Oppenheimer Money Market Fund, Inc.
3410 South Galena Street, Denver, Colorado 80231
1-800-525-7048
Statement of Additional Information dated April 15, 1996
This Statement of Additional Information of Oppenheimer Money Market
Fund, Inc. is not a Prospectus. This document contains additional
information about the Fund and supplements information in the Prospectus
dated April 15, 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
Investment Policies and Strategies
Other Investment Techniques and Strategies
Other Investment Restrictions
How the Fund is Managed
Organization and History
Directors and Officers of the Fund
The Manager and Its Affiliates
Performance of the Fund
About Your Account
How To Buy Shares
How To Sell Shares
How To Exchange Shares
Dividends and Taxes
Additional Information About the Fund
Appendix A: Description of Securities Ratings A-1
Appendix B: Industry Classifications B-1
Financial Information About the Fund
Independent Auditors' Report
Financial Statements
<PAGE>
ABOUT THE FUND
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and
policies of the Fund are described in the Prospectus. Set forth below is
supplemental information about those policies and the types of securities
in which the Fund may invest, as well as the strategies the Fund may use
to try to achieve its objective. Certain capitalized terms used in this
Statement of Additional Information have the same meaning as those terms
have in the Prospectus.
The Fund's objective is to seek high current income (consistent with
stability of principal) and the Fund will not make investments with the
objective of seeking capital growth. However, the value of the securities
held by the Fund may be affected by changes in general interest rates.
Because the current value of debt securities varies inversely with changes
in prevailing interest rates, if interest rates increase after a security
is purchased, that security would normally decline in value. Conversely,
should interest rates decrease after a security is purchased, its value
would rise. However, those fluctuations in value will not generally
result in realized gains or losses to the Fund since the Fund does not
usually intend to dispose of securities prior to their maturity. A debt
security held to maturity is redeemable by its issuer at full principal
value plus accrued interest. To a limited degree, the Fund may engage in
short-term trading to attempt to take advantage of short-term market
variations, or may dispose of a portfolio security prior to its maturity
if, on the basis of a revised credit evaluation of the issuer or other
considerations, the Fund believes such disposition advisable or it needs
to generate cash to satisfy redemptions. In such cases, the Fund may
realize a capital gain or loss.
- Ratings of Securities. The prospectus describes "Eligible
Securities" in which the Fund may invest and indicates that if a
security's rating is downgraded, the Manager and/or the Board may have to
reassess the security's credit risk. If a security has ceased to be a
First Tier Security, OppenheimerFunds, Inc. (the "Manager") will promptly
reassess whether the security continues to present "minimal credit risk."
If the Manager becomes aware that any Rating Organization has downgraded
its rating of a Second Tier Security or rated an unrated security below
its second highest rating category, the Fund's Board of Directors shall
promptly reassess whether the security presents minimal credit risk and
whether it is in the best interests of the Fund to dispose of it; but if
the Fund disposes of the security within five days of the Manager
learning of the downgrade, the Manager will provide the Board with
subsequent notice of such downgrade. If a security is in default, or
ceases to be an Eligible Security, or is determined no longer to present
minimal credit risks, the Board must determine whether it would be in the
best interests of the Fund to dispose of the security. The Rating
Organizations currently designated as such by the Securities and Exchange
Commission are Standard & Poor's Corporation, Moody's Investors Service,
Inc., Fitch Investors Services, Inc., Duff and Phelps, Inc., IBCA Limited
and its affiliate, IBCA, Inc., and Thomson BankWatch, Inc. A discussion
of the ratings categories of those Rating Organizations is contained in
Appendix A to this Statement of Additional Information.
- U.S. Government Securities. U.S. Government Securities are
obligations issued or guaranteed by the U.S. Government or its agencies
or instrumentalities and include Treasury Bills (which mature within one
year of the date they are issued) and Treasury Notes and Bonds (which are
issued with longer maturities). All Treasury securities are backed by
the full faith and credit of the United States. U.S. Government agencies
and instrumentalities that issue or guarantee securities include, but are
not limited to, the Federal Housing Administration, Farmers Home
Administration, Export-Import Bank of the United States, Small Business
Administration, Government National Mortgage Association, General Services
Administration, Bank for Cooperatives, Federal Home Loan Banks, Federal
Home Loan Mortgage Corporation, Federal Intermediate Credit Banks, Federal
Land Banks, Maritime Administration, the Tennessee Valley Authority and
the District of Columbia Armory Board.
Securities issued or guaranteed by U.S. Government agencies and
instrumentalities are not always supported by the full faith and credit
of the United States. Some, such as securities issued by the Federal Home
Loan Banks, are backed by the right of the agency or instrumentality to
borrow from the Treasury. Others, such as securities issued by the
Federal National Mortgage Association ("Fannie Mae"), are supported only
by the credit of the instrumentality and not by the Treasury. If the
securities are not backed by the full faith and credit of the United
States, the owner of the securities must look principally to the agency
issuing the obligation for repayment and may not be able to assert a claim
against the United States in the event that the agency or instrumentality
does not meet its commitment.
Among the U.S. Government Securities that may be purchased by the
Fund are "mortgage-backed securities" of Fannie Mae, Government National
Mortgage Association ("Ginnie Mae") and the Federal Home Loan Mortgage
Association ("Freddie Mac"). These mortgage-backed securities include
"pass-through" securities and "participation certificates"; both types of
securities are similar, in that they represent pools of mortgages that are
assembled by a vendor who sells interests in the pool. Payments of
principal and interest by individual mortgagors are "passed through" to
the holders of the interests in the pool. Another type of mortgage-backed
securities is the "collateralized mortgage obligation," which is similar
to a conventional bond and is secured by groups of individual mortgages.
Timely payment of principal and interest on Ginnie Mae pass-throughs is
guaranteed by the full faith and credit of the United States. Freddie Mac
and Fannie Mae are both instrumentalities of the U.S. Government, but
their obligations are backed by the credit of the instrumentality, and not
by the full faith and credit of the United States.
- Time Deposits. The Fund may invest in fixed time deposits, which
are non-negotiable deposits in a bank for a specified period of time at
a stated interest rate. They may or may not be subject to withdrawal
penalties. However, the Fund's investment in time deposits that are
subject to penalties (other than time deposits maturing in less than 7
days) is subject to the 10% investment limitation for investing in
illiquid securities, set forth in "Investment Objective and Policies" in
the Prospectus.
- Floating Rate/Variable Rate Obligations. The Fund may invest in
instruments with floating or variable interest rates. The interest rate
on a floating rate obligation is based on a stated prevailing market rate,
such as a bank's prime rate, the 91-day U.S. Treasury Bill rate, the rate
of return on commercial paper or bank certificates of deposit, or some
other standard. The rate on the investment is adjusted automatically each
time the market rate is adjusted. The interest rate on a variable rate
obligation is also based on a stated prevailing market rate but is
adjusted automatically at a specified interval of not less than one year.
Some variable rate or floating rate obligations in which the Fund may
invest have a demand feature entitling the holder to demand payment of an
amount approximately equal to the amortized cost of the instrument or the
principal amount of the instrument plus accrued interest at any time, or
at specified intervals not exceeding one year. These notes may or may not
be backed by bank letters of credit.
Variable rate demand notes may include master demand notes, which are
obligations that permit the Fund to invest fluctuating amounts in a note.
The amount may change daily without penalty, pursuant to direct
arrangements between the Fund, as the note purchaser, and the issuer of
the note. The interest rates on these notes fluctuate from time to time.
The issuer of this type of obligation normally has a corresponding right
in its discretion, after a given period, to prepay the outstanding
principal amount of the obligation plus accrued interest. The issuer must
give a specified number of days' notice to the holders of those
obligations. Generally, the changes in the interest rate on those
securities reduce the fluctuation in their market value. As interest
rates decrease or increase, the potential for capital appreciation or
depreciation is less than that for fixed-rate obligations having the same
maturity.
Because these types of obligations are direct lending arrangements
between the note purchaser and issuer of the note, these instruments
generally will not be traded. Generally, there is no established
secondary market for these types of obligations, although they are
redeemable from the issuer at face value. Accordingly, where these
obligations are not secured by letters of credit or other credit support
arrangements, the Fund's right to redeem them is dependent on the ability
of the note issuer to pay principal and interest on demand. These types
of obligations usually are not rated by credit rating agencies. The Fund
may invest in obligations that are not rated only if the Manager
determines at the time of investment that the obligations are of
comparable quality to the other obligations in which the Fund may invest.
The Manager, on behalf of the Fund, will monitor the creditworthiness of
the issuers of the floating and variable rate obligations in the Fund's
portfolio on an ongoing basis.
- Insured Bank Obligations. The Federal Deposit Insurance
Corporation ("FDIC") insures the deposits of banks and savings and loan
associations (collectively referred to as "banks") up to $100,000 per
investor. Within the limits set forth in the Prospectus, the Fund may
purchase bank obligations that are fully insured as to principal by the
FDIC. To remain fully insured as to principal, these investments must
currently be limited to $100,000 per bank. If the principal amount and
accrued interest together exceed $100,000, then the accrued interest in
excess of that $100,000 will not be insured.
- Bank Loan Participation Agreements. The Fund may invest in bank
loan participation agreements, subject to the investment limitation set
forth in "Investment Objective and Policies" in the Prospectus as to
investments in illiquid securities, and to the provisions of Rule 2a-7 of
the Investment Company Act of 1940. Participation agreements provide the
Fund an undivided interest in a loan made by the bank issuing the
participation interest in the proportion that the Fund's participation
interest bears to the total principal amount of the loan. Under this type
of arrangement, the issuing bank may have no obligation to the Fund other
than to pay principal and interest on the loan if and when received by the
bank. Thus, the Fund must look to the creditworthiness of the borrower,
which is obligated to make payments of principal and interest on the loan.
