OPPENHEIMER
Money Market Fund, Inc.
Prospectus dated November 26, 1997
Oppenheimer Money Market Fund, Inc. is a no-load money market mutual fund that
seeks the maximum current income that is consistent with stability of principal.
The Fund seeks to achieve this objective by investing in "money market"
securities meeting specific credit quality standards.
An investment in the Fund is neither insured nor guaranteed by the U.S.
Government. While the Fund seeks to maintain a stable net asset value of $1.00
per share, there can be no assurance that the Fund will be able to do so.
This Prospectus explains concisely what you should know before investing
in the Fund. Please read this Prospectus carefully and keep it for future
reference. You can find more detailed information about the Fund in the November
26, 1997 Statement of Additional Information. For a free copy, call
OppenheimerFunds Services, the Fund's Transfer Agent, at 1-800-525-7048, or
write to the Transfer Agent at the address on the back cover. The Statement of
Additional Information has been filed with the Securities and Exchange
Commission and is incorporated into this Prospectus by reference (which means
that it is legally part of this Prospectus).
(logo)OppenheimerFunds
Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the F.D.I.C. or any other agency, and
involve investment risks, including the possible loss of the principal amount
invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents
A B O U T T H E F U N D
Expenses
A Brief Overview of the Fund
Financial Highlights
Investment Objective and Policies
How the Fund is Managed
Performance of the Fund
A B O U T Y O U R A C C O U N T
How to Buy Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
By Wire
By Checkwriting
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
<PAGE>
A B O U T T H E F U N D
Expenses
The Fund pays a variety of expenses directly for management of its assets,
administration and other services, and those expenses are subtracted from the
Fund's assets to calculate the Fund's net asset value per share. All
shareholders pay those expenses indirectly. The following tables are provided to
help you understand your direct expenses of investing in the Fund and your share
of the Fund's business operating expenses that you will bear indirectly. The
calculations below are based on the Fund's expenses during its fiscal year ended
to July 31, 1997.
o Shareholder Transaction Expenses are charges you pay when you buy or
sell shares of a mutual fund. There are no sales charges assessed when you buy
shares of the Fund. Please refer to "About Your Account" starting on page __ for
more information.
Maximum Sales Charge on Purchases None
- ------------------------------------------------------------------
Maximum Sales Charge on Reinvested Dividends None
- ------------------------------------------------------------------
Redemption Fees None(1)
- ------------------------------------------------------------------
Exchange Fees None
- -------------
(1) There is a $10 transaction fee for redemptions paid by Federal Funds wire,
but not for redemptions paid by check or by ACH transfer through AccountLink, or
for which checkwriting privileges are used (see "How to Sell Shares").
o Annual Fund Operating Expenses are paid out of the Fund's assets and
represent the Fund's expenses in operating its business. For example, the Fund
pays management fees to its investment advisor, OppenheimerFunds, Inc. (which is
referred to in this Prospectus as the "Manager"). The rates of the Manager's
fees are set forth in "How the Fund is Managed" below. The Fund has other
regular expenses for services, such as transfer agent fees, custodial fees paid
to the bank that holds its portfolio securities, audit fees and legal and other
expenses. Those expenses are detailed in the Fund's Financial Statements in the
Statement of Additional Information.
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 0.44%
- -----------------------------------------------------------------
12b-1 Plan Fees None
- -----------------------------------------------------------------
Other Expenses 0.43%
- -----------------------------------------------------------------
Total Fund Operating Expenses 0.87%
The numbers in the chart above are based on the Fund's expenses in the
fiscal year ended July 31, 1997. These amounts are shown as a percentage of the
average net assets of the Fund for that year. The actual expenses in future
years may be more or less than the numbers in the chart, depending on a number
of factors, including the actual value of the Fund's assets.
o Examples. To try to show the effect of these expenses on an investment
over time, we have created the hypothetical examples shown below. Assume that
you make a $1,000 investment in shares of the Fund, and the Fund's annual return
is 5%, and that its operating expenses are the ones shown in the Annual Fund
Operating Expenses chart above. If you were to redeem your shares at the end of
each period shown below, your investment would incur the following expenses by
the end of each period shown:
1 year 3 years 5 years 10 years
------ ------- ------- --------
$9 $28 $48 $107
These examples show the effect of expenses on an investment in the Fund,
but are not meant to state or predict actual or expected costs or investment
returns of the Fund, all of which may be more or less than those shown.
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized below, with references
to the section of this Prospectus where more complete information can be found.
