Oppenheimer Fund
Prospectus dated October 25, 1996
Oppenheimer Fund is a mutual fund with the primary investment
objective of seeking capital appreciation. Its secondary objective
is to achieve income consistent with growth in capital.
The Fund attempts to achieve its objectives through investment
in common stocks that offer growth possibilities while retaining a
flexible approach to investment. In its operations, the Fund may
utilize the following special techniques when such use appears
appropriate: hedging, short-term trading, investment in foreign
securities, and investment of up to 10% of the Fund's net assets in
illiquid or restricted securities. Some investment techniques the
Fund may use may be considered to be speculative investment methods
that may increase the risks of investing in the Fund and may also
increase the Fund's operating costs. You should carefully review
the risks associated with an investment in the Fund.
Please refer to "Investment Objective and Policies" for more
information about the types of securities the Fund invests in and
refer to "Investment Risks" for a discussion of the risks of
investing in the Fund.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and
keep it for future reference. You can find more detailed
information about the Fund in the October 25, 1996, Statement of
Additional Information. For a free copy, call OppenheimerFunds
Services, the Fund's Transfer Agent, at 1-800-525-7048, or write to
the Transfer Agent at the address on the back cover. The Statement
of Additional Information has been filed with the Securities and
Exchange Commission and is incorporated into this Prospectus by
reference (which means that it is legally part of this Prospectus).
(OppenheimerFunds logo)
Shares of the Fund are not deposits or obligations of any bank, are
not guaranteed by any bank, are not insured by the F.D.I.C. or any
other agency, and involve investment risks, including the possible
loss of principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
Contents
A B O U T T H E F U N D
3 Expenses
5 A Brief Overview of the Fund
7 Financial Highlights
10 Investment Objective and Policies
10 Investment Risks
12 Investment Techniques and Strategies
16 How the Fund is Managed
17 Performance of the Fund
A B O U T Y O U R A C C O U N T
21 How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
35 Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
37 How to Sell Shares
By Mail
By Telephone
39 How to Exchange Shares
40 Shareholder Account Rules and Policies
42 Dividends, Capital Gains and Taxes
A-1 Appendix A: Special Sales Charge Arrangements
<PAGE>
A B O U T T H E F U N D
Expenses
The Fund pays a variety of expenses directly for management of its
assets, administration, distribution of its shares and other
services, and those expenses are subtracted from the Fund's assets
to calculate the Fund's net asset value per share. All
shareholders therefore pay those expenses indirectly. Shareholders
pay other expenses directly, such as sales charges and account
transaction charges. The following tables are provided to help you
understand your direct expenses of investing in the Fund and your
share of the Fund's operating expenses that you will bear
indirectly. The numbers below are based on the Fund's expenses
during its fiscal year ended June 30, 1996.
Shareholder Transaction Expenses are charges you pay when
you buy or sell shares of the Fund. Please refer to "About Your
Account: starting on page 21 for an explanation of how and when
these charges apply.
Class A Class B Class C
Shares Shares Shares
Maximum Sales Charge 5.75% None None
on Purchases (as a % of
offering price)
Maximum Deferred Sales Charge None(1) 5% in the first
1% if shares(as a % of the lower of year, declining are redeemed
the original offering to 1% in the within 12 months
price or redemption sixth year and of purchase(2)
proceeds) eliminated
thereafter(2)
Maximum Sales Charge on None None None
on Reinvested Dividends
Exchange Fee None None None
Redemption Fee None(3) None(3) None(3)
(1) If you invest $1 million or more ($500,000 or more for
purchases by "Retirement Plans," as defined in "Class A Contingent
Deferred Sales Charge" on page 26) in Class A shares, you may have
to pay a sales charge of up to 1% if you sell your shares within 18
calendar months from the end of the calendar month during which you
purchased those shares. See "How to Buy Shares - Buying Class A
Shares," below.
(2) See "How to Buy Shares - Buying Class B Shares" and "How to Buy
Shares - Buying Class C Shares" below, for more information on the
contingent deferred sales charge.
(3) There is a $10 transaction fee for redemptions paid by Federal
Funds wire, but not for redemptions paid by ACH transfers through
Account Link. See "How to Sell Shares."
Annual Fund Operating Expenses are paid out of the Fund's
assets and represent the Fund's expenses in operating its business.
For example, the Fund pays management fees to its investment
adviser, OppenheimerFunds, Inc. (referred to in this Prospectus as
the "Manager"). The rates of the Manager's fees are set forth in
"How the Fund is Managed," below. The Fund has other regular
expenses for services, such as transfer agent fees, custodial fees
paid to the bank that holds its portfolio securities, audit fees
and legal and other expenses. Those expenses are detailed in the
Fund's Financial Statements in the Statement of Additional
Information.
Annual Fund Operating Expenses (as a Percentage of Average Net
Assets):
Class A Class B Class C
Shares Shares Shares
Management Fees 0.74% 0.74% 0.74%
12b-1 Plan Fees 0.13% 1.00% 1.00%
Other Expenses 0.39% 0.39% 0.41%
Total Fund Operating
Expenses 1.26% 2.13% 2.15%
The numbers in the chart above for Class A and Class C shares
are based upon the Fund's expenses in its last fiscal year ended
June 30, 1996. Class B shares were not publicly offered prior to
November 1, 1995. Therefore, Annual Fund Operating Expenses shown
for Class B shares are based on the period from November 1, 1995
until June 30, 1996. All amounts are shown as a percentage of the
average net assets of each class of the Fund's shares for the year
ended June 30, 1996, and have been annualized for Class C shares.
The "12b-1 Plan Fees" for Class A shares are the service plan fees
(the maximum fee is 0.25% of average annual net assets of that
Class). Currently, the Board of Trustees has set the maximum fee
at 0.15% for assets representing Class A shares sold before April
1, 1991, and 0.25% for assets representing Class A shares sold on
or after that date. For Class B and Class C shares, the 12b-1 Plan
fees are the service fees (the maximum service fee is 0.25% of
average annual net assets of that Class) and the asset-based sales
charge of 0.75%.
Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples
shown below. Assume that you make a $1,000 investment in each class
of shares of the Fund, and the Fund's annual return is 5%, and that
its operating expenses for each class are the ones shown in the
Annual Fund Operating Expenses table above. If you were to redeem
your shares at the end of each period shown below, your investment
would incur the following expenses by the end of 1, 3, 5 and 10
years:
1 year 3 years 5 years 10 years*
Class A Shares $70 $95 $123 $201
Class B Shares $72 $97 $134 $204
Class C Shares $32 $67 $115 $248
If you did not redeem your investment, it would incur the following
expenses:
1 year 3 years 5 years 10 years*
Class A Shares $70 $95 $123 $201
Class B Shares $22 $67 $114 $204
Class C Shares $22 $67 $115 $248
*In the first example, expenses include the Class A initial sales
charge and the applicable Class B or Class C contingent deferred
sales charge. In the second example Class A expenses include the
initial sales charge, but Class B and Class C expenses do not
include contingent deferred sales charges. The Class B expenses in
years 7 through 10 are based on the Class A expenses shown above,
because the Fund automatically converts your Class B shares into
Class A shares after six years. Because of the asset-based sales
charge and the contingent deferred sales charge imposed on Class B
and Class C shares of the Fund, long-term Class B and Class C
shareholders could bear expenses that would be the economic
equivalent of more than the maximum front-end sales charge
permitted under applicable regulatory requirements. For Class B
shareholders, the automatic conversion of Class B shares to Class
A Shares is designed to minimize the likelihood that this will
occur. Please refer to "How to Buy Shares - Class B Shares" for
more information.
These examples show the effect of expenses on an investment,
but are not meant to state or predict actual or expected costs or
investment returns of the Fund, all of which may be more or less
than those shown.
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized below,
with references to the section of this Prospectus where more
complete information can be found. You should carefully read the
entire Prospectus before making a decision about investing in the
Fund. Keep the Prospectus for reference after you invest,
particularly for information about your account, such as how to
sell or exchange shares.
What Is The Fund's Investment Objective? The Fund's primary
investment objective is to seek capital appreciation. Its second
objective is to achieve income consistent with growth in capital.
What Does the Fund Invest In? The Fund primarily invests in
common stocks (these are called "equity securities") that offer
growth possibilities while retaining a flexible approach to
investment. The Fund may also write covered calls and use certain
derivative investments and hedging instruments to try to manage
investment risks. These investments are more fully explained in
"Investment Objective and Policies" starting on page 10.
Who Manages the Fund? The Fund's investment adviser (the
"Manager") is OppenheimerFunds, Inc., which (including a
subsidiary) manages investment company portfolios having over $55
billion in assets as of September 30, 1996. The Manager is paid an
advisory fee by the Fund, based on its net assets. The Fund has a
portfolio manager, Richard Rubinstein, who is employed by the
Manager and is primarily responsible for the selection of the
Fund's securities. The Fund's Board of Trustees, elected by
shareholders, oversees the investment adviser and the portfolio
manager. Please refer to "How the Fund is Managed," starting on
page ___ for more information about the Manager and its fees.
How Risky is the Fund? All investments carry risks to some
degree. It is important to remember that the Fund is designed for
long-term investors. The Fund's investments in stocks and bonds
are subject to changes in their value from a number of factors such
as changes in general stock and bond market movements. The change
in value of particular stocks or bonds may result from an event
affecting the issuer, or changes in interest rates that can affect
stock and bond prices. The Fund's investments in foreign
securities are subject to additional risks associated with
investing abroad, such as the affect of currency rate changes on
stock values. These changes affect the value of the Fund's
investments and its share prices for each class of its shares. In
the Oppenheimer funds spectrum, the Fund is generally more
aggressive than the other growth and income funds but less
aggressive than the aggressive growth funds. While the Manager
tries to reduce risks by diversifying investments, by carefully
researching securities before they are purchased for the portfolio,
and in some cases by using hedging techniques, there is no
guarantee of success in achieving the Fund's objectives and your
shares may be worth more or less than their original cost when you
redeem them. Please refer to "Investment Risks" starting on page
10 for a more complete discussion of the Fund's investment risks.
How Can I Buy Shares? You can buy shares through your
dealer or financial institution, or you can purchase shares
directly through the Distributor by completing an Application or by
using an Automatic Investment Plan under AccountLink. Please refer
to "How To Buy Shares" on page 21 for more details.
Will I Pay a Sales Charge to Buy Shares? The Fund has three
classes of shares. Each class of shares has the same investment
portfolio, but different expenses. Class A shares are offered with
a front-end sales charge, starting at 5.75%, and reduced for larger
purchases. Class B shares and Class C shares are offered without
a front-end sales charge, but may be subject to a contingent
deferred sales charge if redeemed within 6 years or 12 months of
purchase, respectively. There is also an annual asset-based sales
charge on Class B shares and Class C shares. Please review "How To
Buy Shares" starting on page 21 for more details, including a
discussion about factors you and your financial advisor should
consider in determining which class may be appropriate for you.
How Can I Sell My Shares? Shares can be redeemed by mail or
by telephone call to the Transfer Agent on any business day, or
through your dealer. Please refer to "How To Sell Shares" on page
36. The Fund also offers exchange privileges to other Oppenheimer
funds, described in "How To Exchange Shares" on page 38.
How Has the Fund Performed? The Fund measures its
performance by quoting its average annual total return and
cumulative total returns, which measure historical performance.
Those returns can be compared to the returns (over similar periods)
of other funds. Of course, other funds may have different
objectives, investments, and levels of risk. The Fund's
performance can also be compared to a broad market index, which we
have done on pages __ and __. Please remember that past
performance does not guarantee future results.
Financial Highlights
The table on the following pages presents selected financial
information about the Fund, including per share data and expense
ratios and other data based on the Fund's average net assets. This
information has been audited by KPMG Peat Marwick LLP, the Fund's
independent auditors, whose report on the Fund's financial
statements for the fiscal year ended June 30, 1996, is included in
the Statement of Additional Information. Class B shares were only
offered during a portion of the fiscal year ended June 30, 1996,
commencing on November 1, 1995.
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------
Financial Highlights
Class A
--------------------------------------------------------------------
Year Ended June 30,
1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------
- -----------------
<S> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $11.34 $10.55 $10.41
$9.72
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Income (loss) from investment operations:
Net investment income .20 .31 .07 .11
Net realized and unrealized gain (loss) 1.69 1.58 .55 1.15
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Total income (loss) from investment
operations 1.89 1.89 .62 1.26
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Dividends and distributions to shareholders:
Dividends from net investment income (.13) (.02) (.03)
(.10)
Distributions from net realized gain (.96) (1.08) (.45) (.47)
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Total dividends and distributions
to shareholders (1.09) (1.10) (.48) (.57)
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Net asset value, end of period $12.14 $11.34 $10.55
$10.41
====================================================================
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Total Return, at Net Asset Value(3) 17.56% 19.60% 5.84%
13.33%
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $273,194 $270,381 $237,281
$216,180
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Average net assets (in thousands) $270,211 $254,011 $229,976
$212,660
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Ratios to average net assets:
Net investment income 1.59% 1.10% 0.69%
1.05%
Expenses 1.26% 1.29% 1.16% 1.10%
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Portfolio turnover rate(5) 29.7% 34.1% 41.6%
35.6%
Average brokerage commission rate(6) $0.0324 -- --
- --
<PAGE>
--------------------------------------------------------------------
--------------------------------------------------------------------
1992 1991 1990 1989
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Per Share Operating Data:
Net asset value, beginning of period $9.31 $9.06 $9.17
$8.36
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Income (loss) from investment operations:
Net investment income .16 .26 .32 .21
Net realized and unrealized gain (loss) .84 .69 .23
.82
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Total income (loss) from investment
operations 1.00 .95 .55 1.03
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Dividends and distributions to shareholders:
Dividends from net investment income (.32) (.22) (.25)
(.17)
Distributions from net realized gain (.27) (.48) (.41)
(.05)
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Total dividends and distributions
to shareholders (.59) (.70) (.66) (.22)
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Net asset value, end of period $9.72 $9.31 $9.06
$9.17
=====================================================================
=======
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Total Return, at Net Asset Value(3) 11.22% 11.65% 6.04%
12.60%
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $209,495 $202,509 $196,076
$208,166
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Average net assets (in thousands) $221,369 $189,994 $206,259
$201,556
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Ratios to average net assets:
Net investment income 1.71% 2.91% 3.36%
2.49%
Expenses 1.09% 1.07% 1.04% 1.07%
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Portfolio turnover rate(5) 58.2% 105.8% 79.5%
96.6%
Average brokerage commission rate(6) -- -- --
--
<PAGE>
- ----------------------------------------------------------------------------------
Class B Class C
---------------------------------------- ------------------ ------------
Period Ended
June 30, Year Ended June 30,
1988 1987 1996(2) 1996
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Per Share Operating Data:
Net asset value, beginning of period $12.16 $12.48 $11.85
$11.19
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Income (loss) from investment operations:
Net investment income .13 .06 .14 .07
Net realized and unrealized gain (loss) (1.40) .79 1.17 1.69
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Total income (loss) from investment
operations (1.27) .85 1.31 1.76
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Dividends and distributions to shareholders:
Dividends from net investment income (.17) (.02) (.13) (.07)
Distributions from net realized gain (2.36) (1.15) (.96) (.96)
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Total dividends and distributions
to shareholders (2.53) (1.17) (1.09) (1.03)
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Net asset value, end of period $8.36 $12.16 $12.07 $11.92
=====================================================================
============
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Total Return, at Net Asset Value(3) (12.30)% 8.44% 11.86%
16.51%
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $213,301 $273,756 $1,655
$4,086
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Average net assets (in thousands) $224,367 $261,686 $649
$3,491
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Ratios to average net assets:
Net investment income 1.51% 0.52% 0.74%(4) 0.75%
Expenses 1.04% 0.99% 2.13%(4) 2.15%
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Portfolio turnover rate(5) 118.8% 59.1% 29.7% 29.7%
Average brokerage commission rate(6) -- -- $0.0324 $0.0324
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------
----------------------------------------
1995 1994(1)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $10.49 $11.08
- -------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .03 .02
Net realized and unrealized gain (loss) 1.75 (.14)
- -------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations 1.78 (.12)
- -------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income -- (.02)
Distributions from net realized gain (1.08) (.45)
- -------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (1.08) (.47)
- -------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.19 $10.49
========================================
- -------------------------------------------------------------------------------------------------------
Total Return, at Net Asset Value(3) 18.57% (1.24)%
- -------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $2,154 $294
- -------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,100 $108
- -------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 0.48% 0.05%(4)
Expenses 2.20% 2.44%(4)
- -------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 34.1% 41.6%
Average brokerage commission rate(6) -- --
</TABLE>
<TABLE>
<CAPTION>
<S><C>
1. For the period from December 1, 1993 (inception of offering) to June 30, 1994.
2. For the period from November 1, 1995 (inception of offering) to June 30, 1996.
3. Assumes a hypothetical initial investment on the business day before the first day of the fiscal
period (or inception of
offering), with all dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the
net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected
in the total returns.
Total returns are not annualized for periods of less than one full year.
4. Annualized.
5. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly
average of the market value of
portfolio securities owned during the period. Securities with a maturity or expiration date at the time
of acquisition of one year
or less are excluded from the calculation. Purchases and sales of investment securities (excluding
short-term securities) for the
period ended June 30, 1996 were $74,869,135 and $104,723,299, respectively.
6. Total brokerage commissions paid on applicable purchases and sales of portfolio securities for
the period divided by the total
number of related shares purchased and sold.
</TABLE>
Oppenheimer Fund
<PAGE>
Investment Objective and Policies
Objective. The Fund's primary objective is to seek capital
appreciation. Its secondary objective is to achieve income
consistent with growth in capital.
Investment Policies and Strategies. In seeking its primary
investment objective of capital appreciation, the Fund invests
principally in common stocks that the Manager believes offer growth
possibilities. However, the Manager follows a flexible approach to
investment at all times. Investments may also include preferred
stocks, convertible securities, and rights or warrants. To achieve
its secondary objective of income consistent with capital growth,
the Fund invests in dividend-paying common stocks and may also
invest in corporate debt securities and obligations of U.S. and
foreign governments (see "Foreign Securities," below). The Fund
may try to hedge against losses in the value of its portfolio
securities by using hedging techniques described below.
Can the Fund's Investment Objective and Policies Change?
The Fund has a primary and secondary investment objective,
described above, as well as investment policies it follows to try
to achieve its objectives. Additionally, the Fund uses certain
investment techniques and strategies in carrying out those
investment policies. The Fund's investment policies and practices
are not "fundamental" unless this Prospectus or Statement of
Additional Information says that a particular policy is
"fundamental." The Fund's investment objectives are a fundamental
policy.
Fundamental policies are those that cannot be changed without
the approval of a "majority" of the Fund's outstanding voting
shares. The term "majority" is defined in the Investment Company
Act to be a particular percentage of outstanding voting shares (and
this term is explained in the Statement of Additional Information).
The Fund's Board of Trustees may change non-fundamental policies
without shareholder approval, although significant changes will be
described in amendments to this Prospectus.
Investment Risks
All investments carry risks to some degree, whether they are risks
that market prices of the investment will fluctuate (this is known
as "market risk") or that the underlying issuer will experience
financial difficulties and may default on its obligation under a
fixed-income investment to pay interest and repay principal (this
is referred to as "credit risk"). These general investment risks,
and the special risks of certain types of investments that the Fund
may hold are described below. They affect the value of the Fund's
investments, its investment performance, and the prices of its
shares. These risks collectively form the risk profile of the
Fund.
Because of the types of securities the Fund invests in and the
investment techniques the Fund uses, the Fund is designed for
investors who are investing for the long term. It is not intended
for investors seeking assured income or preservation of capital.
While the Manager tries to reduce risks by diversifying
investments, by carefully researching securities before they are
purchased, and in some cases by using hedging techniques, changes
in overall market prices can occur at any time, and because the
income earned on securities is subject to change, there is no
assurance that the Fund will achieve its investment objective.
When you redeem your shares, they may be worth more or less than
what you paid for them.
Stock Investment Risks. Because the Fund may invest a
substantial portion of its assets in stocks, the value of the
Fund's portfolio will be affected by changes in the stock markets.
At times, the stock markets can be volatile, and stock prices can
change substantially. This market risk will affect the Fund's net
asset values per share, which will fluctuate as the values of the
Fund's portfolio securities change. Not all stock prices change
uniformly or at the same time, not all stock markets move in the
same direction at the same time, and other factors can affect a
particular stock's prices (for example, poor earnings reports by an
issuer, loss of major customers, major litigation against an
issuer, and changes in government regulations affecting an
industry). Not all of these factors can be predicted. The Fund
attempts to limit market risks by diversifying its investments,
that is, by not holding a substantial amount of the stock of any
one company and by not investing too great a percentage of the
Fund's assets in any one company.
Foreign Securities Have Special Risks. While foreign
securities offer special investment opportunities, there are also
special risks. The change in value of a foreign currency against
the U.S. dollar will result in a change in the U.S. dollar value of
securities denominated in that foreign currency. Foreign issuers
are not subject to the same accounting and disclosure requirements
that U.S. companies are subject to. The value of foreign
investments may be affected by exchange control regulations,
expropriation or nationalization of a company's assets, foreign
taxes, delays in settlement of transactions, changes in
governmental economic or monetary policy in the U.S. or abroad, or
other political and economic factors. More information about the
risks and potential rewards of investing in foreign securities is
contained in the Statement of Additional Information.
Hedging instruments can be volatile investments and may
involve special risks. The use of hedging instruments requires
special skills and knowledge of investment techniques that are
different than what is required for normal portfolio management.
If the Manager uses a hedging instrument at the wrong time or
judges market conditions incorrectly, hedging strategies may reduce
the Fund's return. The Fund could also experience losses if the
prices of its futures and options positions were not correlated
with its other investments or if it could not close out a position
because the market for the future or option was illiquid.
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.
The use of forward contracts may reduce the gain that would
otherwise result from a change in the relationship between the U.S.
dollar and a foreign currency. These risks are described in
greater detail in the Statement of Additional Information.
Investment Techniques and Strategies
The Fund may also use the investment techniques and strategies
described below. These techniques involve certain risks. The
Statement of Additional Information contains more detailed
information about these practices, including limitations on their
use that may help reduce some of the risks.
Special Situations. The Fund may invest in securities of
companies that are in "special situations" that the Manager
believes present opportunities for capital growth. A "special
situation" may be an event such as a proposed merger,
reorganization, or other unusual development that is expected to
occur and which may result in an increase in the value of a
company's securities regardless of general business conditions or
the movement of prices in the securities market as a whole. There
is a risk that the price of the security may decline if the
anticipated development fails to occur. Although the Fund may
invest in companies for the purpose of influencing their managerial
policy, the Fund has not made any such investment, and has no
present intention of doing so.
Concentration of Investments. The Fund reserves the right
to concentrate up to 50% of its assets in any one industry and may
do so when the Manager deems it appropriate to seek to achieve the
Fund's investment objectives. Such concentration would possibly
occur only when trends in the market as a whole were considered
unfavorable but at the same time a particular industry was believed
to afford better-than-average prospects. Except in that case, it
is not the intention of the Fund to concentrate more than 25% of
the value of its total assets in any one industry.
Temporary Defensive Investments. When stock market prices
are falling or in other unusual economic or business circumstances,
the Fund may invest all or a portion of its assets in defensive
securities. Securities selected for defensive purposes may include
debt securities, such as rated or unrated bonds and debentures,
preferred stocks, cash or cash equivalents, such as U.S. Treasury
bills and other short-term obligations of the U.S. Government, its
agencies or instrumentalities, or commercial paper rated "A-1" or
better by Standard & Poor's Corporation or "P-1" or better by
Moody's Investors Service, Inc.
Foreign Securities. The Fund may purchase equity and debt
securities issued or guaranteed by foreign companies or foreign
governments or their agencies. The Fund may buy securities of
companies in any country, developed or underdeveloped. Investments
in securities of issuers in underdeveloped countries generally
involve more risk and may be considered highly speculative.
Although the Fund may from time to time emphasize investments in
U.S. issuers, there is no limit on the amount of the Fund's assets
that may be invested in foreign securities.
Warrants and Rights. Warrants are options to purchase
stock at set prices that are valid for a limited period of time.
Rights are similar to warrants but normally have a short duration
and are distributed by the issuer to its shareholders. The Fund
may invest up to 5% of its total assets in warrants and rights.
That 5% does not apply to warrants and rights the Fund acquired as
part of units with other securities or that were attached to other
securities. No more than 2% of the Fund's total assets may be
invested in warrants and rights that are not listed on the New York
or American Stock Exchanges. For further details about these
investments, see "Warrants and Rights" in the Additional Statement.
Convertible Securities. Convertible securities are bonds,
preferred stocks and other securities that normally pay a fixed
rate of interest or dividend and give the owner the option to
convert the security into common stock. While the value of
convertible securities depends in part on interest rate changes and
the credit quality of the issuer, the price will also change based
on the price of the underlying stock. While convertible securities
generally have less potential for gain than common stock, their
income provides a cushion against the stock price's declines. They
generally pay less income than non-convertible bonds. The Manager
generally analyzes these investments from the perspective of the
growth potential of the underlying stock and treats them as "equity
substitutes."
Preferred Stock. The Fund may invest in preferred stock.
Generally, preferred stock is an equity security that has a
specified dividend and ranks after bonds and before common stocks
in its claim on income for dividend payments and on assets should
the issuing company be liquidated or enter bankruptcy proceedings.
While most preferred stocks pay a dividend, the Fund may purchase
preferred stock where the issuer has omitted, or is in danger of
omitting, payment of its dividend. Such investments would be made
primarily for their capital appreciation potential. Certain
preferred stock may be convertible into or exchangeable for a given
number of common shares. Such preferred stock tends to be more
volatile than nonconvertible preferred stock, which behaves more
like a fixed-income security.
Investing in Small, Unseasoned Companies. The Fund may
invest in securities of small, unseasoned companies. These are
companies that have been in operation for less than three years,
even after including the operations of any predecessors.
Securities of these companies may have limited liquidity (which
means that the Fund may have difficulty selling them at an
acceptable price when it wants to) and the prices of these
securities may be volatile. The Fund currently intends to invest no
more than 5% of its total assets in securities of small, unseasoned
issuers.
Illiquid and Restricted Securities. Under the policies
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 currently intends to invest no more than 10% of its net
assets in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional
purchasers, are not subject to that limit.
Loans of Portfolio Securities. To raise cash for liquidity
purposes, the Fund may lend its portfolio securities to brokers,
dealers and other types of financial institutions approved by the
Board of Trustees. The Fund must receive collateral for a loan.
After any loan, the value of the securities loaned must not exceed
25% of the value of the Fund's total assets. There are some risks
in connection with securities lending. The Fund might experience a
delay in receiving additional collateral to secure a loan, or a
delay in recovery of the loaned securities if the borrower
defaults. The Fund presently does not intend to make loans of
portfolio securities that will exceed 5% of the value of the Fund's
total assets in the coming year.
Repurchase Agreements. The Fund may enter into repurchase
agreements. In a repurchase transaction, the Fund buys a security
and simultaneously sells it to the vendor for delivery at a future
date. They are used primarily for liquidity purposes. There is no
limit on the amount of the Fund's net assets that may be subject to
repurchase agreements of seven days or less. Repurchase agreements
must be fully collateralized. However, if the vendor fails to pay
the resale price on the delivery date, the Fund may incur costs in
disposing of the collateral and may experience losses if there is
any delay in its ability to do so. The Fund will not enter into a
repurchase agreement that causes more than 10% of its net assets to
be subject to repurchase agreements having a maturity beyond seven
days.
Hedging. As described below, the Fund may purchase and sell
certain kinds of futures contracts, put and call options, forward
contracts, and options on futures, broadly-based indices and
foreign currencies. These are all referred to as "hedging
instruments." While the Fund currently does not engage extensively
in hedging, the Fund may use these instruments for hedging purposes
and, in the case of covered calls, non-hedging purposes as
described below.
The Fund may write covered call options and buy and sell
options, futures and forward contracts for a number of purposes.
It may do so to try to manage its exposure to the possibility that
the prices of its portfolio securities may decline, or to establish
a position in the equity securities market as a temporary
substitute for purchasing individual securities. Some of these
strategies, such as selling futures and writing covered calls,
hedge the Fund's portfolio against price fluctuations. Other
hedging strategies, such as buying futures, tend to increase the
Fund's exposure to the securities market.
Forward contracts may be used to try to manage foreign
currency risks on the Fund's foreign investments. Foreign currency
options may be used to try to protect against declines in the
dollar value of foreign securities the Fund owns, or to protect
against an increase in the dollar cost of buying foreign
securities. Writing covered call options may also provide income
to the Fund for liquidity purposes.
Futures. The Fund may buy and sell futures contracts that
relate to (1) broadly-based securities indices (these are referred
to as Financial Futures), (2) interest rates (these are referred to
as Interest Rate Futures) or (3) foreign currencies (these are
referred to as Forward Contracts).
Put and Call Options. The Fund may buy and sell certain
kinds of put options (puts) and call options (calls). A call or
put option may not be purchased if the value of all the Fund's put
and call options would exceed 5% of the Fund's total assets.
The Fund may buy calls on securities, broadly-based securities
indices, foreign currencies, Interest Rate Futures or Financial
Futures. The Fund may buy calls to terminate its obligation on a
call the Fund previously wrote. The Fund may write (that is, sell)
call options. When the Fund writes a call, it receives cash
(called a premium). Each call the Fund writes must be "covered"
while the call is outstanding. That means the Fund owns the
investment on which the call was written . The Fund may write
calls on Futures contracts it owns, but these calls must be covered
by securities or other liquid assets the Fund owns and segregates
to enable it to satisfy its obligations if the call is exercised.
After writing any call, not more than 25% of the Fund's total
assets may be subject to calls.
The Fund may buy and sell put options. The Fund can buy those
puts that relate to securities the Fund owns, broadly-based
securities indices, foreign currencies, or Interest Rate Futures or
Financial Futures (whether or not the Fund holds the particular
Future in its portfolio). Writing puts requires the segregation of
liquid assets to cover the put. The Fund will not write a put if
it will require more than 25% of the Fund's total assets to be
segregated to cover the put obligation.
The Fund may buy or sell foreign currency puts and calls only
if they are traded on a securities or commodities exchange or over-
the-counter market, or are quoted by recognized dealers in those
options.
Forward Contracts. Forward contracts are foreign currency
exchange contracts. The 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 may also use "cross-
hedging" where the Fund hedges against changes in currencies other
than the currency in which a security it holds is denominated.
Derivative Investments. In general, a "derivative
investment" is a specially designed investment. Its performance is
linked to the performance of another investment or security.
Examples of derivative investments in which the Fund may invest
include index-linked notes (principal or interest payments on the
note depend on performance of a market index) or equity-linked debt
securities (at maturity, principal is payable in an amount based on
the issuer's common stock price at maturity). In the broadest
sense, exchange-traded options and futures contracts (discussed in
"Hedging," above) may be considered "derivative investments."
Other Investment Restrictions. The Fund has other investment
restrictions which are fundamental policies. Under these
fundamental policies, the Fund cannot do any of the following:
The Fund cannot buy securities issued or guaranteed by any
one issuer (except the U.S. Government or any of its agencies or
instrumentalities) if, with respect to 75% of its total assets,
more than 5% of the Fund's total assets would be invested in
securities of that issuer, or the Fund would then own more than 10%
of that issuer's voting securities.
The Fund cannot deviate from the restrictions listed under
"Concentration of Investments."
All of the percentage restrictions described above and
elsewhere in this Prospectus apply only at the time the Fund
purchases a security. The Fund need not dispose of a security
merely because the size of the Fund's assets has changed or the
security has increased in value relative to the size of the Fund.
There are other fundamental policies discussed in the Statement of
Additional Information.
How the Fund is Managed
Organization and History. The Fund was organized in 1958 as a New
York corporation but was reorganized in 1985 as a Massachusetts
business trust. The Fund is an open-end management investment
company.
The Fund is governed by a Board of Trustees, which is
responsible for protecting the interests of shareholders under
Massachusetts law. The Trustees meet periodically throughout the
year to oversee the Fund's activities, review its performance, and
review the actions of the Manager. "Trustees and Officers of the
Fund" in the Statement of Additional Information names the Trustees
and provides more information about them and the officers of the
Fund. Although the Fund will not normally hold annual meetings of
its shareholders, it may hold shareholder meetings from time to
time on important matters, and shareholders have the right to call
a meeting to remove a Trustee or to take other action described in
the Fund's Declaration of Trust.
The Board of Trustees has the power, without shareholder
approval, to divide unissued shares of the Fund into two or more
classes. The Board has done so, and the Fund currently has three
classes of shares, Class A, Class B and Class C. All classes
invest in the same investment portfolio. Each class has its own
dividends and distributions and pays certain expenses which may be
different for the different classes. Each class may have a
different net asset value. Each share has one vote at shareholder
meetings, with fractional shares voting proportionally on matters
submitted to the vote of shareholders. Shares of each class may
have separate voting rights on matters in which interests of one
class are different from interests of another class, and shares of
a particular class vote as a class on matters that affect that
class alone. Shares are freely transferrable.