If the borrower fails to pay scheduled principal or interest payments, the
Fund may experience a reduction in income.
Other Investment Techniques and Strategies
- Repurchase Agreements. In a repurchase transaction, the Fund
acquires a security from, and simultaneously resells it to, an approved
vendor for delivery on an agreed-upon future date. An "approved vendor"
may be a U.S. commercial bank, the U.S. branch of a foreign bank, or a
broker-dealer which has been designated a primary dealer in government
securities, which must meet the credit requirements set forth by the
Fund's Board of Directors from time to time. The resale price exceeds the
purchase price by an amount that reflects an agreed-upon interest rate
effective for the period during which the repurchase agreement is in
effect. The majority of these transactions run from day to day, and
delivery pursuant to the resale typically will occur within one to five
days of the purchase. Repurchase agreements are considered "loans" under
the Investment Company Act, collateralized by the underlying security.
The Fund's repurchase agreements require that at all times while the
repurchase agreement is in effect, the collateral's value must equal or
exceed the repurchase price to fully collateralize the repayment
obligation. Additionally, the Manager will impose creditworthiness
requirements to confirm that the vendor is financially sound and will
continuously monitor the collateral's value.
- Loans of Portfolio Securities. The Fund may lend its portfolio
securities subject to the restrictions stated in the Prospectus. Under
applicable regulatory requirements (which are subject to change), the loan
collateral must, on each business day, at least equal the market value of
the loaned securities and must consist of cash, bank letters of credit,
U.S. Government securities or other cash equivalents in which the Fund is
permitted to invest. To be acceptable as collateral, letters of credit
must obligate a bank to pay amounts demanded by the Fund if the demand
meets the terms of the letter. 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', custodian, administrative or other fees the Fund pays in
connection with the loan. The Fund may share the interest it receives on
the collateral securities with the borrower as long as it realizes at
least a minimum amount of interest required by the lending guidelines
established by its Board of Directors. The Fund will not lend its
portfolio securities to any officer, trustee, employee or affiliate of the
Fund or its Manager. The terms of the Fund's loans must meet certain
tests under the Internal Revenue Code and permit the Fund to reacquire
loaned securities on five business days notice or in time to vote on any
important matter.
- Illiquid and Restricted Securities. Illiquid securities in which
the Fund may invest include issues which only may be redeemed by the
issuer upon more than seven days notice or at maturity, repurchase
agreements maturing in more than seven days, fixed time deposits subject
to withdrawal penalties which mature in more than seven days, and other
securities that cannot be sold freely due to legal or contractual
restrictions on resale. Contractual restrictions on the resale of
illiquid securities might prevent or delay their sale by the Fund at a
time when such sale would be desirable. Restricted securities that are
not illiquid in which the Fund may invest, include certain master demand
notes redeemable on demand, and short-term corporate debt instruments that
are not related to current transactions of the issuer and therefore are
not exempt from registration as commercial paper.
Other Investment Restrictions
The Fund's most significant investment restrictions are set forth in
the Prospectus. There are additional investment restrictions that the Fund
must follow that are also fundamental policies. Fundamental policies and
the Fund's investment objective cannot be changed without the vote of a
"majority" of the Fund's outstanding voting securities. Under the
Investment Company Act, such a "majority" vote is defined as the vote of
the holders of the lesser of: (1) 67% or more of the shares present or
represented by proxy at a shareholder meeting, if the holders of more than
50% of the outstanding shares are present, or (2) more than 50% of the
outstanding shares.
Under these additional restrictions, the Fund cannot:
(1) invest in commodities or commodity contracts or invest in
interests in oil, gas, or other mineral exploration or mineral development
programs;
(2) invest in real estate (however, the Fund may purchase commercial
paper issued by companies which invest in real estate or interests
therein);
(3) purchase securities on margin or make short sales of securities;
(4) invest in or hold securities of any issuer if those officers and
directors of the Fund or its adviser who beneficially own individually
more than 1/2 of 1% of the securities of such issuer together own more
than 5% of the securities of such issuer;
(5) underwrite securities of other companies; or
(6) invest in securities of other investment companies.
For purposes of the Fund's policy not to concentrate in securities
of issuers as described in "Other Investment Restrictions" in the
Prospectus, the Fund has adopted the industry classifications set forth
in Appendix B to this Statement of Additional Information. This is not
a fundamental policy.
How the Fund is Managed
Organization and History. As a Maryland corporation, 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 Directors or upon proper request of the
shareholders. The Directors will call a meeting of shareholders to vote
on the removal of a Director upon the written request of the record
holders of 10% of its outstanding shares. In addition, if the Directors
receive a request from at least 10 shareholders (who have been
shareholders for at least six months) holding shares of the 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 Director, the
Directors 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 Directors may take such other action as
set forth under Section 16(c) of the Investment Company Act.
Directors and Officers of the Fund. The Fund's Directors and officers and
their principal occupations and business affiliations during the past five
years are listed below. The address of each Director and officer is Two
World Trade Center, New York, New York 10048-0203, unless another address
is listed below. All of the Directors are also trustees or directors of
Oppenheimer Target Fund, Oppenheimer Fund, Oppenheimer Global Fund,
Oppenheimer Growth Fund, Oppenheimer Enterprise Fund, Oppenheimer
Discovery Fund, Oppenheimer Global Growth & Income Fund, Oppenheimer
Global Emerging Growth Fund, Oppenheimer Gold & Special Minerals Fund,
Oppenheimer Tax-Free Bond Fund, Oppenheimer New York Tax-Exempt Fund,
Oppenheimer California Tax-Exempt Fund, Oppenheimer Multi-State Tax-Exempt
Trust, Oppenheimer Asset Allocation Fund, Oppenheimer U.S. Government
Trust, Oppenheimer Multi-Sector Income Trust and Oppenheimer Multi-
Government Trust (the "New York-based Oppenheimer funds"). Messrs. Spiro,
Bishop, Bowen, Donohue, Farrar and Zack, who are officers of the Fund,
respectively hold the same offices with the other New York-based
OppenheimerFunds as with the Fund. As of April 1, 1996, the Directors and
officers of the Fund as a group owned less than 1% of the 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 Directors and officers 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 that plan by the
officers of the Fund listed below.
Leon Levy, Chairman of the Board of Directors; Age: 70
31 West 52nd Street, New York, New York 10019
General Partner of Odyssey Partners, L.P. (investment partnership)
and Chairman of Avatar Holdings, Inc. (real estate development).
Robert G. Galli, Director;* Age: 62
Vice Chairman of the Manager and Vice President and Counsel of
Oppenheimer Acquisition Corp., the Manager's parent holding company;
formerly he held the following positions: Executive Vice President
and General Counsel of the Manager and the OppenheimerFunds
Distributor, Inc. (the "Distributor"); a director of the Manager and
the Distributor, Vice President and a director of HarbourView Asset
Management Corporation ("HarbourView") and Centennial Asset
Management Corporation ("Centennial"), investment adviser
subsidiaries of the Manager, a director of Shareholder Financial
Services, Inc. ("SFSI") and Shareholder Services, Inc. ("SSI"),
transfer agent subsidiaries of the Manager, an officer of other
Oppenheimer funds.
Benjamin Lipstein, Director; Age: 72
591 Breezy Hill Road, Hillsdale, New York 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University; a director of Sussex Publishers,
Inc. (Publishers of Psychology Today and Mother Earth News) and of
Spy Magazine, L.P.
Bridget A. Macaskill, President;* Age 47
President, Chief Executive Officer and a Director of the Manager;
Chairman and a Director of SSI, President and a Director of OAC and
HarbourView; and a Director of Oppenheimer Partnership Holdings,
Inc., a holding company subsidiary of the Manager; formerly an
Executive Vice President of the Manager.
Elizabeth B. Moynihan, Director; Age: 66
801 Pennsylvania Avenue, N.W., Washington, DC 20004
Author and architectural historian; a trustee of the Freer Gallery
of Art (Smithsonian Institution), the Institute of Fine Arts (New
York University), National Building Museum; a member of the Trustees
Council, Preservation League of New York State; a member of the Indo-
U.S. Sub-Commission on Education and Culture.
_____________________
* A Director who is an "interested person" of the Fund as defined in the
Investment Company Act.
Kenneth A. Randall, Director; Age: 68
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Dominion Resources, Inc. (electric utility holding
company), Dominion Energy, Inc. (electric power and oil & gas
producer), Enron-Dominion Cogen Corp. (cogeneration company), Kemper
Corporation (insurance and financial services company), and Fidelity
Life Association (mutual life insurance company); formerly Chairman
of the Board of ICL, Inc. (information systems), and President and
Chief Executive Officer of The Conference Board, Inc. (international
and economic and business research).
Edward V. Regan, Director; Age: 65
40 Park Avenue, New York, New York 10016
Chairman of Municipal Assistance Corporation for the City of New
York; President of Jerome Levy Economics Institute; a member of the
U.S. Competitiveness Policy Council; a director of GranCare, Inc.
(healthcare provider); formerly New York State Comptroller and a
trustee of the New York State and Local Retirement Fund.
Russell S. Reynolds, Jr., Director; Age: 64
200 Park Avenue, New York, New York 10166
Founder Chairman of Russell Reynolds Associates, Inc. (executive
recruiting); Chairman of Directors Publication, Inc. (consulting and
publishing); a trustee of Mystic Seaport Museum, International House,
Greenwich Hospital and Greenwich Historical Society.
Sidney M. Robbins, Director; 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.
(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 Director;* Age: 70
Chairman Emeritus and a director of the Manager; formerly Chairman
of the Manager and the Distributor.
Pauline Trigere, Director; 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, Director; Age: 65
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel to Hogan & Hartson (a law firm); a director of B.A.T.