You should carefully read the entire Prospectus before making a decision about
investing in the Fund. Keep the Prospectus for reference after you invest,
particularly for information about your account, such as how to sell or exchange
shares.
o What Is the Fund's Investment Objective? The Fund's objective is to seek
the maximum current income that is consistent with stability of principal.
o What Does the Fund Invest In? The Fund invests in high-quality money
market securities. These are short-term highly liquid securities that meet
specific credit quality standards under the Investment Company Act of 1940 (the
"Investment Company Act"). Because of their large denominations, money market
investments are generally unavailable to the smaller investor. The money market
securities the Fund invests in may include U.S. Government securities,
repurchase agreements, certificates of deposit and high quality commercial paper
issued by companies. These and other types of money market securities are
described in "Investment Objective and Policies" starting on page __.
o Who Manages the Fund? The Fund's investment advisor or Manager is
OppenheimerFunds, Inc., which (including subsidiaries) manages investment
company portfolios having over $75 billion in assets at September 30, 1997. The
Manager is paid an advisory fee by the Fund, based on its net assets. The Fund's
portfolio manager, who is employed by the Manager and who is primarily
responsible for the selection of the Fund's securities, is Carol E. Wolf. The
Fund's Board of Directors, elected by shareholders, oversees the Manager and the
portfolio manager. Please refer to "How the Fund is Managed," starting on page
__ for more information about the Manager and its fees.
o How Risky Is the Fund? All investments carry risks to some degree. Money
market funds in general are relatively conservative investments. The Fund
attempts to maintain a stable share price of $1.00, but there is no guarantee it
will do so. While money market securities are debt securities that may be
affected by changes in interest rates, because of their short maturity and
liquidity, their prices are less sensitive to interest rate changes than
longer-term debt securities. Fluctuations in value of the Fund's securities will
not generally result in gains or losses to the Fund since the Fund usually holds
securities to their maturity. While the Fund is a conservative investment for
those seeking income, liquidity and stability of principal, it is important to
note that the Fund's shares are not guaranteed by the U.S. Government or insured
by the F.D.I.C. Please refer to "Investment Objective and Policies" starting on
page __ for a more complete discussion of the Fund's investment risks.
o How Can I Buy Shares? You can buy shares through your broker, dealer or
financial institution, or you can purchase shares directly through the
Distributor by completing an Application or by using Federal Funds wires or an
Automatic Investment Plan under AccountLink. Please refer to "How to Buy Shares"
starting on page __ for more details.
o Will I Pay a Sales Charge to Buy Shares? No. Shares of the Fund are sold
at their net asset value, without sales charge. Normally, the net asset value is
$1.00 per share. There can be no assurance that the Fund's net asset value will
not vary.
o How Can I Sell My Shares? Shares can be redeemed by mail or by telephone
call to the Transfer Agent on any business day, or through your dealer or by
writing a check against your Fund account, or by wire to a previously designated
bank account. Please refer to "How to Sell Shares" starting on page __. The Fund
also offers exchange privileges to other Oppenheimer funds, described in "How to
Exchange Shares" starting on page __.
o How Has the Fund Performed? The Fund measures its performance by quoting
its "yield" and "compounded effective yield," which measure historical
performance. Those yields can be compared to the yields of other money market
funds. Please remember that past performance does not guarantee future results.
Financial Highlights
The table on the following pages presents selected financial information about
the Fund, including per share data and expense ratios and other data based on
the Fund's average net assets. This information has been audited by KPMG Peat
Marwick LLP, the Fund's independent auditors, whose report on the Fund's
financial statements for the fiscal year ended July 31, 1997, is included in the
Statement of Additional Information.
-3-
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31, YEAR ENDED DECEMBER 31,
1997 1996(1) 1995 1994 1993
==========================================================================================
<S> <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
- ------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income and
net realized gain .05 .03 .05 .04 .03
Dividends and distributions
to shareholders (.05) (.03) (.05) (.04) (.03)
- ------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
==========================================================================================
TOTAL RETURN, AT NET
ASSET VALUE(2) 4.83% 2.80% 5.40% 3.76% 2.71%
==========================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in millions) $1,014 $1,102 $818 $929 $611
- ------------------------------------------------------------------------------------------
Average net assets
(in millions) $1,011 $ 901 $855 $804 $653
- ------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.73% 4.68%(3) 5.19% 3.79% 2.65%
Expenses 0.87% 0.84%(3) 0.90% 0.82% 0.87%
</TABLE>
1. For the seven months ended July 31, 1996. The Fund changed its fiscal year
end from December 31 to July 31. 2. 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. 3. Annualized
2
<PAGE>
<TABLE>
<CAPTION>
1992 1991 1990 1989 1988 1987
===============================================================
<S> <C> <C> <C> <C> <C>
$1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------
.03 .06 .08 .08 .07 .06
(.03) (.06) (.08) (.08) (.07) (.06)
- ---------------------------------------------------------------
$1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== =====
===============================================================
3.47% 5.87% 7.99% 8.88% 7.14% 6.38%
===============================================================
$692 $ 899 $1,082 $940 $794 $718
- ---------------------------------------------------------------
$811 $1,003 $1,033 $873 $713 $620
- ---------------------------------------------------------------
3.42% 5.66% 7.66% 8.55% 6.98% 6.04%
0.88% 0.77% 0.74% 0.78% 0.80% 0.86%
</TABLE>
3
<PAGE>
Investment Objective and Policies
Objective. The Fund seeks the maximum current income that is consistent with
stability of principal.
Investment Policies and Strategies. In seeking its objective, the Fund invests
in short-term money market securities meeting quality standards consistent with
Rule 2a-7 under the Investment Company Act. While those standards are intended
to help the Fund maintain a stable share value, there can be no assurance that
the Fund's net asset value will not vary from $1.00 per share or that the Fund
will achieve its investment objective.
o Money Market Securities in Which the Fund Invests. The following is a
brief description of the types of money market securities in which the Fund may
invest:
o U.S. Government Securities. These include obligations issued or
guaranteed by the U.S. Government or any of its agencies or instrumentalities.