The Manager and Its Affiliates. The Fund is managed by the Manager,
OppenheimerFunds, Inc., which is responsible for selecting the
Fund's investments and handles its day-to-day business. The
Manager carries out its duties, subject to the policies established
by the Board of Trustees, under an Investment Advisory Agreement
which states the Manager's responsibilities. The Agreement sets
forth the fees paid by the Fund to the Manager, and describes the
expenses that the Fund is responsible to pay to conduct its
business.
The Manager has operated as an investment adviser since 1959.
The Manager (including a subsidiary) currently manages investment
companies, including other Oppenheimer funds, with assets of more
than $55 billion as of September 30, 1996, and with more than 3
million shareholder accounts. The Manager is owned by Oppenheimer
Acquisition Corp., a holding company that is owned in part by
senior officers of the Manager and controlled by Massachusetts
Mutual Life Insurance Company.
Portfolio Manager. The Portfolio Manager of the Fund is
Richard H. Rubinstein. He has been the person principally
responsible for the day-to-day management of the Fund's portfolio
since June, 1990. During the past five years, Mr. Rubinstein has
been a Senior Vice President of the Manager and a Vice President of
the Fund, and has also served as an officer of other Oppenheimer
funds.
Fees and Expenses. Under the Investment Advisory Agreement,
the Fund pays the Manager a monthly fee at the following annual
rates, which decline on additional assets as the Fund grows: 0.75%
of the first $200 million of aggregate net assets, 0.72% of the
next $200 million, 0.69% of the next $200 million, 0.66% of the
next $200 million and 0.60% of net assets in excess of $800
million. The Fund's management fee for its last fiscal year was
0.74% of average annual net assets for Class A shares and for Class
C shares, and 0.74% of the average annual net assets (annualized)
for Class B shares. This rate may be higher than the rate paid by
some other mutual funds.
The Fund pays expenses related to its daily operations, such
as custodian fees, Trustees' fees, transfer agency fees, legal fees
and auditing costs. Those expenses are paid out of the Fund's
assets and are not paid directly by shareholders. However, those
expenses reduce the net asset value of shares, and therefore are
indirectly borne by shareholders through their investment. More
information about the Investment Advisory Agreement and the other
expenses paid by the Fund is contained in the Statement of
Additional Information.
There is also information about the Fund's brokerage policies
and practices in "Brokerage Policies of the Fund" in the Statement
of Additional Information. That section discusses how brokers and
dealers are selected for the Fund's portfolio transactions. When
deciding which brokers to use, the Manager is permitted by the
Investment Advisory Agreement to consider whether brokers have sold
shares of the Fund or any other funds for which the Manager serves
as investment adviser.
The Distributor. The Fund's shares are sold through
dealers, brokers and other financial institutions that have a sales
agreement with OppenheimerFunds Distributor, Inc., a subsidiary of
the Manager that acts as the Fund's Distributor. The Distributor
also distributes the shares of the other "Oppenheimer funds"
managed by the Manager and is sub-distributor for funds managed by
a subsidiary of the Manager.
The Transfer Agent. The Fund's Transfer Agent is
OppenheimerFunds Services, a division of the Manager, which acts as
the shareholder servicing agent for the Fund on an "at-cost" basis.
It also acts as the shareholder servicing agent for the other
Oppenheimer funds. Shareholders should direct inquiries about
their account to the Transfer Agent at the address and toll-free
number shown below in this Prospectus and on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the term
"total return" to illustrate its performance. The performance of
each class of shares is shown separately, because the performance
of each class of shares will usually be different as a result of
the different kinds of expenses each class bears. These returns
measure the performance of a hypothetical account in the Fund over
various periods, and do not show the performance of each
shareholder's account (which will vary if dividends are received in
cash or shares are sold or purchased). The Fund's performance data
may be useful to help you see how well your investment has done
over time and to compare it to market indices.
It is important to understand that the Fund's total returns
represent past performance and should not be considered to be
predictions of future returns or performance. More detailed
information about how total returns are calculated is contained in
the Statement of Additional Information, which also contains
information about other ways to measure and compare the Fund's
performance. The Fund's investment performance will vary, depending
on market conditions, the composition of the portfolio, expenses
and which class of shares you purchase.
Total Returns. There are different types of "total returns"
used to measure the Fund's performance. Total return is the change
in value of a hypothetical investment in the Fund over a given
period, assuming that all dividends and capital gains distributions
are reinvested in additional shares. The cumulative total return
measures the change in value over the entire period (for example,
ten years). An average annual total return shows the average rate
of return for each year in a period that would produce the
cumulative total return over the entire period. However, average
annual total returns do not show the Fund's actual year-by-year
performance.
When total returns are quoted for Class A shares, normally the
current maximum initial sales charge has been deducted. When total
returns are shown for Class B and Class C shares, normally the
contingent deferred sales charge that applies to the period for
which total return is shown has been deducted. However, total
returns may also be quoted at "net asset value," without
considering the effect of either the front-end or the appropriate
contingent deferred sales charge, as applicable, and those returns
would be less if the sales charges were deducted.
How Has the Fund Performed? Below is a discussion by the Manager of
the Fund's performance during its past fiscal year ended June 30,
1996, followed by a graphical comparison of the Fund's performance
to an appropriate broad-based market index.
Management's Discussion of Performance. During the Fund's
fiscal year ended June 30, 1996, its performance was affected
principally by its continued emphasis on growth stocks and by the
overall strong performance of the U.S. stock market during most of
the fiscal year, although there was significant market volatility
near the end of its fiscal year. The Fund's performance benefited
from the Fund's domestic stock holdings, including positions in
technology and healthcare stocks that appreciated as the stock
market rose. Consistent with the portfolio manager's contrarian
investment strategy, the Fund bought retail stocks believed to be
undervalued. As interest rates increased toward the end of the
fiscal year and corporate earnings growth slowed among U.S.
companies the Manager decreased the number of securities in its
portfolio, added to its position in energy stocks , and increased
its position in stocks of foreign companies believed to have
advantages over U.S. competitors or which were selling at prices
the Manager believed to be less than their value.
Comparing the Fund's Performance to the Market. The graphs
below show the performance of a hypothetical $10,000 investment in
Class A, Class B and Class C shares of the Fund held at June 30,
1996. In the case of Class A shares, performance is measured over
a ten-year period. In the case of Class B and Class C shares,
performance is measured from the inception of the class on November
1, 1995 and December 1, 1993, respectively. The Fund's performance
reflects the deduction of the 5.75% current maximum initial sales
charge on Class A shares, the applicable contingent deferred sales
charge on Class B and Class C shares, and reinvestment of all
dividends and capital gains distributions.
The Fund's performance is compared to the performance of the
S&P 500 Index, a broad-based index of equity securities widely
regarded as a general measure of the performance of the U.S. equity
securities market. Index performance reflects the reinvestment of
dividends but does not consider the effect of expenses or taxes.
Also, the Fund's performance reflects the effect of Fund business
and operating expenses. While index comparisons may be useful to
provide a benchmark for the Fund's performance, it must be noted
that the Fund's investments are not limited to the securities in
the S&P 500 Index, which tend to be securities of larger, well-
capitalized companies. Moreover, the index data does not reflect
any assessment of the risk of the investments included in the
index.
Comparison of Change in Value
of $10,000 Hypothetical Investment in:
Oppenheimer Fund and the
S&P 500 Index
[Graph]
Average Annual Total Return of Class A Shares of the Fund at
6/30/96(1)
1-Year 5-Year 10-Year
10.80% 12.07% 8.41%
Cumulative Total Return of Class B Shares of the Fund at
6/30/96(2)
Life
6.86%
Average Annual Total Return of Class C Shares of the Fund at
6/30/96(3)
1-Year Life(2)
15.51% 12.79%
- ----------------------------
Total returns and the ending account values in the graphs reflect
reinvestment of all dividends and capital gains distributions.
(1)The inception date of the fund (Class A shares) was 4/30/59.
Class A returns are shown net of the applicable 5.75% maximum
initial sales charge.
(2)Class B shares of the Fund were first publicly offered on
11/1/95. The cumulative total return and the ending account value
in the graph are shown net of the applicable 5% contingent deferred
sales charge for the period.
Past performance is not predictive of future performance.
Graphs are not drawn to same scale.
A B O U T Y O U R A C C O U N T
How to Buy Shares
Classes of Shares. The Fund offers investors three different
classes of shares. The different classes of shares represent
investments in the same portfolio of securities but are subject to
different expenses and will likely have different share prices.
Class A Shares. If you buy Class A shares, you pay an
initial sales charge on investments up to $1 million (up to
$500,000 for purchases by "Retirement Plans," as defined in "Class
A Contingent Deferred Sales Charge" on page 26). If you purchase
Class A shares as part of an investment of at least $1 million
($500,000 for Retirement Plans) in shares of one or more
Oppenheimer funds, you will not pay an initial sales charge, but if
you sell any of those shares within 18 months of buying them, you
may pay a contingent deferred sales charge. The amount of that
sales charge will vary depending on the amount you invested. Sales
charge rates are described in "Buying Class A Shares" below.
Class B Shares. If you buy Class B shares, you pay no sales
charge at the time of purchase, but if you sell your shares within
six years of buying them, you will normally pay a contingent
deferred sales charge. That sales charge varies depending on how
long you own your shares, as described in "Buying Class B Shares"
below.
Class C Shares. If you buy Class C shares, you pay no sales
charge at the time of purchase, but if you sell your shares within
12 months of buying them, you will normally pay a contingent
deferred sales charge of 1% as discussed in "Buying Class C
Shares," below.
Which Class of Shares Should You Choose? Once you decide that the
Fund is an appropriate investment for you, the decision as to which
class of shares is better suited to your needs depends on a number
of factors which you should discuss with your financial advisor.
The Fund's operating costs that apply to a class of shares and the
effect of the different types of sales charges on your investment
will vary your investment results over time. The most important
factors to consider are how much you plan to invest and how long
you plan to hold your investment. If your goals and objectives
change over time and you plan to purchase additional shares, you
should re-evaluate those factors to see if you should consider
another class of shares.
In the following discussion, to help provide you and your
financial advisor with a framework in which to choose a class, we
have made some assumptions using a hypothetical investment in the
Fund. We used the sales charge rates that apply to each class
considering the effect of the asset-based sales charge on Class B
and Class C expenses (which will affect your investment return).
For the sake of comparison, we have assumed that there is a 10%
rate of appreciation in your investment each year. Of course, the
actual performance of your investment cannot be predicted and will
vary, based on the Fund's actual investment returns, and the
operating expenses borne by each class of shares, and which class
of shares you invest in. The factors discussed below are not
intended to be investment advice, guidelines or recommendations,
because each investor's financial considerations are different.
The discussion below of the factors to consider in purchasing a
particular class of shares assumes that you will purchase only one
class of shares and not a combination of shares of different
classes.
How Long Do You Expect to Hold Your Investment? While
future financial needs cannot be predicted with certainty, knowing
how long you expect to hold your investment will assist you in
selecting the appropriate class of shares. Because of the effect
of class-based expenses, your choice will also depend on how much
you plan to invest. For example, the reduced sales charges
available for larger purchases of Class A shares may, over time,
offset the effect of paying an initial sales charge on your
investment (which reduces the amount of your investment dollars
used to buy shares for your account), compared to the effect over
time of higher class-based expenses on Class B or Class C shares,
for which no initial sales charge is paid.
Investing for the Short Term. If you have a short-term
investment horizon (that is, you plan to hold your shares for not
more than six years), you should probably consider purchasing Class
A or Class C shares rather than Class B shares, because of the
effect of the Class B contingent deferred sales charge if you
redeem in less than 7 years, as well as the effect of the Class B
asset-based sales charge on the investment return for that class in
the short-term. Class C shares might be the appropriate choice
(especially for investments of less than $100,000), because there
is no initial sales charge on Class C shares, and the contingent
deferred sales charge does not apply to amounts you sell after
holding them one year.
However, if you plan to invest more than $100,000 for the
shorter term, then the more you invest and the more your investment
horizon increases toward six years, Class C shares might not be as
advantageous as Class A shares. That is because the annual asset-
based sales charge on Class C shares will have a greater impact on
your account over the longer term than the reduced front-end sales
charge available for larger purchases of Class A shares. For
example, Class A shares might be more advantageous than Class C (as
well as Class B) shares for investments of more than $100,000
expected to be held for 5 or 6 years (or more). For investments
over $250,000 expected to be held 4 to 6 years (or more), Class A
shares may become more advantageous than Class C (and Class B
shares). If investing $500,000 or more, Class A shares may be more
advantageous as your investment horizon approaches 3 years or more.
And for investors who invest $1 million or more, in most cases
Class A shares will be the most advantageous choice, no matter how
long you intend to hold your shares. For that reason, the
Distributor normally will not accept purchase orders of $500,000 or
more of Class B shares or $1 million or more of Class C shares,
from a single investor.
Investing for the Longer Term. If you are investing for the
longer term, for example, for retirement, and do not expect to need
access to your money for seven years or more, Class B shares may be
an appropriate consideration, if you plan to invest less than
$100,000. If you plan to invest more than $100,000 over the long
term, Class A shares will likely be more advantageous than Class B
shares or Class C shares, as discussed above, because of the effect
of the expected lower expenses for Class A shares and the reduced
initial sales charges available for larger investments in Class A
shares under the Fund's Right of Accumulation.
Of course, these examples are based on approximations of the
effect of current sales charges and expenses on a hypothetical
investment over time, using the assumed annual performance return
stated above, and therefore, you should analyze your options
carefully.
Are There Differences in Account Features That Matter to
You? Because some account features may not be available to Class
B and Class C shareholders, or other features (such as Automatic
Withdrawal Plans) might not be advisable (because of the effect of
contingent deferred sales charge) in non-retirement accounts for
Class B and Class C shareholders, you should carefully review how
you plan to use your investment account before deciding which class
of shares to buy. For example, share certificates are not
available for Class B or Class C shares and if you are considering
using your shares as collateral, that may be a factor.
Additionally, the dividends payable to Class B and Class C
shareholders will be reduced by the additional expenses borne
solely by that class, such as the asset-based sales charge to which
Class B and Class C shares are subject, as described below and in
the Statement of Additional Information.
How Does It Affect Payments to My Broker? A salesperson,
such as a broker, or any other person who is entitled to receive
compensation for selling Fund shares may receive different
compensation for selling one class than for selling another class.
It is important that investors understand that the purpose of the
Class B and Class C contingent deferred sales charge and asset-
based sales charges is the same as the purpose of the front-end
sales charge on sales of Class A shares: to compensate the
Distributor for commissions it pays to dealers and financial
institutions for selling shares.
How Much Must You Invest? You can open a Fund account with a
minimum initial investment of $1,000 and make additional
investments at any time with as little as $25. There are reduced
minimum investments under special investment plans:
With Asset Builder Plans, Automatic Exchange Plans,
403(b)(7) custodial plans and military allotment plans, you can
make initial and subsequent investments of as little as $25; and
subsequent purchases of at least $25 can be made by telephone
through AccountLink.
Under pension and profit-sharing and 401(k) plans and
Individual Retirement Accounts (IRAs), you can make an initial
investment of as little as $250 (if your IRA is established under
an Asset Builder Plan, the $25 minimum applies), and subsequent
investments may be as little as $25.
There is no minimum investment requirement if you are buying
shares by reinvesting dividends from the Fund or other Oppenheimer
funds (a list of them appears in the Statement of Additional
Information, or you can ask your dealer or call the Transfer
Agent), or by reinvesting distributions from unit investment trusts
that have made arrangements with the Distributor.
How Are Shares Purchased? You can buy shares several ways --
through any dealer, broker or financial institution that has a
sales agreement with the Distributor, directly through the
Distributor, or automatically from your bank account through an
Asset Builder Plan under the OppenheimerFunds AccountLink service.
The Distributor may appoint certain servicing agents as the
Distributor's agent to accept purchase and redemption orders. When
you buy shares, be sure to specify Class A, Class B or Class C
shares. If you do not choose, your investment will be made in
Class A shares.
Buying Shares Through Your Dealer. Your dealer will place
your order with the Distributor on your behalf.
Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "OppenheimerFunds Distributor, Inc." Mail it to P.O. Box
5270, Denver, Colorado 80217. If you don't list a dealer on the
application, the Distributor will act as your agent in buying the
shares. However, we recommend you discuss your investment first
with a financial advisor, to be sure that it is appropriate for
you.
Buying Shares Through OppenheimerFunds AccountLink. You can
use AccountLink to link your Fund account with an account at a U.S.
bank or other financial institution that is an Automated Clearing
House (ACH) member. You can then transmit funds electronically to
purchase shares, to have the Transfer Agent send redemption
proceeds, or to transmit dividends and distributions to your bank
account.
Shares are purchased for your account on the regular business
day the Distributor is instructed by you to initiate the ACH
transfer to buy shares. You can provide those instructions
automatically, under an Asset Builder Plan, described below, or by
telephone instructions using OppenheimerFunds PhoneLink, also
described below. You should request AccountLink privileges on the
application or dealer settlement instructions used to establish
your account. Please refer to "AccountLink" below for more details.
Asset Builder Plans. You may purchase shares of the Fund
(and up to four other Oppenheimer funds) automatically each month
from your account at a bank or other financial institution under an
Asset Builder Plan with AccountLink. Details are on the
Application and in the Statement of Additional Information.
At What Price Are Shares Sold? Shares are sold at the public
offering price based on the net asset value (and any initial sales
charge that applies) that is next determined after the Distributor
receives the purchase order in Denver. In most cases, to enable
you to receive that day's offering price, the Distributor or its
designated agent must receive your order by the time of day The New
York Stock Exchange closes, which is normally 4:00 P.M., but may be
earlier on some days (all references to time in this Prospectus
mean "New York Time"). The net asset value of each class of shares
is determined as of that time on each day The New York Stock
Exchange is open (which is a "regular business day"). If you buy
shares through a dealer, the dealer must receive your order by the
close of The New York Stock Exchange on a regular business day and
transmit it to the Distributor so that it is received before the
Distributor's close of business that day, which is normally 5:00
P.M. The Distributor may reject any purchase order for the Fund's
shares, in its sole discretion.
Special Sales Charge Arrangements For Certain Persons. Appendix A
to this Prospectus sets forth conditions for the waiver of, or
exemption from, sales charges or the special sales charge rates
that apply to purchases of shares of the Fund (including purchases
by exchange) by a person who was a shareholder of one of the Former
Quest for Value Funds (as defined in that Appendix).
Buying Class A Shares. Class A shares are sold at their offering
price, which is normally net asset value plus an initial sales
charge. However, in some cases, described below, purchases are not
subject to an initial sales charge, and the offering price will be
the net asset value. In some cases, reduced sales charges may be
available, as described below. Out of the amount you invest, the
Fund receives the net asset value to invest for your account. The
sales charge varies depending on the amount of your purchase. A
portion of the sales charge may be retained by the Distributor and
allocated to your dealer as commission. The current sales charge
rates and commissions paid to dealers and brokers are as follows:
Front-End
Front-End Sales Charge as
Sales Charge as a Percentage of Commission as
a Percentage of Amount Percentage of
Amount of Purchase Offering Price Invested Offering Price
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
The Distributor reserves the right to reallow the entire commission
to dealers. If that occurs, the dealer may be considered an
"underwriter" under Federal securities laws.
Class A Contingent Deferred Sales Charge. There is no
initial sales charge on purchases of Class A shares of any one or
more of the Oppenheimer funds in the following cases:
Purchases aggregating $1 million or more.
Purchases by a retirement plan qualified under sections
401(a) or 401(k) of the Internal Revenue Code, by a non-qualified
deferred compensation plan (not including Section 457 plans),
employee benefit plan, group retirement plan (see "How to Buy
Shares - Retirement Plans" in the Statement of Additional
Information for further details), an employee's 403(b)(7) custodial
plan account, SEP IRA, SARSEP, or SIMPLE plan (all of these plans
are collectively referred to as "Retirement Plans"); that: (1) buys
shares costing $500,000 or more or (2) has, at the time of
purchase, 100 or more eligible participants, or (3) certifies that
it projects to have annual plan purchases of $200,000 or more.
Purchases by an OppenheimerFunds Rollover IRA if the
purchases are made (1) through a broker, dealer, bank or registered
investment adviser that has made special arrangements with the
Distributor for these purchases, or (2) by a direct rollover of a
distribution from a qualified retirement plan if the administrator
of that plan has made special arrangements with the Distributor for
those purchases.
The Distributor pays dealers of record commissions on those
purchases in an amount equal to (i) 1.0% for non-Retirement Plan
accounts, and (ii) for Retirement Plan accounts, 1.0% of the first
$2.5 million, plus 0.50% of the next $2.5 million, plus 0.25% of
purchases over $5 million. That commission will be paid only on
those purchases that were not previously subject to a front-end
sales charge and dealer commission. No sales commission will be
paid to the dealer, broker or financial institution on sales of
Class A shares purchased with the redemption proceeds of shares of
a mutual fund offered as an investment option in a Retirement Plan
in which Oppenheimer funds are also offered as investment options
under a special arrangement with the Distributor if the purchase
occurs more than 30 days after the addition of the Oppenheimer
funds as an investment option to the Retirement Plan.
If you redeem any of those shares within 18 months of the end
of the calendar month of their purchase, a contingent deferred
sales charge (called the "Class A contingent deferred sales
charge") may be deducted from the redemption proceeds. That sales
charge will be equal to 1.0% of the lesser of (1) the aggregate net
asset value of the redeemed shares (not including shares purchased
by reinvestment of dividends or capital gain distributions) or (2)
the original offering price (which is the original net asset value)
of the redeemed shares. However, the Class A contingent deferred
sales charge will not exceed the aggregate amount of the
commissions the Distributor paid to your dealer on all Class A
shares of all Oppenheimer funds you purchased subject to the Class
A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is
payable, the Fund will first redeem shares that are not subject to
the sales charge, including shares purchased by reinvestment of
dividends and capital gains, and then will redeem other shares in
the order that you purchased them. The Class A contingent deferred
sales charge is waived in certain cases described in "Waivers of
Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on
exchanges of shares under the Fund's Exchange Privilege (described
below). However, if the shares acquired by exchange are redeemed
within 18 months of the end of the calendar month of the purchase
of the exchanged shares, the sales charge will apply.
Special Arrangements With Dealers. The Distributor may
advance up to 13 months' commissions to dealers that have
established special arrangements with the Distributor for Asset
Builder Plans for their clients. Until January 1, 1997. Dealers
whose sales of Class A shares of Oppenheimer funds (other than
money market funds) under OppenheimerFunds-sponsored 403(b)(7)
custodial plans exceed $5 million per year (calculated per
quarter), will receive monthly one-half of the Distributor's
retained commissions on those sales, and if those sales exceed $10
million per year, those dealers will receive the Distributor's
entire retained commission on those sales.
Reduced Sales Charges for Class A Share Purchases. You may be
eligible to buy Class A shares at reduced sales charge rates in one
or more of the following ways:
Right of Accumulation. To qualify for the lower sales
charge rates that apply to larger purchases of Class A shares, you
and your spouse can add together Class A and Class B shares you
purchase for your individual accounts, or jointly, or for trust or
custodial accounts on behalf of your children who are minors. A
fiduciary can count all shares purchased for a trust, estate or
other fiduciary account (including one or more employee benefit
plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class
A and Class B shares of the Fund and other Oppenheimer funds to
reduce the sales charge rate that applies to current purchases of
Class A shares. You can also include Class A and Class B shares of
Oppenheimer funds you previously purchased subject to an initial or
contingent deferred sales charge to reduce the sales charge rate
for current purchases of Class A shares, provided that you still
hold your investment in one of the Oppenheimer funds. The value of
those shares will be based on the greater of the amount you paid
for the shares or their current value (at offering price). The
Oppenheimer funds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from
the Distributor. The reduced sales charge will apply only to
current purchases and must be requested when you buy your shares.
Letter of Intent. Under a Letter of Intent, if you purchase
Class A shares or Class A and Class B shares of the Fund and other
Oppenheimer funds during a 13-month period, you can reduce the
sales charge rate that applies to your purchases of Class A shares.
The total amount of your intended purchases of both Class A and
Class B shares will determine the reduced sales charge rate for the
Class A shares purchased during that period. This can include
purchases made up to 90 days before the date of the Letter. More
information is contained in the Application and in "Reduced Sales
Charges" in the Statement of Additional Information.
Waivers of Class A Sales Charges. The Class A sales charges
are not imposed in the circumstances described below. There is an
explanation of this policy in "Reduced Sales Charges" in the
Statement of Additional Information.
Waivers of Initial and Contingent Deferred Sales Charges for
Certain Purchasers. Class A shares purchased by the following
investors are not subject to any Class A sales charges:
the Manager or its affiliates;
present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced
Sales Charges" in the Statement of Additional Information) of the
Fund, the Manager and its affiliates, and retirement plans
established by them for their employees;
registered management investment companies, or separate
accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose;
dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
employees and registered representatives (and their spouses)
of dealers or brokers described above or financial institutions
that have entered into sales arrangements with such dealers or
brokers (and are identified to the Distributor) or with the
Distributor; the purchaser must certify to the Distributor at the
time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor
children);
dealers, brokers or registered investment advisers that have
entered into an agreement with the Distributor providing
specifically for the use of shares of the Fund in particular
investment products made available to their clients (those clients
may be charged a transaction fee by their dealer, broker, or
adviser for the purchase or sale of shares of the Fund);
(1) investment advisors and financial planners who charge an
advisory, consulting or other fee for their services and buy shares
for their own accounts or the accounts of their clients, (2)
Retirement Plans and deferred compensation plans and trusts used to
fund those Plans (including, for example, plans qualified or
created under sections 401(a), 403(b) or 457 of the Internal
Revenue Code), and "rabbi trusts" that buy shares for their own
accounts, in each case if those purchases are made through a broker
or agent or other financial intermediary that has made special
arrangements with the Distributor for those purchases; and (3)
clients of such investment advisors or financial planners who buy
shares for their own accounts may also purchase shares without
sales charge but only if their accounts are linked to a master
account of their investment advisor or financial planner on the
books and records of the broker, agent or financial intermediary
with which the Distributor has made such special arrangements (each
of these investors may be charged a fee by the broker, agent or
financial intermediary for purchasing shares).
directors, trustees, officers or full-time employees of
OpCap Advisors or its affiliates, their relatives or any trust,
pension, profit sharing or other benefit plan which beneficially
owns shares for those persons;
accounts for which Oppenheimer Capital is the investment
adviser (the Distributor must be advised of this arrangement) and
persons who are directors or trustees of the company or trust which
is the beneficial owner of such accounts;
any unit investment trust that has entered into an
appropriate agreement with the Distributor;
a TRAC-2000 401(k) plan (sponsored by the former Quest for
Value Advisors) whose Class B or Class C shares of a Former Quest
for Value Fund were exchanged for Class A shares of that Fund due
to the termination of the Class A shares of that Fund due to the
termination of the Class B and TRAC-2000 program on November 24,
1995; or
qualified retirement plans that had agreed with the former
Quest for Value Advisors to purchase shares of any of the Former
Quest for Value Funds at net asset value, with such shares to be
held through DCXchange, a sub-transfer agency mutual fund
clearinghouse, provided that such arrangements are consummated and
share purchases commence be December 31, 1996.
Waivers of Initial and Contingent Deferred Sales Charges in
Certain Transactions. Class A shares issued or purchased in the
following transactions are not subject to Class A sales charges:
shares issued in plans of reorganization, such as mergers,
asset acquisitions and exchange offers, to which the Fund is a
party;
shares purchased by the reinvestment of loan repayments by
a participant in a retirement plan for which the Manager or its
affiliates acts as sponsor;
shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds
(other than Oppenheimer Cash Reserves) or unit investment trusts
for which reinvestment arrangements have been made with the
Distributor; or
shares purchased and paid for with the proceeds of shares
redeemed in the past 12 months from a mutual fund (other than a
fund managed by the Manager or any of its subsidiaries) on which an
initial sales charge or contingent deferred sales charge was paid
(this waiver also applies to shares purchased by exchange of shares
of Oppenheimer Money Market Fund, Inc. that were purchased and paid
for in this manner); this waiver must be requested when the
purchase order is placed for your shares of the Fund, and the
Distributor may require evidence of your qualification for this
waiver; or
shares purchased with the proceeds of maturing principal of
units of any Qualified Unit Investment Liquid Trust Series.
Waivers of the Class A Contingent Deferred Sales Charge for
Certain Redemptions. The Class A contingent deferred sales charge
is also waived if shares that would otherwise be subject to the
contingent deferred sales charge are redeemed in the following
cases:
to make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the original account value;
involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see "Shareholder Account
Rules and Policies," below);
if, at the time a purchase order is placed for Class A
shares that would otherwise be subject to the Class A contingent
deferred sales charge, the dealer agrees in writing to accept the
dealer's portion of the commission payable on the sale in
installments of 1/18th of the commission per month (and no further
commission will be payable if the shares are redeemed within 18
months of purchase);
for distributions from a TRAC-2000 401(k) plan sponsored by
the Distributor due to the termination of the TRAC-2000 program; or
for distributions from Retirement Plans, deferred
compensation plans or other employee benefit plans for any of the
following purposes: (1) following the death or disability (as
defined in the Internal Revenue Code) of the participant or
beneficiary (the death or disability must occur after the
participant's account was established); (2) to return excess
contributions; (3) to return contributions made due to a mistake of
fact; (4) hardship withdrawals, as defined in the plan; (5) under
a Qualified Domestic Relations Order, as defined in the Internal
Revenue Code; (6) to meet the minimum distribution requirements of
the Internal Revenue Code; (7) to establish "substantially equal
periodic payments" as described in Section 72(t) of the Internal
Revenue Code; (8) for retirement distributions or loans to
participants or beneficiaries; (9) separation from service; (10)
participant-directed redemptions to purchase shares of a mutual
fund (other than a fund managed by the Manager or its subsidiary)
offered as an investment option in a Retirement Plan in which
Oppenheimer funds are also offered as investment options under a
special arrangement with the Distributor; or (11) plan termination
or "in-service distributions", if the redemption proceeds are
rolled over directly to an OppenheimerFunds IRA.
Service Plan for Class A Shares. The Fund has adopted a
Service Plan for Class A shares to reimburse the Distributor for a
portion of its costs incurred in connection with the personal
service and maintenance of shareholder accounts that hold Class A
shares. Reimbursement is made quarterly at an annual rate that may
not exceed 0.25% of the average annual net assets of Class A shares
of the Fund. The Fund's Board of Trustees has set the annual rate
for assets representing Class A shares of the Fund sold on or after
April 1, 1991 at 0.25%, and has set the annual rate for assets
representing Class A shares sold before April 1, 1991 at 0.15% (the
Board has authority to increase that rate to no more than 0.25%).
The Distributor uses all of those fees to compensate dealers,
brokers, banks and other financial institutions quarterly for
providing personal service and maintenance of accounts of their
customers that hold Class A shares and to reimburse itself (if the
Fund's Board of Trustees authorizes such reimbursements, which it
has not yet done) for its other expenditures under the Plan.
Services to be provided include, among others, answering
customer inquiries about the Fund, assisting in establishing and
maintaining accounts in the Fund, making the Fund's investment
plans available and providing other services at the request of the
Fund or the Distributor. Payments are made by the Distributor
quarterly at an annual rate not to exceed 0.25% of the average
annual net assets of Class A shares held in accounts of the service
providers or their customers. The payments under the Plan increase
the annual expenses of Class A shares. For more details, please
refer to "Distribution and Service Plans" in the Statement of
Additional Information.
Buying Class B Shares. Class B shares are sold at net asset value
per share without an initial sales charge. However, if Class B
shares are redeemed within 6 years of their purchase, a contingent
deferred sales charge will be deducted from the redemption
proceeds. That sales charge will not apply to shares purchased by
the reinvestment of dividends or capital gains distributions. The
contingent deferred sales charge will be based on the lesser of the
net asset value of the shares at the time of redemption or the
original offering price (which is the original net asset value).
The contingent deferred sales charge is not imposed on the amount
of your account value represented by an increase in net asset value
over the initial purchase price. The Class B contingent deferred
sales charge is paid to the Distributor to reimburse its expenses
of providing distribution-related services to the Fund in
connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 6 years, and (3)
shares held the longest during the 6-year period. The contingent
deferred sales charge is not imposed in the circumstances described
in "Waivers of Class B and Class C Sales Charges" below.
The amount of the contingent deferred sales charge will depend
on the number of years since you invested and the dollar amount
being redeemed, according to the following schedule:
Contingent Deferred Sales Charge
Years Since Beginning of Month In on Redemptions in that Year
Which Purchase Order Was Accepted (As % of Amount Subject to Charge)
0 - 1 5.0%
1 - 2 4.0%
2 - 3 3.0%
3 - 4 3.0%
4 - 5 2.0%
5 - 6 1.0%
6 and following None
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of
the month in which the purchase was made.