Industries, Ltd. (tobacco and financial services), Caterpillar, Inc.
(machinery), ConAgra, Inc. (food and agricultural products), Farmers
Insurance Company (insurance), FMC Corp. (chemicals and machinery),
_____________________
* A Director who is an "interested person" of the Fund as defined in the
Investment Company Act.
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.
Carol E. Wolf, Vice President and Portfolio Manager; Age: 44
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager and Centennial; an officer of other
Oppenheimer funds.
Andrew J. Donohue, Secretary; Age: 45
Executive Vice President and General Counsel of the Manager and the
Distributor; an officer of other Oppenheimer funds; President and a
director of Centennial; formerly Senior Vice President and Associate
General Counsel of the Manager and the Distributor, prior to which
he was a partner in Kraft & McManimon (a law firm), an officer of
First Investors Corporation (a broker-dealer) and First Investors
Management Company, Inc. (broker-dealer and investment adviser), and
a director and an officer of First Investors Family of Funds and
First Investors Life Insurance Company.
George C. Bowen, Treasurer; Age: 59
3410 South Galena Street, Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President
and Treasurer of the Distributor and HarbourView; Senior Vice
President, Treasurer, Assistant Secretary and a director of
Centennial; Vice President, Secretary and Treasurer of SSI and SFSI;
an officer of other Oppenheimer funds.
Robert G. Zack, Assistant Secretary; Age: 47
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; an officer of other Oppenheimer
funds.
Robert J. Bishop, Assistant Treasurer; Age: 37
3410 South Galena Street, Denver, Colorado 80231
Assistant 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 Farrar, Assistant Treasurer; Age: 30
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other Oppenheimer funds; 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.
- Remuneration of Trustees. The officers of the Fund are affiliated
with the Manager. They and the Directors of the Fund who are affiliated
with the Manager (Ms. Macaskill and Messrs. Galli and Spiro) receive no
salary or fee from the Fund. The Directors of the Fund (excluding Ms.
Macaskill and Messrs. Galli and Spiro) received the total amounts shown
below from the Fund, during its fiscal year ended December 31, 1995, and
from all 17 of the New York-based Oppenheimer funds (including the Fund)
listed in the first paragraph of this section (and from Oppenheimer Time
Fund, Oppenheimer Global Environment Fund and Oppenheimer Mortgage Income
Fund, which ceased operations following the acquisition of their assets
by certain other Oppenheimer funds), for services in the positions shown
in the chart below.
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. No payments have been made by the Fund
under the plan as of December 31, 1994.
<TABLE>
<CAPTION>
Aggregate Retirement Benefits Total Compensation
Compensation Accrued as Part From All
Name and from of Fund New York-based
Position Fund Expenses OppenheimerFunds1
<S> <C> <C> <C>
Leon Levy $11,128 $23,553 $141,000
Chairman and
Trustee
Benjamin Lipstein $ 6,803 $14,399 $ 86,200
Study Committee
Member and Trustee
Elizabeth B. Moynihan $ 6,803 $14,399 $ 86,800
Study Committee
Member3 and Trustee
Kenneth A. Randall $ 6,187 $13,096 $ 78,400
Audit Committee
Member and Trustee
Edward V. Regan $ 5,429 $11,492 $ 68,800
Audit Committee
Member and Trustee
Russell S. Reynolds, Jr. $ 4,111 $ 8,703 $ 52,100
Trustee
Sidney M. Robbins $ 9,636 $20,396 $122,100
Study Committee
Chairman, Audit
Committee Vice-Chairman
and Trustee
Pauline Trigere $ 4,111 $ 8,703 $ 52,100
Trustee
Clayton K. Yeutter $ 4,111 $ 8,703 $ 52,100
Trustee
<FN>
______________________
1 For the 1995 calendar year.
</TABLE>
- Major Shareholders. As of March 29, 1996, no person owned of
record or was known by the Fund to own beneficially 5% or more of the
Fund's outstanding shares.
The Manager and Its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled by
Massachusetts Mutual Life Insurance Company. OAC is also owned in part
by certain of the Manager's directors and officers, some of whom also
serve as officers of the Fund, and one of whom (Mr. Spiro) serves as
Director 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. 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 composition of proxy materials and registration
statements for continuous public sale of shares of the Fund.
Expenses not expressly assumed by the Manager under the advisory
agreement or by the Distributor under the General Distributor's Agreement
are paid by the Fund. The advisory agreement lists examples of expenses
paid by the Fund. The major categories relate to interest, taxes, fees
to certain Directors, legal and audit expenses, custodian and transfer
agent expenses, share issuance costs, certain printing and registration
costs and non-recurring expenses, including litigation costs.
Under the advisory agreement, the Manager guarantees that the total
expenses of the Fund in any calendar year, exclusive of taxes, interest
and any brokerage fees, shall not exceed, and the Manager undertakes to
pay or refund to the Fund any amount by which such expenses shall exceed,
the lesser of (a) 1% of the average annual net assets of the Fund, or (b)
25% of the total annual investment income of the Fund. The payment of the
management fee at the end of any month will be reduced so that at no time
will there be any accrued but unpaid liability under this expense
limitation. During the fiscal years ended December 31, 1993, 1994 and
1995 the Fund paid management fees of $2,901,415, $3,540,849 and
$3,759,621, respectively, to the Manager pursuant to the advisory
agreement.
The advisory agreement provides that the Manager is not liable for
any loss sustained by reason of the adoption of any investment policy or
the purchase, sale or retention of any security on its recommendation,
whether or not such recommendation shall have been based on its own
investigation and research or upon investigation and research by any other
individual, firm or corporation, if such recommendation was made, and such
other individual, firm or corporation was selected with due care and in
good faith. However, the Manager is not excused from liability for 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 advisory agreement permits the Manager to act
as investment adviser for any other person, firm or corporation and to use
the name "Oppenheimer" in connection with other investment companies for
which it may act as investment adviser or general distributor. If the
Manager shall no longer act as investment adviser to the Fund, the right
of the Fund to use the name "Oppenheimer" as part of its name may be
withdrawn.
- The Distributor. Under its General Distributor's Agreement with
the Fund, the Distributor acts as the Fund's principal underwriter in the
continuous public offering of the Fund's 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.
- 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.
- Portfolio Transactions. Portfolio decisions are based upon
recommendations and judgment of the Manager subject to the overall
authority of the Board of Directors. As most purchases made by the Fund
are principal transactions at net prices, the Fund incurs little or no
brokerage costs. The Fund deals directly with the selling or purchasing
principal or market maker without incurring charges for the services of
a broker on its behalf unless it is determined that a better price or
execution may be obtained by using the services of a broker. Purchases
of portfolio securities from underwriters include a commission or
concession paid by the issuer to the underwriter, and purchases from
dealers include a spread between the bid and asked prices.
The Fund seeks to obtain prompt execution of orders at the most
favorable net price. If dealers are used for portfolio transactions,
transactions may be directed to dealers for their execution and research
services. The research services provided by a particular broker may be
useful only to one or more of the advisory accounts of the Manager and its
affiliates, and investment research received for the commissions of those
other accounts may be useful both to the Fund and one or more of such
other accounts. Such research, which may be supplied by a third party at
the instance of a broker, includes information and analyses on particular
companies and industries as well as market or economic trends and
portfolio strategy, receipt of market quotations for portfolio
evaluations, information systems, computer hardware and similar products
and services. If a research service also assists the Manager in a non-
research capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to the
Manager in the investment decision-making process may be paid in
commission dollars.
The 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.
Sales of shares of the Fund and/or the other investment companies
managed by the Manager or distributed by the Distributor may, subject to
applicable rules covering the Distributor's activities in this area, also
be considered as a factor in the direction of transactions to dealers, but
only in conformity with the price, execution and other considerations and
practices discussed above. Those other investment companies may also give
similar consideration relating to the sale of the Fund's shares. No
portfolio transactions will be handled by any securities dealer affiliated
with the Manager. The Fund's policy of investing in short-term debt
securities with maturity of less than one year results in high portfolio
turnover. However, since brokerage commissions, if any, are small, high
turnover does not have an appreciable adverse effect upon the income of
the Fund.
Performance of the Fund
- Yield. The Fund's current yield is determined in accordance with
regulations adopted under the Investment Company Act. Yield is calculated
for a seven-day period of time as follows. First, a base period return
is calculated for the seven-day period by determining the net change in
the value of a hypothetical pre-existing account having one share at the
beginning of the seven-day period. The change includes dividends declared
on the original share and dividends declared on any shares purchased with
dividends on that share, but such dividends are adjusted to exclude any
realized or unrealized capital gains or losses affecting the dividends
declared. Next, the base period return is multiplied by 365/7 to obtain
the current yield to the nearest hundredth of one percent. The compounded
effective yield for a seven-day period is calculated by (a) adding 1 to
the base period return (obtained as described above), (b) raising the sum
to a power equal to 365 divided by 7, and (c) subtracting 1 from the
result. The Fund's "current yield" for the seven days ended December 31,
1995, was 5.09% and its "compounded effective yield" was 5.22%.
The yield as calculated above may vary for accounts less than
approximately $100 in value due to the effect of rounding off each daily
dividend to the nearest full cent. Since the calculation of yield under
either procedure described above does not take into consideration any
realized or unrealized gains or losses on the Fund's portfolio securities
which may affect dividends, the return on dividends declared during a
period may not be the same on an annualized basis as the yield for that
period.