These may include direct obligations of the U.S. Treasury, such as Treasury
bills, notes and bonds. Other U.S. Government Securities are supported by the
full faith and credit of the United States, such as pass-through certificates
issued by the Government National Mortgage Association. Others may be supported
by the right of the issuer to borrow from the U.S. Treasury, such as securities
of Federal Home Loan Banks. Others may be supported only by the credit of the
instrumentality, such as obligations of the Federal National Mortgage
Association.
o Bank Obligations and Instruments Secured Thereby. These include time
deposits, certificates of deposit and bankers' acceptances. They must be
obligations of a domestic bank with total assets of at least $1 billion or U.S.
dollar-denominated obligations of a foreign bank with total assets of at least
U.S. $1 billion. The Fund may also invest in instruments secured by these types
of bank obligations, such as separately-issued bank debt which is guaranteed by
the bank. The term "bank" includes commercial banks, savings banks, and savings
and loan associations, which may or may not be members of the Federal Deposit
Insurance Corporation ("FDIC"). The term "foreign bank" includes foreign
branches of U.S. banks ( which may be issuers of "Eurodollar" money market
instruments), U.S. branches and agencies of foreign banks (which may be issuers
of "Yankee dollar" instruments), and foreign branches of foreign banks.
o Commercial Paper. Commercial paper is a short-term, unsecured promissory
note of a domestic or foreign company. The Fund's purchase of commercial paper
is limited to an issuer's direct obligations that at the time of the Fund's
purchase of them are Eligible Securities (defined below). They also must be
rated by at least one Rating Organization (defined below) in one of the two
highest rating categories for short-term debt securities. They may also be an
issuer's unrated securities judged by the Manager to be comparable to these
other types of rated securities.
o Corporate Obligations. The Fund may invest in corporate debt
obligations, other than commercial paper, that at the time of purchase by the
Fund are Eligible Securities that are rated by at least one Rating Organization
in one of the two highest rating categories for short-term debt securities. They
may include comparable unrated securities.
o Other Money Market Obligations. The Fund may invest in money market
obligations other than those listed above if they are subject to repurchase
agreements or guaranteed as to their principal and interest by a domestic bank
having total assets in excess of $500 million or by a corporation whose
commercial paper may be purchased by the Fund.
o Board-Approved Money Market Instruments. These are U.S.
dollar-denominated short-term investments that the Fund's Board of Directors
determines present minimal credit risks and which are of "high quality" as
determined by any Rating Organization. They may also include an instrument that
is not rated, if the Board determines that it is of comparable quality to an
instrument that is an "Eligible Security." This determination is made in light
of the restrictions imposed by Rule 2a-7, described below. Currently,
Board-approved instruments in which the Fund may invest include
dollar-denominated obligations of foreign banks payable in the U.S. or in
London, England, floating or variable rate demand notes, asset-backed
securities, and bank loan participation agreements (subject to restrictions
adopted by the Board). The Board may change its restrictions as to these
investments from time to time.
o Portfolio Quality and Diversification. Under Rule 2a-7 of the Investment
Company Act, the Fund uses the amortized cost method to value its portfolio
securities to determine the Fund's net asset value per share. Rule 2a-7 places
restrictions on a money market fund's investments. Under the Rule, the Fund may
purchase only those securities that the Manager, under Board-approved
procedures, has determined have minimal credit risks and are "Eligible
Securities."
An "Eligible Security" is one that has been rated in one of the two
highest short-term rating categories by any two "nationally-recognized
statistical rating organizations" (as defined in the Rule) (these are referred
to as "Rating Organizations"), or, if only one Rating Organization has rated
that security, it must have been rated in one of the two highest rating
categories by that Rating Organization. An unrated security that is judged by
the Manager to be of comparable quality to "Eligible Securities" rated by Rating
Organizations may also be an "Eligible Security."
Rule 2a-7 permits the Fund to purchase any number of "First Tier
Securities." These are Eligible Securities rated in the highest rating category
for short-term debt obligations by at least two Rating Organizations, or, if
only one Rating Organization has rated a particular security, by that Rating
Organization. Comparable unrated securities may also be First Tier Securities.
Under Rule 2a-7, the Fund may invest only up to 5% of its assets in "Second Tier
Securities," which are Eligible Securities that are not "First Tier Securities."
In addition to the overall 5% limit on Second Tier Securities, the Fund may
not invest more than (i) 5% of its total assets in the securities of any one
issuer (other than the U.S. Government, its agencies or instrumentalities) or
(ii) 1% of its total assets or $1 million (whichever is greater) in Second Tier
Securities of any one issuer. The Fund's Board of Directors must approve or
ratify the purchase of Eligible Securities that are unrated or are rated by only
one Rating Organization. Additionally, under Rule 2a-7, the Fund must maintain a
dollar-weighted average portfolio maturity of no more than 90 days, and the
maturity of any single portfolio investment may not exceed 397 days. The Board
regularly reviews reports from the Manager to show the Manager's compliance with
the Fund's procedures and with the Rule.