Automatic Conversion of Class B Shares. 72 months after you
purchase Class B shares, those shares will automatically convert to
Class A shares. This conversion feature relieves Class B
shareholders of the asset-based sales charge that applies to Class
B shares under the Class B Distribution and Service Plan, described
below. The conversion is based on the relative net asset value of
the two classes, and no sales load or other charge is imposed. When
Class B shares convert, any other Class B shares that were acquired
by the reinvestment of dividends and distributions on the converted
shares will also convert to Class A shares. The conversion feature
is subject to the continued availability of a tax ruling described
in "Alternative Sales Arrangements - Class A, Class B and Class C
Shares" in the Statement of Additional Information.
Distribution and Service Plan for Class B Shares. The Fund
has adopted a Distribution and Service Plan for Class B shares to
compensate the Distributor for distributing Class B shares and
servicing accounts. This Plan is described below under
"Distribution and Service Plans for Class B and Class C Shares".
Waiver of Class B Sales Charge. The Class B contingent
deferred sales charge will be waived under the circumstances
described below under "Waivers of Class B and Class C Sales
Charge."
Buying Class C Shares. Class C shares are sold at net asset value
per share without an initial sales charge. However, if Class C
shares are redeemed within 12 months of their purchase, a
contingent deferred sales charge of 1.0% will be deducted from the
redemption proceeds. That sales charge will not apply to shares
purchased by the reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge will be based
on the lesser of the net asset value of the redeemed shares at the
time of redemption or the original offering price (which is the
original net asset value). The contingent deferred sales charge is
not imposed on the amount of your account value represented by the
increase in net asset value over the initial purchase price. The
Class C contingent deferred sales charge is paid to compensate the
Distributor for its expenses of providing distribution-related
services to the Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 12 months, and 3)
shares held the longest during the 12-month period.
Distribution and Service Plans for Class B and Class C Shares.
The Fund has adopted Distribution and Service Plans for Class B and
Class C shares to compensate the Distributor for 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.
Under each Plan, both fees are computed on the average of the
net asset value of shares in the respective class, determined as of
the close of each regular business day during the period. The
asset-based sales charge and service fees increase Class B and
Class C expenses by up to 1.00% of the net assets per year of the
respective class.
The Distributor uses the service fees to compensate dealers
for providing personal services for accounts that hold Class B or
Class C shares. Those services are similar to those provided under
the Class A Service Plan, described above. The Distributor pays
the 0.25% service fees to dealers in advance for the first year
after Class B or Class C shares have been sold by the dealer and
retains the service fee paid by the Fund in that year. After the
shares have been held for a year, the Distributor pays the service
fees to dealers on a quarterly basis.
The asset-based sales charge allows investors to buy Class B
or C shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell those shares. The Fund
pays the asset-based sales charges to the Distributor for its
services rendered in distributing Class B shares. Those payments
are at a fixed rate that is not related to the Distributor's
expenses. The services rendered by the Distributor include paying
and financing the payment of sales commissions, service fees and
other costs of distributing and selling Class B shares.
The Distributor currently pays sales commissions of 3.75% of
the purchase price of Class B shares to dealers from its own
resources at the time of sale. Including the advance of the
service fee, the total amount paid by the Distributor to the dealer
at the time of sales of Class B shares is 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 to dealers from its own resources at the time of
sale of Class C shares. Including the advance of the service fee,
the total amount paid by the Distributor to the dealer at the time
of sale of Class C shares is 1.00% of the purchase price. The
Distributor plans to pay the asset-based sales charge as an ongoing
commission to the dealer on Class C shares that have been
outstanding for a year or more.
The Distributor's actual expenses in selling Class B and Class
C shares may be more than the payments it receives from contingent
deferred sales charges collected on redeemed shares and from the
Fund under the Distribution and Service Plans for Class B and Class
C shares. If the Fund terminates either Plan, 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.
Waivers of Class B and Class C Sales Charges. The Class B and
Class C contingent deferred sales charges will not be applied to
shares purchased in certain types of transactions nor will it apply
to shares redeemed in certain circumstances as described below. The
reasons for this policy are in "Reduced Sales Charges" in the
Statement of Additional Information.
Waivers for Redemptions of Shares in Certain Cases. The Class
B and Class C contingent deferred sales charge will be waived for
redemptions of shares in the following cases:
distributions to participants or beneficiaries from
Retirement Plans, if the distributions are made (a) under an
Automatic Withdrawal Plan after the participant reaches age 59-1/2,
as long as the payments are no more than 10% of the account value
annually (measured from the date the Transfer Agent receives the
request), or (b) following the death or disability (as defined in
the Internal Revenue Code) of the participant or beneficiary (the
death or disability must have occurred after the account was
established);
redemptions from accounts other than Retirement Plans
following the death or disability of the last surviving
shareholder, 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;
for distributions from OppenheimerFunds prototype 401(k)
plans (1) for hardship withdrawals; (2) under a Qualified Domestic
Relations Order, as defined in the Internal Revenue Code; (3) to
meet minimum distribution requirements as defined in the Internal
Revenue Code; (4) to make "substantially equal periodic payments"
as described in Section 72(t) of the Internal Revenue Code; or (5)
for separation from service.
Waivers for Shares Sold or Issued in Certain Transactions.
The contingent deferred sales charge is also waived on Class B and
Class C shares sold or issued in the following cases:
shares sold to the Manager or its affiliates;
shares sold to registered management investment companies or
separate accounts of insurance companies having an agreement with
the Manager or the Distributor for that purpose;
shares issued in plans of reorganization to which the Fund
is a party; or
shares redeemed in involuntary redemptions as described
below.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account
to your account at your bank or other financial institution to
enable you to send money electronically between those accounts to
perform a number of types of account transactions. These include
purchases of shares by telephone (either through a service
representative or by PhoneLink, described below), automatic
investments under Asset Builder Plans, and sending dividends and
distributions or Automatic Withdrawal Plan payments directly to
your bank account. Please refer to the Application for details or
call the Transfer Agent for more information.
AccountLink privileges should be requested on the Application
you use to buy shares, or on your dealer's settlement instructions
if you buy your shares through your dealer. After your account is
established, you can request AccountLink privileges by sending
signature-guaranteed instructions to the Transfer Agent.
AccountLink privileges will apply to each shareholder listed in the
registration on your account as well as to your dealer
representative of record unless and until the Transfer Agent
receives written instructions terminating or changing those
privileges. After you establish AccountLink for your account, any
change of bank account information must be made by signature-
guaranteed instructions to the Transfer Agent signed by all
shareholders who own the account.
Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase
shares in amounts up to $250,000 through a telephone
representative, call the Distributor at 1-800-852-8457. The
purchase payment will be debited from your bank account.
PhoneLink. PhoneLink is the OppenheimerFunds automated
telephone system that enables shareholders to perform a number of
account transactions automatically using a touch-tone phone.
PhoneLink may be used on already-established Fund accounts after
you obtain a Personal Identification Number (PIN), by calling the
special PhoneLink number: 1-800-533-3310.
Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have
established AccountLink privileges to link your bank account with
the Fund, to pay for these purchases.
Exchanging Shares. With the OppenheimerFunds Exchange
Privilege, described below, you can exchange shares automatically
by phone from your Fund account to another Oppenheimer funds
account you have already established by calling the special
PhoneLink number. Please refer to "How to Exchange Shares," below,
for details.
Selling Shares. You can redeem shares by telephone
automatically by calling the PhoneLink number and the Fund will
send the proceeds directly to your AccountLink bank account.
Please refer to "How to Sell Shares," below, for details.
Automatic Withdrawal and Exchange Plans. The Fund has several
plans that enable you to sell shares automatically or exchange them
to another Oppenheimer funds account on a regular basis:
Automatic Withdrawal Plans. If your Fund account is $5,000
or more, you can establish an Automatic Withdrawal Plan to receive
payments of at least $50 on a monthly, quarterly, semi-annual or
annual basis. The checks may be sent to you or sent automatically
to your bank account on AccountLink. You may even set up certain
types of withdrawals of up to $1,500 per month by telephone. You
should consult the Application and Statement of Additional
Information for more details.
Automatic Exchange Plans. You can authorize the Transfer
Agent to automatically exchange an amount you establish in advance
for shares of up to five other Oppenheimer funds on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange
Plan. The minimum purchase for each Oppenheimer funds account is
$25. These exchanges are subject to the terms of the Exchange
Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class A
or Class B shares of the Fund, you have up to 6 months to reinvest
all or part of the redemption proceeds in Class A shares of the
Fund or other Oppenheimer funds without paying a sales charge.
This privilege applies to Class A or Class B shares that you
purchased subject to an initial sales charge and to Class A and
Class B shares on which you paid a contingent deferred sales charge
when you redeemed them. It does not apply to Class C shares. You
must be sure to ask the Distributor for this privilege when you
send your payment. Please consult the Statement of Additional
Information for more details.
Retirement Plans. Fund shares are available as an investment for
your retirement plans. If you participate in a plan sponsored by
your employer, the plan trustee or administrator must make the
purchase of shares for your retirement plan account. The
Distributor offers a number of different retirement plans that can
be used by individuals and employers:
Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
403(b)(7) Custodial Plans for employees of eligible tax-
exempt organizations, such as schools, hospitals and charitable
organizations
SEP-IRAs (Simplified Employee Pension Plans) for small
business owners or people with income from self-employment,
including SAR/SEP-IRAs
Pension and Profit-Sharing Plans for self-employed persons
and other employers
401(k) prototype retirement plans for businesses
Please call the Distributor for the OppenheimerFunds plan
documents, which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account by selling
(redeeming) some or all of your shares on any regular business day.
Your shares will be sold at the next net asset value calculated
after your order is received and accepted by the Transfer Agent.
The Fund offers you a number of ways to sell your shares: in
writing or by telephone. You can also set up Automatic Withdrawal
Plans to redeem shares on a regular basis, as described above. If
you have questions about any of these procedures, and especially if
you are redeeming shares in a special situation, such as due to the
death of the owner, or from a retirement plan, please call the
Transfer Agent first, at 1-800-525-7048, for assistance.
Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must
submit a withholding form with your request to avoid delay. If your
retirement plan account is held for you by your employer, you must
arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the
Statement of Additional Information.
Certain Requests Require a Signature Guarantee. To protect
you and the Fund from fraud, certain redemption requests must be in
writing and must include a signature guarantee in the following
situations (there may be other situations also requiring a
signature guarantee):
You wish to redeem more than $50,000 worth of shares and
receive a check
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 redeemed by someone other than the owners (such
as an Executor)
Where Can I Have My Signature Guaranteed? The Transfer
Agent will accept a guarantee of your signature by a number of
financial institutions, including: a U.S. bank, trust company,
credit union or savings association, or by a foreign bank that has
a U.S. correspondent bank, or by a U.S. registered dealer or broker
in securities, municipal securities or government securities, or by
a U.S. national securities exchange, a registered securities
association or a clearing agency. If you are signing on behalf of
a corporation, partnership or other business, or as a fiduciary,
you must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that
includes:
Your name
The Fund's name
Your Fund account number (from your account statement)
The dollar amount or number of shares to be redeemed
Any special payment instructions
Any share certificates for the shares you are selling
The signatures of all registered owners exactly as the
account is registered; and
Any special requirements or documents requested by the
Transfer Agent to assure proper authorization of the person asking
to sell shares.
Use the following address for requests Send courier or Express Mail requests
to:
by mail:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270, Denver, Colorado 80217 10200 E. Girard Avenue, Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of
record may also sell your shares by telephone. To receive the
redemption price on a regular business day, your call must be
received by the Transfer Agent by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M. but may be earlier
on some days. You may not redeem shares held in an
OppenheimerFunds retirement plan or under a share certificate by
telephone.
To redeem shares through a service representative, call 1-
800-852-8457
To redeem shares automatically on PhoneLink, call 1-800-533-
3310
Whichever method you use, you may have a check sent to the
address on the account statement, or, if you have linked your Fund
account to your bank account on AccountLink, you may have the
proceeds wired to that bank account.
Telephone Redemptions Paid by Check. Up to $50,000 may be
redeemed by telephone, in any 7-day period. The check must be
payable to all owners of record of the shares and must be sent to
the address on the account statement. This service is not
available within 30 days of changing the address on an account.
Telephone Redemptions Through AccountLink or Wire. There
are no dollar limits on telephone redemption proceeds sent to a
bank account designated when you establish AccountLink. Normally
the ACH transfer to your bank is initiated on the business day
after the redemption. You do not receive dividends on the proceeds
of the shares you redeemed while they are waiting to be
transferred.
Shareholders may also have the Transfer Agent send redemption
proceeds of $2,500 or more by Federal Funds wire to a designated
commercial bank account if the bank is a member of the Federal
Reserve wire system. There is a $10 fee for each Federal Funds
wire. To place a wire redemption request, call the Transfer Agent
at 1-800-852-8457. The wire will normally be transmitted on the
next bank business day after the shares are redeemed. There is a
possibility that the wire may be delayed up to seven days to enable
the Fund to sell securities to pay the redemption proceeds. No
dividends are accrued or paid on the proceeds of shares that have
been redeemed and are awaiting transmittal by wire. To establish
wire redemption privileges on an account that is already
established, please contact the Transfer Agent for instructions.
Selling Shares Through Your Dealer. The Distributor has made
arrangements to repurchase Fund shares from dealers and brokers on
behalf of their customers. Please call your dealer for more
information about this procedure. Brokers or dealers may charge
for that service. Please refer to "Special Arrangements for
Repurchase of Shares from Dealers and Brokers" in the Statement of
Additional Information for more details.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain
Oppenheimer funds at net asset value per share at the time of
exchange, without sales charge. To exchange shares, you must meet
several conditions:
Shares of the fund selected for exchange must be available
for sale in your state of residence
The prospectuses of this Fund and the fund whose shares you
want to buy must offer the exchange privilege
You must hold the shares you buy when you establish your
account for at least 7 days before you can exchange them; after the
account is open 7 days, you can exchange shares every regular
business day
You must meet the minimum purchase requirements for the fund
you purchase by exchange
Before exchanging into a fund, you should obtain and read
its prospectus
Shares of a particular class of the Fund may be exchanged only
for shares of the same class in the other Oppenheimer funds. For
example, you can exchange Class A shares of this Fund only for
Class A shares of another fund. At present Oppenheimer Money
Market Fund, Inc. offers only one class of shares, which are
considered to be Class A shares for this purpose. In some cases,
sales charges may be imposed on exchange transactions. Please
refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.
Exchanges may be requested in writing or by telephone:
Written Exchange Requests. Submit an OppenheimerFunds
Exchange Request form, signed by all owners of the account. Send
it to the Transfer Agent at the addresses listed in "How to Sell
Shares."
Telephone Exchange Requests. Telephone exchange requests may
be made either by calling a service representative at 1-800-852-
8457, or by using PhoneLink for automated exchanges, by calling 1-
800-533-3310. Telephone exchanges may be made only between accounts
that are registered with the same name(s) and address. Shares held
under certificates may not be exchanged by telephone.
You can find a list of Oppenheimer funds currently available
for exchanges in the Statement of Additional Information or obtain
one by calling a service representative at 1-800-525-7048. The
list can change from time to time.
There are certain exchange policies you should be aware of:
Shares are normally redeemed from one fund and purchased
from the other fund in the exchange transaction on the same regular
business day on which the Transfer Agent receives an exchange
request that is in proper form by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M. but may be earlier
on some days. However, either fund may delay the purchase of
shares of the fund you are exchanging into up to 7 days if it
determines it would be disadvantaged by a same-day transfer of the
proceeds to buy shares. For example, the receipt of multiple
exchange requests from a dealer in a "market-timing" strategy might
require the sale of portfolio securities at a time or price
disadvantageous to the Fund.
Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange
request that will disadvantage it, or to refuse multiple exchange
requests submitted by a shareholder or dealer.
The Fund may amend, suspend or terminate the exchange
privilege at any time. Although the Fund will attempt to provide
you notice whenever it is reasonably able to do so, it may impose
these changes at any time.
For tax purposes, exchanges of shares involve a redemption
of the shares of the Fund you own and a purchase of the shares of
the other fund, which may result in a capital gain or loss. For
more information about taxes affecting exchanges, please refer to
"How to Exchange Shares" in the Statement of Additional
Information.
If the Transfer Agent cannot exchange all the shares you
request because of a restriction cited above, only the shares
eligible for exchange will be exchanged.
The Distributor has entered into agreements with certain
dealers and investment advisers permitting them to exchange their
clients' shares by telephone. These privileges are limited under
those agreements and the Distributor has the right to reject or
suspend those privileges. As a result, those exchanges may be
subject to notice requirements, delays and other limitations that
do not apply to shareholders who exchange their shares directly by
calling or writing the Transfer Agent.
Shareholder Account Rules and Policies
Net Asset Value Per Share is determined for each class of
shares as of the close of The New York Stock Exchange, which is
normally 4:00 P.M. but may be earlier on some days, on each day the
Exchange is open by dividing the value of the Fund's net assets
attributable to a class by the number of shares of that class that
are outstanding. The Fund's Board of Trustees has established
procedures to value the Fund's securities to determine net asset
value. In general, securities values are based on market value.
There are special procedures for valuing illiquid and restricted
securities and obligations for which market values cannot be
readily obtained. These procedures are described more completely
in the Statement of Additional Information.
The offering of shares may be suspended during any period in
which the determination of net asset value is suspended, and the
offering may be suspended by the Board of Trustees at any time the
Board believes it is in the Fund's best interest to do so.
Telephone Transaction Privileges for purchases, redemptions
or exchanges may be modified, suspended or terminated by the Fund
at any time. If an account has more than one owner, the Fund and
the Transfer Agent may rely on the instructions of any one owner.
Telephone privileges apply to each owner of the account and the
dealer representative of record for the account unless and until
the Transfer Agent receives cancellation instructions from an owner
of the account.
The Transfer Agent will record any telephone calls to verify
data concerning transactions and has adopted other procedures to
confirm that telephone instructions are genuine, by requiring
callers to provide tax identification numbers and other account
data or by using PINs, and by confirming such transactions in
writing. If the Transfer Agent does not use reasonable procedures
it may be liable for losses due to unauthorized transactions, but
otherwise neither the Transfer Agent nor the Fund will be liable
for losses or expenses arising out of telephone instructions
reasonably believed to be genuine. If you are unable to reach the
Transfer Agent during periods of unusual market activity, you may
not be able to complete a telephone transaction and should consider
placing your order by mail.
Redemption or transfer requests will not be honored until
the Transfer Agent receives all required documents in proper form.
From time to time, the Transfer Agent in its discretion may waive
certain of the requirements for redemptions stated in this
Prospectus.
Dealers that can perform account transactions for their
clients by participating in NETWORKING through the National
Securities Clearing Corporation are responsible for obtaining their
clients' permission to perform those transactions and are
responsible to their clients who are shareholders of the Fund if
the dealer performs any transaction erroneously.
The redemption price for shares will vary from day to day
because the values of the securities in the Fund's portfolio
fluctuate, and the redemption price, which is the net asset value
per share, will normally be different for Class A, Class B and
Class C shares. Therefore, the redemption value of your shares may
be more or less than their original cost.
Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the
shareholder under the redemption procedures described above) within
7 days after the Transfer Agent receives redemption instructions in
proper form, except under unusual circumstances determined by the
Securities and Exchange Commission delaying or suspending such
payments. For accounts registered in the name of a broker-dealer,
payment will be forwarded within 3 business days. The Transfer
Agent may delay forwarding a check or processing a payment via
AccountLink for recently purchased shares, but only until the
purchase payment has cleared. That delay may be as much as 10 days
from the date the shares were purchased. That delay may be avoided
if you purchase shares by certified check or arrange with your bank
to provide telephone or written assurance to the Transfer Agent
that your purchase payment has cleared.
Involuntary redemptions of small accounts may be made by the
Fund if the account value has fallen below $200 for reasons other
than the fact that the market value of shares has dropped, and in
some cases involuntary redemptions may be made to repay the
Distributor for losses from the cancellation of share purchase
orders.
Under unusual circumstances, shares of the Fund may be
redeemed "in kind," which means that the redemption proceeds will
be paid with securities from the Fund's portfolio. Please refer to
"How to Sell Shares" in the Statement of Additional Information for
more details.
"Backup Withholding" of Federal income tax may be applied at
the rate of 31% from taxable dividends, distributions and
redemption proceeds (including exchanges) if you fail to furnish
the Fund a certified Social Security or Employer Identification
Number when you sign your application, or if you violate Internal
Revenue Service regulations on tax reporting of income.
The Fund does not charge a redemption fee, but if your
dealer or broker handles your redemption, they may charge a fee.
That fee can be avoided by redeeming your Fund shares directly
through the Transfer Agent. Under the circumstances described in
"How to Buy Shares," you may be subject to a contingent deferred
sales charges when redeeming certain Class A, Class B and Class C
shares.
To avoid sending duplicate copies of materials to
households, the Fund will mail only one copy of each annual and
semi-annual report to shareholders having the same last name and
address on the Fund's records. However, each shareholder may call
the Transfer Agent at 1-800-525-7048 to ask that copies of those
materials be sent personally to that shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A,
Class B and Class C shares from net investment income on an annual
basis and normally pays those dividends to shareholders in
December, but the Board of Trustees can change that date. The Board
may also cause the Fund to declare dividends after the close of the
Fund's fiscal year (which ends June 30). Because the Fund does not
have an objective of seeking current income, the amounts of
dividends it pays, if any, will likely be small. Also, dividends
paid on Class A shares generally are expected to be higher than for
Class B and Class C shares because expenses allocable to Class B
and Class C shares will generally be higher.
Capital Gains. The Fund may make distributions annually in December
out of any net short-term or long-term capital gains, and the Fund
may make supplemental distributions of dividends and capital gains
following the end of its fiscal year. Long-term capital gains will
be separately identified in the tax information the Fund sends you
after the end of the year. Short-term capital gains are treated as
dividends for tax purposes. There can be no assurances that the
Fund will pay any capital gains distributions in a particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are
reinvested. For other accounts, you have four options:
Reinvest All Distributions in the Fund. You can elect to
reinvest all dividends and long-term capital gains distributions in
additional shares of the Fund.
Reinvest Long-Term Capital Gains Only. You can elect to
reinvest long-term capital gains in the Fund while receiving
dividends by check or sent to your bank account on AccountLink.
Receive All Distributions in Cash. You can elect to receive
a check for all dividends and long-term capital gains distributions
or have them sent to your bank on AccountLink.
Reinvest Your Distributions in Another Oppenheimer Fund
Account. You can reinvest all distributions in another Oppenheimer
fund account you have established.
Taxes. If your account is not a tax-deferred retirement account,
you should be aware of the following tax implications of investing
in the Fund. The Fund's distributions from long-term capital gains
are taxable to shareholders as long-term capital gains, no matter
how long you held your shares. Dividends paid by the Fund from
short-term capital gains and net investment income, including
certain net realized foreign exchange gains, are taxable as
ordinary income. These dividends and distributions are subject to
Federal income tax and may be subject to state or local taxes.
Your distributions are taxable as described above, whether you
reinvest them in additional shares or take them in cash. Corporate
shareholders may be entitled to the corporate dividends received
deduction for some portion of the Fund's distributions treated as
ordinary income, subject to applicable limitations under the
Internal Revenue Code. Every year the Fund will send you and the
IRS a statement showing the aggregate amount and character of the
dividends and other distributions you received for the previous
year.
"Buying a Dividend": When a fund goes ex-dividend, its share
price is reduced by the amount of the distribution. If you buy
shares on or just before the ex-dividend date, or just before the
Fund declares a capital gains distribution, you will pay the full
price for the shares and then receive a portion of the price back
as a taxable dividend or capital gain.
Taxes on Transactions: Share redemptions, including
redemptions for exchanges, are subject to capital gains tax.
Generally speaking, a capital gain or loss is the difference
between the price you paid for the shares and the price you
received when you sold them.
Returns of Capital: In certain cases distributions made by
the Fund may be considered a non-taxable return of capital to
shareholders. If that occurs, it will be identified in notices to
shareholders. A non-taxable return of capital may reduce your tax
basis in your Fund shares.
This information is only a summary of certain federal tax
information about your investment. More information is contained
in the Statement of Additional Information, and in addition you
should consult with your tax adviser about the effect of an
investment in the Fund on your particular tax situation.
<PAGE>
APPENDIX A
Special Sales Charge Arrangements for Shareholders of the Fund Who
Were Shareholders of the Former Quest for Value Funds
The initial and contingent sales charge rates and waivers for
Class A, Class B and Class C shares of the Fund described elsewhere
in this Prospectus are modified as described below for those
shareholders of (i) Quest for Value Fund, Inc., Quest for Value
Growth and Income Fund, Quest for Value Opportunity Fund, Quest for
Value Small Capitalization Fund and Quest for Value Global Equity
Fund, Inc. on November 24, 1995, when OppenheimerFunds, Inc. became
the investment adviser to those funds, and (ii) Quest for Value
U.S. Government Income Fund, Quest for Value Investment Quality
Income Fund, Quest for Global Income Fund, Quest for Value New York
Tax-Exempt Fund, Quest for Value National Tax-Exempt Fund and Quest
for Value California Tax-Exempt Fund when those funds merged into
various Oppenheimer funds on November 24, 1995. The funds listed
above are referred to in this Prospectus as the "Former Quest for
Value Funds." The waivers of initial and contingent deferred sales
charges described in this Appendix apply to shares of the fund (i)
acquired by such shareholder pursuant to an exchange of shares of
one of the Oppenheimer funds that was one of the Former Quest for
Value Funds or (ii) received by such shareholder pursuant to the
merger of any of the Former Quest for Value Funds into an
Oppenheimer fund on November 24, 1995.
Class A Sales Charges
Reduced Class A Initial Sales Charge Rates for Certain
Former Quest Shareholders
Purchases by Groups, Associations and Certain Qualified
Retirement Plans. The following table sets forth the initial sales
charge rates for Class A shares purchased by a "Qualified
Retirement Plan" through a single broker, dealer or financial
institution , or by members of "Associations" formed for any
purpose other than the purchase of securities if that Qualified
Retirement Plan or that Association purchased shares of any of the
Former Quest for Value Funds or received a proposal to purchase
such shares from OCC Distributors prior to November 24, 1995. For
this purpose only, a "Qualified Retirement Plan" includes any
401(k) plan, 403(b) plan, and SEP/IRA or IRA plan for employees of
a single employer.
Front-End Front-End Commission
Sales Charge Sales Charge as
as a as a Percentage
Number of Percentage Percentage of
Eligible Employees of Offering of Amount Offering
or Members Price Invested Price
9 or fewer 2.50% 2.56% 2.00%
At least 10 but not
more than 49 2.00% 2.04% 1.60%
For purchases by Qualified Retirement plans and Associations
having 50 or more eligible employees or members, there is no
initial sales charge on purchases of Class A shares, but those
shares are subject to the Class A contingent deferred sales charge
described on pages 20 to 21 of this Prospectus.
Purchases made under this arrangement qualify for the lower of
the sales charge rate in the table based on the number of eligible
employees in a Qualified Retirement Plan or members of an
Association or the sales charge rate that applies under the Rights
of Accumulation described above in the Prospectus. In addition,
purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they
qualified to purchase shares of any of the Former Quest For Value
Funds by virtue of projected contributions or investments of $1
million or more each year. Individuals who qualify under this
arrangement for reduced sales charge rates as members of
Associations, or as eligible employees in Qualified Retirement
Plans also may purchase shares for their individual or custodial
accounts at these reduced sales charge rates, upon request to the
Fund's Distributor.
Special Class A Contingent Deferred Sales Charge Rates.
Class A shares of the Fund purchased by exchange of shares of other
Oppenheimer funds that were acquired as a result of the merger of
Former Quest for Value Funds into those Oppenheimer Funds, and
which shares were subject to a Class A contingent deferred sales
charge prior to November 24, 1995, will be subject to a contingent
deferred sales charge at the following rates: if they are redeemed
within 18 months of the end of the calendar month in which they
were purchased, at a rate equal to 1.0% if the redemption occurs
within 12 months of their initial purchase and at a rate of 0.50%
of 1.0% if the redemption occurs in the subsequent six months.
Class A shares of any of the Former Quest Fund for Value Funds
purchased without an initial sales charge on or before November 22,
1995 will continue to be subject to the applicable contingent
deferred sales charge in effect as of that date as set forth in the
then-current prospectus for such fund.
Waiver of Class A Sales Charges for Certain Shareholders.
Class A shares of the Fund purchased by the following investors are
not subject to any Class A initial or contingent deferred sales
charges:
Shareholders of the Fund who were shareholders of the AMA
Family of Funds on February 28, 1991 and who acquired shares of any
of the Former Quest for Value Funds by merger of a portfolio of the
AMA Family of Funds.
Shareholders of the Fund who acquired shares of any Former
Quest for Value Fund by merger of any of the portfolios of the
Unified Funds.
Waiver of Class A Contingent Deferred Sales Charge in
Certain Transactions. The Class A contingent deferred sales charge
will not apply to redemptions of Class A shares of the Fund
purchased by the following investors who were shareholders of any
Former Quest for Value Fund:
Investors who purchased Class A shares form a dealer that is
not or was not permitted to receive a sales load or redemption fee
imposed on a shareholder with whom that dealer has a fiduciary
relationship under the Employee Retirement Income Security Act of
1974 and regulations adopted under that law.
Participants in Qualified Retirement Plans that purchased
shares of any of the Former Quest for Value Funds pursuant to a
special "strategic alliance" with the distributor of those funds.
The Fund's Distributor will pay a commission to the dealer for
purchases of Fund shares as described above in "Class A Contingent
Deferred Sales Charge."
Class A, Class B and Class C Contingent Deferred Sales Charge
Waivers
Waivers for Redemptions of Shares Purchased Prior to March
6, 1995. In the following cases, the contingent deferred sales
charge will be waived for redemptions of Class A, B or C shares of
the Fund acquired by merger of a Former Quest for Value Fund into
the Fund or by exchange from an Oppenheimer fund that was a Former
Quest for Value Fund or into which such fund merged, if those
shares were purchased prior to March 6, 1995: in connection with
(i) distributions to participants or beneficiaries of plans
qualified under Section 401(a) of the Internal Revenue Code or from
custodial accounts under Section 403(b)(7) of the Code, Individual
Retirement Accounts, deferred compensation plans under Section 457
of the Code, and other employee benefit plans, and returns of
excess contributions made to each type of plan, (ii) withdrawals
under an automatic withdrawal plan holding only either Class B or
C shares if the annual withdrawal does not exceed 10% of the
initial value of the account, and (iii) liquidation of a
shareholder's account if the aggregate net asset value of shares
held in the account is less than the required minimum value of such
accounts.
Waivers for Redemptions of Shares Purchased on or After
March 6, 1995 but Prior to November 24, 1995. In the following
cases, the contingent deferred sales charge will be waived for
redemptions of Class A, B or C shares of the Fund acquired by
merger of a Former Quest for Value Fund into the Fund or by
exchange from an Oppenheimer fund that was a Former Quest For
Value Fund or into which such fund merged, if those shares were
purchased on or after March 6, 1995, but prior to November 24,
1995: (1) distributions to participants or beneficiaries from
Individual Retirement Accounts under Section 408(a) of the Internal
Revenue Code or retirement plans under Section 401(a), 401(k),
403(b) and 457 of the Code, if those distributions are made either
(a) to an individual participant as a result of separation from
service or (b) following the death or disability (as defined in the
Code) of the participant or beneficiary; (2) returns of excess
contributions to such retirement plans; (3) redemptions other than
from retirement plans following the death or disability of the
shareholder(s) (as evidenced by a determination of total disability
by the U.S. Social Security Administration); (4) withdrawals under
an automatic withdrawal plan (but only for Class B or C shares)
where the annual withdrawals do not exceed 10% of the initial value
of the account; and (5) liquidation of a shareholder's account if
the aggregate net asset value of shares held in the account is less
than the required minimum account value. A shareholder's account
will be credited with the amount of any contingent deferred sales
charge paid on the redemption of any Class A, B or C shares of the
Fund described in this section if within 90 days after that
redemption, the proceeds are invested in the same Class of shares
in this Fund or another Oppenheimer fund.
Special Dealer Arrangements
Dealers who sold Class B shares of a Former Quest for Value Fund to
Quest for Value prototype 401(k) plans that were maintained on the
TRAC-2000 recordkeeping system and that were transferred to an
OppenheimerFunds prototype 401(k) plan shall be eligible for an
additional one-time payment by the Distributor of 1% of the value
of the plan assets transferred, but that payment may not exceed
$5,000 as to any one plan.
Dealers who sold Class C shares of a Former Quest for Value Fund to
Quest for Value prototype 401(k) plans that were maintained on the
TRAC-2000 recordkeeping system and (i) the shares held by those
plans were exchanged for Class A shares, or (ii) the plan assets
were transferred to an OppenheimerFunds prototype 401(k) plan,
shall be eligible for an additional one-time payment by the
Distributor of 1% of the value of the plan assets transferred, but
that payment may not exceed $5,000.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER FUND
Graphic material included in Prospectus of Oppenheimer Fund:
"Comparison of Total Return of Oppenheimer Fund and the S&P 500
Index - Change in Value of a $10,000 Hypothetical Investment."