- Other Performance Comparisons. Yield information may be useful to
investors in reviewing the Fund's performance. The Fund may make
comparisons between its yield and that of other investments, by citing
various indices such as The Bank Rate Monitor National Index (provided by
Bank Rate Monitor) which measures the average rate paid on bank money
market accounts, NOW accounts and certificates of deposits by the 100
largest banks and thrifts in the top ten metro areas. However, a number
of factors should be considered before using yield information as a basis
for comparison with other investments. An investment in the Fund is not
insured. Its yield is not guaranteed and normally will fluctuate on a
daily basis. The yield for any given past period is not an indication or
representation by the Fund of future yields or rates of return on its
shares. The Fund's yield is affected by portfolio quality, portfolio
maturity, type of instruments held and operating expenses. When comparing
the Fund's yield with that of other investments, investors should
understand that certain other investment alternatives such as certificates
of deposit, U.S. government securities, money market instruments or bank
accounts may provide fixed yields or may vary above a stated minimum, and
may be insured or guaranteed.
From time to time, the Fund may include in its advertisements and
sales literature performance information about the Fund cited in other
newspapers and periodicals, such as The New York Times, which may include
performance quotations from other sources.
From time to time, the Fund's Manager may publish rankings or ratings
of the Manager (or the 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 investor/shareholder services by third parties may compare the services
of the Oppenheimer funds to those of other mutual fund families selected
by the rating or ranking services and may be based on the opinions of the
rating or ranking service itself, based on its research or judgment, or
based on surveys of investors, brokers, shareholders or others.
About Your Account
How to Buy Shares
Determination of Net Asset Value Per Share. The net asset value per
share of the Fund is 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 by the total number
of shares outstanding. The Exchange normally closes at 4:00 P.M., New
York time, but may close earlier on some days (for example, in case of
weather emergencies or on days falling before a holiday). The Exchange's
most recent annual announcement (which is subject to change) states that
it will close on New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. It
may also close on other days.
The Fund will seek to maintain a net asset value of $1.00 per share
for purchases and redemptions. There can be no assurance that it will do
so. Under Rule 2a-7, the Fund may use the amortized cost method of
valuing its shares. Under the amortized cost method, a security is valued
initially at its cost and its valuation assumes a constant amortization
of any premium or accretion of
a discount, regardless of the impact of fluctuating interest rates on the
market value of the security. The method does not take into account
unrealized capital gains or losses.
The Fund's Board of Directors has established procedures intended to
stabilize the Fund's net asset value at $1.00 per share. If the Fund's
net asset value per share were to deviate from $1.00 by more than 0.5%,
Rule 2a-7 requires the Board promptly to consider what action, if any,
should be taken. If the Directors find that the extent of any such
deviation may result in material dilution or other unfair effects on
shareholders, the Board will take whatever steps it considers appropriate
to eliminate or reduce such dilution or unfair effects, including, without
limitation, selling portfolio securities prior to maturity, shortening the
average portfolio maturity, withholding or reducing dividends, reducing
the outstanding number of Fund shares without monetary consideration, or
calculating net asset value per share by using available market
quotations.
As long as it uses Rule 2a-7, the Fund must abide by certain
conditions described in the prospectus. Some of those conditions relate
to portfolio management and require the Fund to: (i) maintain a dollar-
weighted average portfolio maturity not in excess of 90 days; (ii) limit
its investments, including repurchase agreements, to those instruments
which are denominated in U.S. dollars, and which are rated in one of the
two highest short-term rating categories by at least two "nationally-
recognized statistical rating organizations" ("NRSROs"), as defined in
Rule 2a-7, or by only one NRSRO if only one NRSRO has rated the security;
an instrument that is not rated must be of comparable quality as
determined by the Board; and (iii) not purchase any instruments with a
remaining maturity of more than 397 days. Under Rule 2a-7, the maturity
of an instrument is generally considered to be its stated maturity (or in
the case of an instrument called for redemption, the date on which the
redemption payment must be made), with special exceptions for certain
variable rate demand and floating rate instruments. Repurchase agreements
and securities loan agreements are, in general, treated as having a
maturity equal to the period scheduled until repurchase or return, or if
subject to demand, equal to the notice period.
While the amortized cost method provides certainty in valuation,
there may be periods during which the value of an instrument as determined
by the amortized cost method is higher or lower than the price the Fund
would receive if it sold the instrument. During periods of declining
interest rates, the daily yield on shares of the Fund may tend to be lower
(and net investment income and daily dividends higher) than a like
computation made by a fund with identical investments utilizing a method
of valuation based upon market prices or estimates of market prices for
its portfolio. Thus, if the use of amortized cost by the Fund resulted
in a lower aggregate portfolio value on a particular day, a prospective
investor in the Fund would be able to obtain a somewhat higher yield than
would result from investment in a fund utilizing only market values, and
existing shareholders in the Fund would receive less investment income
than if the Fund were priced at market value. Conversely, during periods
of rising interest rates, the daily yield on Fund shares will tend to be
higher and its aggregate value lower than that of a portfolio priced at
market value. A prospective investor would receive a lower yield than
from an investment in a portfolio priced at market value, while existing
investors in the Fund would receive more investment income than if the
Fund were priced at market value.
AccountLink. When shares are purchased through AccountLink, each purchase
must be at least $25.00. Shares will be purchased on the regular business
day the Distributor is instructed to initiate the Automated Clearing House
transfer to buy shares. Dividends will begin to accrue on shares
purchased by the proceeds of ACH transfers on the business day the Fund
receives Federal Funds for the purchase through the ACH system before the
close of The New York Stock Exchange. The Exchange normally closes at
4:00 P.M., but may close earlier on certain days. If Federal Funds are
received on a business day after the close of the Exchange, the shares
will be purchased and dividends will begin to accrue on the next regular
business day. The proceeds of ACH transfers are normally received by the
Fund 3 days after the transfers are initiated. The Distributor and the
Fund are not responsible for any delays in purchasing shares resulting
from delays in ACH transmissions.
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 the Fund 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. 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.
- The Oppenheimer Funds. The Oppenheimer funds are those mutual
funds for which the Distributor acts as the distributor or the sub-
Distributor and include the following:
Oppenheimer Tax-Free Bond Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Fund
Oppenheimer Insured Tax-Exempt Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion Income Fund
Oppenheimer Bond Fund
Oppenheimer International 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 Strategic Income Fund
Oppenheimer Bond Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Enterprise Fund
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Global Value Fund, Inc.
Rochester Fund Municipals*
Rochester Fund Series - The Bond Fund for Growth*
Rochester Portfolio Series - Limited-Term New York Municipal
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.
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.
- Checkwriting. When a check is presented to the Bank for clearance,
the Bank will ask the Fund to redeem a sufficient number of full and
fractional shares in the shareholder's account to cover the amount of the
check. This enables the shareholder to continue receiving dividends on
those shares until the check is presented to the Fund. Checks may not be
presented for payment at the offices of the Bank or the Fund's Custodian.
This limitation does not affect the use of checks for the payment of bills
or to obtain cash at other banks. The Fund reserves the right to amend,
suspend or discontinue offering checkwriting privileges at any time
without prior notice.
- Selling Shares by Wire. The wire of redemptions proceeds may be
delayed if the 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.
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 "Director,
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) in OppenheimerFunds-
sponsored pension or profit-sharing plans may not directly request
redemption of their accounts. 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 Director and
the Transfer Agent assume no responsibility to determine whether a
distribution satisfies the conditions of applicable tax laws and will not
be responsible for any tax penalties assessed in connection with a
distribution.
Special Arrangements for Repurchase of Shares from Dealers and Brokers.
The Distributor is the Fund's agent to repurchase its shares from
authorized dealers or brokers. The repurchase price per share will be the
net asset value next computed after the Distributor receives the order
placed by the dealer or broker, except that if the Distributor receives
a repurchase order from a dealer or broker after the close of The New York
Stock Exchange on a regular business day, it will be processed at that
day's net asset value if the order was received by the dealer or broker
from its customers prior to the time the Exchange closes (normally, that
is 4:00 P.M., but may be earlier on some days) and if the order was
transmitted to and received by the Distributor prior to its close of
business that day (normally 5:00 P.M.). Ordinarily, for accounts redeemed
by a broker-dealer under this procedure, payment will be made within three
business days after the shares have been redeemed upon the Distributor's
receipt of the required redemption documents in proper form, with the
signature(s) of the registered owner(s) 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.
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such plans,
as stated below and in the provisions of the OppenheimerFunds Application
relating to such Plans, as well as the Prospectus. These provisions may
be amended from time to time by the Fund and/or the Distributor. When
adopted, such amendments will automatically apply to existing Plans.
- Automatic Exchange Plans. Shareholders can authorize the Transfer
Agent (on the OppenheimerFunds Application or signature-guaranteed
instructions) to exchange a pre-determined amount of shares of the Fund
for shares (of the same class) of other Oppenheimer funds automatically
on a monthly, quarterly, semi-annual or annual basis under an Automatic
Exchange Plan. The minimum amount that may be exchanged to each other
fund account is $25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "How to Exchange
Shares" in the Prospectus and below in this Statement of Additional
Information.
- Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a sales
charge will be redeemed first and shares acquired with reinvested
dividends and capital gains distributions will be redeemed next, followed
by shares acquired with a sales charge, to the extent necessary to make
withdrawal payments. Depending upon the amount withdrawn, the investor's
principal may be depleted. Payments made under withdrawal plans should
not be considered as a yield or income on your investment.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the "Planholder")
who executed the Plan authorization and application submitted to the
Transfer Agent. The Transfer Agent and the Fund shall incur no liability
to the Planholder for any action taken or omitted by the Transfer Agent
in good faith to administer the Plan. Certificates will not be issued for
shares of the Fund purchased for and held under the Plan, but the Transfer
Agent will credit all such shares to the account of the Planholder on the
records of the Fund. Any share certificates held by a Planholder may be
surrendered unendorsed to the Transfer Agent with the Plan application so
that the shares represented by the certificate may be held under the Plan.