Appendix A of the Statement of Additional Information contains descriptions
of the rating categories of Rating Organizations. Ratings at the time of
purchase will determine whether securities may be acquired under the
restrictions described above. Subsequent downgrades in ratings may require the
Manager to reassess the credit risks presented by a security and may require its
sale. The rating restrictions described in this Prospectus do not apply to banks
in which the Fund's cash is kept.
o Can the Fund's Investment Objective and Policies Change? The Fund has an
investment objective, described above, as well as investment policies it follows
to try to achieve its objective. Additionally, the Fund uses certain investment
techniques and strategies in carrying out those investment polices. The Fund's
investment policies and techniques are not "fundamental" unless this Prospectus
or the Statement of Additional Information says that a particular policy is
"fundamental." The Fund's investment objective is a fundamental policy.
Fundamental policies are those that cannot be changed without the approval
of a "majority" of the Fund's outstanding voting shares. The term "majority" is
defined in the Investment Company Act to be a particular percentage of
outstanding voting shares (and this term is explained in the Statement of
Additional Information). The Fund's Board of Directors may change
non-fundamental policies without shareholder approval, although significant
changes will be described in amendments to this Prospectus.
Other Investment Techniques and Strategies. The Fund may also use the investment
techniques and strategies described below. These techniques involve investment
risks. The Statement of Additional Information contains more information about
some of these practices, including limitations on their use that are designed to
reduce some of the risks.
o Floating Rate/Variable Rate Notes. The Fund may purchase notes with
floating or variable interest rates. Variable rates are adjustable at stated
periodic intervals. Floating rates are adjusted automatically according to a
specified market index for such investments, such as the prime rate of a bank.
If the maturity of these notes is greater than 397 days, they may be purchased
if they have a demand feature permitting the Fund to recover the principal
amount of the note on not more than thirty days' notice at any time, or at
specified times not exceeding 397 days.
o Obligations of Foreign Banks and Foreign Branches of U.S. Banks. Because
the Fund may invest in U.S. dollar-denominated securities of (1) foreign banks
that are payable in the U.S. or in London, England and (2) foreign branches of
U.S. banks, the Fund may be subject to additional investment risks different
from those incurred by an investment company that invests only in debt
obligations of domestic branches of U.S. banks. These risks may include future
political and economic developments in the country in which the bank or branch
is located, possible imposition of withholding taxes on interest income payable
on the securities, possible seizure or nationalization of foreign deposits, the
possible establishment of exchange control regulations or the adoption of other
governmental restrictions that might affect the payment of principal and
interest on those securities. Additionally, not all U.S. and state banking laws
and regulations applicable to domestic banks (relating to maintenance of
reserves, loan limits and financial soundness) apply to foreign branches of
domestic banks, and none of those regulations apply to foreign banks.
o Bank Loan Participation Agreements. Subject to the provisions of Rule
2a-7 and the Fund's limitation on illiquid securities below, the Fund may invest
in bank loan participation agreements that provide the Fund an undivided
interest in a loan made by the issuing bank in the proportion the Fund's
interest bears to the total principal amount of the loan. The Fund looks to the
creditworthiness of the borrower obligated to make principal and interest
payments on the loan.
o Asset-Backed Securities. The Fund may invest in asset- backed
securities, which are fractional interests in pools of consumer loans and other
trade receivables. They are issued by trusts and special purpose corporations.
They are backed by a pool of assets, such as credit card or auto loan
receivables, which are the obligations of a number of different parties. The
income from the underlying pool is passed through to holders, such as the Fund.
These securities are frequently supported by a credit enhancement, such as
a letter of credit, a guarantee or a preference right. However, the credit
enhancement generally applies to only a fraction of the security's value. The
Fund's investment in those securities is subject to Rule 2a-7, as described
above. A risk of these securities is that the issuer of the security may have no
security interest in the related collateral.
o Repurchase Agreements. The Fund may enter into repurchase agreements. In
a repurchase transaction, the Fund buys a security and simultaneously sells it
to the vendor for delivery at a future date. Repurchase agreements must be fully
collateralized. However, if the vendor fails to pay the resale price on the
delivery date, the Fund may incur costs in disposing of the collateral and may
experience losses if there is any delay in its ability to do so. The Fund will
not enter into a repurchase agreement that will cause more than 10% of its net
assets to be subject to repurchase agreements maturing in more than seven days.
There is no limit on the amount of the Fund's net assets that may be subject to
repurchase agreements of 7 days or less.
o Illiquid and Restricted Securities. Under the policies and procedures
established by the Fund's Board of Directors, the Manager determines the
liquidity of certain of the Fund's investments. Investments may be illiquid
because of the absence of an active trading market, making it difficult to value
them or dispose of them promptly at an acceptable price. A restricted security
is one that has a contractual restriction on its resale or which cannot be sold
publicly until it is registered under the Securities Act of 1933. The Fund will
not invest more than 10% of its net assets in illiquid or restricted securities.
The Fund's percentage limitation on these investments does not apply to certain
restricted securities that are eligible for resale to qualified institutional
purchasers. The Manager monitors holdings of illiquid securities on an ongoing
basis to determine whether to sell any holdings to maintain adequate liquidity.
Illiquid securities include repurchase agreements maturing in more than 7 days,
or certain participation interests other than those with puts exercisable within
7 days.