A linear graph will be included in the Prospectus of
Oppenheimer Fund (the "Fund") depicting the initial account value
and subsequent account value of a hypothetical $10,000 investment
in the Fund. In the case of the Fund's Class A shares, that graph
will cover each of the Fund's last ten fiscal years from 6/30/86
through 6/30/96. In the case of the Fund's Class B shares, the
graph will cover the period from the inception of the Class
(November 1, 1995) through 6/30/96. In the case of the Fund's
Class C shares, the graph will cover the period from inception of
the class (December 1, 1993) through 6/30/96. The graphs will
compare such values with hypothetical $10,000 investments over the
same time periods in the S&P 500 Index.
Set forth below are the relevant data points that will appear
on the linear graph. Additional information with respect to the
foregoing, including a description of the S&P 500 Index, is set
forth in the Prospectus under "Performance of the Fund - Comparing
the Fund's Performance to the Market."
Fiscal Year Oppenheimer S&P 500
Ended Fund A Index
06/30/86 $9,425 $10,000
06/30/87 $10,221 $13,150
06/30/88 $8,965 $11,649
06/30/89 $10,093 $14,039
06/30/90 $10,702 $16,348
06/30/91 $11,949 $17,553
06/30/92 $13,290 $19,903
06/30/93 $15,062 $22,611
06/30/94 $15,941 $22,928
06/30/95 $19,066 $28,897
06/30/96 $22,414 $36,404
Fiscal Period Oppenheimer S&P 500
Ended Fund B Index
11/01/95 $10,000 $10,000
06/30/96 $10,687 $11,713
Fiscal Period Oppenheimer S&P 500
Ended Fund C Index
12/1/93 $10,000 $10,000
06/30/94 $9,877 $9,779
06/30/95 $11,711 $12,324
06/30/96 $13,644 $15,526
<PAGE>
Oppenheimer Fund
Two World Trade Center
New York, NY 10048-0203
1-800-525-7048
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, broker, salesperson or any other person has been
authorized to give any information or to make any representations
other than those contained in this Prospectus or the Statement of
Additional Information, and if given or made, such information and
representations must not be relied upon as having been authorized
by the Fund, OppenheimerFunds, Inc., OppenheimerFunds Distributor,
Inc. or any affiliate thereof. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any state to any person to whom it is
unlawful to make such an offer in such state.
PR400.1096 Printed on recycled paper
<PAGE>
Oppenheimer Fund
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Statement of Additional Information dated October 25, 1996
This Statement of Additional Information of Oppenheimer Fund
is not a Prospectus. This document contains additional information
about the Fund and supplements information in the Prospectus dated
October 25 1996. It should be read together with the Prospectus,
which may be obtained by writing to the Fund's Transfer Agent,
OppenheimerFunds Services at P.O. Box 5270, Denver, Colorado 80217
or by calling the Transfer Agent at the toll-free number shown
above.
Contents
Page
About the Fund
Investment Objective and Policies. . . . . . . . . . . . . . 2
Investment Policies and Strategies. . . . . . . . . . . 2
Other Investment Techniques and Strategies. . . . . . . 3
Other Investment Restrictions . . . . . . . . . . . . . 15
How the Fund is Managed. . . . . . . . . . . . . . . . . . . 16
Organization and History. . . . . . . . . . . . . . . . 16
Trustees and Officers of the Fund . . . . . . . . . . . 17
The Manager and Its Affiliates. . . . . . . . . . . . . 22
Brokerage Policies of the Fund . . . . . . . . . . . . . . . 24
Performance of the Fund. . . . . . . . . . . . . . . . . . . 25
Distribution and Service Plans . . . . . . . . . . . . . . . 28
About Your Account
How To Buy Shares. . . . . . . . . . . . . . . . . . . . . . 30
How To Sell Shares . . . . . . . . . . . . . . . . . . . . . 37
How To Exchange Shares . . . . . . . . . . . . . . . . . . . 42
Dividends, Capital Gains and Taxes . . . . . . . . . . . . . 44
Additional Information About the Fund. . . . . . . . . . . . 46
Financial Information About the Fund
Independent Auditors' Report . . . . . . . . . . . . . . . . 47
Financial Statements . . . . . . . . . . . . . . . . . . . . 48
Appendix A: Industry Classifications . . . . . . . . . . . . A-1
<PAGE>
<PAGE>
ABOUT THE FUND
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and
policies of the Fund are described in the Prospectus. Set forth
below is supplemental information about those policies and the
types of securities in which the Fund invests, as well as the
strategies the Fund may use to try to achieve its objective.
Capitalized terms used in this Statement of Additional Information
have the same meaning as those terms have in the Prospectus.
In selecting securities for the Fund's portfolio, the Fund's
investment advisor, OppenheimerFunds, Inc. (the "Manager"),
evaluates the merits of securities primarily through the exercise
of its own investment analysis. This may include, among other
things, evaluation of the history of the issuer's operations,
prospects for the industry of which the issuer is part, the
issuer's financial condition, the issuer's pending product
developments and developments by competitors, the effect of general
market and economic conditions on the issuer's business, and
legislative proposals or new laws that might affect the issuer.
Current income is not a consideration in the selection of portfolio
securities for the Fund, whether for appreciation, defensive or
liquidity purposes. The fact that a security has a low yield or
does not pay current income will not be an adverse factor in
selecting securities to try to achieve the Fund's investment
objective of capital appreciation unless the Manager believes that
the lack of yield might adversely affect appreciation
possibilities.
The portion of the Fund's assets allocated to securities and
methods selected for capital appreciation will depend upon the
judgment of the Manager as to the future movement of the equity
securities markets. If the Manager believes that economic
conditions favor a rising market, the Fund will emphasize
securities and investment methods selected for high capital growth.
If the Manager believes that a market decline is likely, defensive
securities and investment methods will be emphasized (See
"Temporary Defensive Investments," below).
Foreign Securities. As noted in the Prospectus, the Fund
may invest in securities (which may be denominated in U.S. dollars
or non-U.S. currencies) issued or guaranteed by foreign
corporations, certain supranational entities (described below) and
foreign governments or their agencies or instrumentalities and in
securities issued by U.S. corporations denominated in non-U.S.
currencies. The types of foreign debt obligations and other
securities in which the Fund may invest are the same types of debt
and equity securities identified above. Foreign securities are
subject however, to additional risks not associated with domestic
securities, as discussed below. These additional risks may be more
pronounced as to investments in securities issued by emerging
market countries or by companies located in emerging market
countries.
"Foreign securities" include equity and debt securities of
companies organized under the laws of countries other than the
United States and debt securities of foreign governments that are
traded on foreign securities exchanges or in the foreign over-the-
counter markets. Securities of foreign issuers that are
represented by American Depository Receipts or that are listed on
a U.S. securities exchange or traded in the U.S. over-the-counter
markets are not considered "foreign securities" for the purpose of
the Fund's investment allocations, because they are not subject to
many of the special considerations and risks, discussed below, that
apply to foreign securities traded and held abroad.
Investing in foreign securities offer potential benefits not
available from investing solely in securities of domestic issuers,
including the opportunity to invest in foreign issuers that appear
to offer growth potential, or in foreign countries with economic
policies or business cycles different from those of the U.S., or to
reduce fluctuations in portfolio value by taking advantage of
foreign stock markets that do not move in a manner parallel to U.S.
markets. In buying foreign securities, the Fund may convert U.S.
dollars into foreign currency, but only to effect securities
transactions on foreign securities exchanges and not to hold such
currency as an investment. If the Fund's portfolio securities are
held abroad, the sub-custodians or depositories holding them must
be approved by the Fund's Board of Trustees to the extent that
approval is required under applicable rules of the Securities and
Exchange Commission.
Risks of Foreign Investing. Investing in foreign securities
involves special additional risks and considerations not typically
associated with investing in securities of issuers traded in the
U.S. These include: reduction of income by foreign taxes;
fluctuation in value of foreign portfolio investments due to
changes in currency rates and control regulations (e.g., currency
blockage); transaction charges for currency exchange; lack of
public information about foreign issuers; lack of uniform
accounting, auditing and financial reporting standards comparable
to those applicable to domestic issuers; less volume on foreign
exchanges than on U.S. exchanges; greater volatility and less
liquidity on foreign markets than in the U.S.; less regulation of
foreign issuers, stock exchanges and brokers than in the U.S.;
greater difficulties in commencing lawsuits against foreign
issuers; higher brokerage commission rates than in the U.S.;
increased risks of delays in settlement of portfolio transactions
or loss of certificates for portfolio securities because of the
lesser speed and reliability of mail service between the U.S. and
foreign countries than within the U.S.; possibilities in some
countries of expropriation or nationalization of assets,
confiscatory taxation, political, financial or social instability
or adverse diplomatic developments; and differences (which may be
favorable or unfavorable) between the U.S. economy and foreign
economies. From time to time, U.S. Government policies have
discouraged certain investments abroad by U.S. investors, through
taxation or other restrictions, and it is possible that such
restrictions could be re-imposed. If the Fund's securities are
held abroad, the countries in which such securities may be held and
the sub-custodians holding them must be approved by the Fund's
Board of Trustees under applicable SEC rules.
Other Investment Techniques and Strategies
Temporary Defensive Investments. When the equity markets in
general are declining, the Fund may commit an increasing portion of
its assets to defensive securities. These may include the types of
securities described in the Prospectus. When investing for
defensive purposes, the Fund will normally emphasize investment in
short-term debt securities (that is, securities maturing in one
year or less from the date of purchase), since those types of
securities are generally more liquid and usually may be disposed of
quickly without significant gains or losses so that the Manager may
have liquid assets when it wishes to make investments in securities
for appreciation possibilities.
Warrants and Rights. Warrants are options to purchase
equity securities at set prices valid for a specified period of
time. The prices of warrants do not necessarily move in a manner
parallel to the prices of the underlying securities. The prices of
warrants do not necessarily move parallel to the prices of the
underlying securities. The price the Fund pays for a warrant will
be lost unless the warrant is exercised prior to its expiration.
Rights are similar to warrants, but normally have a short duration
and are distributed directly by the issuer to its shareholders.
Rights and warrants have no voting rights, receive no dividends and
have no rights with respect to the assets of the issuer.
Illiquid and Restricted Securities. To enable the Fund to
sell restricted securities not registered under the Securities Act
of 1933, the Fund may have to cause those securities to be
registered. The expenses of registration of restricted securities
may be negotiated by the Fund with the issuer at the time such
securities are purchased by the Fund, if such registration is
required before such securities may be sold publicly. When
registration must be arranged because the Fund wishes to sell the
security, a considerable period may elapse between the time the
decision is made to sell the securities and the time the Fund would
be permitted to sell them. The Fund would bear the risks of any
downward price fluctuation during that period. The Fund may also
acquire, through private placements, securities having contractual
restrictions on their resale, which might limit the Fund's ability
to dispose of such securities and might lower the amount realizable
upon the sale of such securities.
The Fund has percentage limitations that apply to purchases of
restricted securities, as stated in the Prospectus. Those
percentage restrictions do not limit purchases of restricted
securities that are eligible for sale to qualified institutional
purchasers pursuant to Rule 144A under the Securities Act of 1933,
provided that those securities have been determined to be liquid by
the Board of Trustees of the Fund or by the Manager under Board-
approved guidelines. Those guidelines take into account the trading
activity for such securities and the availability of reliable
pricing information, among other factors. If there is a lack of
trading interest in a particular Rule 144A security, the Fund's
holding of that security may be deemed to be illiquid.
Loans of Portfolio Securities. The Fund may lend its
portfolio securities subject to the restrictions stated in the
Prospectus. Repurchase transactions are not considered "loans" for
the purpose of the Fund's limit on the percentage of its assets
that can be loaned. Under applicable regulatory requirements
(which are subject to change), the loan collateral on each business
day must at least equal the value of the loaned securities and must
consist of cash, bank letters of credit or securities of the U.S.
Government (or its agencies or instrumentalities). To be
acceptable as collateral, letters of credit must obligate a bank to
pay amounts demanded by the Fund if the demand meets the terms of
the letter. Such terms and the issuing bank must be satisfactory
to the Fund. In a portfolio securities lending transaction, the
Fund receives from the borrower an amount equal to the interest
paid or the dividends declared on the loaned securities during the
term of the loan as well as the interest on the collateral
securities, less any finders', administrative or other fees the
Fund pays in connection with the loan. The terms of the Fund's
loans must meet applicable tests under the Internal Revenue Code
and must permit the Fund to reacquire loaned securities on five
days' notice or in time to vote on any important matter.
Repurchase Agreements. The Fund may acquire securities
subject to repurchase agreements for liquidity purposes to meet
anticipated redemptions, or pending the investment of the proceeds
from sale of fund shares, or pending settlement of purchases of
portfolio securities. In a repurchase transaction, the Fund
acquires a security from, and simultaneously resells it to, an
approved vendor. An "approved vendor" is a commercial bank or the
U.S. branch of a foreign bank or a broker-dealer which has been
designated a primary dealer in government securities which must
meet credit requirements set by the Fund's Board of Trustees from
time to time. The repurchase price exceeds the purchase price by
an amount that reflects an agreed-upon interest rate effective for
the period during which the repurchase agreement is in effect. The
majority of these transactions run from day to day, and delivery
pursuant to the resale typically will occur within one to five days
of the purchase. Repurchase agreements are considered "loans"
under the Investment Company Act of 1940 (the "Investment Company
Act"), collateralized by the underlying security. The Fund's
repurchase agreements require that at all times while the
repurchase agreement is in effect, the value of the collateral must
equal or exceed the repurchase price to fully collateralize the
repayment obligation. Additionally, the Manager will impose
creditworthiness requirements to confirm that the vendor is
financially sound and will continuously monitor the collateral's
value.
Hedging with Options and Futures Contracts. The Fund may
use hedging instruments for the purposes described in the
Prospectus. When hedging to attempt to protect against declines in
the market value of the Fund's portfolio, or to permit the Fund to
retain unrealized gains in the value of portfolio securities which
have appreciated, or to facilitate selling securities for
investment reasons, the Fund may: (1) sell Stock Index Futures, (2)
buy puts, or (3) write covered calls on securities or on Futures
(as described in the Prospectus). When hedging to establish a
position in the equities market as a temporary substitute for the
purchase of individual equity securities, the Fund may: (1) buy
Futures, or (2) buy calls on such Futures or on securities.
Normally, the Fund would then purchase the equity securities and
terminate the hedging portion.
The Fund's strategy of hedging with Futures and options on
Futures will be incidental to the Fund's investment activities in
the underlying cash market. In the future, the Fund may employ
hedging instruments and strategies that are not presently
contemplated but which may be developed, to the extent such
investment methods are consistent with the Fund's investment
objective, and are legally permissible and disclosed in the
Prospectus. Additional information about the hedging instruments
the Fund may use is provided below.
Futures. The Fund may buy and sell futures contracts
related to financial indices, including stock indices (a "Financial
Future"). A financial index assigns relative values to the
securities included in the index and fluctuates with the changes in
the market value of those securities. Financial indices cannot be
purchased or sold directly. The contracts obligate the seller to
deliver, and the purchaser to take, cash to settle the futures
transaction or to enter into an offsetting contract. No physical
delivery of the securities underlying the index is made on settling
the futures obligation. No monetary amount is paid or received by
a Fund on the purchase or sale of a Financial Future.
A Fund may buy and sell futures contracts on interest rates
("Interest Rate Futures"). No price is paid or received upon the
purchase or sale of an Interest Rate Future. An Interest Rate
Future obligates the seller to deliver and the purchaser to take a
specific type of debt security at a specific future date for a
fixed price. That obligation may be satisfied by actual delivery
of the debt security or by entering into an offsetting contract.
Upon entering into a Futures transaction, the Fund will be
required to deposit an initial margin payment in cash or U.S.
Treasury bills with the futures commission merchant (the "futures
broker"). The initial margin payment will be deposited with the
Fund's Custodian in an account registered in the futures broker's
name; however, the futures broker can gain access to that account
only under specified conditions. As the Future is marked to market
to reflect changes in its market value, subsequent margin payments,
called variation margin, will be paid to or by the futures broker
on a daily basis. Prior to expiration of the Future, if the Fund
elects to close out its position by taking an opposite position, a
final determination of variation margin is made, additional cash is
required to be paid by or released to the Fund, and any loss or
gain is realized for tax purposes. Although Financial Futures and
Interest Rate Futures by their terms call for settlement by
delivery of cash or securities, respectively, in most cases the
obligation is fulfilled by entering into an offsetting position.
All futures transactions are effected through a clearinghouse
associated with the exchange on which the contracts are traded.
Writing Covered Calls. When the Fund writes a call on a
security, it receives a premium and agrees to sell the callable
investment to a purchaser of a corresponding call during the call
period (usually not more than 9 months) at a fixed exercise price
(which may differ from the market price of the underlying
investment), regardless of market price changes during the call
period. The Fund retains the risk of loss should the price of the
underlying security decline during the call period, which may be
offset to some extent by the premium.
To terminate its obligation on a call it has written, the Fund
may purchase a corresponding call in a "closing purchase
transaction." A profit or loss will be realized, depending upon
whether the net of the option transaction costs and the premium
received on the call written was more or less than the price of the
call subsequently purchased. A profit may also be realized if the
call lapses unexercised, because the Fund retains the related
investments and the premium received. Those profits are considered
short-term capital gains for Federal income tax purposes, and when
distributed by the fund are taxable as ordinary income. If the
Fund could not effect a closing purchase transaction due to the
lack of a market, it would have to hold the callable investments
until the call lapsed or was exercised.
The Fund may also write calls on Futures without owning a
futures contract or deliverable securities, provided that at the
time the call is written, the Fund covers the call by segregating
in escrow an equivalent dollar value of liquid assets. The Fund
will segregate additional liquid assets if the value of the
escrowed assets drops below 100% of the current value of the
Future. In no circumstances would an exercise notice as to a
Future put the Fund in a short futures position.
Writing Put Options. A put option on an investment gives
the purchaser the right to sell, and the writer the obligation to
buy, the underlying investment at the exercise price during the
option period. Writing a put covered by segregated liquid assets
equal to the exercise price of the put has the same economic effect
to the Fund as writing a covered call. The premium the Fund
receives from writing a put option represents a profit, as long as
the price of the underlying investment remains above the exercise
price. However, the Fund has also assumed the obligation during
the option period to buy the underlying investment from the buyer
of the put at the exercise price, even though the value of the
investment may fall below the exercise price. If the put expires
unexercised, the Fund (as the writer of the put) realizes a gain in
the amount of the premium less transaction costs. If the put is
exercised, the Fund must fulfill its obligation to purchase the
underlying investment at the exercise price, which will usually
exceed the market value of the investment at that time. In that
case, the Fund may incur a loss, equal to the sum of the sale price
of the underlying investment and the premium received minus the sum
of the exercise price and any transaction costs incurred.
When writing put options on securities or on foreign
currencies, to secure its obligation to pay for the underlying
security, the Fund will deposit in escrow liquid assets with a
value equal to or greater than the exercise price of the underlying
securities. The Fund therefore forgoes the opportunity of
investing the segregated assets or writing calls against those
assets. As long as the obligation of the Fund as the put writer
continues, it may be assigned an exercise notice by the broker-
dealer through whom such option was sold, requiring the Fund to
take delivery of the underlying security against payment of the
exercise price. The Fund has no control over when it may be
required to purchase the underlying security, since it may be
assigned an exercise notice at any time prior to the termination of
its obligation as the writer of the put. This obligation
terminates upon expiration of the put, or such earlier time at
which the Fund effects a closing purchase transaction by purchasing
a put of the same series as that previously sold. Once the Fund
has been assigned an exercise notice, it is thereafter not allowed
to effect a closing purchase transaction.
The Fund may effect a closing purchase transaction to realize
a profit on an outstanding put option it has written or to prevent
an underlying security from being put. Furthermore, effecting such
a closing purchase transaction will permit the Fund to write
another put option to the extent that the exercise price thereof is
secured by the deposited assets, or to utilize the proceeds from
the sale of such assets for other investments by the Fund. The
Fund will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the
premium received from writing the option. As above for writing
covered calls, any and all such profits described herein from
writing puts are considered short-term gains for Federal tax
purposes, and when distributed by the Fund, are taxable as ordinary
income.
Purchasing Puts and Calls. When the Fund purchases a call
(other than in a closing purchase transaction), it pays a premium
and, except as to calls on securities indices or Futures, has the
right to buy the underlying investment from a seller of a
corresponding call on the same investment during the call period at
a fixed exercise price. The Fund benefits only if the call is sold
at a profit or if, during the call period, the market price of the
underlying investment is above the sum of the exercise price, the
transaction costs and the premium paid, and the call is exercised.
If the call is not exercised or sold (whether or not at a profit),
it will become worthless at its expiration date and the Fund will
lose its premium payment and the right to purchase the underlying
investment.
When the Fund purchases a put, it pays a premium and, except
as to puts on indices, has the right to sell the underlying
investment to a seller of a corresponding put on the same
investment during the put period at a fixed exercise price. Buying
a put on an investment the Fund owns (a "protective put") enables
the Fund to attempt to protect itself during the put period against
a decline in the value of the underlying investment below the
exercise price by selling such 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, and the Fund
will lose its premium payment and the right to sell the underlying
investment. However, the put may be sold prior to expiration
(whether or not at a profit).
The Fund's option activities may affect its portfolio turnover
rate and brokerage commissions. The exercise of calls written by
the Fund may cause the Fund to sell related portfolio securities,
thus increasing its turnover rate. The exercise by the Fund of
puts on securities will cause the sale of underlying investments,
increasing portfolio turnover. Although the decision whether to
exercise a put it holds within the Fund's control, holding a put
might cause the Fund to sell the related investments for reasons
which would not exist in the absence of the put. The Fund will pay
a brokerage commission each time it buys or sells a call, put, or
underlying investment in connection with the exercise of a put or
call. Such commissions may be higher on a relative basis than
those which would apply to direct purchases or sales of such
underlying investments.
Premiums paid for options are small in relation to the market
value of the underlying investments and consequently, put and call
options offer large amounts of leverage. The leverage offered by
trading in options could result in the Fund's net asset value being
more sensitive to changes in the value of the underlying
investments.
Options on Indices and Futures. Puts and calls on broadly-
based indices or Futures are similar to puts and calls on
securities or futures contracts except that all settlements are in
cash and gain or loss depends on changes in the index in question
(and thus on price movements in the market generally) rather than
on price movements of individual securities or futures contracts.
When the Fund buys a call on an index or Future, it pays a premium.
If the Fund exercises the call during the call period, a seller of
a corresponding call on the same investment will pay the Fund an
amount of cash to settle the call if the closing level of the index
or Future upon which the call is based is greater than the exercise
price of the call. That cash payment is equal to the difference
between the closing price of the call and the exercise price of the
call times a specified multiple (the "multiplier") which determines
the total dollar value for each point of difference.
When the Fund buys a put on an index or Future, it pays a
premium and has the right during the put period to require a seller
of a corresponding put, upon the Fund's exercise of its put, to
deliver cash to the Fund to settle the put if the closing level of
the index or Future upon which the put is based is less than the
exercise price of the put. That cash payment is determined by the
multiplier, in the same manner as described above as to calls. The
put protects the Fund to the extent that the index moves in a
similar pattern to the securities the Fund holds. The Fund can
either resell the put or, in the case of a put on a Future, buy the
underlying investment and sell it at the exercise price. The
resale price of the put will vary inversely with the price of the
underlying investment. If the market price of the underlying
investment is above the exercise price, and as a result the put is
not exercised, the put will become worthless on the expiration
date. In the event of a decline in price of the underlying
investment, the Fund could exercise or sell the put at a profit to
attempt to offset some or all of its loss on its portfolio
securities.
Options on Foreign Currencies. The Fund may write and
purchase calls and puts on foreign currencies that are traded on a
securities or commodities exchange or over-the-counter markets or
are quoted by major recognized dealers in such options. The Fund
does so to protect against declines in the dollar value of foreign
securities and against increases in the dollar cost of foreign
securities to be acquired. If the Manager anticipates a rise in
the dollar value of a foreign currency in which securities to be
acquired are denominated, the increased cost of such securities may
be partially offset by purchasing calls or writing puts on that
foreign currency. If a decline in the dollar value of a foreign
currency is anticipated, the decline in value of portfolio
securities denominated in that currency may be partially offset by
writing calls or purchasing puts on that foreign currency.
However, in the event of currency rate fluctuations adverse to the
Fund's position, it would lose the premium it paid and transaction
costs.
A call written on a foreign currency by the Fund is covered if
the Fund owns the underlying foreign currency covered by the call
or has an absolute and immediate right to acquire that foreign
currency without additional cash consideration (or for additional
cash consideration held in a segregated account by its Custodian)
upon conversion or exchange of other foreign currency held in its
portfolio. A call may be written by the Fund on a foreign currency
to provide a hedge against a decline due to an expected adverse
change in the exchange rate in the U.S. dollar value of a security
which the Fund owns or has the right to acquire and which is
denominated in the currency underlying the option. This is a
"cross-hedging" strategy. In such circumstances, the Fund covers
the option by maintaining in a segregated account with the Fund's
custodian, liquid assets of any type, including equity and debt
securities of any grade, in an amount not less than the exercise
price of the option.
Forward Contracts. A Forward Contract involves bilateral
obligations of one party to purchase, and another party to sell, a
specific currency at a future date (which may be any fixed number
of days from the date of the contract agreed upon by the parties),
at a price set at the time the contract is entered into. These
contracts are traded in the interbank market conducted directly
between currency traders (usually large commercial banks) and their
customers. The Fund may enter into a Forward Contract to "lock in"
the U.S. dollar price of a security denominated in a foreign
currency which it has purchased or sold but which has not yet
settled, or to protect against a possible loss resulting from an
adverse change in the relationship between the U.S. dollar and a
foreign currency.
The Fund may use Forward Contracts to protect against
uncertainty in the level of future exchange rates. The use of
Forward Contracts does not eliminate fluctuations in the prices of
the underlying securities the Fund owns or intends to acquire, but
it does fix a rate of exchange in advance. In addition, although
Forward Contracts limit the risk of loss due to a decline in the
value of the hedged currencies, at the same time they limit any
potential gain that might result should the value of the currencies
increase.
The Fund may enter into Forward Contracts with respect to
specific transactions. For example, when the Fund enters into a
contract for the purchase of sale of a security denominated in a
foreign currency, or when the fund anticipates receipt of dividend
payments in a foreign currency, the Fund may desire to lock-in
the U.S. dollar price of the security or the U.S. dollar equivalent
of such payment. To do so, the Fund enters into a Forward
Contract, for a fixed amount of U.S. dollars per unit of foreign
currency, for the purchase or sale of the amount of foreign
currency involved in the underlying transaction ( transaction
hedge ). The Fund will thereby be able to protect itself against
a possible loss resulting from an adverse change in the
relationship between the currency exchange rates during the period
between the date on which the security is purchased or sold, or on
which the payment is declared, and the date on which such payments
are made or received.
The Fund may also use Forward Contracts to lock in the value
of portfolio positions ( position hedges ). In a position hedge,
for example, when the Fund believes that a foreign currency in
which the Fund has security holdings may suffer a substantial
decline against the U.S. dollar, the Fund may enter into a forward
sale contract to sell an amount of that foreign currency for a
fixed U.S. dollar amount. Additionally, when the Fund believes
that the U.S. dollar may suffer a substantial decline against a
foreign currency, it may enter into a forward purchase contract to
buy that foreign currency for a fixed U.S. dollar amount.
The Fund may also enter into a forward contract to sell a
foreign currency other than that in which the underlying security
is denominated. This technique is referred to as cross hedging,
and is done when the foreign currency sold through the forward
contract is correlated with the foreign currency or currencies in
which the underlying security positions are denominated. The
foreign currency sold through the forward contract may be sold for
a fixed U.S. dollar amount or for a fixed amount of another
currency correlated with the U.S. dollar.
The Fund may also cross hedge its portfolio positions by
entering into a forward contract to buy or sell a foreign currency
other than the currency in which its underlying securities are
denominated for a fixed amount in U.S. dollars or a fixed amount in
another currency which is correlated with the U.S. dollar. If the
Fund does not own portfolio securities denominated in the currency
on the long side of the cross hedge, the Fund will not be required
to later purchase portfolio securities denominated in that
currency. Instead, the Fund may unwind the cross hedge by
reversing the original transaction, that is, by transacting in a
forward contract that is opposite to the original cross hedge or it
may extend the hedge by "rolling" the hedge forward.
The success of cross hedging is dependent on many factors,
including the ability of the Manager to correctly identify and
monitor the correlation among foreign currencies and between
foreign currencies and the U.S. dollar. To the extent that these
correlations are not identical, the Fund may experience losses or
gains on both the underlying security and the cross currency hedge.
However, the Manager shall determine that any cross hedge is a bona
fide hedge in that it is expected to reduce the volatility of the
Fund s total return.
The Fund s Custodian will identify liquid assets for a
separate account having a value equal to the aggregate amount of
the Fund s commitment under Forward Contracts to cover its short
positions. The Fund will not enter into such Forward Contracts or
maintain a net exposure to such contracts where the consummation of
the contracts would obligate the Fund to deliver an amount of
foreign currency in excess of the value of the Fund s portfolio
securities or other assets denominated in that currency or another
currency that is the subject of the hedge. The Fund, however, in
order to avoid excess transactions and transaction costs, may
maintain a net exposure to Forward Contracts in excess of the value
of the Fund s portfolio securities or other assets denominated in
these currencies provided the excess amount is covered by liquid
securities denominated in any currency, at lest equal at all times
to the amount of such excess. As an alternative, the Fund may
purchase a call option permitting the Fund to purchase the amount
of foreign currency being hedged by a forward sale contract at a
price no higher than the forward contract price or the Fund may
purchase a put option permitting the Fund to sell the amount of
foreign currency subject to a forward purchase contract at a price
as high or higher than the forward contact price. Unanticipated
changes in currency prices may result in poorer overall performance
for the Fund than if it had not entered into such contracts.
The precise matching of the Forward Contract amounts and the
value of the securities involved will not generally be possible
because the future value of such securities in foreign currencies
will change as a consequence of market movements in the value of
these securities between the date the Forward Contract is entered
into and the date it is sold. Accordingly, it may be necessary for
the Fund to purchase additional foreign currency on the spot (i.e.,
cash) market (and bear the expense of such purchase), if the market
value of the security is less than the amount of foreign currency
the Fund is obligated to deliver and if a decision is made to sell
the security and make delivery of the foreign currency.
Conversely, it may be necessary to sell on the spot market some of
the foreign currency received upon the sale of the portfolio
security if its market value exceeds the amount of foreign currency
the Fund is obligated to deliver. The projection of short-term
currency market movements is extremely difficult, and the
successful execution of a short-term hedging strategy is highly
uncertain. Forward Contracts involve the risk that anticipated
currency movements will not be accurately predicted, causing the
Fund to sustain losses on these contracts and incur transactions
costs.
At or before the maturity of a Forward Contract requiring the
Fund to sell a currency, the Fund may either sell a portfolio
security and use the sale proceeds to make delivery of the currency
or retain the security and offset its contractual obligation to
deliver the currency by purchasing a second contract pursuant to
which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly,
the Fund may close out a Forward Contract requiring it to purchase
a specified currency by entering into a second contract entitling
it to sell the same amount of the same currency on the maturity
date of the first contract. The Fund would realize a gain or loss
as a result of entering into such an offsetting Forward Contract
under either circumstance to the extent the exchange rate or rates
between the currencies involved moved between the execution dates
of the first contract and offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies
with factors such as the currencies involved, the length of the
contract period and the market conditions then prevailing. Because
Forward Contracts are usually entered into on a principal basis, no
fees or commissions are involved. Such contracts are not traded on
an exchange. Therefore, the Fund must evaluate the credit and
performance risk of each particular counterparty under a Forward
Contract.
Although the Fund values its assets daily in terms of U.S.
dollars, it does not intend to convert all of its holdings of
foreign currency deposits into U.S. dollars on a daily basis. The
Fund may convert foreign currency from time to time, and investors
should be aware of the costs of currency conversion. Foreign
exchange dealers do not charge a fee for conversion, by they do
seek to realize a profit based on the difference between the prices
at which they buy and sell various currencies. Thus, a dealer may
offer to sell a foreign currency to the Fund at one rate, while
offering a lesser rate of exchange should the Fund desire to resell
that currency to the dealer.
Additional Information About Hedging Instruments and Their
Use. The Fund's Custodian, or a securities depository acting for
the Custodian, will act as the Fund's escrow agent, through the
facilities of the Options Clearing Corporation ("OCC"), as to the
investments on which the Fund has written options traded on
exchanges or as to other acceptable escrow securities, so that no
margin will be required for such transactions. OCC will release
the securities on the expiration of the option or upon the Fund's
entering into a closing transaction. An option position may be
closed out only on a market which provides secondary trading for
options of the same series, and there is no assurance that a liquid
secondary market will exist for any particular option.