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. All of the
other Oppenheimer funds offer Class A, B and C shares except Centennial
Money Market Trust, Centennial Tax Exempt Trust, Centennial Government
Trust, Centennial New York Tax Exempt Trust, Centennial America Fund, L.P.
and Daily Cash Accumulation Fund, Inc., which only offers Class A shares,
and Oppenheimer Main Street California Tax-Exempt Fund, which only offers
Class A and Class B shares. A list of funds showing which funds offer
which classes may be obtained by calling the Distributor at 1-800-525-
7048.
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 (other than
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.
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. No contingent deferred
sales charge is imposed on exchanges of shares of any class purchased
subject to a contingent deferred sales charge. However, when Class A
shares acquired by exchange of Class A shares of other Oppenheimer funds
purchased subject to a Class A contingent deferred sales charge are
redeemed within 18 months of the end of the calendar month of the initial
purchase of the exchanged Class A shares, the Class A contingent deferred
sales charge is imposed on the redeemed shares.
The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of 10 or more accounts. The
Fund may accept requests for exchanges of up to 50 accounts per day from
representatives of authorized dealers that qualify for this privilege. In
connection with any exchange request, the number of shares exchanged may
be less than the number requested if the exchange or the number requested
would include shares subject to a restriction cited in the Prospectus or
this Statement of Additional Information or would include shares covered
by a share certificate that is not tendered with the request. In those
cases, only the shares available for exchange without restriction will be
exchanged.
When exchanging shares by telephone, a shareholder must either have
an existing account in, or obtain and acknowledge receipt of a prospectus
of, the fund to which the exchange is to be made. For full or partial
exchanges of an account made by telephone, any special account features
such as Asset Builder Plans, Automatic Withdrawal Plans and retirement
plan contributions will be switched to the new account unless the Transfer
Agent is instructed otherwise. If all telephone lines are busy (which
might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by
telephone and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the
"Redemption Date"). Normally, shares of the fund to be acquired are
purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The
Fund reserves the right, in its discretion, to refuse any exchange request
that may disadvantage it (for example, if the receipt of multiple exchange
requests from a dealer might require the disposition of portfolio
securities at a time or at a price that might be disadvantageous to the
Fund).
The different Oppenheimer funds available for exchange have different
investment objectives, policies and risks, and a shareholder should assure
that the Fund selected is appropriate for his or her investment and should
be aware of the tax consequences of an exchange. For Federal income tax
purposes, an exchange transaction is treated as a redemption of shares of
one fund and a purchase of shares of another. "Reinvestment Privilege,"
above, discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and the
Transfer Agent are unable to provide investment, tax or legal advice to
a shareholder in connection with an exchange request or any other
investment transaction.
Dividends and Taxes
Tax Status of the Fund's Dividends and Distributions. The Federal tax
treatment of the Fund's dividends and capital gains distributions is
explained in the Prospectus under the caption "Dividends and Taxes."
Under the Internal Revenue Code, by December 31 each year, the Fund must
distribute 98% of its taxable investment income earned from January 1
through December 31 of that year and 98% of its capital gains realized in
the period from November 1 of the prior year through October 31 of the
current year, or else the Fund must pay an excise tax on the amounts not
distributed. While it is presently anticipated that the Fund will meet
those requirements, the Fund's Board of Directors and the Manager might
determine in a particular year that it would be in the best interest of
shareholders for the Fund not to make such distributions at the required
levels and to pay the excise tax on the undistributed amounts. That would
reduce the amount of income or capital gains available for distribution
to shareholders.
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 the Fund as
promptly as possible after the return of such checks to the Transfer
Agent, in order to enable the investor to earn a return on otherwise idle
funds.
Dividend Reinvestment in Another Fund. Shareholders of the Fund may
elect to reinvest all dividends and/or capital gains distributions in
shares of the same class of any of the other Oppenheimer funds listed
above under "How to Exchange Shares," at net asset value without sales
charge. To elect this option, a shareholder must notify the Transfer
Agent in writing and must either have an existing account in the fund
selected for reinvestment or must obtain a prospectus for that fund and
an application from the Distributor to establish an account. The
investment will be made at the net asset value per share in effect at the
close of business on the payable date of the dividend or distribution.
Dividends and/or distributions from shares of other Oppenheimer funds may
be invested in shares of this Fund on the same basis.
Additional Information About the Fund
The Custodian. Citibank, N.A. is the Custodian of the Fund's assets. The
Custodian's responsibilities include safeguarding and controlling the
Fund's portfolio securities and handling the delivery of such securities
to and from the Fund. The Manager has represented to the Fund that the
Manager's 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. The Fund's cash
balances with the Custodian in excess of $100,000 are not protected by
Federal deposit insurance. Those uninsured balances at times may be
substantial.
Independent Auditors. The independent auditors of the Fund audit the
Fund's financial statements and perform other related audit services.
They also act as auditors for certain other funds advised by the Manager
and its affiliates.
<PAGE>
INDEPENDENT AUDITORS' REPORT
==========================================================
======================
The Board of Directors and Shareholders of Oppenheimer Money Market Fund, Inc.:
We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer Money Market Fund, Inc. as of December 31, 1995, and
the related statement of operations for the year then ended, the statements of
changes in net assets for each of the years in the two-year period then ended
and the financial highlights for each of the years in the ten-year period then
ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian. 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 Money Market Fund, Inc. as of December 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the financial highlights for
each of the years in the ten-year period then ended, in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Denver, Colorado
January 22, 1996
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS December 31, 1995
FACE VALUE
AMOUNT SEE NOTE 1
<S> <C> <C> <C>
==========================================================
==========================================================
========
BANKERS' ACCEPTANCES - 0.6%
- ----------------------------------------------------------------------------------------------------------------------------
CoreStates Bank, N.A., 5.63%, 1/19/96 (Cost $5,076,317) $ 5,090,647 $ 5,076,317
==========================================================
==========================================================
========
CERTIFICATES OF DEPOSIT - 2.4%
- ----------------------------------------------------------------------------------------------------------------------------
DOMESTIC CERTIFICATES OF DEPOSIT - 0.6%
- ----------------------------------------------------------------------------------------------------------------------------
LaSalle National Bank, 5.40%, 7/5/96 5,000,000 5,000,000
- ----------------------------------------------------------------------------------------------------------------------------
YANKEE CERTIFICATES OF DEPOSIT - 1.8%
- ----------------------------------------------------------------------------------------------------------------------------
Sanwa Bank Ltd., 5.67%, 1/10/96 5,000,000 4,999,881
-----------------------------------------------------------------------------------------------------------------
Societe Generale, 5.86%, 1/22/96 10,000,000 10,000,000
----------------
14,999,881
----------------
Total Certificates of Deposit (Cost $19,999,881) 19,999,881
==========================================================
==========================================================
========
DIRECT BANK OBLIGATIONS - 13.0%
- ----------------------------------------------------------------------------------------------------------------------------
Abbey National North America Corp., 5.69%, 2/1/96 5,000,000 4,975,501
-----------------------------------------------------------------------------------------------------------------
ABN Amro North America Finance, Inc.:
5.45%, 1/12/96 12,000,000 11,980,016
5.55%, 4/29/96 5,000,000 4,908,271
5.61%, 4/25/96 5,000,000 4,910,396
5.71%, 1/24/96 5,000,000 4,981,760
-----------------------------------------------------------------------------------------------------------------
Colorado National Bank of Denver, 5.918%, 4/17/96(1) 5,000,000 4,999,704
-----------------------------------------------------------------------------------------------------------------
FCC National Bank, 5.85%, 3/4/96(1) 4,000,000 4,001,351
-----------------------------------------------------------------------------------------------------------------
First National Bank of Boston:
5.53%, 5/20/96 5,000,000 5,000,000
5.77%, 1/16/96 5,000,000 5,000,000
5.78%, 1/4/96 5,000,000 5,000,000
5.88%, 10/30/96 5,000,000 5,000,000
5.75%, 5/31/96(1) 5,000,000 5,000,000
-----------------------------------------------------------------------------------------------------------------
Huntington National Bank, 6.15%, 3/4/96(1) 5,000,000 5,002,313
-----------------------------------------------------------------------------------------------------------------
National Westminster Bank of Canada:
5.65%, 1/26/96 5,000,000 4,980,382
5.70%, 2/2/96 5,000,000 4,974,667
-----------------------------------------------------------------------------------------------------------------
NationsBank of Texas, 5.50%, 6/28/96 5,000,000 5,000,000
-----------------------------------------------------------------------------------------------------------------
Shawmut Bank of Connecticut, N.A.:
5.68%, 6/24/96(1) 5,000,000 4,999,825
5.75%, 6/10/96(1) 5,000,000 4,999,281
5.75%, 6/17/96(1) 5,000,000 5,000,000
5.895%, 5/10/96(1) 5,000,000 5,000,000
----------------
Total Direct Bank Obligations (Cost $105,713,467) 105,713,467
==========================================================
==========================================================
========
LETTERS OF CREDIT - 4.2%
- ----------------------------------------------------------------------------------------------------------------------------
Barclays Bank PLC, guaranteeing commercial paper of:
Banco Real, S.A.-Grand Cayman Branch, 5.63%, 4/18/96 5,000,000 4,915,550
Petroleo Brasileiro, S.A.-Petrobras, 5.40%, 6/7/96 10,000,000 9,763,000
Petroleo Brasileiro, S.A.-Petrobras, 5.52%, 5/20/96 5,000,000 4,892,667
-----------------------------------------------------------------------------------------------------------------
Credit Suisse, guaranteeing commercial paper of:
Daewoo International Corp., 5.70%, 2/20/96 10,000,000 9,920,833
Queensland Alumina Limited, 5.67%, 2/16/96 5,000,000 4,963,775
----------------
Total Letters of Credit (Cost $34,455,825) 34,455,825
</TABLE>
5 Oppenheimer Money Market Fund, Inc.
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (Continued)
FACE VALUE
AMOUNT SEE NOTE 1
<S> <C> <C> <C>
==========================================================
==========================================================
========
SHORT-TERM NOTES - 72.3%
- ----------------------------------------------------------------------------------------------------------------------------
BANKS - 6.0%
-----------------------------------------------------------------------------------------------------------------
Barnett Banks, Inc., 6.10%, 1/5/96 5,000,000 4,996,611
-----------------------------------------------------------------------------------------------------------------
Chemical Banking Corp.:
5.22%, 6/27/96 10,000,000 9,735,472
5.70%, 1/19/96 15,000,000 14,957,250
-----------------------------------------------------------------------------------------------------------------
CoreStates Capital Corp.:
5.64%, 1/22/96 5,000,000 4,983,550
5.71%, 2/15/96 5,000,000 4,964,312
5.72%, 1/17/96 5,000,000 4,987,289
6.10%, 5/15/96(1) 4,250,000 4,256,864
----------------
48,881,348
- ----------------------------------------------------------------------------------------------------------------------------
BEVERAGES - 0.6%
-----------------------------------------------------------------------------------------------------------------
Coca-Cola Enterprises, Inc., 5.67%-5.68%, 2/20/96(2) 5,000,000 4,960,555
- ----------------------------------------------------------------------------------------------------------------------------
BROKER/DEALERS - 11.8%
-----------------------------------------------------------------------------------------------------------------
CS First Boston, Inc., 5.70%, 1/26/96 5,000,000 4,980,208
-----------------------------------------------------------------------------------------------------------------
Dean Witter, Discover & Co., 5.895%, 11/15/96(1) 10,000,000 10,015,178
-----------------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., 6.25%, 1/2/96 20,000,000 19,996,528
-----------------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc.:
5.65%, 3/29/96 5,000,000 4,930,944
5.68%-5.70%, 2/29/96 10,000,000 9,906,747
5.70%-5.72%, 1/31/96 10,000,000 9,952,500
6.02%, 9/19/96(1) 5,000,000 5,000,000
-----------------------------------------------------------------------------------------------------------------
Morgan Stanley Group, Inc., 5.53%, 9/30/96(1) 31,800,000 31,800,000
----------------
96,582,105
- ----------------------------------------------------------------------------------------------------------------------------
COMMERCIAL FINANCE - 12.3%
-----------------------------------------------------------------------------------------------------------------
CIT Group Holdings, Inc.:
5.55%, 11/18/96(1) 5,000,000 4,995,625
5.70%, 3/1/96 5,000,000 4,952,500
5.95%, 1/12/96(1) 5,000,000 4,999,955
6.027%, 1/10/96(3) 10,000,000 10,000,000
-----------------------------------------------------------------------------------------------------------------
FINOVA Capital Corp.:
5.72%-5.97%, 1/31/96 5,000,000 4,976,167
5.85%-5.90%, 1/30/96 5,000,000 4,976,236
5.87%, 4/26/96(1) 5,000,000 5,000,000
5.90%, 1/29/96 5,000,000 4,977,056
5.90%, 2/5/96 5,000,000 4,971,319
6.40%, 1/3/96 10,700,000 10,696,195
-----------------------------------------------------------------------------------------------------------------
Heller Financial, Inc.:
5.52%, 3/12/96 5,000,000 4,945,567
5.75%, 10/7/96(1) 5,000,000 5,000,000
5.75%, 4/5/96 5,000,000 4,924,132
5.78%, 1/31/96 5,000,000 4,975,917
5.78%, 2/28/96 5,000,000 4,953,439
5.80%, 4/29/96 5,000,000 4,904,139
5.957%, 8/28/96(1) 10,000,000 10,000,000
----------------
100,248,247
</TABLE>
6 Oppenheimer Money Market Fund, Inc.
<PAGE>
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT SEE NOTE 1
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
CONGLOMERATES - 4.9%
-----------------------------------------------------------------------------------------------------------------
Mitsubishi International Corp.:
5.41%, 6/18/96(2) 2,700,000 2,631,428
5.58%, 3/15/96 5,000,000 4,942,650
5.76%, 1/23/96 5,540,000 5,520,499
5.76%, 1/24/96 13,100,000 13,051,750
5.76%, 1/25/96 5,000,000 4,980,783
5.78%, 1/31/96 5,000,000 4,975,917
-----------------------------------------------------------------------------------------------------------------
Pacific Dunlop Holdings, Inc., guaranteed by Pacific
Dunlop Ltd., 5.70%, 2/29/96(2) 3,952,000 3,915,082
----------------
40,018,109
- ----------------------------------------------------------------------------------------------------------------------------
CONSUMER FINANCE - 2.7%
-----------------------------------------------------------------------------------------------------------------
Beneficial Corp., 5.26%, 2/1/96(1) 5,000,000 5,000,000
-----------------------------------------------------------------------------------------------------------------
Island Finance Puerto Rico, Inc.:
5.67%, 2/22/96 5,000,000 4,958,111
5.71%, 2/29/96 12,200,000 12,085,832
----------------
22,043,943
- ----------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 6.0%
-----------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 5.67%, 2/21/96 10,000,000 9,919,675
-----------------------------------------------------------------------------------------------------------------
General Electric Capital Corp., 5.46%, 5/7/96 15,000,000 14,710,017
-----------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp.:
5.47%, 8/19/96(1) 5,000,000 4,999,819
5.50%, 5/13/96(1) 5,000,000 5,001,429
6.05%, 1/2/96 10,000,000 9,998,319
-----------------------------------------------------------------------------------------------------------------
Toyota Motor Credit Corp., 5.20%, 1/12/96(1) 4,360,000 4,359,083
----------------
48,988,342
- ----------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES - 1.0%
-----------------------------------------------------------------------------------------------------------------
Central & Southwest Corp., 5.71%, 2/16/96 8,000,000 7,941,682
- ----------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 1.8%
-----------------------------------------------------------------------------------------------------------------
Xerox Corp., 5.72%, 1/11/96 15,000,000 14,976,167
- ----------------------------------------------------------------------------------------------------------------------------
ELECTRONICS - 0.6%
-----------------------------------------------------------------------------------------------------------------
Mitsubishi Electric Finance America, Inc., 5.32%, 6/19/96 5,000,000 4,874,389
- ----------------------------------------------------------------------------------------------------------------------------
ENVIRONMENTAL - 1.0%
-----------------------------------------------------------------------------------------------------------------
WMX Technologies, Inc., 5.32%, 9/10/96(2) 8,000,000 7,700,898
- ----------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 3.5%
-----------------------------------------------------------------------------------------------------------------
A.H. Robins Co., Inc., guaranteed by American Home
Products, 5.71%, 2/7/96(2) 5,000,000 4,970,657
-----------------------------------------------------------------------------------------------------------------
American Home Food Products, Inc., guaranteed by
American Home Products:
5.72%, 1/29/96(2) 13,600,000 13,539,495
5.72%, 1/30/96(2) 5,500,000 5,474,657
-----------------------------------------------------------------------------------------------------------------
American Home Products, 5.72%, 1/30/96(2) 5,000,000 4,976,961
----------------
28,961,770
- ----------------------------------------------------------------------------------------------------------------------------
INSURANCE - 3.3%
-----------------------------------------------------------------------------------------------------------------
General American Life Insurance Co., 6%, 1/6/96(2)(3) 20,000,000 20,000,000
-----------------------------------------------------------------------------------------------------------------
TransAmerica Life Insurance & Annuity Co., 5.95%,
1/6/1996(2)(3) 7,000,000 7,000,000
----------------
27,000,000
- ----------------------------------------------------------------------------------------------------------------------------
LEASING & FACTORING - 0.6%
-----------------------------------------------------------------------------------------------------------------
International Lease Finance Corp., 5.70%, 1/19/96 5,000,000 4,985,750
- ----------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 2.4%
-----------------------------------------------------------------------------------------------------------------
Hanson Finance (UK) PLC, guaranteed by Hanson PLC:
5.70%, 2/5/96 5,000,000 4,972,292
5.71%, 1/24/96 15,000,000 14,945,279
----------------
19,917,571
</TABLE>
7 Oppenheimer Money Market Fund, Inc.
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (Continued)
FACE VALUE
AMOUNT SEE NOTE 1
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
NONDURABLE HOUSEHOLD GOODS - 0.6%
-----------------------------------------------------------------------------------------------------------------
Colgate-Palmolive Co., 5.37%, 6/24/96(2) 5,000,000 4,869,358
- ----------------------------------------------------------------------------------------------------------------------------
SAVINGS & LOANS - 4.6%
-----------------------------------------------------------------------------------------------------------------
Great Western Bank FSB:
5.70%, 2/5/96 5,000,000 4,972,292
5.72%-5.74%, 1/22/96 7,500,000 7,474,800
5.72%-5.75%, 1/29/96 5,500,000 5,475,531
5.74%, 1/25/96 5,000,000 4,980,867
5.74%, 1/26/96 10,000,000 9,960,139
-----------------------------------------------------------------------------------------------------------------
Household Bank FSB, 5.89%, 9/27/96(1) 5,000,000 4,999,566
----------------
37,863,195
- ----------------------------------------------------------------------------------------------------------------------------
SPECIAL PURPOSE FINANCIAL - 5.4%
-----------------------------------------------------------------------------------------------------------------
Cooperative Association of Tractor Dealers, Inc.:
5.64%, 1/16/96 5,100,000 5,088,015
5.67%, 3/27/96 8,200,000 8,088,833
5.67%, 3/8/96 5,200,000 5,145,127
5.70%, 4/5/96 3,100,000 3,053,371
5.75%, 2/2/96 2,000,000 1,989,778
-----------------------------------------------------------------------------------------------------------------
Madison Funding Corp.:
5.70%, 1/22/96 16,000,000 15,943,253
5.77%-5.95%, 1/10/96 5,000,000 4,992,787
----------------
44,301,164
- ----------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAILING - 2.0%
-----------------------------------------------------------------------------------------------------------------
St. Michael Finance, Ltd., guaranteed by Marks & Spencer PLC:
5.63%, 1/31/96 10,150,000 10,102,380
5.70%, 2/12/96 6,000,000 5,960,100
----------------
16,062,480
- ----------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY - 1.2%
-----------------------------------------------------------------------------------------------------------------
NYNEX Corp.:
5.70%-5.73%, 2/12/96 5,000,000 4,966,750
5.74%, 1/31/96 5,000,000 4,976,083
----------------
9,942,833
----------------
Total Short-Term Notes (Cost $591,119,906) 591,119,906
==========================================================
==========================================================
========
U.S. GOVERNMENT OBLIGATIONS - 4.0%
- ----------------------------------------------------------------------------------------------------------------------------
Export-Import Bank:
6.32%, 1/2/96(1)(2) 629,358 632,592
6.32%, 1/2/96(1)(2) 514,554 517,198
-----------------------------------------------------------------------------------------------------------------
Small Business Administration, 10.38%, 1/2/96(3) 509,934 550,840
-----------------------------------------------------------------------------------------------------------------
Student Loan Marketing Assn., guaranteeing commercial
paper of:
New Hampshire Higher Education Loan Corp.,
Commercial Paper Nts.:
Series 1995A, 5.72%, 1/12/96 4,411,000 4,403,291
Series 1995A, 6%, 1/5/96 2,203,000 2,201,531
Secondary Market Services, Inc., Education Loan
Revenue Nts.:
Series-1995A, 5.72%-5.75%, 1/12/96 13,166,000 13,142,934
Series-1995A, 5.77%, 1/19/96 11,156,000 11,124,038
----------------
Total U.S. Government Obligations (Cost $32,572,424) 32,572,424
</TABLE>
8 Oppenheimer Money Market Fund, Inc.
<PAGE>
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT SEE NOTE 1
<S> <C> <C> <C>
==========================================================
==========================================================
========
FOREIGN GOVERNMENT OBLIGATIONS - 3.0%
- ----------------------------------------------------------------------------------------------------------------------------
New South Wales Treasury Corp., guaranteed by the
State of New South Wales, Commonwealth of Australia,
5.45%, 1/11/96 3,000,000 2,995,458
-----------------------------------------------------------------------------------------------------------------
Swedish Export Credit Corp., supported by Kingdom of
Sweden, 5.68%, 1/16/96 5,000,000 4,988,167
-----------------------------------------------------------------------------------------------------------------
Westdeutsche Landesbank Girozentrale supported by
Federal Republic of Germany, guaranteeing commercial
paper of:
Unibanco-Unaio de Brancos Brasileiros S.A.-Grand Cayman:
5.58%, 4/4/96 5,000,000 4,927,150
5.66%, 4/12/96 7,000,000 6,887,743
5.66%, 4/15/96 5,000,000 4,849,067
----------------
Total Foreign Government Obligations (Cost $24,647,585) 24,647,585
==========================================================
==========================================================
========
REPURCHASE AGREEMENT - 0.5%
- ----------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with PaineWebber, Inc., 5.93%, dated 12/29/95, to
be repurchased at $4,052,689 on 1/2/96, collateralized by Government
National Mortgage Assn. Participation Nts., 7%-8%, 8/15/23-11/15/25,
with a value of $2,787,252, and Federal National Mortgage Assn.
Participation Nts., 7.50%, 3/1/24, with a value of $1,627,820
(Cost $4,050,000) 4,050,000 4,050,000
-----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE 100.0% 817,635,405
-----------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 0.0 292,305
-------------- ------------------
NET ASSETS 100.0% $817,927,710
==============
==================
<FN>
Short-term notes, bankers' acceptances, direct bank obligations and
letters of credit are generally traded on a discount basis; the
interest rate is the discount rate received by the Fund at the time of
purchase. Other securities normally bear interest at the rates shown.
1. Variable rate security. The interest rate, which is based on
specific, or an index of, market interest rates, is subject to change
periodically and is the effective rate on December 31, 1995.
2. Security issued in an exempt transaction, without registration
under the Securities Act of 1933 (the Act). The securities are carried
at amortized cost, and amount to $81,188,881, or 9.93% of the Fund's
net assets. Pursuant to guidelines adopted by the Board of Directors,
these securities are determined to be liquid.
3. Floating or variable rate obligation maturing in more than one
year. The interest rate, which is based on specific, or an index of,
market interest rates, is subject to change periodically and is the
effective rate on December 31, 1995. This instrument may also have a
demand feature which allows the recovery of principal at any time, or
at specified intervals not exceeding one year, on up to 30 days'
notice. Maturity date shown represents effective maturity based on
variable rate and, if applicable, demand feature.
See accompanying Notes to Financial Statements.
</FN>
</TABLE>
9 Oppenheimer Money Market Fund, Inc.
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES December 31, 1995
<S> <C> <C>
==========================================================
==========================================================
====
ASSETS Investments, at value - see accompanying statement $817,635,405
--------------------------------------------------------------------------------------------------
Cash 5,464,842
--------------------------------------------------------------------------------------------------
Receivables:
Shares of capital stock sold 33,414,520
Interest and principal paydowns 1,662,363
--------------------------------------------------------------------------------------------------
Other 115,521
-------------
Total assets 858,292,651
==========================================================
==========================================================
====
LIABILITIES Payables and other liabilities:
Shares of capital stock redeemed 39,723,859
Directors' fees 179,410
Shareholder reports 174,782
Dividends 177,437
Transfer and shareholder servicing agent fees 87,307
Other 22,146
-------------
Total liabilities 40,364,941
==========================================================
==========================================================
====
NET ASSETS $817,927,710
-------------
-------------
==========================================================
==========================================================
====
COMPOSITION OF Par value of shares of capital stock $ 81,793,720
NET ASSETS -------------------------------------------------------------------------------------------------
Additional paid-in capital 736,143,480
--------------------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (9,490)
-------------
Net assets - applicable to 817,937,200 shares of capital
stock outstanding $817,927,710
-------------
-------------
==========================================================
==========================================================
====
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE
$1.00
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Money Market Fund, Inc.
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS For the Year Ended December 31, 1995
<S> <C> <C>
==========================================================
==========================================================
====
INVESTMENT INCOME Interest $52,074,805
EXPENSES Management fees - Note 3 3,759,621
--------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees - Note 3 2,965,169
--------------------------------------------------------------------------------------------------
Shareholder reports 524,397
--------------------------------------------------------------------------------------------------
Registration and filing fees 124,687
--------------------------------------------------------------------------------------------------
Directors' fees and expenses 86,647
--------------------------------------------------------------------------------------------------
Custodian fees and expenses 66,156
--------------------------------------------------------------------------------------------------
Legal and auditing fees 57,389
--------------------------------------------------------------------------------------------------
Insurance expenses 36,048
--------------------------------------------------------------------------------------------------
Other 83,910
-------------
Total expenses 7,704,024
==========================================================
==========================================================
====
NET INVESTMENT INCOME 44,370,781
==========================================================
==========================================================
====
NET REALIZED GAIN ON INVESTMENTS 639,389
==========================================================
==========================================================
====
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$45,010,170
------------
------------
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer Money Market Fund, Inc.
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31,
1995 1994
<S> <C> <C> <C>
==========================================================
==========================================================
=====
OPERATIONS Net investment income $ 44,370,781 $ 30,443,600
---------------------------------------------------------------------------------------------------
Net realized gain (loss) 639,389 (51,539)
--------------------------------
Net increase in net assets resulting
from operations 45,010,170 30,392,061
==========================================================
==========================================================
=====
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS (44,968,631) (30,443,600)
==========================================================
==========================================================
=====
CAPITAL STOCK Net increase (decrease) in net assets resulting from
TRANSACTIONS capital stock transactions - Note 2 (111,066,422) 317,726,707
==========================================================
==========================================================
=====
NET ASSETS Total increase (decrease) (111,024,883) 317,675,168
---------------------------------------------------------------------------------------------------
Beginning of period 928,952,593 611,277,425
-------------------------------
End of period $817,927,710 $928,952,593
-------------------------------
-------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
12 Oppenheimer Money Market Fund, Inc.
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
YEAR ENDED DECEMBER 31,
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<C> <C>
==========================================================
==========================================================
================
PER SHARE OPERATING DATA:
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income and net realized gain .05 .04 .03 .03 .06 .08 .08 .07 .06 .06
Dividends and distributions to shareholders (.05) (.04) (.03) (.03) (.06) (.08) (.08) (.07) (.06) (.06)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
==========================================================
==============================
==========================================================
==========================================================
================
TOTAL RETURN, AT NET ASSET VALUE (1) 5.40% 3.76% 2.71% 3.47% 5.87% 7.99% 8.88%
7.14% 6.38% 6.35%
==========================================================
==========================================================
================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in millions) $818 $929 $611 $692 $899 $1,082 $940 $794 $718 $744
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $855 $804 $653 $811 $1,003 $1,033 $873 $713 $620 $752
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.19% 3.79% 2.65% 3.42% 5.66% 7.66% 8.55% 6.98% 6.04%
6.12%
Expenses 0.90% 0.82% 0.87% 0.88% 0.77% 0.74% 0.78% 0.80% 0.86%
0.77%
<FN>
1. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends 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. Total returns are not
annualized for periods of less than one full year.
See accompanying Notes to Financial Statements.
</FN>
</TABLE>
13 Oppenheimer Money Market Fund, Inc.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
==========================================================
======================
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Money Market Fund, Inc. (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 the
maximum current income that is consistent with stability of principal. The
Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The following
is a summary of significant accounting policies consistently followed by the
Fund.