Other Investment Restrictions. The Fund has other investment restrictions which
are fundamental policies. Under these fundamental policies, the Fund cannot do
any of the following:
o invest more than 5% of its total assets in securities of any issuer
(except the U.S. Government or its agencies or instrumentalities);
o concentrate investments in any particular industry; therefore the Fund
will not purchase the securities of companies in any one industry if more than
25% of the value of the Fund's total assets would consist of securities of
companies in that industry; except for obligations of foreign branches of
domestic banks, or obligations issued or guaranteed by foreign banks, the
investments set forth in "U.S. Government Securities" and "Bank Obligations"
under "Investment Objective and Policies" are not included in this limitation;
o make loans, except through the purchase of the types of debt securities
listed under "Investment Objective and Policies" or through repurchase
agreements; the Fund may also lend securities as described under "Loans of
Portfolio Securities" in the Statement of Additional Information;
o borrow money in excess of 5% of the value of its total assets; the Fund
may borrow only as a temporary measure for extraordinary or emergency purposes
and no assets of the Fund may be pledged, mortgaged or assigned to secure a
debt; or
o invest more than 5% of the value of its total assets in securities of
companies that have operated less than three years, including the operations of
predecessors.
Unless the Prospectus states that a percentage restriction applies on an
ongoing basis, it applies only at the time the Fund makes an investment, and the
Fund need not sell securities to meet the percentage limits if the value of the
investment increases in proportion to the size of the Fund. Additional
investment restrictions are listed in "Other Investment Restrictions" in the
Statement of Additional Information.
How the Fund is Managed
Organization and History. The Fund was incorporated in Maryland in 1973. The
Fund is a diversified, open-end management investment company.
The Fund is governed by a Board of Directors, which is responsible for
protecting the interests of shareholders under Maryland law. The Directors meet
periodically throughout the year to oversee the Fund's activities, review its
performance, and review the actions of the Manager. "Directors and Officers of
the Fund" in the Statement of Additional Information names the Directors and
provides more information about them and the officers of the Fund. Although the
Fund will not normally hold annual meetings of its shareholders, it may hold
shareholder meetings from time to time on important matters, and shareholders
have the right to call a meeting to remove a Director or to take other action
described in the Fund's Articles of Incorporation.
The Manager and Its Affiliates. The Fund is managed by the Manager,
OppenheimerFunds, Inc., which is responsible for selecting the Fund's
investments and handles its day-to-day business. The Manager carries out its
duties, subject to the policies established by the Board of Directors, under an
Investment Advisory Agreement that states the Manager's responsibilities. The
Agreement sets forth the fees paid by the Fund to the Manager and describes the
expenses that the Fund is responsible to pay to conduct its business.
The Manager has operated as an investment advisor since 1959. The Manager
(including subsidiaries) currently manages investment companies, including other
Oppenheimer funds, with assets of more than $75 billion as of September 30,
1997, held in over 3 million shareholder accounts. The Manager is owned by
Oppenheimer Acquisition Corp., a holding company that is owned in part by senior
officers of the Manager and controlled by Massachusetts Mutual Life Insurance
Company.
o Portfolio Manager. The Manager has designated Carol E. Wolf as the
Portfolio Manager of the Fund. She has been the person principally responsible
for the day to day management of the Fund's portfolio since November, 1988. Ms.
Wolf is also an officer of Centennial Asset Management Corporation, an
investment advisor subsidiary of the Manager, and is an officer and portfolio
manager of other Oppenheimer funds.
o Fees and Expenses. Under the Investment Advisory Agreement, the Fund
pays the Manager the following annual fees, which decline on additional assets
as the Fund grows: 0.45% of the first $500 million of aggregate net assets,
0.425% of the next $500 million, 0.40% of the next $500 million, and 0.375% of
net assets in excess of $1.5 billion. The Fund's management fee for the fiscal
year ended July 31, 1997 was 0.44% of the Fund's average annual net assets.
The Fund pays expenses related to its daily operations, such as custodian
fees, Directors' fees, transfer agency fees, legal and auditing costs. Those
expenses are paid out of the Fund's assets and are not paid directly by
shareholders, but are indirectly borne by shareholders through their investment.
More information about the Investment Advisory Agreement and the other expenses
paid by the Fund is contained in the Statement of Additional Information.
o The Distributor. The Fund's shares are sold through dealers and brokers
that have a sales agreement with OppenheimerFunds Distributor, Inc., a
subsidiary of the Manager that acts as the Fund's Distributor. The Distributor
also distributes the shares of the other Oppenheimer funds, and is sub-
distributor for funds managed by a subsidiary of the Manager.
o The Transfer Agent. The Fund's transfer agent is OppenheimerFunds
Services, a division of the Manager, which acts as the shareholder servicing
agent for the Fund on an "at-cost" basis. It also acts as the shareholder
servicing agent for the other Oppenheimer funds. Shareholders should direct
inquiries about their accounts to the Transfer Agent at the address and
toll-free numbers shown below in this Prospectus and on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms "yield" and
"compounded effective yield" to illustrate its performance. This performance
information may be useful to help you see how well your investment has done and
to compare it to other money market funds.
