered to the other Trustees or to any officer of the
Trust, and such resignation or retirement shall take effect upon such
delivery or upon such later date as is specified in such instrument and shall
be effective as to the Trust and each Series of the Trust hereunder.
Notwithstanding the foregoing, any and all Trustees shall be subject to the
provisions with respect to mandatory retirement set forth in the Trust's
Retirement Plan for Non-Interested Trustees or Directors adopted by the
Trust, as the same may be amended from time to time.
Section 3. Place of Meeting. The Trustees may hold their meetings,
have one or more offices, and keep the books of the Trust outside
Massachusetts, at any office or offices of the Trust or at any other place as
they may from time to time by resolution determine, or, in the case of
meetings, as they may from time to time by resolution determine or as shall
be specified or fixed in the respective notices or waivers of notice thereof.
Section 4. Regular Meetings. Regular meetings of the Board of Trustees
shall be held at such time and on such notice, if any, as the Trustees may
from time to time determine. The annual meeting of the Board of Trustees
shall be held as soon as practicable after the annual meeting of the
Shareholders for the election of Trustees.
Section 5. Special Meetings. Special meetings of the Board of Trustees
may be held from time to time upon call of the Chairman of the Board of
Trustees, if any, the President or two or more of the Trustees, by oral
telegraphic or written notice duly served on or sent or mailed to each
Trustee not less than one day before such meeting. No notice need be given to
any Trustee who attends in person or to any Trustee who in writing executed
and filed with the records of the meeting either before or after the holding
thereof, waives such notice. Such notice or waiver of notice need not state
the purpose or purposes of such meeting.
Section 6. Quorum. One-third of the Trustees then in office shall
constitute a quorum for the transaction of business, provided that a quorum
shall in no case be less than two Trustees. If at any of the Board there
shall be less than a quorum present (in person or by open telephone line, to
the extent permitted by the Investment Company Act of 1940 (the "1940 Act")),
a majority of those present may adjourn the meeting from time to time until a
quorum shall have been obtained. The act of the majority of the Trustees
present at any meeting at which there is a quorum shall be the act of the
Board, except as may be otherwise specifically provided by statute, by the
Declaration of Trust or by these By-Laws.
Section 7. Executive Committee. The Board of Trustees may, by the
affirmative vote of a majority of the entire Board, elect from the Trustees
an Executive Committee to consist of such number of Trustees as the Board
may from time to time determine. The Board of Trustees by such affirmative
vote shall have power at any time to change the members of such Committee and
may fill vacancies in the Committee by election from the Trustees. When the
Board of Trustees is not in session, the Executive Committee shall have and
may exercise any or all of the powers of the Board of Trustees in the
management of the business and affairs of the Trust (including the power to
authorize the seal of the Trust to be affixed to all papers which may require
it) except as provided by law and except the power to increase or decrease
the size of, or fill vacancies on the Board. The Executive Committee may fix
its own rules of procedure, and may meet, when and as provided by such rules
or by resolution of the Board of Trustees, but in every case the presence of
a majority shall be necessary to constitute a quorum. In the absence of any
member of the Executive Committee the members thereof present at any meeting,
whether or not they constitute a quorum, may appoint a member of the Board of
Trustees to act in the place of such absent member.
Section 8. Other Committees. The Board of Trustees, by the affirmative
vote of a majority of the entire Board, may appoint other committees which
shall in each case consist of such number of members (not less than two) and
shall have and may exercise such powers as the Board may determine in the
resolution appointing them. A majority of all members of any such committee
may determine its action, and fix the time and place of its meetings, unless
the Board of Trustees shall otherwise provide. The Board of Trustees shall
have power at any time to change the members and powers of any such
committee, to fill vacancies, and to discharge any such committee.
Section 9. Informal Action by _and Telephone Meetings of Trustees and
Committees. Any action required or permitted to be taken at any meeting of
the Board of Trustees or any committee thereof may be taken without a
meeting, if a written consent to such action is signed by all members of the
Board, or of such committee, as the case may be. Trustees or members of a
committee of the Board of Trustees may participate in a meeting by means of a
conference telephone or similar communications
equipment; such participation shall, except as otherwise required by the 1940
Act, have the same effect as presence in person.
Section 10. Compensation of Trustees. Trustees shall be entitled to
receive such compensation from the Trust for their services as may from time
to time be voted by the Board of Trustees.