When the Fund writes an over-the-counter("OTC") option, it
will enter into an arrangement with a primary U.S. Government
securities dealer, which would establish a formula price at which
the Fund would have the absolute right to repurchase that OTC
option. That formula price would generally be based on a multiple
of the premium received for the option, plus the amount by which
the option is exercisable below the market price of the underlying
security (that is, the extent to which the option is "in-the-
money"). When the Fund writes an OTC option, it will treat as
illiquid (for purposes of the limit on its assets that may be
invested in illiquid securities, stated in the Prospectus) the
mark-to-market value of any OTC option held by it. The Securities
and Exchange Commission is evaluating whether OTC options should be
considered liquid securities, and the procedure described above
could be affected by the outcome of that evaluation.
Regulatory Aspects of Hedging Instruments. The Fund is
required to operate within certain guidelines and restrictions with
respect to its use of Futures and options on Futures established by
the Commodity Futures Trading Commission ("CFTC"). In particular
the Fund is exempted from registration with the CFTC as a
"commodity pool operator" if the Fund complies with the
requirements of Rule 4.5 adopted by the CFTC. The Rule does not
limit the percentage of the Fund's assets that may be used for
Futures margin and related options premiums for a bona fide hedging
position. However, under the Rule the Fund must limit its
aggregate initial futures margin and related option premiums to no
more than 5% of the Fund's total assets for hedging strategies that
are not considered bona fide hedging strategies under the Rule.
Under the Rule, the Fund also must use short Futures and Futures
options positions solely for "bona fide hedging purposes" within
the meaning and intent of the applicable provisions of the
Commodity Exchange Act.
Transactions in options by the Fund are subject to limitations
established by each of the exchanges governing the maximum number
of options which may be written or held by a single investor or
group of investors acting in concert, regardless of whether the
options were written or purchased on the same or different
exchanges or are held in one or more accounts or through one or
more different exchanges or futures brokers. Thus, the number of
options which the Fund may write or hold may be affected by
options written or held by other entities, including other
investment companies having the same or an affiliated investment
adviser. Position limits also apply to Futures. An exchange may
order the liquidation of positions found to be in violation of
those limits and may impose certain other sanctions. Due to
requirements under the Investment Company Act of 1940 (the
"Investment Company Act"), when the Fund purchases a Future, the
Fund will maintain in a segregated account or accounts with its
Custodian, liquid assets in an amount equal to the market value of
the securities underlying such Future, less the margin deposit
applicable to it.
Tax Aspects of Covered Calls and Hedging Instruments. The
Fund intends to qualify as a "regulated investment company" under
the Internal Revenue Code (although it reserves the right not to
qualify). That qualification enables the Fund to "pass through"
its income and realized capital gains to shareholders without
having to pay tax on them. This avoids a "double tax" on that
income and capital gains, since shareholders normally will be taxed
on the dividends and capital gains they receive from the Fund
(unless the Fund's shares are held in a retirement account or the
shareholder is otherwise exempt from tax). One of the tests for
the Fund's qualification as a regulated investment company is that
less than 30% of its gross income must be derived from gains
realized on the sale of securities held for less than three months.
To comply with this 30% cap, the Fund will limit the extent to
which it engages in the following activities, but will not be
precluded from them: (1) selling investments, including Futures,
held for less than three months, whether or not they were purchased
on the exercise of a call held by the Fund; (2) purchasing calls or
puts which expire in less than three months; (3) effecting closing
transactions with respect to calls or puts purchased less than
three months previously; (4) exercising puts or calls held by the
Fund for less than three months; or (5) writing calls on
investments held for less than three months.
Certain foreign currency exchange contracts ("Forward
Contracts") in which the Fund may invest are treated as "Section
1256 contracts." Gains or losses relating to Section 1256
contracts generally are characterized under the Internal Revenue
Code as 60% long-term and 40% short-term capital gains or losses.
However, foreign currency gains or losses arising from certain
Section 1256 contracts (including Forward Contracts) generally are
treated as ordinary income or loss. In addition, Section 1256
contracts held by the Fund at the end of each taxable year are
"marked-to-market" with the result that unrealized gains or losses
are treated as though they were realized. These contracts also may
be marked-to-market for purposes of the excise tax applicable to
investment company distributions and for other purposes under rules
prescribed pursuant to the Internal Revenue Code. An election can
be made by the Fund to exempt these transactions from this marked-
to-market treatment.
Certain Forward Contracts entered into by the Fund may result
in "straddles" for Federal income tax purposes. The straddle rules
may affect the timing and character of gains (or losses) recognized
by the Fund on straddle positions. Generally, a loss sustained on
the disposition of a position making up a straddle is allowed only
to the extent such loss exceeds any unrecognized gain in the
offsetting positions making up the straddle. Disallowed loss is
generally allowed at the point where there is no unrecognized gain
in the offsetting positions making up the straddle, or the
offsetting position is disposed of.
Under the Internal Revenue Code, generally gains or losses
attributable to fluctuations in exchange rates that occur between
the time the Fund accrues interest or other receivables or accrues
expenses or other liabilities denominated in a foreign currency and
the time the Fund actually collects such receivables or pays such
liabilities are treated as ordinary income or ordinary loss.
Similarly, on disposition of debt securities denominated in a
foreign currency and on disposition of foreign currency forward
contracts, gains or losses attributable to fluctuations in the
value of a foreign currency between the date of acquisition of the
security or contract and the date of disposition also are treated
as ordinary gain or loss. Currency gains and losses are offset
against market gains and losses 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 company income available for distribution to its
shareholders.
Risks of Hedging with Options and Futures. In addition to
the risks associated with respect to hedging that are discussed in
the Prospectus and above, there is a risk in using short hedging by
selling Futures to attempt to protect declines in the values of the
fund's securities. The risk is that the prices of the Futures will
correlate imperfectly with the behavior of the cash (i.e., market
value) prices of the Fund's securities. The ordinary spreads
between prices in the cash and futures markets are subject to
distortions due to differences in the natures of those markets.
First, all participants in the futures markets are subject to
margin deposit and maintenance requirements. Rather than meeting
additional margin deposit requirements, investors may close out
futures contracts through off-setting transactions which could
distort the normal relationship between the cash and futures
markets. Second, the liquidity of the futures markets depends on
participants entering into offsetting transactions rather than
making or taking delivery. To the extent participants decide to
make or take delivery, liquidity in the futures markets could be
reduced, thus producing distortion. Third, from the point of view
of speculators, the deposit requirements in the futures markets are
less onerous than margin requirements in the securities markets.
Therefore, increased participation by speculators in the futures
markets may cause temporary price distortions.
The risk of imperfect correlation increases as the composition
of the Fund's portfolio diverges from the securities included in
the applicable index. To compensate for the imperfect correlation
of movements in the price of the securities being hedged and
movements in the price of the Hedging Instruments, the Fund may use
Hedging Instruments in a greater dollar amount than the dollar
amount of securities being hedged if the historical volatility of
the prices of such securities being hedged is more than the
historical volatility of the applicable index. It is also possible
that where the Fund has used Hedging Instruments in a short hedge,
the market may advance and the value of securities held in the
Fund's portfolio may decline. If this occurred, the Fund would
lose money on the Hedging Instruments and also experience a decline
in value in its 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.
If the Fund uses hedging instruments to establish a position
in the equities markets as a temporary substitute for the purchase
of individual equity securities (long hedging) by buying Futures
and/or calls on such Futures, on securities or on stock indices, it
is possible that the market may decline. If the Fund then
concludes not to invest in equity securities at that time because
of concerns as to a possible further market decline or for other
reasons, the Fund will realize a loss on the hedging instruments
that is not offset by a reduction in the price of the equity
securities purchased.
Other Investment Restrictions
The Fund's most significant investment restrictions are set
forth in the Prospectus. The following are fundamental policies,
and together with the Fund's fundamental policies described in the
Prospectus, cannot be changed without the vote of a "majority" of
the Fund's outstanding voting securities. Such a "majority" vote
is defined in the Investment Company Act, as the vote of the
holders of the lesser of (i) 67% or more of the shares present or
represented by proxy at such meeting, if the holders of more than
50% of the outstanding shares are present, or (ii) more than 50% of
the outstanding shares. Under these additional restrictions, the
Fund cannot:
make short sales;
invest in commodities or commodities contracts other than
the Hedging Instruments permitted by any of its other fundamental
policies, whether or not any such Hedging Instrument is considered
to be a commodity or commodity contract;
invest in real estate or in interests in real estate, but
may purchase readily marketable securities of companies holding
real estate or interests therein;
purchase or sell securities on margin; however, the Fund may
make margin deposits in connection with any of the Hedging
Instruments permitted by any of its other fundamental policies;
mortgage, hypothecate or pledge any of its assets; however,
this does not prohibit the escrow arrangements contemplated by the
writing of covered call options or other collateral or margin
arrangements in connection with any of the Hedging Instruments
permitted by any of its other fundamental policies;
borrow money in excess of 5% of its gross assets taken at
current value, and then only as a temporary measure for
extraordinary or emergency purposes;
invest in or acquire shares of any other investment company
or trust except in connection with a plan of merger, consolidation
or reorganization; however, this policy shall not prevent the Fund
from investing in the securities issued by a real estate investment
trust, provided that such trust is not permitted to invest in real
estate or interests in real estate other than mortgages or other
security interests;
underwrite securities of other companies except insofar as
it might be deemed to be an underwriter in the resale of any
securities held in its own portfolio; or
Invest more than 15% of the Fund's total assets in
securities of an issuer which together with any predecessor has
been in operation for less than three years of continuous operation
or securities of issuers which are restricted as to disposition,
including securities that may be resold pursuant to Rule 144A under
the Securities Act of 1933.
purchase or retain the securities of any issuer if those
officers, trustees and directors of the Fund or the Manager who
beneficially own individually more than .5% of the securities of
such issuer together own more than 5% of the securities of such
issuer.
Non-Fundamental Investment Restrictions. For purposes of
the Fund's policy not to concentrate its assets as described under
the second investment restriction in "Other Investment
Restrictions" in the Prospectus, the Fund has adopted the industry
classifications set forth in Appendix A to this Statement of
Additional Information. This is not a fundamental policy.
In connection with the qualification of its shares in certain
states, the Fund has undertaken that in addition to the above, as
a non-fundamental policy, the Fund will not (1) invest in oil, gas
or other mineral leases, or (2) invest in real estate limited
partnership interests. In the event the Fund's shares cease to be
qualified under such laws or if such undertaking(s) otherwise cease
to be operative, the Fund would not be subject to such
restrictions.
How the Fund Is Managed
Organization and History. As a Massachusetts business trust, the
Fund is not required to hold, and does not plan to hold, regular
annual meetings of shareholders. The Fund will hold meetings when
required to do so by the Investment Company Act or other applicable
law, or when a shareholder meeting is called by the Trustees or
upon proper request of the shareholders. Shareholders have the
right, upon the declaration in writing or vote of two-thirds of the
outstanding shares of the Fund, to remove a Trustee. The Trustees
will call a meeting of shareholders to vote on the removal of a
Trustee upon the written request of the record holders of 10% of
its outstanding shares. In addition, if the Trustees receive a
request from at least 10 shareholders (who have been shareholders
for at least six months) holding shares of the Fund valued at
$25,000 or more or holding at least 1% of the Fund's outstanding
shares, whichever is less, stating that they wish to communicate
with other shareholders to request a meeting to remove a Trustee,
the Trustees will then either make the Fund's shareholder list
available to the applicants or mail their communication to all
other shareholders at the applicants' expense, or the Trustees may
take such other action as set forth under Section 16(c) of the
Investment Company Act.
The Fund's Declaration of Trust contains an express disclaimer
of shareholder or Trustee liability for the Fund's obligations, and
provides for indemnification and reimbursement of expenses out of
its property for any shareholder held personally liable for its
obligations. The Declaration of Trust also provides that the Fund
shall, upon request, assume the defense of any claim made against
any shareholder for any act or obligation of the Fund and satisfy
any judgment thereon. Thus, while Massachusetts law permits a
shareholder of a business trust (such as the Fund) to be held
personally liable as a "partner" under certain circumstances, the
risk of a Fund shareholder incurring financial loss on account of
shareholder liability is limited to the relatively remote
circumstances in which the Fund would be unable to meet its
obligations described above. Any person doing business with the
Trust, and any shareholder of the Trust, agrees under the Trust's
Declaration of Trust to look solely to the assets of the Trust for
satisfaction of any claim or demand which may arise out of any
dealings with the Trust, and the Trustees shall have no personal
liability to any such person, to the extent permitted by law.
Trustees and Officers of the Fund. The Fund's Trustees and
officers and their principal occupations and business affiliations
during the past five years are set forth below. The address for
each, Trustee and officer, is Two World Trade Center, New York, New
York 10048-0203, unless another address is listed below. Ms.
Macaskill is not a director of Oppenheimer Money Market Fund, Inc.
Otherwise, all of the Trustees are also trustees or directors of
Oppenheimer Global Fund, Oppenheimer Growth Fund, Oppenheimer
Enterprise Fund, Oppenheimer International Growth Fund, Oppenheimer
Money Market Fund, Inc., Oppenheimer Target Fund, Oppenheimer
Municipal Bond Fund, Oppenheimer New York Municipal Fund,
Oppenheimer California Municipal Fund, Oppenheimer Multi-State
Municipal Trust, Oppenheimer Asset Allocation Fund, Oppenheimer
Global Emerging Growth Fund, Oppenheimer Global Growth & Income
Fund, Oppenheimer Gold & Special Minerals Fund, Oppenheimer
Discovery Fund, Oppenheimer U.S. Government Trust, Oppenheimer
World Bond Fund and Oppenheimer Multi-Sector Income Trust
(collectively, the "New York-based Oppenheimer funds"). As of
October 2, 1996, all of the Fund's Trustees and officers as a group
beneficially owned less than 1% of the Fund's outstanding shares of
the Fund. That statement does not include ownership of shares held
of record by an employee benefit plan for employees of the Manager
(one of the Trustees of the fund listed below, Ms. Macaskill, and
one of the officers, Mr. Donohue, are trustees of that plan, other
than the shares beneficially owned under the plan by the officers
of the Fund listed above.
Leon Levy, Chairman of the Board of Trustees; Age 71
General Partner of Odyssey Partners, L.P. (investment partnership)
and Chairman of Avatar Holdings, Inc. (real estate development).
Robert G. Galli, Trustee*; Age 63
Vice Chairman of the Manager and formerly he held the following
positions: Vice President and Counsel of Oppenheimer Acquisition
Corp. ("OAC") the Manager's parent holding company, Executive Vice
President and General Counsel and a director of the Manager and
Oppenheimer Funds Distributor, Inc. (the "Distributor"), Vice
President a director of HarbourView Asset Management Corporation
("HarbourView") and Centennial Asset Management Corporation
("Centennial"), investment adviser subsidiaries of the Manager, a
director of Shareholder Financial Services, Inc. ("SFSI") and
Shareholder Services, Inc. ("SSI"), transfer agent subsidiaries of
the Manager, an officer of other Oppenheimer funds.
Benjamin Lipstein, Trustee; Age 73
591 Breezy Hill Road, Hillsdale, New York 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University; a director of Sussex
Publishers, Inc. (Publishers of Psychology Today and Mother Earth
News) and Spy Magazine, L.P.
Bridget A. Macaskill, President and Trustee*; Age 48
President, Chief Executive Officer and a Director of the Manager;
Chairman and a Director of SSI and SFSI; President and a director
of OAC, HarbourView and of Oppenheimer Partnership Holdings, Inc.,
a holding company subsidiary of the Manager; a director of
Oppenheimer Real Asset Management, Inc; formerly an Executive Vice
President of the Manager.
Elizabeth B. Moynihan, Trustee; Age 67
801 Pennsylvania Avenue, N.W., Washington, D.C. 20004
Author and architectural historian; a trustee of the Freer Gallery
of Art (Smithsonian Institution), the Institute of Fine Arts (New
York University) and National Building Museum; a member of the
Trustees Council, Preservation League of New York State; a member
of the Indo-U.S. Sub-Commissions on Education and Culture.
Kenneth A. Randall, Trustee; Age 69
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Dominion Resources, Inc. (electric utility holding
company), Dominion Energy, Inc. (electric power & oil & gas
producer), Enron-Dominion Cogen Corp. (Cogeneration Company), and
Kemper Corporation (insurance and financial services company);
Fidelity Life Association (mutual life insurance company); formerly
President and Chief Executive Officer of the Conference Board, Inc.
(international economic and business research) and a director of
Lumbermens Mutual Casualty Company, American Motorists Insurance
Company and American Manufacturers Mutual Insurance Company.
Edward V. Regan, Trustee; Age 66
40 Park Avenue, New York, New York 10016
Chairman of Municipal Assistance Corporation for the City of New
York; Senior Fellow of Jerome Levy Economics Institute, Bard
College, a member of the U.S. Competitiveness Policy Council; a
director of GranCare, Inc. (health care provider); formerly New
York State Comptroller and trustee, New York State and Local
Retirement Fund.
Russell S. Reynolds, Jr., Trustee; Age 64
200 Park Avenue, New York, New York 10166
Founder and Chairman of Russell Reynolds Associates, Inc.
(executive recruiting); Chairman of Directors Publication, Inc.
(consulting and publishing); a director of XYAN Inc. (printing),
Professional Staff Limited and American Scientific Resources, Inc.;
a trustee of Mystic Seaport Museum, International House, Greenwich
Historical Society and Greenwich Hospital.
Sidney M. Robbins, Trustee; Age 84
50 Overlook Road, Ossining, New York 10562
Chase Manhattan Professor Emeritus of Financial Institutions,
Graduate School of Business, Columbia University; Visiting
Professor of Finance, University of Hawaii; a director of The Korea
Fund, Inc. (a closed-end investment company); a member of the Board
of Advisors, Olympus Private Placement Fund, L.P.; Professor
Emeritus of Finance, Adelphi University.
Donald W. Spiro, Vice Chairman and Trustee*; Age 70
Chairman Emeritus and a director of the Manager; formerly Chairman
of the Manager and OppenheimerFunds Distributor, Inc. (the
"Distributor").
Pauline Trigere, Trustee; Age 83
498 Seventh Avenue, New York, New York 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and
sale of women's fashions).
Clayton K. Yeutter, Trustee; Age 65
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel, Hogan & Hartson (a law firm); a director of B.A.T.
Industries, Ltd. (tobacco and financial services), Caterpillar,
Inc. (machinery), ConAgra, Inc. (food and agricultural products),
FMC Corp. (chemicals and machinery), IMC Global, Inc. (chemicals
and animal feed) and Texas Instruments, Inc. (electronics);
formerly (in descending chronological order), Counsellor to the
President (Bush) for Domestic Policy, Chairman of the Republican
National Committee, Secretary of the U.S. Department of
Agriculture, and U.S. Trade Representative.
[FN]
- --------------------
*A Trustee who is an "interested person" of the Fund as defined in
the Investment Company Act.
Richard H. Rubinstein, Vice President and Portfolio Manager; Age 48
Senior Vice President of the Manager; an officer of other
Oppenheimer funds, formerly Vice President and Portfolio
Manager/Security Analyst for Oppenheimer Capital Corp., an
investment adviser.
Andrew J. Donohue, Secretary; Age 46
Executive Vice President and General Counsel of the Manager and the
Distributor; President and a director of Centennial; Executive
Vice President, General Counsel and a director of HarbourView, SSI,
SFSI, an Oppenheimer Partnership Holdings, Inc.; President and
director of Oppenheimer Real Asset Management, Inc.; General
Counsel of OAC; Executive Vice President, Chief Legal Officer and
a director of MultiSource Services, Inc. (a broker-dealer); an
officer of other Oppenheimer funds; formerly Senior Vice President
and Associate General Counsel of the Manager and the Distributor;
Partner in Kraft & McManimon (a law firm); an officer of First
Investors Corporation (a broker-dealer) and First Investors
Management Company, Inc. (broker-dealer and investment adviser);
director and an officer of First Investors Family of Funds and
First Investors Life Insurance Company.
George C. Bowen, Treasurer; Age 60
3410 South Galena Street Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President
and Treasurer of the Distributor and HarbourView; Senior Vice
President, Treasurer, Assistant Secretary and a director of
Centennial; Senior Vice President, Treasurer and Secretary of SSI;
Vice President, Treasurer and Secretary of SFSI; Treasurer of OAC;
Vice President and Treasurer of Oppenheimer Real Asset Management,
Inc; Chief Executive Officer, Treasurer and a director of
MultiSource Services, Inc. (a broker-dealer); an officer of other
Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer; Age 37
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly a Fund Controller for the
Manager, prior to which he was an Accountant for Yale & Seffinger,
P.C., an accounting firm, and previously an Accountant and
Commissions Supervisor for Stuart James Company Inc., a broker-
dealer.
Scott T. Farrar, Assistant Treasurer; Age 31
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer
funds; formerly a Fund Controller for the Manager, prior to which
he was an International Mutual Fund Supervisor for Brown Brothers
Harriman & Co., a bank, and previously a Senior Fund Accountant for
State Street Bank & Trust Company.
Robert G. Zack, Assistant Secretary; Age 48
Senior Vice President and Associate General Counsel of the Manager,
Assistant Secretary of SSI, SFSI; an officer of other Oppenheimer
funds.
Remuneration of Trustees. The officers of the Fund are
affiliated with the Manager. They and the Trustees of the Fund who
are affiliated with the Manager (Ms. Macaskill and Messrs. Galli
and Spiro; Ms. Macaskill and Mr. Spiro are also officers) receive
no salary or fee from the Fund. The remaining Trustees of the Fund
received the compensation shown below from the Fund, during its
fiscal year ended June 30, 1996, and from the New York-based
Oppenheimer funds (including the Fund) for which they served as
Trustee or Director. Compensation is paid for services in the
positions below their names:
Retirement Total
Benefits Compensation
Aggregate Accrued as From All
Compensation Part of New York-based
Name and Position from Fund Fund Expenses Oppenheimer
funds1
Leon Levy $8,409 6,536 $141,000
Chairman and Trustee
Benjamin Lipstein $5,141 3,996 $ 86,200
Study Committee
Chairman and Trustee
Elizabeth B. Moynihan $5,141 3,996 $ 86,200
Study Committee Member
and Trustee
Kenneth A. Randall $4,676 3,634 $ 78,400
Audit Committee
Chairman and Trustee
Russell S. Reynolds, Jr. $3,107 $2,415 $ 52,100
Proxy Committee Member2
and Trustee
Edward V. Regan $4,103 $3,189 $68,800
Proxy Committee Chairman,2
Audit Committee Member
and Trustee
Sidney M. Robbins $7,282 $5,660 $122,100
Study Committee
advisory member, Audit
Committee Vice-Chairman
and Trustee
Pauline Trigere, Trustee $3,107 $2,415 $ 52,100
Clayton K. Yeutter $3,107 $2,415 $ 52,100
Proxy Committee Member2
and Trustee
- -----------------------
1For the 1995 calendar year (prior to the inception of the Proxy
Committee) during which the New York-based Oppenheimer funds,
listed in the first paragraph of this section, including
Oppenheimer Mortgage Income Fund and Oppenheimer Time Fund (which
ceased operation following the acquisition of their assets by
certain other Oppenheimer funds) but excluding Oppenheimer
International Growth Fund, which had not yet commenced operations.
2Committee position held during a portion of the period shown. The
Study and Audit Committees meet for all of the New York-based
Oppenheimer funds and the fees are allocated among the funds by the
Board.
The Fund has adopted a retirement plan that provides for
payment to a retired Trustee of up to 80% of the average
compensation paid during that Trustee's five years of service in
which the highest compensation was received. A Trustee must serve
in that capacity for any of the New York-based OppenheimerFunds for
at least 15 years to be eligible for the maximum payment. Because
each Trustee's retirement benefits will depend on the amount of the
Trustee's future compensation and length of service, the amount of
those benefits cannot be determined at this time, nor can the Fund
estimate the number of years of credited service that will be used
to determine those benefits. During the year ended June 30, 1996,
a provision of $41,657 was made for the Fund's projected benefit
obligations and payments of $2,831 were made to retired trustees,
resulting in an accumulated liability of $102,810 at June 30, 1996.
Major Shareholders. As of October 2, 1996, the two entities that
owned of record or was known by the Fund to own beneficially 5% or
more of the Fund's outstanding shares were (i) Donaldson Lufkin &
Jenrette Securities Corporation Inc., P.O. Box 2052, Jersey City,
N.J. 07303-0998, which owned 54,998.996 Class B shares (33.28%) and
(ii) Merrill Lynch Pierce Fenner & Smith Inc., Attn. Book Entry
Dept., 4800 Deer Lake Drive EA3, Jacksonville, FL 32246-6484, which
owned 37,984 Class C shares (10.79%).
The Manager and Its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled
by Massachusetts Mutual Life Insurance Company. OAC is also owned
in part by certain of the Manager's directors and officers, some of
whom may also serve as officers of the Fund, and three of whom (Ms.
Macaskill and Messrs. Spiro and Galli) serve as Trustees of the
Fund.
The Manager and the Fund have a Code of Ethics. It is
designed to detect and prevent improper personal trading by certain
employees, including portfolio managers, that would compete with or
take advantage of the Fund's portfolio transactions. Compliance
with the Code of Ethics is carefully monitored and strictly
enforced by the Manager.
The Investment Advisory Agreement. A management fee is
payable monthly to the Manager under the terms of the Investment
Advisory Agreement between the Manager and the Fund and is computed
on the aggregate net assets of the Fund as of the close of business
each day. The Investment Advisory Agreement between the Manager
and the Fund requires the Manager, at its expense, to provide the
Fund with adequate office space, facilities and equipment, and to
provide and supervise the activities of all administrative and
clerical personnel required to provide effective administration for
the Fund, including the compilation and maintenance of records with
respect to its operations, the preparation and filing of specified
reports, and the composition of proxy materials and registration
statements for continuous public sale of shares of the Fund.
Expenses not expressly assumed by the Manager under the
Investment Advisory Agreement or by the Distributor under the
General Distributor's Agreement are paid by the Fund. The
Investment Advisory Agreement lists examples of expenses paid by
the Fund, the major categories of which relate to interest, taxes,
brokerage commissions, certain insurance premiums, 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. For the
Fund's fiscal years ended June 30, 1994, 1995 and 1996, the
management fees paid by the Fund to the Manager were $1,715,675,
$1,896,121, and $2,036,339 respectively.
The Investment Advisory Agreement contains no expense
limitation. However, independently of the Investment Advisory
Agreement, the Manager has voluntarily undertaken that the total
expenses of the Fund in any fiscal year (including the management
fee but excluding taxes, interest, brokerage fees, distribution
plan payments, and extraordinary non-recurring expenses, such as
litigation costs) shall not exceed the most stringent expense
limitation imposed under state law applicable to the Fund.
Pursuant to the undertaking, the Manager's fee will be reduced at
the end of a month so that there will not be any accrued but unpaid
liability under this undertaking. Currently, the most stringent
state expense limitation is imposed by California, and limits the
Fund's expenses (with specified exclusions) to 2.5% of the first
$30 million of average net assets, 2.0% of the next $70 million of
average net assets, and 1.5% of average net assets in excess of
$100 million. The Manager reserves the right to terminate or amend
the undertaking at any time. Any assumption of the Fund's expenses
under this limitation would lower the Fund's overall expense ratio
and increase its total return during any period for which expenses
are limited.
The Investment Advisory Agreement provides that so long as it
has acted with due care and in good faith, the Manager shall not be
liable for any loss sustained by reason of any investment, the
adoption of any investment policy, or the purchase, sale or
retention of securities, irrespective of whether the determinations
of the Manager relative thereto shall have been based, wholly or
partly, upon the investigation or research of any other individual,
firm or corporation believed by it to be reliable. However, the
Investment Advisory Agreement does not protect the Manager against
liability by reason of its willful misfeasance, bad faith or gross
negligence in the performance of its duties or its reckless
disregard of its obligations and duties under the advisory
agreement. The Investment Advisory Agreement permits the Manager
to act as investment adviser for any other person, firm or
corporation and to use the name "Oppenheimer" in connection with
its other investment activities. If the Manager shall no longer
act as investment adviser to the Fund, the right of the Fund to use
the name "Oppenheimer" as part of its corporate name may be
withdrawn.
The Distributor. Under its General Distributor's Agreement
with the Fund, the Distributor acts as the Fund's principal
underwriter in the continuous public offering of the Fund's Class
A, Class B and Class C shares but is not obligated to sell a
specific number of shares. Expenses normally attributable to
sales, including advertising and the cost of printing and mailing
prospectuses, (other than those furnished to existing
shareholders), are borne by the Distributor. During the Fund's
fiscal years ended June 30, 1994, 1995 and 1996, the aggregate
amount of sales charge on sales of the Fund's Class A shares was
$537,507, $1,275,166 and $581,891 respectively, of which the
Distributor and an affiliated broker-dealer retained $140,880,
$280,415 and $146,293 in those respective years. During the Fund's
fiscal year ended June 30, 1996, the contingent deferred sales
charge collected on the Fund's Class B shares totalled $46, all of
which the Distributor retained. During fiscal year ended June 30,
1996, sales charges advanced to broker/dealers by the Distributor
on sales of the Fund's Class B shares totalled 51,972 of which $72
was paid to an affiliated broker/dealer. During the Fund's fiscal
year ended June 30, 1996, the contingent deferred sales charge
collected on Class C shares totalled $2,962, all of which the
Distributor retained. During the fiscal year ended June 30, 1996,
sales charges advanced to broker/dealers by the Distributor on
sales of the Fund's Class C shares totalled $21,470 of which $1,625
was paid to an affiliated broker/dealer. For additional
information about distribution of the Fund's shares and the
expenses connected with such activities, please refer to
"Distribution and Service Plans," below.
The Transfer Agent. OppenheimerFunds Services, the Fund's
transfer agent, is responsible for maintaining the Fund's
shareholder registry and shareholder accounting records, and for
shareholder servicing and administrative functions.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of
the duties of the Manager under the Investment Advisory Agreement
is to arrange the portfolio transactions for the Fund. The
Advisory Agreement contains provisions relating to the employment
of broker-dealers ("brokers") to effect the Fund's portfolio
transactions. In doing so, the Manager is authorized by the
advisory agreement to employ broker-dealers including "affiliated"
brokers as that term is defined in the Investment Company Act, as
may, in its best judgment based on all relevant factors, implement
the policy of the Fund to obtain, at reasonable expense, the "best
execution" (prompt and reliable execution at the most favorable
price obtainable) of such transactions. The Manager need not seek
competitive commission bidding, but is expected to 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 Advisory Agreement, the Manager is authorized to
select brokers which provide brokerage and/or research services for
the Fund and/or the other accounts over which the Manager or its
affiliates have investment discretion. The commissions paid to
such brokers may be higher than another qualified broker would have
charged if a good faith determination is made by the Manager that
the commission is reasonable in relation to the services provided.
Subject to the foregoing considerations, the Manager may also
consider sales of shares of the Fund and other investment companies
managed by the Manager or its affiliates as a factor in the
selection of brokers for the Fund's portfolio transactions.
Description of Brokerage Practices Followed by the Manager.
Subject to the provisions of the Investment Advisory Agreement, the
procedures and rules described above, allocations of brokerage are
generally made by the Manager's portfolio traders upon
recommendations from the Manager's portfolio managers. In certain
instances portfolio managers may directly place trades and allocate
brokerage, also subject to the provisions of the advisory agreement
and the procedures and rules described above. In either case,
brokerage is allocated under the supervision of the Manager's
executive officers. Transactions in securities other than those
for which an exchange is the primary market are generally done with
principals or market makers. Brokerage commissions are paid
primarily for effecting transactions in listed securities or for
certain fixed-income agency transactions in the secondary market,
and otherwise only if it appears likely that a better price or
execution can be obtained. When the Fund engages in an option
transaction, ordinarily the same broker will be used for the
purchase or sale of the option and any transactions in the
securities to which the option relates. Where possible, concurrent
orders to purchase or sell the same security by more than one of
the accounts managed by the Manager or its affiliates are combined.
The transactions effected pursuant to such combined orders are
averaged as to price and allocated in accordance with the purchase
or sale orders actually placed for each account. Option
commissions may be relatively higher than those which would apply
to direct purchases and sales of portfolio securities.
Most purchases of money market instruments and debt
obligations are principal transactions at net prices. Instead of
using a broker for those transactions, the Fund normally deals
directly with the selling or purchasing principal or market maker
unless it determines that a better price or execution can be
obtained by using a broker. Purchases of these securities from
underwriters include a commission or concession paid by the issuer
to the underwriter. Purchases from dealers include a spread
between the bid and asked price. The Fund seeks to obtain prompt
execution of these orders at the most favorable net price.