It is important to understand that the Fund's yields represent past
performance and should not be considered to be predictions of future
performance. The Fund's investment performance will vary over time, depending on
market conditions, the composition of the portfolio, and expenses. More detailed
information about how yields are calculated is contained in the Statement of
Additional Information, which also contains information about other ways to
measure and compare the Fund's performance.
o Yield. Different types of yields may be quoted to show performance. The
"yield" of the Fund is the income generated by an investment in the Fund over a
seven-day period, which is then "annualized." In annualizing, the amount of
income generated by the investment during that seven days is assumed to be
generated each week over a 52-week period, and is shown as a percentage of the
investment.
o Compounded Effective Yield. The "compounded effective yield" is
calculated similarly, but the annualized income earned by an investment in the
Fund is assumed to be reinvested in additional shares. The "compounded effective
yield" will be slightly higher than the yield because of the effect of the
assumed reinvestment.
A B O U T Y O U R A C C O U N T
How to Buy Shares
How Much Must You Invest? You can open a Fund account with a minimum initial
investment of $1,000 and make additional investments at any time with as little
as $25. There are reduced minimum investments under special investment plans.
o With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7) custodial
plans and military allotment plans, you can make initial and subsequent
investments of as little as $25. Subsequent purchases of at least $25 can be
made by telephone through AccountLink.
o Under pension, profit-sharing, 401(k) plans and Individual Retirement
Accounts (IRAs), you can make an initial investment of as little as $250 (if
your IRA is established under an Asset Builder Plan, the $25 minimum applies),
and subsequent investments may be as little as $25.
o There is no minimum investment requirement if you are buying shares by
reinvesting dividends from the Fund or other Oppenheimer funds (a list of them
appears in the Statement of Additional Information, or you can ask your dealer
or call the Transfer Agent), or by reinvesting distributions from unit
investment trusts that have made arrangements with the Distributor.
o How Are Shares Purchased? You can buy shares several ways -- through any
dealer, broker or financial institution that has a sales agreement with the
Distributor, or directly through the Distributor, or automatically from your
bank account through an Asset Builder Plan under the OppenheimerFunds
AccountLink service. The Distributor may appoint certain servicing agents as the
Distributor's agent to accept purchase and redemption orders.
o Buying Shares Through Your Dealer. Your dealer will place your order with
the Distributor on your behalf.
o Buying Shares Through the Distributor. Complete an OppenheimerFunds New
Account Application and return it with a check payable to "OppenheimerFunds
Distributor, Inc." Mail it to P.O. Box 5270, Denver, Colorado 80217. If you
don't list a dealer on the application, the Distributor will act as your agent
in buying the shares. However, we recommend that you discuss our investment
first with a financial advisor to be sure it is appropriate for you.
o Payment by Check. If payment is made by check in U.S. dollars drawn on a
U.S. bank, dividends will begin to accrue on the next regular business day after
the purchase order is accepted by the Distributor.
o Payment by Federal Funds Wire. Shares may be purchased by Federal Funds
wire. The minimum investment is $2,500. You must first call the Distributor's
Wire Department at 1-800-525-7041 to notify the Distributor of the wire, and to
receive further instructions.
o Guaranteed Payment. Broker-dealers that have sales agreements with the
Distributor may place purchase orders for shares on a regular business day with
the Distributor before the close of The New York Stock Exchange, which is
normally 4:00 P.M., New York time, but may be earlier on some days (all
references to time in this Prospectus mean New York time).The order will be
effected that day if the broker-dealer guarantees that the Fund's custodian bank
will receive Federal Funds to pay for the purchase by 2:00 P.M. on the next
regular business day. Dividends will begin to accrue on shares purchased in this
way on the regular business day the Federal Funds are received by the required
time.
o Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or other
financial institution that is an Automated Clearing House (ACH) member. You can
then transmit funds electronically to purchase shares, or to have the Transfer
Agent send redemption proceeds, or to transmit dividends and distributions to
your bank account.
Shares are purchased for your account on AccountLink on the regular
business day the Distributor is instructed by you to initiate the ACH transfer
to buy shares. You can provide those instructions automatically, under an Asset
Builder Plan, described below, or by telephone instructions using
OppenheimerFunds PhoneLink, also described below. You should request AccountLink
privileges on the Application or dealer settlement instructions used to
establish your account. Please refer to "AccountLink," below for more details.
o Asset Builder Plans. You may purchase shares of the Fund (and up to four
other Oppenheimer funds) automatically each month from your account at a bank or
other financial institution under an Asset Builder Plan with AccountLink.
Details are in the Statement of Additional Information.
o At What Price Are Shares Sold? The Fund's shares may be purchased at net
asset value without sales charge. The net asset value will remain fixed at $1.00
per share, except under extraordinary circumstances. There can be no guarantee
that the Fund will maintain a stable net asset value of $1.00 per share.
In most cases, to enable you to receive that day's offering price the
Distributor or its designated agent must receive your order by the time of day
The New York Stock Exchange closes, which is normally 4:00 P.M. but may be
earlier on some days (all references to time in this Prospectus mean "New York
time"). The net asset value is determined as of that time on each day The New
York Stock Exchange is open (which is a "regular business day").