Section 11. Dividends. Dividends or distributions payable on the
Shares of any Series may, but need not be, declared by specific resolution of
the Board as to each dividend or distribution; in lieu of such specific
resolutions, the Board may, by general resolution, determine the method of
computation thereof, the method of determining the Shareholders of the Series
to which they are payable and the methods of determining whether and to which
Shareholders they are to be paid in cash or in additional Shares.
ARTICLE III
OFFICERS
Section 1. Executive Officers. The executive officers of the Trust may
include a Chairman of the Board of Trustees, and shall include a President,
one or more Vice-Presidents (the number thereof to be determined by the Board
of Trustees), a Secretary and a Treasurer. The Chairman of the Board of
Trustees, if any, and the President shall be selected from among the
Trustees. The Board of Trustees may also in its discretion appoint Assistant
Secretaries, Assistant Treasurers, and other officers, agents and employees,
who shall have authority and perform such duties as the Board or the
Executive Committee may determine. The Board of Trustees may fill any
vacancy which may occur in any office. Any two offices, except those of
President and Vice-President, may be held by the same person, but no officer
shall execute, acknowledge or verify any instrument in more than one
capacity, if such instrument is required by law or these By-Laws to be
executed, acknowledged or verified by two or more officers.
Section 2. Term of Office. The term of office of all officers shall be
one year and until their respective successors are chosen and qualify;
however, any officer may be removed from office at any time with or without
cause by the vote of a majority of the entire Board of Trustees.
Section 3. Powers and Duties. The officers of the Trust shall have
such powers and duties as generally pertain to their respective offices, as
well as such powers and duties as may from time to time be conferred by the
Board of Trustees or the Executive Committee.
ARTICLE IV
SHARES
Section 1. Certificates of Shares. Each Shareholder of any Series of
the Trust may be issued a certificate or certificates for his Shares of that
Series, in such form as the Board of Trustees may from time to time
prescribe, but only if and to the extent and on the conditions described by
the Board.
Section 2. Transfer of Shares. Shares of any Series shall be
transferable on the books of the Trust by the holder thereof in person or by
his duly authorized attorney or legal representative, upon surrender and
cancellation of certificates, if any, for the same number of Shares of that
Series, duly endorsed or accompanied by proper instruments of assignment and
transfer, with such proof of the authenticity of the signature as the Trust
or its agent may reasonably require; in the case of shares not represented by
certificates, the same or similar requirements may be imposed by the Board of
Trustees.
Section 3. Share Ledgers. The share ledgers of the Trust, containing
the name and address of the Shareholders of each Series and the number of
shares of that Series, held by them respectively, shall be kept at the
principal offices of the Trust or, if the Trust employs a transfer agent, at
the offices of the transfer agent of the Trust.
Section 4. Lost, Stolen or Destroyed Certificates. The Board of
Trustees may determine the conditions upon which a new certificate may be
issued in place of a certificate which is alleged to have been lost, stolen
or destroyed; and may, in their discretion, require the owner of such
certificate or his legal representative to give bond, with sufficient surety
to the Trust and the transfer agent, if any, to indemnify it and such
transfer agent against any and all loss or claims which may arise by reason
of the issue of a new certificate in the place of the one so lost, stolen or
destroyed.
ARTICLE V
SEAL
The Board of Trustees shall provide a suitable seal of the Trust, in
such form and bearing such inscriptions as it may determine.
ARTICLE VI
FISCAL YEAR
The fiscal year of the Trust shall be fixed by the Board of Trustees.
ARTICLE VII
AMENDMENT OF BY-LAWS
The By-Laws of the Trust may be altered, amended, added to or repealed
by the Shareholders or by majority vote of the entire Board of Trustees, but
any such alteration, amendment, addition or repeal of the By-Laws by action
of the Board of Trustees may be altered or repealed by the Shareholders.
orgzn\240bylaw_698
INDEPENDENT AUDITORS' CONSENT
To The Board of Trustees of
Oppenheimer Multiple Strategies Fund:
We consent to the use in this Registration Statement of Oppenheimer Multiple
Strategies Fund of our report dated October 21, 1998, appearing in the
Statement of Additional Information, which is a part of such Registration
Statement; to the references to our firm under the headings "Financial
Highlights" included in the Prospectus and "Independent Auditors" included in
the Statement of Additional Information, both of which is are parts of such
Registration Statement.
/s/ KPMG LLP
- ---------------------------------------------
KPMG LLP
Denver, Colorado
January 28, 1999
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