The research services provided by a particular broker may be
useful only to one or more of the advisory accounts of the Manager
and its affiliates, and investment research for the commissions of
these other accounts may be useful both to the Fund and one or more
of such other accounts. Such research, which may be supplied by a
third party at the instance of a broker, includes information and
analyses on particular companies and industries as well as market
or economic trends and portfolio strategy, receipt of market
quotations for portfolio evaluations, information systems, computer
hardware and similar products and services. If a research service
also assists the Manager in a non-research capacity (such as
bookkeeping or other administrative functions), then only the
percentage or component that provides assistance to the Manager in
the investment decision-making process may be paid for in
commission dollars. The Board has also permitted the Manager to
use stated commissions on secondary fixed-income agency trades to
obtain research where the broker has represented to Manager that:
(i) the trade is not from or for the broker's own inventory, (ii)
the trade was executed by the broker of an agency basis at the
stated commission, and (iii) the trade is not a riskless principal
transaction.
The research services provided by brokers broaden the scope
and supplement the research activities of the Manager, by making
available additional views for consideration and comparisons, and
enabling the Manager to obtain market information for the valuation
of securities held in the Fund's portfolio or being considered for
purchase. The Board of Trustees, including the "independent"
Trustees of the Fund (those Trustees of the Fund who are not
"interested persons" as defined in the Investment Company Act, and
who have no direct or indirect financial interest in the operation
of the Investment Advisory Agreement or the Distribution and
Service Plans described below), annually reviews information
furnished by the Manager as to the commissions paid to brokers
furnishing such services so that the Board may ascertain whether
the amount of such commissions was reasonably related to the value
or benefit of such services.
During the Fund's fiscal years ended June 30, 1994, 1995 and
1996, total brokerage commissions paid by the Fund (not including
spreads or concessions on principal transactions on a net trade
basis) were $406,111, $349,512 and $366,506 respectively. During
the fiscal year ended June 30, 1996, $144,110 was paid to brokers
as commissions in return for research services; the aggregate
dollar amount of those transactions was $50,048,961. The
transactions giving rise to those commissions were allocated in
accordance with the internal allocation procedures described above.
Performance of the Fund
Total Return Information. As described in the Prospectus, from
time to time the "average annual total return," "cumulative total
return" "average annual total return at net asset value" and "total
return at net asset value" of an investment in each class of shares
of the Fund may be advertised. An explanation of how these total
returns and total returns are calculated for each class and the
components of those calculations is set forth below.
The Fund's advertisements of its performance data must, under
applicable rules of the Securities and Exchange Commission, include
the average annual total returns for each advertised class of
shares of the Fund for the 1, 5, and 10-year periods (or the life
of the class, if less) ending as of the most recently-ended
calendar quarter prior to the publication of the advertisement.
This enables an investor to compare the Fund's performance to the
performance of other funds for the same periods. However, a number
of factors should be considered before using such information as a
basis for comparison with other investments. An investment in the
Fund is not insured; its returns and share prices are not
guaranteed and normally will fluctuate on a daily basis. When
redeemed, an investor's shares may be worth more or less than their
original cost. Returns for any given past period are not a
prediction or representation by the Fund of future returns. The
returns of Class A, Class B and Class C shares of the Fund are
affected by portfolio quality, the type of investments the Fund
holds and its operating expenses allocated to the particular class.
Average Annual Total Returns. The "average annual total
return" of each class is an average annual compounded rate of
return for each year in a specified number of years. It is the
rate of return based on factors which include a hypothetical
initial investment of $1,000 ("P" in the formula below) held for a
number of years ("n") to achieve an Ending Redeemable Value
("ERV") of that investment, according to the following formula:
1/n
(ERV)
(---) -1 = Average Annual Total Return
( P )
Cumulative Total Returns. The cumulative "total return"
calculation measures the change in value of a hypothetical
investment of $1,000 over an entire period of years. Its
calculation uses some of the same factors as average annual total
return, but it does not average the rate of return on an annual
basis. Cumulative total return is determined as follows:
ERV - P
------- = Total Return
P
In calculating total returns for Class A shares, the current
maximum sales charge of 5.75% (as a percentage of the offering
price) is deducted from the initial investment ("P") (unless the
return is shown at net asset value, as described below). For Class
B shares, the payment of the applicable contingent deferred sales
charge of (5.0% for the first year, 4.0% for the second year, 3.0%
for the third and fourth years, 2.0% in the fifth year, 1.0% in the
sixth year and none thereafter) is applied to the investment result
for the time period shown (unless the total return is shown at net
asset value as described below). For Class C shares, the 1.0%
contingent deferred sales charge is applied to the investment
result for the one-year period (or less). Total returns also
assume that all dividends and capital gains distributions during
the period are reinvested at net asset value per share, and that
the investment is redeemed at the end of the period.
The "average annual total returns" on an investment in Class
A shares of the Fund (using the method described above) for the
one, five and ten-year periods ended June 30, 1996, were 10.80%,
12.07% and 8.41%, respectively. The Fund's "cumulative total
return" for Class A shares for the ten-year period ended June 30,
1996, was 124.15%. During a portion of the periods for which total
returns are shown, the Fund's maximum sales charge rate was higher;
as a result, performance returns on actual investments during those
periods may be lower than the results shown. The cumulative total
return on Class B shares of the Fund for the period from November
1, 1995 through June 30, 1996 was 6.86%. The average annual total
return on Class C shares for the year ended June 30, 1996 was
15.51% and the average annual total return for the period December
1, 1993 (the commencement of the offering of the shares) through
June 30, 1996 was 12.79%. The cumulative total return on Class C
shares for the period December 1, 1993 through June 30, 1996 was
36.44%.
Total Returns at Net Asset Value. From time to time the
Fund may also quote an average annual total return at net asset
value or a cumulative total return at net asset value for Class A,
Class B or Class C shares. Each is based on the difference in net
asset value per share at the beginning and the end of the period
for a hypothetical investment in that class of shares (without
considering front-end or contingent deferred sales charges) and
takes into consideration the reinvestment of dividends and capital
gains distributions.
The cumulative total return at net asset value of the Fund's
Class A shares for the ten-year period ended June 30, 1996, was
137.82%. The average annual total returns at net asset value for
the one, five and ten-year periods ended June 30, 1996 for Class A
shares were 17.56%, 13.41% and 9.05%, respectively. The cumulative
total return at net asset value for Class B shares for the period
November 1, 1995 through June 30, 1996 was 11.86%. The cumulative
total return at net asset value of the Fund's Class C shares for
the period December 1, 1993 (commencement of the offering of
shares) through June 30, 1996 was 36.44%. The average annual total
returns at net asset value for the one year ended June 30, 1996 and
the period December 1, 1993 through June 30, 1996 for the Fund's
Class C shares were 16.51% and 12.79%, respectively.
Total return information may be useful to investors in
reviewing the performance of the Fund's Class A, Class B or Class
C shares. However, when comparing total return of an investment in
Class A, Class B or Class C shares of the Fund with that of other
alternatives, investors should understand that as the Fund is an
equity fund seeking capital appreciation, its shares are subject to
greater market risks and volatility than shares of funds having
other investment objectives.
Other Performance Comparisons. From time to time the Fund may also
include in its advertisements and sales literature performance
information about the Fund or rankings of the Fund's performance
cited in newspapers or periodicals, such as The New York Times.
These articles may include quotations of performance from other
sources, such as Lipper Analytical Services, Inc. ("Lipper") or
Morningstar, Inc. and Lipper is a widely-recognized independent
mutual fund monitoring service. Lipper monitors the performance of
regulated investment companies, including the Fund, and ranks their
performance for various periods based on categories relating to
investment objectives. The performance of the Fund's classes of
shares is ranked against (i) all other funds and (ii) all other
gold-oriented funds. The Lipper performance rankings are based on
total returns that include the reinvestment of capital gain
distributions and income dividends but do not take sales charges or
taxes into consideration.
Morningstar is an independent mutual fund monitoring service
that ranks mutual funds, including the Fund, monthly in broad
investment categories (equity, taxable bond, municipal bond and
hybrid) based on risk-adjusted investment return. Investment
return measures a fund's three, five and ten-year average annual
total returns (when available) in excess of 90-day U.S. Treasury
bill returns after considering sales charges and expenses. Risk
measures fund performance below 90-day U.S. Treasury bill monthly
returns. Risk and investment return are combined to produce star
rankings reflecting performance relative to the average fund in a
fund's category. Five stars is the "highest" ranking (top 10%),
four stars is "above average" (next 22.5%), three stars is
"average" (next 35%), two stars is "below average" (next 22.5%) and
one star is "lowest" (bottom 10%). Morningstar ranks the Fund's
Class A, Class B and Class C shares in relation to other equity
funds. Rankings are subject to change.
From time to time, the Fund's Manager may publish rankings or
ratings of the Manager (or Transfer Agent) or the investor services
provided by them to shareholders of the Oppenheimer funds, other
than performance rankings of the Oppenheimer funds themselves.
Those ratings or rankings of shareholder/investor services by third
parties may compare the Oppenheimer funds services to those of
other mutual fund families selected by the rating or ranking
services, and may be based upon the opinions of the rating or
ranking service itself, using its own research or judgment, or
based upon surveys of investors, brokers, shareholders or others.
Distribution and Service Plans
The Fund has adopted a Service Plan for Class A shares and
Distribution and Service Plans for Class B and Class C shares of
the Fund under Rule 12b-1 of the Investment Company Act pursuant to
which the Fund makes payments to the Distributor in connection with
the distribution and/or servicing of the shares of that class as
described in the Prospectus. Each Plan has been approved by a vote
of (i) the Board of Trustees of the Fund, including a majority of
the "Independent Trustees," cast in person at a meeting called for
the purpose of voting on that Plan, and (ii) the holders of a
"majority" (as defined in the Investment Company Act) of the shares
of each class. For the Distribution and Service Plans for Class B
and Class C shares, that vote was cast by the Manager as the sole
initial holder of Class B and Class C shares of the Fund.
In addition, under the Plans the Manager and the Distributor,
in their sole discretion, from time to time may use their own
resources (which, in the case of the Manager, may include profits
from the advisory fee it receives from the Fund) to make payments
to brokers, dealers or other financial institutions (each is
referred to as a "Recipient" under the Plans) for distribution and
administrative services they perform at no cost to the Fund. The
Distributor and the Manager may, in their sole discretion, increase
or decrease the amount of payments they make from their own
resources to Recipients.
Unless terminated as described below, each Plan continues in
effect from year to year but only as long as such continuance is
specifically approved at least annually by the Fund's Board of
Trustees and its Independent Trustees by a vote cast in person at
a meeting called for the purpose of voting on such continuance.
Each Plan may be terminated at any time by the vote of a majority
of the Independent Trustees or by the vote of the holders of a
"majority" (as defined in the Investment Company Act) of the
outstanding shares of that class. None of the Plans may be amended
to increase materially the amount of payments to be made unless
such amendment is approved by shareholders of the Class affected by
the amendment. In addition, because Class B shares of the Fund
automatically convert into Class A shares after six years, the Fund
is required to obtain the approval of Class B as well as Class A
shareholders for a proposed amendment to the Class A Plan that
would materially increase payments under the plan. Such approval
must be by a "majority" of the Class A and Class B shares (as
defined in the Investment Company Act), voting separately by class.
All material amendments must be approved by the Independent
Trustees.
While the Plans are in effect, the Treasurer of the Fund shall
provide separate written reports to the Fund's Board of Trustees at
least quarterly on the amount of all payments made pursuant to each
Plan, the purpose for which payments were made and the identity of
each Recipient that received any such payment. The reports for the
Class B and Class C Plans shall also include the distribution costs
for that quarter, and such costs for previous fiscal periods that
are carried forward, as explained in the Prospectus and below.
Those reports, including the allocations on which they are based,
will be subject to the review and approval of the Independent
Trustees in the exercise of their fiduciary duty. Each Plan
further provides that while it is in effect, the selection and
nomination of those Trustees of the Fund who are not "interested
persons" of the Fund is committed to the discretion of the
Independent Trustees. This does not prevent the involvement of
others in such selection and nomination if the final decision on
any such selection or nomination is approved by a majority of the
Independent Trustees.
Under the Plans, no payment will be made to any Recipient in
any quarter if the aggregate net asset value of all Fund shares
held by the Recipient for itself and its customers did not exceed
a minimum amount, if any, that may be determined from time to time
by a majority of the Fund's Independent Trustees. Initially, the
Board of Trustees has set the fee at the maximum rate and set no
minimum amount. However, while the maximum fee rate under the
Class a Plan is 0.25% of average annual net assets of the Fund, the
Board of Trustees has set the maximum rate for assets representing
Class A shares of the Fund acquired before April 1, 1991 at 0.15%,
and for assets representing Class A shares acquired on or after
April 1, 1991, at 0.25%.
For the fiscal year ended June 30, 1996, payments under this
Class A Plan totaled $350,307, all of which was paid by the
Distributor to Recipients, including $5,013 paid to an affiliate of
the Distributor. Any unreimbursed expenses incurred by the
Distributor with respect to Class A shares for any fiscal year may
not be recovered in subsequent fiscal years. Payments received by
the Distributor under the Class A Plan will not be used to pay any
interest expense, carrying charges, or other financial costs, or
allocation of overhead by the Distributor.
The Class B and Class C Plans allow the service fee payment to
be paid by the Distributor to Recipients in advance for the first
year such shares are outstanding, and thereafter on a quarterly
basis, as described in the Prospectus. The advance payment is
based on the net asset value of shares sold. An exchange of shares
does not entitle the Recipient to an advance service fee payment.
In the event shares are redeemed during the first year such shares
are outstanding, the Recipient will be obligated to repay a pro
rata portion of such advance payment to the Distributor. Payments
made under the Class B Plan during the period from November 1,
1995 through June 30, 1996 totalled $4,128 all of which was
retained by the Distributor. Payments made under Class C Plan
during the fiscal year ended June 30, 1996 totalled $34,894 of
which $21,763 was retained by the Distributor and $218 was paid to
a dealer affiliated with the Distributor.
Although the Class B and Class C Plans permit the Distributor
to retain both the asset-based sales charges and the service fees
on shares, or to pay Recipients the service fee on a quarterly
basis without payment in advance, the Distributor intends to pay
the service fee to Recipients in the manner described above. A
minimum holding period may be established from time to time under
the Class B and Class C Plans by the Board. Initially, the Board
has set no minimum holding period. All payments under the Class B
and Class C Plans are subject to the limitations imposed by the
Rule of Fair Practice of the National Association of Securities
Dealers, Inc. The Distributor anticipates that it will take a
number of years for it to recoup (from the Fund's payments to the
Distributor under the Class B or Class C Plan and from the
contingent deferred sales charges collected on redeemed Class B or
Class C shares) the sales commissions paid to authorized brokers or
dealers.
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A, Class B and Class C
Shares. The availability of three classes of shares permits an
investor to choose the method of purchasing shares that is more
beneficial to the investor depending on the amount of the purchase,
the length of time the investor expects to hold shares and other
relevant circumstances. Investors should understand that the
purpose and function of the deferred sales charge and asset-based
sales charge with respect to Class B and Class C shares are the
same as those of the initial sales charge with respect to Class A
shares. Any salesperson or other person entitled to receive
compensation for selling Fund shares may receive different
compensation with respect to one class of shares than the other.
The Distributor normally will not accept any order for $500,000 or
more of Class B shares or $1 million or more of Class C shares on
behalf of a single investor (not including dealer "street name" or
omnibus accounts) because generally it will be more advantageous
for that investor to purchase Class A shares of the Fund instead.
The three classes of shares each represent an interest in the
same portfolio investments of the Fund. However, each class has
different shareholder privileges and features. The net income
attributable to Class B and Class C shares and the dividends
payable on Class B and Class C shares will be reduced by
incremental expenses borne solely by that class, including the
asset-based sales charge to which Class B and Class C shares are
subject.
The conversion of Class B shares to Class A shares after six
years is subject to the continuing availability of a private letter
ruling from the Internal Revenue Service, or an opinion of counsel
or tax adviser, to the effect that the conversion of Class B shares
does not constitute a taxable event for the holder under Federal
income tax law. If such a revenue ruling or opinion is no longer
available, the automatic conversion feature may be suspended, in
which event no further conversions of Class B shares would occur
while such suspension remained in effect. Although Class B shares
could then be exchanged for Class A shares on the basis of relative
net asset value of the two classes, without the imposition of a
sales charge or fee, such exchange could constitute a taxable event
for the holder, and absent such exchange, Class B shares might
continue to be subject to the asset-based sales charge for longer
than six years.
The methodology for calculating the net asset value, dividends
and distributions of the Fund's Class A, Class B and Class C shares
recognizes two types of expenses. General expenses that do not
pertain specifically to any class are allocated pro rata to the
shares of each class, based on the percentage of the net assets of
such class to the Fund's total net assets, and then equally to each
outstanding share within a given class. Such general expenses
include (i) management fees, (ii) legal, bookkeeping and audit
fees, (iii) printing and mailing costs of shareholder reports,
Prospectuses, Statements of Additional Information and other
materials for current shareholders, (iv) fees to Independent
Trustees, (v) custodian expenses, (vi) share issuance costs, (vii)
organization and start-up costs, (viii) interest, taxes and
brokerage commissions, and (ix) non-recurring expenses, such as
litigation costs. Other expenses that are directly attributable to
a class are allocated equally to each outstanding share within that
class. Such expenses include (i) Distribution and/or Service Plan
fees, (ii) incremental transfer and shareholder servicing agent
fees and expenses, (iii) registration fees and (iv) shareholder
meeting expenses, to the extent that such expenses pertain to a
specific class rather than to the Fund as a whole.
Determination of Net Asset Value Per Share. The net asset values
per share of Class A, Class B and Class C shares of the Fund are
determined as of the close of business of The New York Stock
Exchange (the "Exchange") on each day that the Exchange is open, by
dividing the value of the Fund's net assets attributable to that
class by the total number of Fund shares of that class outstanding.
The Exchange normally closes at 4:00 P.M. New York time, but may
close earlier on some days (for example, in case of weather
emergencies or days falling before a holiday). The Exchange's most
recent annual holiday schedule (which is subject to change) states
that it will close on New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. It may also close on other days. The Fund may
invest a substantial portion of its assets in foreign securities
primarily listed on foreign exchanges which may trade on Saturdays
or customary U.S. business holidays on which the Exchange is
closed. Because the Fund's net asset values will not be calculated
on those days, the Fund's net asset value per share may be
significantly affected on such days when shareholders may not
purchase or redeem shares.
The Fund's Board of Trustees has established procedures for
the valuation of the Fund's securities, generally as follows: (i)
equity securities traded on a securities exchange or on the
Automated Quotation System ("NASDAQ") of the Nasdaq Stock Market,
Inc. for which last sale information is regularly reported are
valued at the last reported sale price on their primary exchange or
NASDAQ that day (or, in the absence of sales that day, at values
based on the last sale price of the preceding trading day, or
closing bid and asked prices that day); (ii) securities traded on
a foreign securities exchange are valued generally at the last
sales price available to the pricing service approved by the Fund's
Board of Trustees or to the Manager as reported by the principal
exchange on which the security is traded at its last trading
session on or immediately preceding the valuation date, or at the
mean between "bid" and "asked" prices obtained from the principal
exchange or two active market makers in the security on the basis
of reasonable inquiry; (iii) long-term debt securities having a
remaining maturity in excess of 60 days are valued based on the
mean between the "bid" and "asked" prices determined by a portfolio
pricing service approved by the Fund's Board of Trustees or
obtained by the Manager from two active market makers in the
security on the basis of reasonable inquiry; (iv) debt instruments
having a maturity of more than 397 days when issued, and non-money
market type instruments having a maturity of 397 days or less when
issued, which have a remaining maturity of 60 days or less are
valued at the mean between "bid" and "asked" prices determined by
a pricing service approved by the Fund's Board of Trustees or
obtained by the Manager from two active market makers in the
security on the basis of reasonable inquiry; (v) money market-type
debt securities that had a maturity of less than 397 days when
issued that have a remaining maturity of 60 days or less are valued
at cost, adjusted for amortization of premiums and accretion of
discounts; and (vi) securities (including restricted securities)
not having readily-available market quotations are valued at fair
value determined under the Board's procedures. If the Manager is
unable to locate two market makers willing to give quotes (see
(ii), (iii) and (iv) above), the security may be priced at the mean
between the "bid" and "asked" prices provided by a single active
market maker.
In the case of U.S. Government Securities and mortgage-backed
securities, where last sale information is not generally available,
such pricing procedures may include matrix comparisons to the
prices for comparable instruments on the basis of quality, yield,
maturity and other special factors involved. The Manager may use
pricing services approved by the Board of Trustees to price any of
the types of securities described above to price U.S. Government
Securities, mortgage-backed securities, foreign government
securities and corporate bonds. The Manager will monitor the
accuracy of such pricing services, which may include comparing
prices used for portfolio evaluation to actual sales prices of
selected securities.
Trading in securities on European and Asian exchanges and
over-the-counter markets is normally completed before the close of
the New York Stock Exchange. Events affecting the values of
foreign securities traded in securities markets that occur between
the time their prices are determined and the close of the New York
Stock Exchange will not be reflected in the Fund's calculation of
net asset value unless the Board of Trustees or the Manager, under
procedures established by the Board of Trustees, determines that
the particular event is likely to effect a material change in the
value of such security. Foreign currency, including forward
contracts, will be valued at the closing price in the London
foreign exchange market that day as provided by a reliable bank,
dealer or pricing service. The values of securities denominated in
foreign currency will be converted to U.S. dollars at the closing
price in the London foreign exchange market that day as provided by
a reliable bank, dealer or pricing service.
Puts, calls and Futures are valued at the last sales price on
the principal exchange on which they are traded, or on NASDAQ, as
applicable, as determined by a pricing service approved by the
Board of Trustees or by the Manager. If there were no sales that
day, value shall be the last sale price on the preceding trading
day if it is within the spread of the closing bid and asked prices
on the principal exchange or on NASDAQ on the valuation date, or,
if not, value shall be the closing bid price on the principal
exchange or on NASDAQ on the valuation date. If the put, call or
future is not traded on an exchange or on NASDAQ, it shall be
valued at the mean between bid and asked prices obtained by the
Manager from two active market makers (which in certain cases may
be the bid price if no asked price is available).
AccountLink. When shares are purchased through AccountLink, each
purchase must be at least $25.00. Shares will be purchased on the
regular business day the Distributor is instructed to initiate the
Automated Clearing House transfer to buy shares. Dividends will
begin to accrue on such shares on the day the Fund receives Federal
Funds for the purchase through the ACH system before the close of
The New York Stock Exchange that day, which is normally three days
after the ACH transfer is initiated. The Exchange normally closes
at 4:00 P.M., but may close earlier on certain days. If Federal
Funds are received on a business day after the close of the
Exchange, the shares will be purchased and dividends will begin to
accrue on the next regular business day. The proceeds of ACH
transfers are normally received by the Fund 3 days after the
transfers are initiated. The Distributor and the Fund are not
responsible for any delays in purchasing shares resulting from
delays in ACH transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced
sales charge rate may be obtained for Class A shares under Right of
Accumulation and Letters of Intent because of the economies of
sales efforts and expenses realized by the Distributor, dealers and
brokers making such sales. No sales charge is imposed in certain
circumstances described in the Prospectus because the Distributor
or dealer or broker incurs little or no selling expenses. The term
"immediate family" refers to one's spouse, children, grandchildren,
parents, grandparents, parents-in-law, brothers and sisters, sons-
and daughters-in-law, siblings, a sibling's spouse, a spouse's
siblings, aunts, uncles, nieces and nephews.
The Oppenheimer Funds. The Oppenheimer funds are those
mutual funds for which the Distributor acts as the distributor or
the sub-distributor and include the following:
Oppenheimer Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer California Municipal Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer Insured Municipal Fund
Oppenheimer Main Street California
Municipal Fund
Oppenheimer Florida Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income &
Growth Fund
Oppenheimer International Growth Fund
Oppenheimer Enterprise Fund
Oppenheimer Bond Fund for Growth
Oppenheimer High Yield Fund
Oppenheimer Champion Income Fund
Oppenheimer Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term
Government Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer International Bond Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income &
Growth Fund
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Growth & Income Fund
Rochester Fund Municipals*
Rochester Portfolio Series-Limited Term
New York Municipal Fund*
Oppenheimer Disciplined Value Fund
Oppenheimer Disciplined Allocation Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Growth Fund
Oppenheimer LifeSpan Income Fund
*Shares of the Fund are not presently exchangeable for shares of
these funds.
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
There is an initial sales charge on the purchase of Class A
shares of each of the Oppenheimer funds except Money Market Funds
(under certain circumstances described herein, redemption proceeds
of Money Market Fund shares may be subject to a contingent
deferred sales charge).
Letters of Intent. A Letter of Intent (referred to as a
"Letter") is an investor's statement in writing to the Distributor
of the intention to purchase Class A shares or Class A and Class B
shares of the Fund (and other OppenheimerFunds) during a 13-month
period (the "Letter of Intent period"), which may, at the
investor's request, include purchases made up to 90 days prior to
the date of the Letter. The Letter states the investor's intention
to make the aggregate amount of purchases of shares which, when
added to the investor's holdings of shares of those funds, will
equal or exceed the amount specified in the Letter. Purchases made
by reinvestment of dividends or distributions of capital gains and
purchases made at net asset value without sales charge do not count
toward satisfying the amount of the Letter. A Letter enables an
investor to count the Class A and Class B shares purchased under
the Letter to obtain the reduced sales charge rate on purchases of
Class A shares of the Fund (and of other Oppenheimer funds) that
applies under the Right of Accumulation to current purchases of
Class A shares. Each purchase under the Letter will be made at the
public offering price applicable to a single lump-sum purchase of
shares in the intended purchase amount, as described in the
Prospectus.
In submitting a Letter, the investor makes no commitment to
purchase shares, but if the investor's purchases of shares within
the Letter of Intent period, when added to the value (at offering
price) of the investor's holdings of shares on the last day of that
period, do not equal or exceed the intended purchase amount, the
investor agrees to pay the additional amount of sales charge
applicable to such purchases, as set forth in "Terms of Escrow,"
below (as those terms may be amended from time to time). The
investor agrees that shares equal in value to 5% of the intended
purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be
bound by the terms of the Prospectus, this Statement of Additional
Information and the Application used for such Letter of Intent, and
if such terms are amended, as they may be from time to time by the
Fund, that those amendments will apply automatically to existing
Letters of Intent.
For purchases of shares of the Fund and other OppenheimerFunds
by OppenheimerFunds prototype 401(k) plans under a Letter of
Intent, the Transfer Agent will not hold shares in escrow. If the
intended purchase amount under the Letter entered into by an
OppenheimerFunds prototype 401(k) plan is not purchased by the plan
by the end of the Letter of Intent period, there will be no
adjustment of commissions paid to the broker-dealer or financial
institution of record for accounts held in the name of that plan.
If the total eligible purchases made during the Letter of
Intent period do not equal or exceed the intended purchase amount,
the commissions previously paid to the dealer of record for the
account and the amount of sales charge retained by the Distributor
will be adjusted to the rates applicable to actual purchases. If
total eligible purchases during the Letter of Intent period exceed
the intended purchase amount and exceed the amount needed to
qualify for the next sales charge rate reduction set forth in the
applicable prospectus, the sales charges paid will be adjusted to
the lower rate, but only if and when the dealer returns to the
Distributor the excess of the amount of commissions allowed or paid
to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the
Distributor will be used to purchase additional shares for the
investor's account at the net asset value per share in effect on
the date of such purchase, promptly after the Distributor's receipt
thereof.
In determining the total amount of purchases made under a
Letter, shares redeemed by the investor prior to the termination of
the Letter of Intent period will be deducted. It is the
responsibility of the dealer of record and/or the investor to
advise the Distributor about the Letter in placing any purchase
orders for the investor during the Letter of Intent period. All
of such purchases must be made through the Distributor.
Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in
value to 5% of the intended purchase amount specified in the Letter
shall be held in escrow by the Transfer Agent. For example, if the
intended purchase amount is $50,000, the escrow shall be shares
valued in the amount of $2,500 (computed at the public offering
price adjusted for a $50,000 purchase). Any dividends and capital
gains distributions on the escrowed shares will be credited to the
investor's account.
2. If the intended purchase amount specified under the
Letter is completed within the thirteen-month Letter of Intent
period, the escrowed shares will be promptly released to the
investor.
3. If, at the end of the thirteen-month Letter of Intent
period the total purchases pursuant to the Letter are less than the
intended purchase amount specified in the Letter, the investor must
remit to the Distributor an amount equal to the difference between
the dollar amount of sales charges actually paid and the amount of
sales charges which would have been paid if the total amount
purchased had been made at a single time. Such sales charge
adjustment will apply to any shares redeemed prior to the
completion of the Letter. If such difference in sales charges is
not paid within twenty days after a request from the Distributor or
the dealer, the Distributor will, within sixty days of the
expiration of the Letter, redeem the number of escrowed shares
necessary to realize such difference in sales charges. Full and
fractional shares remaining after such redemption will be released
from escrow. If a request is received to redeem escrowed shares
prior to the payment of such additional sales charge, the sales
charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably
constitutes and appoints the Transfer Agent as attorney-in-fact to
surrender for redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the
holding of which may be counted toward completion of a Letter)
include (a) Class A shares sold with a front-end sales charge or
subject to a Class A contingent deferred sales charge, (b) Class B
shares of other Oppenheimer funds acquired subject to a contingent
deferred sales charge, and (c) Class A or Class B shares of other
Oppenheimer funds acquired in exchange for either (i) Class A
shares of one of the other Oppenheimer funds that were acquired
subject to a Class A initial or contingent deferred sales charge or
(ii) Class B shares of one of the other Oppenheimer funds that were
acquired subject to a contingent deferred sales charge.
6. Shares held in escrow hereunder will automatically be
exchanged for shares of another fund to which an exchange is
requested, as described in the section of the Prospectus entitled
"Exchange Privilege," and the escrow will be transferred to that
other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a
bank account, a check (minimum $25) for the initial purchase must
accompany the application. Shares purchased by Asset Builder Plan
payments from bank accounts are subject to the redemption
restrictions for recent purchases described in "How to Sell
Shares," in the Prospectus. Asset Builder Plans also enable
shareholders of Oppenheimer Cash Reserves to use those accounts for
monthly automatic purchases of shares of up to four other
Oppenheimer funds.
There is a front-end sales charge on the purchase of certain
Oppenheimer funds, or a contingent deferred sales charge may apply
to shares purchased by Asset Builder payments. An application
should be obtained from the Distributor, completed and returned,
and a prospectus of the selected fund(s) should be obtained from
the Distributor or your financial advisor before initiating Asset
Builder payments. The amount of the Asset Builder investment may
be changed or the automatic investments may be terminated at any
time by writing to the Transfer Agent. A reasonable period
(approximately 15 days) is required after the Transfer Agent's
receipt of such instructions to implement them. The Fund reserves
the right to amend, suspend, or discontinue offering such plans at
any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders
for the Fund's shares (for example, when a purchase check is
returned to the Fund unpaid) causes a loss to be incurred when the
net asset value of the Fund's shares on the cancellation date is
less than on the purchase date. That loss is equal to the amount
of the decline in the net asset value per share multiplied by the
number of shares in the purchase order. The investor is
responsible for that loss. If the investor fails to compensate the
Fund for the loss, the Distributor will do so. The Fund may
reimburse the Distributor for that amount by redeeming shares from
any account registered in that investor's name, or the Fund or the
Distributor may seek other redress.
Retirement Plans. In describing certain types of employee benefit
plans that may purchase Class A shares without being subject to the
Class A contingent deferred sales charge, the term "employee
benefit plan" means any plan or arrangement, whether or not
"qualified" under the Internal Revenue Code, including, medical
savings accounts, payroll deduction plans or similar plans in which
Class A shares are purchased by a fiduciary or other person for the
account of participants who are employees of a single employer or
of affiliated employers, if the Fund account is registered in the
name of the fiduciary or other person for the benefit of
participants in the plan.
The term "group retirement plan" means any qualified or non-
qualified retirement plan (including 457 plans, SEPs, SARSEPs,
403(b) plans, and SIMPLE plans) for employees of a corporation or
a sole proprietorship, members and employees of a partnership or
association or other organized group of persons (the members of
which may include other groups), if the group has made special
arrangements with the Distributor and all members of the group
participating in the plan purchase Class A shares of the Fund
through a single investment dealer, broker or other financial
institution designated by the group.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and
conditions for redemptions set forth in the Prospectus.
Involuntary Redemptions. The Fund's Board of Trustees has
the right to cause the involuntary redemption of the shares held in
any account if the aggregate net asset value of those shares is
less than $200 or such lesser amount as the Board may fix. The
Board of Trustees will not cause the involuntary redemption of
shares in an account if the aggregate net asset value of the shares
has fallen below the stated minimum solely as a result of market
fluctuations. Should the Board elect to exercise this right, it
may also fix, in accordance with the Investment Company Act, the
requirements for any notice to be given to the shareholders in
question (not less than 30 days), or the Board may set requirements
for the Shareholder to increase the investment, and set other terms
and conditions so that the shares would not be involuntarily
redeemed.