If you buy shares through a dealer, unless your dealer uses the "guaranteed
payment" procedure described above, the dealer must receive your order by the
close of The New York Stock Exchange on a regular business day and transmit your
order and payment to the Distributor so that it is received before the
Distributor's close of business that day, which is normally 5:00 P.M. The
Distributor may reject any purchase order for the Fund's shares, in its sole
discretion.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account to your
account at your bank or other financial institution to enable you to send money
electronically between those accounts to perform a number of types of account
transactions. These include purchases of shares by telephone (either through a
service representative or by PhoneLink, described below), automatic investments
under Asset Builder Plans, and sending dividends and distributions or Automatic
Withdrawal Plan payments directly to your bank account. Please call the Transfer
Agent for more information.
AccountLink privileges should be requested on your dealer's settlement
instructions if you buy your shares through your dealer. After your account is
established, you can request AccountLink privileges by sending
signature-guaranteed instructions to the Transfer Agent. AccountLink privileges
will apply to each shareholder listed in the registration on your account as
well as to your dealer representative of record unless and until the Transfer
Agent receives written instructions terminating or changing those privileges.
After you establish AccountLink for your account, any change of bank account
information must be made by signature-guaranteed instructions to the Transfer
Agent signed by all shareholders who own the account.
o Using AccountLink to Buy Shares. Purchases may be made by telephone only
after your account has been established. To purchase shares in amounts up to
$250,000 through a telephone representative, call the Distributor at
1-800-852-8457. The purchase payment will be debited from your bank account.
o PhoneLink. PhoneLink is the OppenheimerFunds automated telephone system
that enables shareholders to perform a number of account transactions
automatically using a touch-tone phone. PhoneLink may be used on
already-established Fund accounts after you obtain a Personal Identification
Number (PIN), by calling the special PhoneLink number: 1-800-533-3310.
o Purchasing Shares. You may purchase shares in amounts up to $100,000 by
phone, by calling 1-800-533-3310. You must have established AccountLink
privileges to link your bank account with the Fund, to pay for these purchases.
o Exchanging Shares. With the OppenheimerFunds exchange privilege,
described below, you can exchange shares automatically by phone from your Fund
account to another Oppenheimer fund account you have already established by
calling the special PhoneLink number. Please refer to "How to Exchange Shares"
below for details.
o Selling Shares. You can redeem shares by telephone automatically by
calling the PhoneLink number and the Fund will send the proceeds directly to
your AccountLink bank account. Please refer to "How to Sell Shares," below, for
details.
Shareholder Transactions by Fax. Requests for certain account transactions may
be sent to the Transfer Agent by fax (telecopier). Please call 1-800-525-7048
for information about which transactions are included. Transaction requests
submitted by fax are subject to the same rules and restrictions as written and
telephone requests described in this Prospectus.
Automatic Withdrawal and Exchange Plans. The Fund has several plans that enable
you to sell shares automatically or exchange them to another Oppenheimer fund
account on a regular basis:
o Automatic Withdrawal Plans. If your Fund account is worth $5,000 or
more, you can establish an Automatic Withdrawal Plan to receive payments of at
least $50 on a monthly, quarterly, semi-annual or annual basis. The checks may
be sent to you or sent automatically to your bank account by AccountLink. You
may even set up certain types of withdrawals of up to $1,500 per month by
telephone. You should consult the Statement of Additional Information for more
details.
o Automatic Exchange Plans. You can authorize the Transfer Agent
automatically to exchange an amount you establish in advance for shares of up to
five other Oppenheimer funds on a monthly, quarterly, semi-annual or annual
basis under an Automatic Exchange Plan. The minimum purchase for each
Oppenheimer fund account is $25. These exchanges are subject to the terms of the
exchange privilege, described in "How To Exchange Shares," below.
Reinvestment Privilege. If you redeem some or all of your Fund shares that were
purchased by reinvesting dividends or by exchanging shares from another
Oppenheimer fund account on which you already paid a sales charge, you have up
to 6 months to reinvest all or part of the redemption proceeds in Class A shares
of other Oppenheimer funds without paying a sales charge. You must be sure to
ask the Distributor for this privilege when you send your payment. Please
consult the Statement of Additional Information for more details.
Retirement Plans. Fund shares are available as an investment for your retirement
plans. If you participate in a plan sponsored by your employer, the plan trustee
or administrator must make the purchase of shares for your retirement plan
account. The Distributor offers a number of different retirement plans that can
be used by individuals and employers:
o Individual Retirement Accounts including rollover IRAs, for individuals
and their spouses
o 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
o SEP-IRAs (Simplified Employee Pension Plans) for small business owners
or people with income from self-employment
o Pension and Profit-Sharing Plans for self-employed persons and other
employers
o 401(k) Prototype Retirement Plans for businesses
Please call the Distributor for the OppenheimerFunds plan documents, which
contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account by selling (redeeming) some or
all of your shares on any regular business day. Your shares will be sold at the
next net asset value calculated after your order is received and accepted by the
Transfer Agent. The Fund offers you a number of ways to sell your shares: in
writing, by using the Fund's checkwriting privilege, by wire or by telephone.