- --------------------------------------------------------------------------------
INVESTMENT VALUATION. Portfolio securities are valued on the basis of
amortized cost, which approximates market value.
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to shareholders. Therefore, no federal
income or excise tax provision is required.
- --------------------------------------------------------------------------------
DIRECTORS' FEES AND EXPENSES. The Fund has adopted a nonfunded retirement plan
for the Fund's independent directors. Benefits are based on years of service and
fees paid to each director during the years of service. During the year ended
December 31, 1995, a provision of $18,528 was made for the Fund's projected
benefit obligations, and a payment of $2,280 was made to a retired director,
resulting in an accumulated liability of $144,180 at December 31, 1995.
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to declare dividends from net
investment income each day the New York Stock Exchange is open for business and
pay such dividends monthly. To effect its policy of maintaining a net asset
value of $1.00 per share, the Fund may withhold dividends or make distributions
of net realized gains.
- --------------------------------------------------------------------------------
OTHER. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date). Realized gains and losses on investments 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.
14 Oppenheimer Money Market Fund, Inc.
<PAGE>
==========================================================
======================
2. CAPITAL STOCK
The Fund has authorized 5,000,000,000 shares of $.10 par value capital stock.
Transactions in shares of capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
1995 1994
------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------
Sold 1,772,666,521 $1,772,666,521 1,884,595,724 $1,884,595,724
Dividends and
distributions
reinvested 42,507,860 42,507,860 28,594,376 28,594,376
Redeemed (1,926,240,803) (1,926,240,803) (1,595,463,393) (1,595,463,393)
--------------- --------------- --------------- ---------------
Net increase
(decrease) (111,066,422) $ (111,066,422) 317,726,707 $ 317,726,707
=============== ===============
=============== ===============
</TABLE>
==========================================================
======================
3. 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 .45% on the first
$500 million of average annual net assets with a reduction of .025% on each $500
million thereafter, to .375% on net assets in excess of $1.5 billion. The
Manager has agreed to reimburse the Fund if aggregate expenses (with specified
exceptions) exceed the lesser of 1% of average annual net assets of the Fund or
25% of the total annual investment income of the Fund.
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.
Appendix A: Description of Securities Ratings
Below is a description of the two highest rating categories for Short Term
Debt and Long Term Debt by the "Nationally-Recognized Statistical Rating
Organizations" which the Manager evaluates in purchasing securities on
behalf of the Fund. The ratings descriptions are based on information
supplied by the ratings organizations to subscribers.
Short Term Debt Ratings.
Moody's Investors Service, Inc. ("Moody's"): The following rating
designations for commercial paper (defined by Moody's as promissory
obligations not having original maturity in excess of nine months), are
judged by Moody's to be investment grade, and indicate the relative
repayment capacity of rated issuers:
Prime-1: Superior capacity for repayment. Capacity will normally be
evidenced by the following characteristics: (a) leveling market positions
in well-established industries; (b) high rates of return on funds
employed; (c) conservative capitalization structures with moderate
reliance on debt and ample asset protection; (d) broad margins in earning
coverage of fixed financial charges and high internal cash generation; and
(e) well established access to a range of financial markets and assured
sources of alternate liquidity.
Prime-2: Strong capacity for repayment. This will normally be evidenced
by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may
be more affected by external conditions. Ample alternate liquidity is
maintained.
Moody's ratings for state and municipal short-term obligations are
designated "Moody's Investment Grade" ("MIG"). Short-term notes which
have demand features may also be designated as "VMIG". These rating
categories are as follows:
MIG1/VMIG1: Best quality. There is present strong protection by
established cash flows, superior liquidity support or demonstrated
broadbased access to the market for refinancing.
MIG2/VMIG2: High quality. Margins of protection are ample although not
so large as in the preceding group.
Standard & Poor's Corporation ("S&P"): The following ratings by S&P for
commercial paper (defined by S&P as debt having an original maturity of
no more than 365 days) assess the likelihood of payment:
A-1: Strong capacity for timely payment. Those issues determined to
possess extremely strong safety characteristics are denoted with a
plus sign (+) designation.
A-2: Satisfactory capacity for timely payment. However, the relative
degree of safety is not as high as for issues designated "A-1".
S&P's ratings for Municipal Notes due in three years or less are:
SP-1: Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
will be given a plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest.
S&P assigns "dual ratings" to all municipal debt issues that have a demand
or double feature as part of their provisions. The first rating addresses
the likelihood of repayment of principal and interest as due, and the
second rating addresses only the demand feature. With short-term demand
debt, S&P's note rating symbols are used with the commercial paper symbols
(for example, "SP-1+/A-1+").
Fitch Investors Service, Inc. ("Fitch"): Fitch assigns the following
short-term ratings to debt obligations that are payable on demand or have
original maturities of generally up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and
investment notes:
F-1+: Exceptionally strong credit quality; the strongest degree of
assurance for timely payment.
F-1: Very strong credit quality; assurance of timely payment is only
slightly less in degree than issues rated "F-1+".
F-2: Good credit quality; satisfactory degree of assurance for timely
payment, but the margin of safety is not as great as for issues
assigned "F-1+" or "F-1" ratings.
Duff & Phelps, Inc. ("Duff & Phelps"): The following ratings are for
commercial paper (defined by Duff & Phelps as obligations with maturities,
when issued, of under one year), asset-backed commercial paper, and
certificates of deposit (the ratings cover all obligations of the
institution with maturities, when issued, of under one year, including
bankers' acceptance and letters of credit):
Duff 1+: Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative sources
of funds, is outstanding, and safety is just below risk-free U.S. Treasury
short-term obligations.
Duff 1: Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk
factors are minor.
Duff 1-: High certainty of timely payment. Liquidity factors are strong
and supported by good fundamental protection factors. Risk factors are
very small.
Duff 2: Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors
are small.
IBCA Limited or its affiliate IBCA Inc. ("IBCA"): Short-term ratings,
including commercial paper (with maturities up to 12 months), are as
follows:
A1+: Obligations supported by the highest capacity for timely repayment.
A1: Obligations supported by a very strong capacity for timely repayment.
A2: Obligations supported by a strong capacity for timely repayment,
although such capacity may be susceptible to adverse changes in
business, economic, or financial conditions.
Thomson BankWatch, Inc. ("TBW"): The following short-term ratings apply
to commercial paper, certificates of deposit, unsecured notes, and other
securities having a maturity of one year or less.
TBW-1: The highest category; indicates the degree of safety regarding
timely repayment of principal and interest is very strong.
TBW-2: The second highest rating category; while the degree of safety
regarding timely repayment of principal and interest is strong, the
relative degree of safety is not as high as for issues rated "TBW-1".
Long Term Debt Ratings.
These ratings are relevant for securities purchased by the Fund with a
remaining maturity of 397 days or less, or for rating issuers of short-
term obligations.
Moody's: Bonds (including municipal bonds) are rated as follows:
Aaa: Judged to be the best quality. They carry the smallest degree of
investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong positions of such
issues.
Aa: Judged to be of high quality by all standards. Together with the
"Aaa" group they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in "Aaa" securities or fluctuations
of protective elements may be of greater amplitude or there may be
other elements present which make the long-term risks appear somewhat
larger than in "Aaa" securities.
Moody's applies numerical modifiers "1", "2" and "3" in its "Aa" rating
classification. The modifier "1" indicates that the security ranks in the
higher end of its generic rating category; the modifier "2" indicates a
mid-range ranking; and the modifier "3" indicates that the issue ranks
in the lower end of its generic rating category.
Standard & Poor's: Bonds (including municipal bonds) are rated as
follows:
AAA: The highest rating assigned by S&P. Capacity to pay interest and
repay principal is extremely strong.
AA: A strong capacity to pay interest and repay principal and differ from
"AAA" rated issues only in small degree.
Fitch:
AAA: Considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA: Considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA". Plus (+)
and minus (-) signs are used in the "AA" category to indicate the
relative position of a credit within that category.
Because bonds rated in the "AAA" and "AA" categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these
issuers is generally rated "F-1+".
Duff & Phelps:
AAA: The highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.
AA: High credit quality. Protection factors are strong. Risk is modest
but may vary slightly from time to time because of economic
conditions. Plus (+) and minus (-) signs are used in the "AA"
category to indicate the relative position of a credit within that
category.
IBCA: Long-term obligations (with maturities of more than 12 months) are
rated as follows:
AAA: The lowest expectation of investment risk. Capacity for timely
repayment of principal and interest is substantial such that adverse
changes in business, economic, or financial conditions are unlikely
to increase investment risk significantly.
AA: A very low expectation for investment risk. Capacity for timely
repayment of principal and interest is substantial. Adverse changes
in business, economic, or financial conditions may increase
investment risk albeit not very significantly.
A plus (+) or minus (-) sign may be appended to a long term rating
to denote relative status within a rating category.
TBW: TBW issues the following ratings for companies. These ratings
assess the likelihood of receiving payment of principal and interest on
a timely basis and incorporate TBW's opinion as to the vulnerability of
the company to adverse developments, which may impact the market's
perception of the company, thereby affecting the marketability of its
securities.
A: Possesses an exceptionally strong balance sheet and earnings record,
translating into an excellent reputation and unquestioned access to
its natural money markets. If weakness or vulnerability exists in
any aspect of the company's business, it is entirely mitigated by the
strengths of the organization.
A/B: The company is financially very solid with a favorable track record
and no readily apparent weakness. Its overall risk profile, while
low, is not quite as favorable as for companies in the highest rating
category.
<PAGE>
Appendix B: 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 Transmission
Gas Utilities
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking
<PAGE>
Investment Adviser
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
Citibank, N.A.
399 Park Avenue
New York, New York 10043
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