Selling Shares by Wire. The wire of redemption proceeds may
be delayed if a Fund's Custodian bank is not open for business on
a day when the Fund would normally authorize the wire to be made,
which is usually the Fund's next regular business day following the
redemption. In those circumstances, the wire will not be
transmitted until the next bank business day on which the Fund is
open for business. No dividends will be paid on the proceeds of
redeemed shares awaiting transfer by wire.
Payments "In Kind". The Prospectus states that payment for
shares tendered for redemption is ordinarily made in cash. However,
the Board of Trustees of the Fund may determine that it would be
detrimental to the best interests of the remaining shareholders of
the Fund to make payment of a redemption order wholly or partly in
cash. In that case the Fund may pay the redemption proceeds in
whole or in part by a distribution "in kind" of securities from the
portfolio of the Fund, in lieu of cash, in conformity with
applicable rules of the Securities and Exchange Commission. The
Fund has elected to be governed by Rule 18f-1 under the Investment
Company Act, pursuant to which the Fund is obligated to redeem
shares solely in cash up to the lesser of $250,000 or 1% of the net
assets of the Fund during any 90-day period for any one
shareholder. If shares are redeemed in kind, the redeeming
shareholder might incur brokerage or other costs in selling the
securities for cash. The method of valuing securities used to make
redemptions in kind will be the same as the method the Fund uses to
value it portfolio securities described above under "Determination
of Net Asset Values Per Share" and that valuation will be made as
of the time the redemption price is determined.
Reinvestment Privilege. Within six months of a redemption, a
shareholder may reinvest all or part of the redemption proceeds of
(i) Class A shares, or (ii) Class B shares subject to the Class B
contingent deferred sales charge when you redeemed them. The
reinvestment may be made without sales charge only in Class A
shares of the Fund or any of the other Oppenheimer funds into which
shares of the Fund are exchangeable as described below, at the net
asset value next computed after the Transfer Agent receives the
reinvestment order. The shareholder must ask the Distributor for
that privilege at the time of reinvestment. Any capital gain that
was realized when the shares were redeemed is taxable, and
reinvestment will not alter any capital gains tax payable on that
gain. If there has been a capital loss on the redemption, some or
all of the loss may not be tax deductible, depending on the timing
and amount of the reinvestment. Under the Internal Revenue Code,
if the redemption proceeds of Fund shares on which a sales charge
was paid are reinvested in shares of the Fund or another of the
Oppenheimer funds within 90 days of payment of the sales charge,
the shareholder's basis in the shares of the Fund that were
redeemed may not include the amount of the sales charge paid. That
would reduce the loss or increase the gain recognized from the
redemption. However, in that case the sales charge would be added
to the basis of the shares acquired by the reinvestment of the
redemption proceeds. The Fund may amend, suspend or cease offering
this reinvestment privilege at any time as to shares redeemed after
the date of such amendment, suspension or cessation.
Transfer of Shares. Shares are not subject to the payment of a
contingent deferred sales charge at the time of transfer to the
name of another person or entity (whether the transfer occurs by
absolute assignment, gift or bequest, not involving, directly or
indirectly, a public sale). The transferred shares will remain
subject to the contingent deferred sales charge, calculated as if
the transferee shareholder had acquired the transferred shares in
the same manner and at the same time as the transferring
shareholder. If less than all shares held in an account are
transferred, and some but not all shares in the account would be
subject to a contingent deferred sales charge if redeemed at the
time of transfer, the priorities described in the Prospectus under
"How to Buy Shares" for the imposition of the Class B or the Class
C contingent deferred sales charge will be followed in determining
the order in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions
from OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans,
401(k) plans or pension or profit-sharing plans should be addressed
to "Trustee, OppenheimerFunds Retirement Plans," c/o the Transfer
Agent at its address listed in "How To Sell Shares" in the
Prospectus or on the back cover of this Statement of Additional
Information. The request must: (i) state the reason for the
distribution; (ii) state the owner's awareness of tax penalties if
the distribution is premature; and (iii) conform to the
requirements of the plan and the Fund's other redemption
requirements. Participants (other than self-employed persons
maintaining a plan account in their own name) in OppenheimerFunds-
sponsored prototype pension, profit-sharing or 401(k) plans may not
directly redeem or exchange shares held for their account under
those plans. The employer or plan administrator must sign the
request. Distributions from pension and profit sharing plans are
subject to special requirements under the Internal Revenue Code and
certain documents (available from the Transfer Agent) must be
completed before the distribution may be made. Distributions from
retirement plans are subject to withholding requirements under the
Internal Revenue Code, and IRS Form W-4P (available from the
Transfer Agent) must be submitted to the Transfer Agent with the
distribution request, or the distribution may be delayed. Unless
the shareholder has provided the Transfer Agent with a certified
tax identification number, the Internal Revenue Code requires that
tax be withheld from any distribution even if the shareholder
elects not to have tax withheld. The Fund, the Manager, the
Distributor, the Trustee and the Transfer Agent assume no
responsibility to determine whether a distribution satisfies the
conditions of applicable tax laws and will not be responsible for
any tax penalties assessed in connection with a distribution.
Special Arrangements for Repurchase of Shares from Dealers and
Brokers. The Distributor is the Fund's agent to repurchase its
shares from authorized dealers or brokers on behalf of their
customers. The shareholder should contact the broker or dealer to
arrange this type of redemption. The repurchase price will be the
net asset value next computed after the receipt of an order placed
by such dealer or broker, except that if the Distributor receives
an order from a dealer or broker after the close of The New York
Stock Exchange on a regular business day, it will be processed at
that day's net asset value if the order was received by the dealer
or broker from its customer prior to the time the Exchange closes
(normally that is 4:00 P.M., but may be earlier on some days) and
the order was transmitted to and received by the Distributor prior
to its close of business that day (normally 5:00 P.M.).
Ordinarily, for accounts redeemed by a broker-dealer under this
procedure, payment will be made within three business days after
the shares have been redeemed upon the Distributor's receipt the
required redemption documents in proper form, with the signature(s)
of the registered owners guaranteed on the redemption document as
described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares
of the Fund valued at $5,000 or more can authorize the Transfer
Agent to redeem shares (minimum $50) automatically on a monthly,
quarterly, semi-annual or annual basis under an Automatic
Withdrawal Plan. Shares will be redeemed three business days prior
to the date requested by the shareholder for receipt of the
payment. Automatic withdrawals of up to $1,500 per month may be
requested by telephone if payments are to be made by check payable
to all shareholders of record and sent to the address of record for
the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on
this basis. Payments are normally made by check, but shareholders
having AccountLink privileges (see "How To Buy Shares") may arrange
to have Automatic Withdrawal Plan payments transferred to the bank
account designated on the OppenheimerFunds New Account Application
or signature-guaranteed instructions. The Fund cannot guarantee
receipt of a payment on the date requested and reserves the right
to amend, suspend or discontinue offering such plans at any time
without prior notice. Because of the sales charge assessed on
Class A share purchases, shareholders should not make regular
additional Class A share purchases while participating in an
Automatic Withdrawal Plan. Class B and Class C shareholders should
not establish withdrawal plans that would require the redemption of
shares held less than 6 years or 12 months, respectively, because
of the imposition of contingent deferred sales charges on such
withdrawals (except where the Class B and Class C contingent
deferred sales charges are waived as described in the Prospectus
under "Waivers of Class B and Class C Contingent Deferred Sales
Charge").
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such
plans, as stated below and in the provisions of the
OppenheimerFunds Application relating to such Plans, as well as the
Prospectus. These provisions may be amended from time to time by
the Fund and/or the Distributor. When adopted, such amendments
will automatically apply to existing Plans.
Automatic Exchange Plans. Shareholders can authorize the
Transfer Agent (on the OppenheimerFunds Application or signature-
guaranteed instructions) to exchange a pre-determined amount of
shares of the Fund for shares (of the same class) of other
Oppenheimer funds automatically on a monthly, quarterly, semi-
annual or annual basis under an Automatic Exchange Plan. The
minimum amount that may be exchanged to each other fund account is
$25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "How to
Exchange Shares" in the Prospectus and below in this Statement of
Additional Information.
Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a
sales charge will be redeemed first and shares acquired with
reinvested dividends and capital gains distributions will be
redeemed next, followed by shares acquired with a sales charge, to
the extent necessary to make withdrawal payments. Depending upon
the amount withdrawn, the investor's principal may be depleted.
Payments made under withdrawal plans should not be considered as a
yield or income on your investment. It may not be desirable to
purchase additional Class A shares while making automatic
withdrawals because of the sales charges that apply to purchases
when made. Accordingly, a shareholder normally may not maintain an
Automatic Withdrawal Plan while simultaneously making regular
purchases of Class A shares.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the
"Planholder") who executed the Plan authorization and application
submitted to the Transfer Agent. The Transfer Agent shall incur no
liability to the Planholder for any action taken or omitted by the
Transfer Agent in good faith to administer the Plan. Certificates
will not be issued for shares of the Fund purchased for and held
under the Plan, but the Transfer Agent will credit all such shares
to the account of the Planholder on the records of the Fund. Any
share certificates held by a Planholder may be surrendered
unendorsed to the Transfer Agent with the Plan application so that
the shares represented by the certificate may be held under the
Plan.
For accounts subject to Automatic Withdrawal Plans,
distributions of capital gains must be reinvested in shares of the
Fund, which will be done at net asset value without a sales charge.
Dividends on shares held in the account may be paid in cash or
reinvested.
Redemptions of shares needed to make withdrawal payments will
be made at the net asset value per share determined on the
redemption date. Checks or AccountLink payments of the proceeds of
Plan withdrawals will normally be transmitted three business days
prior to the date selected for receipt of the payment (receipt of
payment on the date selected cannot be guaranteed), according to
the choice specified in writing by the Planholder.
The amount and the interval of disbursement payments and the
address to which checks are to be mailed or AccountLink payments
are to be sent may be changed at any time by the Planholder by
writing to the Transfer Agent. The Planholder should allow at
least two weeks' time in mailing such notification for the
requested change to be put in effect. The Planholder may, at any
time, instruct the Transfer Agent by written notice (in proper form
in accordance with the requirements of the then-current Prospectus
of the Fund) to redeem all, or any part of, the shares held under
the Plan. In that case, the Transfer Agent will redeem the number
of shares requested at the net asset value per share in effect in
accordance with the Fund's usual redemption procedures and will
mail a check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by
writing to the Transfer Agent. A Plan may also be terminated at
any time by the Transfer Agent upon receiving directions to that
effect from the Fund. The Transfer Agent will also terminate a
Plan upon receipt of evidence satisfactory to it of the death or
legal incapacity of the Planholder. Upon termination of a Plan by
the Transfer Agent or the Fund, shares that have not been redeemed
from the account will be held in uncertificated form in the name of
the Planholder, and the account will continue as a dividend-
reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder or his or her
executor or guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt,
the Planholder may request issuance of a portion of the shares in
certificated form. Upon written request from the Planholder, the
Transfer Agent will determine the number of shares for which a
certificate may be issued without causing the withdrawal checks to
stop because of exhaustion of uncertificated shares needed to
continue payments. However, should such uncertificated shares
become exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the
Fund, the Planholder will be deemed to have appointed any successor
transfer agent to act as agent in administering the Plan.
How To Exchange Shares
As stated in the Prospectus, shares of a particular class of
Oppenheimer funds having more than one class of shares may be
exchanged only for shares of the same class of other Oppenheimer
funds. Shares of Oppenheimer funds that have a single class
without a class designation are deemed "Class A" shares for this
purpose. All of the Oppenheimer funds offer Class A, B and C
shares except Oppenheimer Money Market Fund, Inc., Centennial Money
Market Trust, Centennial Tax Exempt Trust, Centennial Government
Trust, Centennial New York Tax Exempt Trust, Centennial California
Tax Exempt Trust, Centennial America Fund, L.P., and Daily Cash
Accumulation Fund, Inc., which only offer Class A shares and
Oppenheimer Main Street California Tax Exempt Fund which only
offers Class A and Class B shares, (Class B and Class C shares of
Oppenheimer Cash Reserves are generally available only by exchange
from the same class of shares of other Oppenheimer funds or through
OppenheimerFunds sponsored 401(k) plans).
For accounts established on or before March 8, 1996 holding
Class M shares of Oppenheimer Bond Fund for Growth, Class M shares
can be exchanged only for Class A shares of other Oppenheimer
funds, including Rochester Fund Municipals and Limited Term New
York Municipal Fund. Class A shares of Rochester Fund Municipals
or Limited Term New York Municipal Fund acquired on the exchange of
Class M shares of Oppenheimer Bond Fund for Growth may be exchanged
for Class M shares of that fund. For accounts of Oppenheimer Bond
Fund for Growth established after March 8, 1996, Class M shares may
be exchanged for Class A shares of other Oppenheimer funds except
Rochester Fund Municipals and Limited Term New York Municipals.
Exchanges to Class M shares of Oppenheimer Bond Fund for Growth are
permitted from Class A shares of Oppenheimer Money Market Fund,
Inc. or Oppenheimer Cash Reserves that were acquired by exchange
from Class M shares. Otherwise no exchanges of any class of any
Oppenheimer fund into Class M shares are permitted.
Class A shares of Oppenheimer funds may be exchanged at net
asset value for shares of any Money Market Fund. Shares of any
Money Market Fund purchased without a sales charge may be exchanged
for shares of Oppenheimer funds offered with a sales charge upon
payment of the sales charge (or, if applicable, may be used to
purchase shares of Oppenheimer funds subject to a contingent
deferred sales charge).
Shares of this Fund acquired by reinvestment of dividends or
distributions from any other of the Oppenheimer funds (except
Oppenheimer Cash Reserves) or from any unit investment trust for
which reinvestment arrangements have been made with the Distributor
may be exchanged at net asset value for shares of any of the
Oppenheimer funds.
No contingent deferred sales charge is imposed on exchanges of
shares of either class purchased subject to a contingent deferred
sales charge. However, shares of Oppenheimer Money Market Fund,
Inc. purchased with the redemption proceeds of shares of other
mutual funds (other than funds managed by the Manager or its
subsidiaries) redeemed within the 12 months prior to that purchase
may subsequently be exchanged for shares of other Oppenheimer funds
without being subject to an initial or contingent deferred sales
charge, whichever is applicable. To qualify for that privilege,
the investor or the investor's dealer must notify the Distributor
of eligibility for this privilege at the time the shares of
Oppenheimer Money Market Fund, Inc. are purchased, and, if
requested, must supply proof of entitlement to this privilege. The
Class C contingent deferred sales charge is imposed on Class C
shares acquired by exchange if they are redeemed within 12 months
of the initial purchase of the exchanged Class C shares.
When Class B or Class C shares are redeemed to effect an
exchange, the priorities described in "How To Buy Shares" in the
Prospectus for the imposition of the Class B or Class C contingent
deferred sales charge will be followed in determining the order in
which the shares are exchanged. Shareholders should take into
account the effect of any exchange on the applicability and rate of
any contingent deferred sales charge that might be imposed in the
subsequent redemption of remaining shares. Shareholders owning
shares of more than one class must specify whether they intend to
exchange Class A, Class B or Class C shares.
The Fund reserves the right to reject telephone or written
exchange requests submitted in bulk by anyone on behalf of more
than one account. The Fund may accept requests for exchanges of up
to 50 accounts per day from representatives of authorized dealers
that qualify for this privilege. In connection with any exchange
request, the number of shares exchanged may be less than the number
requested if the exchange or the number requested would include
shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information or would include shares covered
by a share certificate that is not tendered with the request. In
those cases, only the shares available for exchange without
restriction will be exchanged.
When exchanging shares by telephone, a shareholder must either
have an existing account in, or obtain and acknowledge receipt of
a prospectus of, the fund to which the exchange is to be made. For
full or partial exchanges of an account made by telephone, any
special account features such as Asset Builder Plans, Automatic
Withdrawal Plans and retirement plan contributions will be switched
to the new account unless the Transfer Agent is instructed
otherwise. If all telephone lines are busy (which might occur, for
example, during periods of substantial market fluctuations),
shareholders might not be able to request exchanges by telephone
and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business
day the Transfer Agent receives an exchange request in proper form
(the "Redemption Date"). Normally, shares of the fund to be
acquired are purchased on the Redemption Date, but such purchases
may be delayed by either fund up to five business days if it
determines that it would be disadvantaged by an immediate transfer
of the redemption proceeds. The Fund reserves the right, in its
discretion, to refuse any exchange request that may disadvantage it
(for example, if the receipt of multiple exchange requests from a
dealer might require the disposition of portfolio securities at a
time or at a price that might be disadvantageous to the Fund).
The different Oppenheimer funds available for exchange have
different investment objectives, policies and risks, and a
shareholder should assure that the Fund selected is appropriate for
his or her investment and should be aware of the tax consequences
of an exchange. For federal income tax purposes, an exchange
transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. "Reinvestment Privilege," above,
discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and
the Transfer Agent are unable to provide investment, tax or legal
advice to a shareholder in connection with an exchange request or
any other investment transaction.
Dividends, Capital Gains and Taxes
Dividends and Distributions. Dividends will be payable on shares
held of record at the time of the previous determination of net
asset value, or as otherwise described in "How to Buy Shares."
Daily dividends on newly purchased shares will not be declared or
paid until such time as Federal Funds (funds credited to a member
bank's account at the Federal Reserve Bank) are available from the
purchase payment for such shares. Normally, purchase checks
received from investors are converted to Federal Funds on the next
business day. Dividends will be declared on shares repurchased by
a dealer or broker for three business days following the trade date
(i.e., to and including the day prior to settlement of the
repurchase). If all shares in an account are redeemed, all
dividends accrued on shares of the same class in the account will
be paid together with the redemption proceeds.
Dividends, distributions and the proceeds of the redemption of
Fund shares represented by checks returned to the Transfer Agent by
the Postal Service as undeliverable will be invested in shares of
Oppenheimer Money Market Fund, Inc., as promptly as possible after
the return of such checks to the Transfer Agent, to enable the
investor to earn a return on otherwise idle funds.
The amount of a class's distributions may vary from time to
time depending on market conditions, the composition of a Fund's
portfolio, and expenses borne by the Fund or borne separately by a
class, as described in "Alternative Sales Arrangements -- Class A,
Class B and Class C shares" above. Dividends are calculated in the
same manner, at the same time and on the same day for shares of
each class. However, dividends on Class B and Class C shares are
expected to be lower than dividends on Class A shares as a result
of the asset-based sales charges on Class B and Class C shares, and
will also differ in amount as a consequence of any difference in
net asset value between the classes.
Tax Status of the Fund's Dividends and Distributions. The Federal
tax treatment of the Fund's dividends and capital gains
distributions is explained in the Prospectus under the caption
"Dividends, Capital Gains and Taxes." Special provisions of the
Internal Revenue Code govern the eligibility of the Fund's
dividends for the dividends-received deduction for corporate
shareholders. Long-term capital gains distributions are not
eligible for the deduction. In addition, the amount of dividends
paid by the Fund which may qualify for the deduction is limited to
the aggregate amount of qualifying dividends (generally dividends
from domestic corporations) which the Fund derives from its
portfolio investments held for a minimum period, usually 46 days.
A corporate shareholder will not be eligible for the deduction on
dividends paid on shares held by the shareholder for 45 days or
less. To the extent the Fund derives a significant portion of its
gross income from option premiums, interest income or short-term
capital gains from the sale of securities, or dividends from
foreign corporations, its dividends will not qualify for the
deduction. It is expected that only a portion of dividends paid by
the Fund will 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 1st of the prior
year through October 31 of that year or else must pay an excise tax
on the amounts not distributed. While it is presently anticipated
that the Fund's distributions will meet those requirements, the
Manager might determine that in a particular year that it might be
in the best interests of shareholders not to distribute income or
capital gains at the mandated levels and to pay the excise tax on
the undistributed amounts, which would reduce the amount available
for distribution to shareholders.
If prior distributions must be re-characterized at the end of
the fiscal year as a result of the effect of a Fund's investment
policies, shareholders may have a non-taxable return of capital,
which will be identified in notices to shareholders. There is no
fixed dividend rate and there can be no assurance as to the payment
of any dividends or the realization of any capital gains.
If the Fund has more than 50% of its total assets invested in
foreign securities at the end of its fiscal year, it may elect the
application of Section 853 of the Internal Revenue Code to permit
shareholders to take a credit (or, at their option, a deduction)
for foreign taxes paid by the Fund. Under Section 853,
shareholders would be entitled to treat the foreign taxes withheld
from interest and dividends paid to the Fund from its foreign
investments as a credit on their federal income taxes. As an
alternative, shareholders could, if to their advantage, treat the
foreign tax withheld as a deduction from gross income in computing
taxable income rather than as a tax credit. In substance, the
Fund's election would enable shareholders to benefit from the same
foreign tax credit or deduction that would be received if they had
been the record owners of the Fund's foreign securities and had
paid foreign taxes on the income received.
If the Fund qualifies as a "regulated investment company"
under the Internal Revenue Code, it will not be liable for Federal
income taxes on amounts paid by it as dividends and distributions.
The Fund qualified during its last fiscal year, and intends to
qualify in current and future years, but reserves the right not to
do so. The Internal Revenue Code contains a number of complex
tests relating to such qualification. For example, if the Fund
derives 30% or more of its gross income from the sale of securities
held less than three months, it may fail to qualify (see "Tax
Aspects of Covered Calls and Hedging Instruments," above). If it
did not so qualify, the Fund would be treated for tax purposes as
an ordinary corporation and would not receive a tax deduction for
payments made to shareholders.
Dividend Reinvestment in Another Fund. Shareholders of the Fund
may elect to reinvest all dividends and/or capital gains
distributions in shares of the same class of any of the other
Oppenheimer funds listed in "Reduced Sales Charges," above, at net
asset value without sales charge. To elect this option, the
shareholder must notify the Transfer Agent in writing and either
must have an existing account in the fund selected for reinvestment
or must obtain a prospectus for that fund and an application from
the Distributor to establish an account. The investment will be
made at the net asset value per share in effect at the close of
business on the payable date of the dividend or distribution.
Dividends and/or distributions from shares of other Oppenheimer
funds may be invested in shares of this Fund on the same basis.
Additional Information About the Fund
The Custodian. The Bank of New York is the Custodian of the Fund's
assets. The Custodian's responsibilities include safeguarding and
controlling the Fund's portfolio securities and handling the
delivery of such securities to and from the Fund. The Manager has
represented to the Fund that its banking relationships with the
Custodian have been and will continue to be unrelated to and
unaffected by the relationship between the Fund and the Custodian.
It will be the practice of the Fund to deal with the Custodian in
a manner uninfluenced by any banking relationship the Custodian may
have with the Manager and its affiliates.
Independent Auditors. The independent auditors of the Fund audit
the Fund's financial statements and perform other related audit
services. They also act as auditors for certain other funds
advised by the Manager and its affiliates.
<PAGE>
Independent Auditors' Report
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders of Oppenheimer Fund:
We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer Fund as of June 30, 1996, and the related statement
of operations for the year then ended, the statements of changes in net assets
for each of the years in the two-year period then ended and the financial
highlights for each of the years in the five-year period then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1996, by correspondence with the custodian and brokers; and where
confirmations were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Fund as of June 30, 1996, the results of its operations for the year
then ended, the changes in its net assets for each of the years in the two-year
period then ended, and the financial highlights for each of the years in the
five-year period then ended, in conformity with generally accepted accounting
principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Denver, Colorado
July 22, 1996
<PAGE>
<TABLE>
<CAPTION>
Statement of Investments June 30, 1996
Face Market Value
Amount See Note 1
<S> <C> <C>
=====================================================================
==============================================================
Foreign Government Obligations--1.1%
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Argentina (Republic of) Past Due Interest Bonds, Series L, 6.312%, 3/31/05
(Cost $2,264,894)(1) $ 3,960,000 $
3,101,155
=====================================================================
==============================================================
Convertible Corporate Bonds and Notes--0.6%
- ------------------------------------------------------------------------------------------------------------------
- -----------------
MEDIQ, Inc., 7.50% Exchangeable Sub. Debs., 7/15/03 (Cost $1,748,461)
1,850,000 1,572,500
Shares
=====================================================================
==============================================================
Common Stocks--86.5%
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Basic Materials--6.3%
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Chemicals--3.2%
Agrium, Inc. 30,000 393,281
- ---------------------------------------------------------------------------------------------------------------
ARCO Chemical Co. 28,900
1,502,800
- ---------------------------------------------------------------------------------------------------------------
Bayer AG, Sponsored ADR 170,000
6,003,058
- ---------------------------------------------------------------------------------------------------------------
Georgia Gulf Corp. 22,100 646,425
- ---------------------------------------------------------------------------------------------------------------
IMC Global, Inc. 12,400 466,550
------------
9,012,114
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Gold--0.5%
Santa Fe Pacific Gold Corp. 92,800
1,310,800
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Metals--1.3%
Brush Wellman, Inc. 151,400
2,876,600
- ---------------------------------------------------------------------------------------------------------------
J&L Specialty Steel, Inc. 54,500 810,687
------------
3,687,287
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Paper--1.3%
Aracruz Celulose SA, Sponsored ADR 165,000
1,567,500
- ---------------------------------------------------------------------------------------------------------------
MacMillan Bloedel Ltd. 90,323
1,197,146
- ---------------------------------------------------------------------------------------------------------------
MacMillan Bloedel Ltd. 4,900 64,925
- ---------------------------------------------------------------------------------------------------------------
Stone Container Corp. 64,800 891,000
------------
3,720,571
=====================================================================
==============================================================
Consumer Cyclicals--12.4%
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Autos & Housing--1.3%
Chromcraft Revington, Inc.(2) 18,500
432,437
- ---------------------------------------------------------------------------------------------------------------
Fiat SpA 350,000 1,172,412
- ---------------------------------------------------------------------------------------------------------------
General Motors Corp.(3) 26,000
1,361,750
- ---------------------------------------------------------------------------------------------------------------
IRSA Inversiones y Representaciones, SA 214,506
730,355
------------
3,696,954
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Leisure & Entertainment--5.6%
AMR Corp.(2) 19,300 1,756,300
- ---------------------------------------------------------------------------------------------------------------
Carnival Corp., Cl. A 30,800 889,350
- ---------------------------------------------------------------------------------------------------------------
Circus Circus Enterprises, Inc.(2)(3) 31,800
1,303,800
- ---------------------------------------------------------------------------------------------------------------
Cracker Barrel Old Country Store, Inc. 90,800
2,201,900
- ---------------------------------------------------------------------------------------------------------------
Eastman Kodak Co.(3) 25,500
1,982,625
- ---------------------------------------------------------------------------------------------------------------
International Game Technology 57,000
961,875
- ---------------------------------------------------------------------------------------------------------------
King World Productions, Inc.(2)(3) 56,500
2,055,187
- ---------------------------------------------------------------------------------------------------------------
Mattel, Inc.(3) 76,093 2,178,162
- ---------------------------------------------------------------------------------------------------------------
Shimano, Inc. 82,000 1,465,334
- ---------------------------------------------------------------------------------------------------------------
U S West Media Group(2) 45,700
834,025
------------
15,628,558
6 Oppenheimer Fund
<PAGE>
Market Value
Shares See Note 1
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Media--2.6%
Bowne & Co., Inc. 34,000 $ 701,250
- ---------------------------------------------------------------------------------------------------------------
Comcast Corp., Cl. A Special 130,000
2,405,000
- ---------------------------------------------------------------------------------------------------------------
Dow Jones & Co., Inc. 25,200
1,052,100
- ---------------------------------------------------------------------------------------------------------------
South China Morning Post Holdings Ltd. 2,400,000
1,643,303
- ---------------------------------------------------------------------------------------------------------------
Time Warner, Inc. 40,600 1,593,550
------------
7,395,203
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Retail: General--1.8%
Cone Mills Corp.(2) 243,000 2,733,750
- ---------------------------------------------------------------------------------------------------------------
Price/Costco, Inc.(2) 73,100 1,580,787
- ---------------------------------------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 32,900 834,837
------------
5,149,374
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Retail: Specialty--1.1%
Gymboree Corp.(2)(3) 40,700
1,241,350
- ---------------------------------------------------------------------------------------------------------------
Toys 'R' Us, Inc.(2) 69,200 1,972,200
------------
3,213,550
=====================================================================
==============================================================
Consumer Non-Cyclicals--17.1%
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Beverages--1.2%
Buenos Aires Embotelladora SA, Sponsored ADR 35,000
463,750
- ---------------------------------------------------------------------------------------------------------------
Guinness PLC 182,000 1,323,466
- ---------------------------------------------------------------------------------------------------------------
Whitman Corp.(3) 63,100 1,522,287
------------
3,309,503
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Food--2.2%
Chiquita Brands International, Inc. 32,249
419,237
- ---------------------------------------------------------------------------------------------------------------
Groupe Danone 6,241 944,377
- ---------------------------------------------------------------------------------------------------------------
IBP, Inc.(3) 31,500 870,187
- ---------------------------------------------------------------------------------------------------------------
Nestle SA, Sponsored ADR 40,000
2,283,400
- ---------------------------------------------------------------------------------------------------------------
Sara Lee Corp.(3) 52,700 1,706,163
------------
6,223,364
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Healthcare/Drugs--7.3%
Abbott Laboratories 24,000 1,044,000
- ---------------------------------------------------------------------------------------------------------------
American Home Products Corp. 24,000
1,443,000
- ---------------------------------------------------------------------------------------------------------------
Astra AB Free, Series A 37,250
1,644,834
- ---------------------------------------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 48,000
4,320,000
- ---------------------------------------------------------------------------------------------------------------
Ciba-Geigy AG 2,825 3,441,981
- ---------------------------------------------------------------------------------------------------------------
Foundation Health Corp.(2) 23,000
825,125
- ---------------------------------------------------------------------------------------------------------------
Genzyme Corp.(2)(3) 31,500
1,582,875
- ---------------------------------------------------------------------------------------------------------------
Johnson & Johnson 38,600 1,910,700
- ---------------------------------------------------------------------------------------------------------------
Mylan Laboratories, Inc. 50,000 862,500
- ---------------------------------------------------------------------------------------------------------------
NBTY, Inc.(2) 204,400 2,056,775
- ---------------------------------------------------------------------------------------------------------------
SmithKline Beecham PLC, ADR 22,500
1,223,438
------------
20,355,228
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Healthcare/Supplies &
Services--3.2%
Biomet, Inc.(2) 45,000 646,875
- ---------------------------------------------------------------------------------------------------------------
Cardinal Health, Inc.(3) 4,472 322,543
- ---------------------------------------------------------------------------------------------------------------
Manor Care, Inc.(3) 30,770 1,211,569
- ---------------------------------------------------------------------------------------------------------------
Medtronic, Inc. 20,000 1,120,000
7 Oppenheimer Fund
<PAGE>
Statement of Investments (Continued)
Market Value
Shares See Note 1
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Healthcare/Supplies &
Services (continued)
Nellcor Puritan Bennett, Inc.(2) 10,800 $
523,800
- ---------------------------------------------------------------------------------------------------------------
Sofamor Danek Group, Inc.(2)(3) 22,000
610,500
- ---------------------------------------------------------------------------------------------------------------
U.S. Healthcare, Inc.(3) 63,500 3,492,500
- ---------------------------------------------------------------------------------------------------------------
WellPoint Health Networks, Inc.(2)(3) 34,417
1,075,531
------------
9,003,318
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Household Goods--1.2%
Kimberly-Clark Corp. 13,100
1,011,975
- ---------------------------------------------------------------------------------------------------------------
Procter & Gamble Co.(3) 14,000
1,268,750
- ---------------------------------------------------------------------------------------------------------------
Wella AG 1,750 1,003,686
------------
3,284,411
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Tobacco--2.0%
Philip Morris Cos., Inc. 54,300 5,647,200
=====================================================================
==============================================================
Energy--4.9%
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Energy Services &
Producers--1.2%
Kerr-McGee Corp.(3) 13,000
791,375
- ---------------------------------------------------------------------------------------------------------------
Landmark Graphics Corp.(2) 66,600
1,282,050
- ---------------------------------------------------------------------------------------------------------------
Western Atlas, Inc.(2) 20,000 1,165,000
------------
3,238,425
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Oil-Integrated--3.7%
Atlantic Richfield Co. 13,900 1,647,150
- ---------------------------------------------------------------------------------------------------------------
Enterprise Oil PLC 118,000 843,403
- ---------------------------------------------------------------------------------------------------------------
Royal Dutch Petroleum Co. 9,500
1,460,625
- ---------------------------------------------------------------------------------------------------------------
Saga Petroleum AS, Cl. B 82,000
1,110,781
- ---------------------------------------------------------------------------------------------------------------
Total SA, Sponsored ADR(3) 52,680
1,955,745
- ---------------------------------------------------------------------------------------------------------------
Unocal Corp. 88,000 2,970,000
- ---------------------------------------------------------------------------------------------------------------
Yukong Ltd., GDR(4) 39,500
258,081
- ---------------------------------------------------------------------------------------------------------------
Yukong Ltd., GDR 1,438 12,237
- ---------------------------------------------------------------------------------------------------------------
Yukong Ltd., GDR 3,294 28,032
------------
10,286,054
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Financial--10.4%
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Banks--6.5%
Akbank T.A.S. 2,661,250 320,662
- ---------------------------------------------------------------------------------------------------------------
Banco Frances del Rio de la Plata SA 109,900
1,058,737
- ---------------------------------------------------------------------------------------------------------------
Chase Manhattan Corp. (New)(3) 94,600
6,681,125
- ---------------------------------------------------------------------------------------------------------------
Citicorp(3) 16,000 1,322,000
- ---------------------------------------------------------------------------------------------------------------
Deutsche Bank, Sponsored ADR 60,000
2,838,108
- ---------------------------------------------------------------------------------------------------------------
NationsBank Corp. 72,200 5,965,525
------------
18,186,157
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Diversified Financial--1.4%
American Express Co. 44,100
1,967,963
- ---------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. 9,700
829,350
- ---------------------------------------------------------------------------------------------------------------
H & R Block, Inc.(3) 30,600 998,325
------------
3,795,638
8 Oppenheimer Fund
<PAGE>
Market Value
Shares See Note 1
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Insurance--2.5%
ACE Ltd. 21,600 $ 1,015,200
- ---------------------------------------------------------------------------------------------------------------
Aetna Life & Casualty Co. 5,600
400,400
- ---------------------------------------------------------------------------------------------------------------
American International Group, Inc. 13,700
1,351,163
- ---------------------------------------------------------------------------------------------------------------
American Re Corp.(3) 48,800
2,189,900
- ---------------------------------------------------------------------------------------------------------------
Skandia Forsakrings AB 40,000
1,057,950
- ---------------------------------------------------------------------------------------------------------------
UNUM Corp. 13,500 840,375
------------
6,854,988
=====================================================================
==============================================================
Industrial--10.9%
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Electrical Equipment--1.2%
General Electric Co.(3) 39,600 3,425,400
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Industrial Materials--2.0%
Insituform Technologies, Cl. A(2) 72,000
558,000
- ---------------------------------------------------------------------------------------------------------------
Interpool, Inc. 42,500 775,625
- ---------------------------------------------------------------------------------------------------------------
Owens Corning 77,000 3,311,000
- ---------------------------------------------------------------------------------------------------------------
Wolverine Tube, Inc.(2) 25,700 899,500
------------
5,544,125
=====================================================================
==============================================================
Industrial Services--0.4%
Ecolab, Inc.(3) 35,400 1,168,200
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Manufacturing--3.7%
Citic Pacific Ltd. 214,000 865,344
- ---------------------------------------------------------------------------------------------------------------
Harnischfeger Industries, Inc.(3) 21,800
724,850
- ---------------------------------------------------------------------------------------------------------------
Hutchison Whampoa Ltd. 132,000
830,488
- ---------------------------------------------------------------------------------------------------------------
Mannesmann AG 6,000 2,065,514
- ---------------------------------------------------------------------------------------------------------------
Pacific Dunlop Ltd. 476,000 1,071,463
- ---------------------------------------------------------------------------------------------------------------
Tenneco, Inc.(3) 75,800 3,875,275
- ---------------------------------------------------------------------------------------------------------------
Westinghouse Air Brake Co. 60,200
790,125
------------
10,223,059
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Transportation--3.6%
Airborne Freight Corp.(3) 44,000
1,144,000
- ---------------------------------------------------------------------------------------------------------------
Burlington Northern Santa Fe Corp.(3) 57,400
4,642,225
- ---------------------------------------------------------------------------------------------------------------
Canadian National Railway Co. 38,000
699,828
- ---------------------------------------------------------------------------------------------------------------
Consolidated Freightways, Inc. 14,200
299,975
- ---------------------------------------------------------------------------------------------------------------
Stolt-Nielsen SA 116,000 2,102,500
- ---------------------------------------------------------------------------------------------------------------
Stolt-Nielsen SA, ADR 58,000
1,080,250
------------
9,968,778
=====================================================================
==============================================================
Technology--21.1%
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Aerospace/Defense--0.6%
Rockwell International Corp.(3) 27,300
1,562,925
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Computer Hardware--3.9%
Digital Equipment Corp.(2) 21,000
945,000
- ---------------------------------------------------------------------------------------------------------------
EMC Corp.(2) 36,800 685,400
- ---------------------------------------------------------------------------------------------------------------
International Business Machines Corp.(3) 17,400
1,722,600
- ---------------------------------------------------------------------------------------------------------------
Moore Corp. Ltd. 37,400 705,925
- ---------------------------------------------------------------------------------------------------------------
Storage Technology Corp. (New)(2)(3) 11,000
420,750
- ---------------------------------------------------------------------------------------------------------------
Sun Microsystems, Inc.(2)(3) 7,000
412,125
- ---------------------------------------------------------------------------------------------------------------
Xerox Corp.(3) 111,000 5,938,500
------------
10,830,300
9 Oppenheimer Fund
<PAGE>
Statement of Investments (Continued)
Market Value
Shares See Note 1
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Computer Software--6.8%
American Software, Inc. 50,000 $
231,250
- ---------------------------------------------------------------------------------------------------------------
Computer Associates International, Inc.(3) 44,100
3,142,125
- ---------------------------------------------------------------------------------------------------------------
Davidson & Associates, Inc.(2) 34,000
1,020,000
- ---------------------------------------------------------------------------------------------------------------
Electronic Arts, Inc.(2) 48,600 1,300,050
- ---------------------------------------------------------------------------------------------------------------
Informix Corp.(2)(3) 52,800 1,188,000
- ---------------------------------------------------------------------------------------------------------------
Microsoft Corp.(2) 9,800 1,177,225
- ---------------------------------------------------------------------------------------------------------------
Nintendo Co. Ltd. 45,000 3,347,876
- ---------------------------------------------------------------------------------------------------------------
Novell, Inc.(2) 238,400 3,307,800
- ---------------------------------------------------------------------------------------------------------------
Structural Dynamics Research Corp.(2) 67,100
1,476,200
- ---------------------------------------------------------------------------------------------------------------
Sybase, Inc.(2) 46,600 1,100,925
- ---------------------------------------------------------------------------------------------------------------
Symantec Corp.(2) 137,340 1,716,750
------------
19,008,201
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Electronics--7.2%
Duracell International, Inc. 18,500 797,813
- ---------------------------------------------------------------------------------------------------------------
General Motors Corp., Cl. H 20,800
1,250,600
- ---------------------------------------------------------------------------------------------------------------
Hewlett-Packard Co. 34,000 3,387,250
- ---------------------------------------------------------------------------------------------------------------
Intel Corp. 119,800 8,797,813
- ---------------------------------------------------------------------------------------------------------------
Kyocera Corp. 17,000 1,201,205
- ---------------------------------------------------------------------------------------------------------------
LSI Logic Corp.(2)(3) 32,000 832,000
- ---------------------------------------------------------------------------------------------------------------
Nokia Corp., Preference 22,000 814,000
- ---------------------------------------------------------------------------------------------------------------
Proxima Corp.(2) 70,000 848,750
- ---------------------------------------------------------------------------------------------------------------
Samsung Electronics (First New)(2) 79
6,282
- ---------------------------------------------------------------------------------------------------------------
Samsung Electronics Co. 265 22,247
- ---------------------------------------------------------------------------------------------------------------
Teradyne, Inc.(2) 55,000 948,750
- ---------------------------------------------------------------------------------------------------------------
VLSI Technology, Inc.(2) 76,500
1,061,438
------------
19,968,148
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Telecommunications-
Technology--2.6%
Airtouch Communications, Inc.(2)(3) 45,500
1,285,375
- ---------------------------------------------------------------------------------------------------------------
Bay Networks, Inc.(2)(3) 26,870
691,903
- ---------------------------------------------------------------------------------------------------------------
ECI Telecommunications Ltd.(3) 57,500
1,336,875
- ---------------------------------------------------------------------------------------------------------------
Kinnevik Investments AB Free, Series B 31,500
954,190
- ---------------------------------------------------------------------------------------------------------------
MCI Communications Corp. 100,000
2,562,500
- ---------------------------------------------------------------------------------------------------------------
NetCom Systems AB, B Shares(2) 31,500
356,041
------------
7,186,884
=====================================================================
==============================================================
Utilities--3.4%
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Electric Utilities--1.3%
Korea Electric Power Corp. 20,000
814,622
- ---------------------------------------------------------------------------------------------------------------
Public Service Enterprise Group, Inc. 30,000
821,250
- ---------------------------------------------------------------------------------------------------------------
Verbund Oest Electriz 25,200 1,923,113
------------
3,558,985
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Gas Utilities--0.7%
Hong Kong & China Gas 591,648
943,976
- ---------------------------------------------------------------------------------------------------------------
Southwestern Energy Co. 72,500
1,024,063
------------
1,968,039
10 Oppenheimer Fund
<PAGE>
Market Value
Shares See Note 1
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Telephone Utilities--1.4%
BCE, Inc. 34,000 $ 1,343,000
- ---------------------------------------------------------------------------------------------------------------
Portugal Telecom SA(2) 15,900
415,321
- ---------------------------------------------------------------------------------------------------------------
U S West Communications Group 65,500
2,087,813
------------
3,846,134
------------
Total Common Stocks (Cost $164,928,947)
241,257,875
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Preferred Stocks--1.5%
- ---------------------------------------------------------------------------------------------------------------
Alumax, Inc., $4.00 Cv., Series A 6,333
825,665
- ---------------------------------------------------------------------------------------------------------------
Cyprus Amax Minerals Co., $4.00 Cv., Series A 20,666
1,131,463
- ---------------------------------------------------------------------------------------------------------------
Delta Air Lines, Inc., $3.50 Cv. Depositary Shares, Series C 36,300
2,286,900
------------
Total Preferred Stocks (Cost $3,245,783)
4,244,028
Units
=====================================================================
==============================================================
Rights, Warrants and Certificates--0.0%
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Hong Kong & China Gas Wts., Exp. 9/97 (Cost $19,691) 74,304
19,439
Face
Amount
=====================================================================
==============================================================
Repurchase Agreement--10.8%
- ---------------------------------------------------------------------------------------------------------------
Repurchase agreement with Canadian Imperial Bank of Commerce,
5.45%, dated 6/28/96, to be repurchased at $30,213,716 on 7/1/96,
collateralized by U.S. Treasury Bonds, 9.125%--11.25%, 2/15/15--5/11/18,
with a value of $10,675,333, and U.S. Treasury Nts., 5.25%--8.50%,
1/11/97--11/15/04, with a value of $20,174,956 (Cost $30,200,000) $
30,200,000 30,200,000
- ---------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $202,407,776) 100.5%
280,394,997
- ---------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (0.5)
(1,460,799)
------------ ------------
Net Assets 100.0% $278,934,198
============
============
</TABLE>
1. Represents the current interest rate for a variable rate
security.
2. Non-income producing security.
11 Oppenheimer Fund
<PAGE>
<TABLE>
<CAPTION>
Statement of Investments (Continued)
- ------------------------------------------------------------------------------------------------------------------
- -----------------
3. A sufficient amount of liquid assets has been designated
to cover outstanding written call options, as follows:
Shares Expiration Exercise Premium Market
Value
Subject To Call Date Price Received See Note
1
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Airborne Freight Corp. 15,000 8/96 $ 30 $ 26,125 $
3,746
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Airtouch Communications, Inc. 9,000 7/96 34 12,771
563
- ------------------------------------------------------------------------------------------------------------------
- -----------------
American Re Corp. 10,800 7/96 45 19,925
14,175
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Bay Networks, Inc. 21,000 9/96 35 91,242
14,438
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Burlington Northern Santa Fe Corp. 11,200 7/96 85 43,063
7,000
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Cardinal Health, Inc. 11,000 7/96 18 17,544
129,250
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Chase Manhattan Corp. (New) 18,500 9/96 70 73,443
97,125
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Circus Circus Enterprises, Inc. 6,200 9/96 33 19,188
58,900
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Citicorp 3,200 7/96 75 10,704 24,400
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Computer Associates International, Inc. 8,800 7/96 50 35,551
8,800
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Eastman Kodak Co. 5,000 7/96 75 20,474
18,750
- ------------------------------------------------------------------------------------------------------------------
- -----------------
ECI Telecommunications Ltd. 15,200 8/96 30 26,143
3,800
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Ecolab, Inc. 5,000 7/96 35 5,850 1,563
- ------------------------------------------------------------------------------------------------------------------
- -----------------
General Electric Co. 8,000 9/96 80 24,759
64,000
- ------------------------------------------------------------------------------------------------------------------
- -----------------
General Motors Corp. 4,000 9/96 65 15,379
7,500
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Genzyme Corp. 5,400 7/96 80 27,679
338
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Gymboree Corp. 9,000 7/96 20 13,230
97,875
- ------------------------------------------------------------------------------------------------------------------
- -----------------
H & R Block, Inc. 12,000 7/96 40 24,635
750
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Harnischfeger Industries, Inc. 14,600 8/96 35 67,335
12,775
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Harnischfeger Industries, Inc. 7,200 8/96 40 7,884
1,800
- ------------------------------------------------------------------------------------------------------------------
- -----------------
IBP, Inc. 31,500 11/96 25 69,928
110,250
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Informix Corp. 29,000 8/96 35 129,626
3,625
- ------------------------------------------------------------------------------------------------------------------
- -----------------
International Business Machines Corp. 2,800 7/96 120 13,216
350
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Kerr-McGee Corp. 2,600 7/96 70 2,684
650
- ------------------------------------------------------------------------------------------------------------------
- -----------------
King World Productions, Inc. 16,000 8/96 45 27,519
4,000
- ------------------------------------------------------------------------------------------------------------------
- -----------------
LSI Logic Corp. 8,000 7/96 35 25,759
1,000
- ------------------------------------------------------------------------------------------------------------------
- -----------------
LSI Logic Corp. 8,000 7/96 45 20,259
500
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Manor Care, Inc. 6,000 7/96 45 5,820
750
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Mattel, Inc. 15,000 7/96 28 20,414 23,438
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Procter & Gamble Co. 2,800 7/96 95 5,341
1,050
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Rockwell International Corp. 5,400 7/96 65 14,013
675
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Sara Lee Corp. 12,200 7/96 35 16,408
763
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Sofamor Danek Group, Inc. 12,000 9/96 30 55,138
33,750
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Storage Technology Corp. (New) 11,000 9/96 23 50,545
177,375
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Sun Microsystems, Inc. 7,000 7/96 48 56,331
84,000
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Tenneco, Inc. 15,000 8/96 60 22,049
2,813
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Total SA, Sponsored ADR 11,000 8/96 40 10,670
6,188
- ------------------------------------------------------------------------------------------------------------------
- -----------------
U.S. Healthcare, Inc. 15,000 7/96 55 20,174
9,375
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Wellpoint Health Networks, Inc. 10,200 7/96 30 10,383
2,550
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Whitman Corp. 15,000 9/96 25 14,550
11,250
- ------------------------------------------------------------------------------------------------------------------
- -----------------
Xerox Corp. 22,200 7/96 50 60,827
88,800
---------- ------------
$1,234,581 $ 1,130,700
==========
============
</TABLE>
4. Represents a security sold under Rule 144A, which is
exempt from registration under the Securities Act of 1933,
as amended. This security has been determined to be liquid
under guidelines established by the Board of Trustees. These
securities amount to $258,081 or 0.09% of the Fund's net
assets, at June 30, 1996.
See accompanying Notes to Financial Statements.
12 Oppenheimer Fund
<PAGE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities June 30, 1996
<S> <C>
=====================================================================
==============================================================
Assets Investments, at value (including repurchase agreement of $30,200,000)
(cost $202,407,776)--see accompanying statement
$280,394,997
- ---------------------------------------------------------------------------------------------------------------
Cash 101,788
- ---------------------------------------------------------------------------------------------------------------
Receivables:
Interest and dividends 595,026
Shares of beneficial interest sold 108,283
- ---------------------------------------------------------------------------------------------------------------
Other 66,034
------------
Total assets 281,266,128
=====================================================================
==============================================================
Liabilities Options written, at value (premiums received $1,234,581)--
see accompanying statement--Note 5
1,130,700
- ---------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed
426,981
Investments purchased 350,990
Trustees' fees 118,521
Distribution and service plan fees 91,662
Transfer and shareholder servicing agent fees
66,305
Shareholder reports 60,356
Other 86,415
------------
Total liabilities 2,331,930
=====================================================================
==============================================================
Net Assets $278,934,198
============
=====================================================================
==============================================================
Composition of Paid-in capital
$178,389,656
Net Assets
- ---------------------------------------------------------------------------------------------------------------
Undistributed net investment income
4,179,246
- ---------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions
18,274,717
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and
liabilities denominated in foreign currencies
78,090,579
------------
Net assets $278,934,198
============
=====================================================================
==============================================================
Net Asset Value Class A Shares:
Per Share Net asset value and redemption price per share (based on net assets of
$273,193,978 and 22,495,412 shares of beneficial interest outstanding)
$ 12.14
Maximum offering price per share (net asset value plus sales charge of
5.75% of offering price) $ 12.88
- ---------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $1,654,505 and 137,088 shares of beneficial interest outstanding)
$ 12.07
- ---------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based
on net assets of $4,085,715 and 342,672 shares of beneficial interest outstanding)
$ 11.92
</TABLE>
See accompanying Notes to Financial Statements.
13 Oppenheimer Fund
<PAGE>
<TABLE>
<CAPTION>
Statement of Operations For the Year Ended June 30, 1996
<S> <C>
=====================================================================
==============================================================
Investment Income Dividends (net of foreign withholding taxes of $112,278)
$ 5,887,471
- ---------------------------------------------------------------------------------------------------------------
Interest 1,929,027
------------
Total income 7,816,498
=====================================================================
==============================================================
Expenses Management fees--Note 4
2,036,339
- ---------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4
616,198
- ---------------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 350,307
Class B 4,128
Class C 34,894
- ---------------------------------------------------------------------------------------------------------------
Shareholder reports 108,816
- ---------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses--Note 1 91,485
- ---------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 85,190
- ---------------------------------------------------------------------------------------------------------------
Legal and auditing fees 71,929
- ---------------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 334
Class B 561
Class C 496
- ---------------------------------------------------------------------------------------------------------------
Other 98,175
------------
Total expenses 3,498,852
=====================================================================
==============================================================
Net Investment Income 4,317,646
=====================================================================
==============================================================
Realized and Net realized gain on:
Unrealized Investments (including premiums on options exercised)
21,639,931
Gain (Loss) Foreign currency transactions
309,497
Closing and expiration of options written--Note 5
845,454
------------
Net realized gain 22,794,882
- ---------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 18,834,911
Translation of assets and liabilities denominated in foreign currencies
(1,955,886)
------------
Net change 16,879,025
------------
Net realized and unrealized gain
39,673,907
=====================================================================
==============================================================
Net Increase in Net Assets Resulting From Operations
$ 43,991,553
============
See accompanying Notes to Financial Statements
</TABLE>
14 Oppenheimer Fund
<PAGE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
Year Ended June 30,
1996 1995
<S> <C> <C>
=====================================================================
==============================================================
Operations Net investment income $ 4,317,646 $
2,806,853
- ---------------------------------------------------------------------------------------------------------------
Net realized gain 22,794,882 19,743,628
- ---------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 16,879,025
23,440,270
------------- -------------
Net increase in net assets resulting from operations 43,991,553
45,990,751
=====================================================================
==============================================================
Dividends and Dividends from net investment income:
Distributions to Class A (2,763,277)
(498,859)
Shareholders Class B (1,333) --
Class C (19,415) --
- ---------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (20,559,886) (24,601,920)
Class B (10,043) --
Class C (287,511) (100,620)
=====================================================================
==============================================================
Beneficial Net increase (decrease) in net assets resulting from
Interest beneficial interest transactions--Note 2:
Transactions Class A (17,324,834)
12,428,700
Class B 1,639,742 --
Class C 1,733,727 1,742,306
=====================================================================
==============================================================
Net Assets Total increase 6,398,723
34,960,358
- ---------------------------------------------------------------------------------------------------------------
Beginning of period 272,535,475
237,575,117
------------- -------------
End of period (including undistributed net investment income
of $4,179,246 and $3,477,408, respectively) $ 278,934,198
$ 272,535,475
=============
=============
</TABLE>
See accompanying Notes to Financial Statements
15 Oppenheimer Fund
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights
Class A
----------------------------------------------------------------
Year Ended June 30,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
=====================================================================
================================================
Per Share Operating Data:
Net asset value, beginning of period $ 11.34 $ 10.55 $ 10.41 $ 9.72 $ 9.31
- ---------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .20 .31 .07 .11 .16
Net realized and unrealized
gain (loss) 1.69 1.58 .55 1.15 .84
-------- -------- -------- -------- --------
Total income (loss) from investment
operations 1.89 1.89 .62 1.26 1.00
- ---------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.13) (.02) (.03) (.10) (.32)
Distributions from net realized gain (.96) (1.08) (.45) (.47) (.27)
-------- -------- -------- -------- --------
Total dividends and distributions
to shareholders (1.09) (1.10) (.48) (.57) (.59)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.14 $ 11.34 $ 10.55 $ 10.41 $ 9.72
======== ======== ======== ========
========
=====================================================================
================================================
Total Return, at Net Asset Value(3) 17.56% 19.60% 5.84% 13.33%
11.22%
=====================================================================
================================================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $273,194 $270,381 $237,281 $216,180 $209,495
- ---------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $270,211 $254,011 $229,976 $212,660
$221,369
- ---------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 1.59% 1.10% 0.69% 1.05% 1.71%
Expenses 1.26% 1.29% 1.16% 1.10% 1.09%
- ---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 29.7% 34.1% 41.6% 35.6% 58.2%
Average brokerage commission rate(6) $ 0.0324 -- -- -- --
<CAPTION>
Class B Class C
------- ------------------------------------
Period
Ended
June 30, Year Ended June 30,
1996(2) 1996 1995 1994(1)
<S> <C> <C> <C> <C>
=====================================================================
============================
Per Share Operating Data:
Net asset value, beginning of period $ 11.85 $ 11.19 $ 10.49 $ 11.08
- -------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .14 .07 .03 .02
Net realized and unrealized
gain (loss) 1.17 1.69 1.75 (.14)
-------- -------- -------- --------
Total income (loss) from investment
operations 1.31 1.76 1.78 (.12)
- -------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.13) (.07) -- (.02)
Distributions from net realized gain (.96) (.96) (1.08) (.45)
-------- -------- -------- --------
Total dividends and distributions
to shareholders (1.09) (1.03) (1.08) (.47)
- -------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.07 $ 11.92 $ 11.19 $ 10.49
======== ======== ======== ========
=====================================================================
============================
Total Return, at Net Asset Value(3) 11.86% 16.51% 18.57% (1.24)%
=====================================================================
============================
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $ 1,655 $ 4,086 $ 2,154 $ 294
- -------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 649 $ 3,491 $ 1,100 $ 108
- -------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 0.74%(4) 0.75% 0.48% 0.05%(4)
Expenses 2.13%(4) 2.15% 2.20% 2.44%(4)
- -------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 29.7% 29.7% 34.1% 41.6%
Average brokerage commission rate(6) $ 0.0324 $ 0.0324 -- --
</TABLE>
1. For the period from December 1, 1993 (inception of offering) to June 30,
1994.
2. For the period from November 1, 1995 (inception of offering) to June 30,
1996.
3. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
4. Annualized.
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended June 30, 1996 were $74,869,135 and $104,723,299, respectively.
6. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period divided by the total number of related
shares purchased and sold.
See accompanying Notes to Financial Statements.
16 Oppenheimer Fund
<PAGE>
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Oppenheimer Fund (the Fund) is registered under the Investment Company Act of
1940, as amended, as a diversified, open-end management investment company. The
Fund's investment objective is to seek capital appreciation through investment
in common stocks that offer growth potential. The Fund's investment advisor is
OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B and Class
C shares. Class A shares are sold with a front-end sales charge. Class B and
Class C shares may be subject to a contingent deferred sales charge. All classes
of shares have identical rights to earnings, assets and voting privileges,
except that each class has its own distribution and/or service plan, expenses
directly attributable to a particular class and exclusive voting rights with
respect to matters affecting a single class. The following is a summary of
significant accounting policies consistently followed by the Fund.
- --------------------------------------------------------------------------------
Investment Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
asked price or the last sale price on the prior trading day. Long-term and
short-term "non-money market" debt securities are valued by a portfolio pricing
service approved by the Board of Trustees. Such securities which cannot be
valued by the approved portfolio pricing service are valued using
dealer-supplied valuations provided the Manager is satisfied that the firm
rendering the quotes is reliable and that the quotes reflect current market
value, or are valued under consistently applied procedures established by the
Board of Trustees to determine fair value in good faith. Short-term "money
market type" debt securities having a remaining maturity of 60 days or less are
valued at cost (or last determined market value) adjusted for amortization to
maturity of any premium or discount. 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 or asked
price closest to the last reported sale price 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 securities and investment income are translated at
the rates of exchange prevailing on the respective dates of such transactions.
The effect of changes in foreign currency exchange rates is separately
identified from the fluctuations arising from changes in market values of
securities held and reported with all other foreign currency gains and losses in
the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses, and Gains and Losses. Income, expenses (other
than those attributable to a specific class) and gains and losses are allocated
daily to each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required.
- --------------------------------------------------------------------------------
Trustees' Fees and Expenses. The Fund has adopted a nonfunded retirement plan
for the Fund's independent trustees. Benefits are based on years of service and
fees paid to each trustee during the years of service. During the year ended
June 30, 1996, a provision of $41,657 was made for the Fund's projected benefit
obligations and payments of $2,831 were made to retired trustees, resulting in
an accumulated liability of $102,810 at June 30, 1996.
17 Oppenheimer Fund
<PAGE>
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
1. Significant
Accounting
Policies
(continued)
Distributions to Shareholders. Dividends and distributions to shareholders are
reported on the ex-dividend date.
- --------------------------------------------------------------------------------
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of the recognition of certain foreign currency gains (losses)
as ordinary income (loss) for tax purposes. The character of the distributions
made during the year from net investment income or net realized gains may differ
from their ultimate characterization for federal income tax purposes. Also, due
to timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized gain (loss) was
recorded by the Fund.
During the year ended June 30, 1996, the Fund changed the classification of
distributions to shareholders to better disclose the differences between
financial statement amounts and distributions determined in accordance with
income tax regulations. Accordingly, during the year ended June 30, 1996,
amounts have been classified to reflect a decrease in paid in capital of
$770,135, a decrease in undistributed net investment income of $831,783, and an
increase in accumulated net realized gain on investments of $1,601,918.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. Discount on securities purchased is amortized over the life of
the respective securities, in accordance with federal income tax requirements.
Realized gains and losses on investments and unrealized appreciation and
depreciation are determined on an identified cost basis, which is the same basis
used for federal income tax purposes.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
2. Shares of
Beneficial
Interest
The Fund has authorized an unlimited number of no par value shares of beneficial
interest. Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
Year Ended June 30, 1996(1) Year Ended June
30, 1995
------------------------------ -------------------------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
- ------------------
Class A:
Sold 2,083,446 $ 24,678,546 6,673,759 $
71,435,301
Dividends and distributions reinvested 1,924,123 21,357,698 2,364,103
23,168,217
Redeemed (5,349,170) (63,361,078) (7,685,964)
(82,174,818)
---------- ------------ --------- ------------
Net increase (decrease) (1,341,601) $(17,324,834) 1,351,898
$ 12,428,700
========== ============ =========
============
- ------------------------------------------------------------------------------------------------------------------
- ------------------
Class B:
Sold 215,151 $ 2,550,547 -- $ --
Dividends and distributions reinvested 1,026 11,365 --
--
Redeemed (79,090) (922,170) -- --
---------- ------------ --------- ------------
Net increase 137,088 $ 1,639,742 -- $
- --
========== ============ =========
============
- ------------------------------------------------------------------------------------------------------------------
- ------------------
Class C:
Sold 238,989 $ 2,774,056 183,982 $
1,948,887
Dividends and distributions reinvested 26,363 288,410 8,876
86,189
Redeemed (115,207) (1,328,739) (28,381)
(292,770)
---------- ------------ --------- ------------
Net increase 150,145 $ 1,733,727 164,477 $
1,742,306
========== ============ =========
============
</TABLE>
1. For the year ended June 30, 1996 for Class A and Class C shares, and for
the period from November 1, 1995 (inception of offering) to June 30, 1996 for
Class B shares.
18 Oppenheimer Fund
<PAGE>
- --------------------------------------------------------------------------------
3. Unrealized Gains and
Losses on Investments and
Options Written
At June 30, 1996, net unrealized appreciation on investments and options written
of $78,091,102 was composed of gross appreciation of $84,234,203, and gross
depreciation of $6,143,101.
- --------------------------------------------------------------------------------
4. Management Fees and
Other Transactions
With Affiliates
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of 0.75% on the first
$200 million of average annual net assets with a reduction of 0.03% on each $200
million thereafter to $800 million, and 0.60% on net assets in excess of $800
million. The Manager has agreed to reimburse the Fund if aggregate expenses
(with specified exceptions) exceed the most stringent applicable regulatory
limit on Fund expenses.
For the year ended June 30, 1996, commissions (sales charges paid by
investors) on sales of Class A shares totaled $581,891, of which $146,293 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 $51,972 and $21,470, of which $1,625 was paid to an
affiliated broker/dealer for Class C shares. During the year ended June 30,
1996, OFDI received contingent deferred sales charges of $2,962 upon redemption
of Class C shares as reimbursement for sales commissions advanced by OFDI at the
time of sale of such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the transfer
and shareholder servicing agent for the Fund, and for other registered
investment companies. OFS's total costs of providing such services are allocated
ratably to these companies.
The Fund has adopted a Service Plan for Class A shares to reimburse OFDI
for a portion of its costs incurred in connection with the personal service and
maintenance of accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate that may not exceed 0.25% of the average annual net
assets of Class A shares of the Fund. OFDI uses the service fee to reimburse
brokers, dealers, banks and other financial institutions quarterly for providing
personal service and maintenance of accounts of their customers that hold Class
A shares. During the year ended June 30, 1996, OFDI paid $5,013 to an affiliated
broker/dealer as reimbursement for Class A personal service and maintenance
expenses.
The Fund has adopted a compensation type Distribution and Service Plan for
Class B shares to compensate OFDI for its services and costs in distributing
Class B shares and servicing accounts. Under the Plan, the Fund pays OFDI an
annual asset-based sales charge of 0.75% per year on Class B shares that are
outstanding for 6 years or less. OFDI also receives a service fee of 0.25% per
year to compensate dealers for providing personal services for accounts that
hold Class B shares. Both fees are computed on the average annual net assets of
Class B shares, determined as of the close of each regular business day. If the
Plan is terminated by the Fund, the Board of Trustees may allow the Fund to
continue payments of the asset-based sales charge to OFDI for certain expenses
it incurred before the Plan was terminated. During the year ended June 30, 1996,
OFDI retained $4,128 as compensation for Class B sales commissions and service
fee advances, as well as financing costs. As of June 30, 1996, OFDI had incurred
unreimbursed expenses of $58,024 for Class B.
The Fund has adopted a reimbursement type Distribution and Service Plan for
Class C shares to reimburse OFDI for its services and costs in distributing
Class C shares and servicing accounts. Under the Plan, the Fund pays OFDI an
annual asset-based sales charge of 0.75% per year on Class C shares. OFDI also
receives a service fee of 0.25% per year to reimburse dealers for providing
personal services for accounts that hold Class C shares. Both fees are computed
on the average annual net assets of Class C shares, determined as of the close
of each regular business day. If the Plan is terminated by the Fund, the Board
of Trustees may allow the Fund to continue payments of the asset-based sales
charge to OFDI for certain expenses it incurred before the Plan was terminated.
During the year ended June 30, 1996, OFDI retained $21,763 as reimbursement for
Class C sales commissions and service fee advances, as well as financing costs.
As of June 30, 1996, OFDI had incurred unreimbursed expenses of $67,156 for
Class C.
19 Oppenheimer Fund
<PAGE>
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
5. 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 June 30, 1996 was as follows:
Call Options
------------------------
Number of Amount of
Options Premiums
- --------------------------------------------------------------------------------
Options outstanding at June 30, 1995 5,992 $ 1,266,634
- --------------------------------------------------------------------------------
Options written 9,804 2,642,006
- --------------------------------------------------------------------------------
Options closed or expired (8,036) (1,868,399)
- --------------------------------------------------------------------------------
Options exercised (3,182) (805,660)
----- -----------
Options outstanding at June 30, 1996 4,578 $ 1,234,581
===== ===========
<PAGE>
<PAGE>
Appendix A
Corporate Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
Food
Gas Utilities
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking
<PAGE>
<PAGE>
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