You can also set up Automatic Withdrawal Plans to
redeem shares on a regular basis, as described above. If you have questions
about any of these procedures, and especially if you are redeeming shares in a
special situation, such as due to the death of the owner, or from a retirement
plan, please call the Transfer Agent first, at 1-800-525-7048, for assistance.
o Retirement Accounts. To sell shares in an OppenheimerFunds retirement
account in your name, call the Transfer Agent for a distribution request form.
There are special income tax withholding requirements for distributions from
retirement plans and you must submit a withholding form with your request to
avoid delay. If your retirement plan account is held for you by your employer,
you must arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the Statement of
Additional Information.
o Certain Requests Require a Signature Guarantee. To protect you and the
Fund from fraud, certain redemption requests must be in writing and must include
a signature guarantee in the following situations (there may be other situations
also requiring a signature guarantee):
o You wish to redeem more than $50,000 worth of shares and receive a check
o A redemption check is not payable to all shareholders listed on the
account statement
o A redemption check is not sent to the address of record on your statement
o Shares are being transferred to a Fund account with a different owner or
name
o Shares are redeemed by someone other than the owners (such as an
Executor)
o Where Can I Have My Signature Guaranteed? The Transfer Agent will accept
a guarantee of your signature by a number of financial institutions, including:
a U.S. bank, trust company, credit union or savings association, or by a foreign
bank that has a U.S. correspondent bank, or by a U.S. registered dealer or
broker in securities, municipal securities or government securities, or by a
U.S. national securities exchange, a registered securities association or a
clearing agency. If you are signing on behalf of a corporation, partnership or
other business, or as a fiduciary, you must also include your title in the
signature.
Selling Shares by Mail. Write a "letter of instructions" that includes:
o Your name
o The Fund's name
o Your Fund account number (from your account statement)
o The dollar amount or number of shares to be redeemed
o Any special payment instructions
o Any share certificates for the shares you are selling,
o The signatures of all registered owners exactly as the account is
registered, and
o Any special requirements or documents requested by the Transfer Agent to
assure proper authorization of the person asking to sell shares.
Use the following address for requests by mail:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
Send courier or Express Mail requests to:
OppenheimerFunds Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of record may
also sell your shares by telephone. To receive the redemption price on a regular
business day, your call must be received by the Transfer Agent by the close of
The New York Stock Exchange that day, which is normally 4:00 P.M., but may be
earlier on some days. You may not redeem shares held in an OppenheimerFunds
retirement plan or under a share certificate by telephone.
o To redeem shares through a service representative, call 1-800-852-8457
o To redeem shares automatically on PhoneLink, call 1-800-
533-3310
Whichever method you use, you may have a check sent to the address on the
account statement or, if you have linked your Fund account to your bank account
on AccountLink, you may have the proceeds wired to that bank account.
o Telephone Redemptions Paid by Check. Up to $50,000 may be redeemed by
telephone in any 7-day period. The check must be payable to all owners of record
of the shares and must be sent to the address on the account statement. This
service is not available within 30 days of changing the address on an account.
o Telephone Redemptions Through AccountLink. There are no dollar limits on
telephone redemption proceeds sent to a bank account designated when you
establish AccountLink. Normally the ACH transfer to your bank is initiated on
the business day after the redemption. You do not receive dividends on the
proceeds of the shares you redeemed while they are waiting to be transferred.
Selling Shares by Wire. You may request that redemption proceeds of $2,500 or
more be wired in Federal Funds to a previously designated account at a
commercial bank that is a member of the Federal Reserve wire system. There is a
$10 fee for each wire. To place a wire redemption request, call the Transfer
Agent at 1-800- 852-8457.
Selling Shares Through Your Dealer. The Distributor has made arrangements to
repurchase Fund shares from dealers and brokers on behalf of their customers.
Brokers or dealers may charge for that service. Please call your dealer for more
information about this procedure. Please refer to "Special Arrangements for
Repurchase of Shares from Dealers and Brokers" in the Statement of Additional
Information for more details.
Checkwriting. To be able to write checks against your Fund account, you may
request that privilege on your Account Application or you can contact the
Transfer Agent for signature cards, which must be signed (with a signature
guarantee) by all owners of the account and returned to the Transfer Agent so
that checks can be sent to you to use. Shareholders with joint accounts can
elect in writing to have checks paid over the signature of one owner.
o Checks can be written to the order of whomever you wish, but may not be
cashed at the Fund's bank or custodian.
o Checkwriting privileges are not available for accounts holding shares
subject to a contingent deferred sales charge.
o Checks must be written for at least $100.
o Checks cannot be paid if they are written for more than your account
value.
o You may not write a check that would require the Fund to redeem shares
that were purchased by check or Asset Builder Plan payments within the prior 10
days.
o Don't use your checks if you changed your Fund account number.
How to Exchange Shares
Shares of the Fund may be exchanged for Class A shares of other Oppenheimer
funds. 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 12 months (18 months for shares purchased prior to
May 1, 1997) of the end of the calendar month of the initial purchase of the
exchanged Class A shares, a Class A contingent deferred sales charge may be
deducted from the proceeds. That sales charge will be equal to 1.0% of either
(1) the aggregate net asset value of the redeemed shares (not including shares
purchased by reinvestment of dividends or capital gain distributions) or (2) the
original cost of the shares, whichever is less. However, the Class A contingent
deferred sales charge will not exceed the aggregate commissions the Distributor
paid to your dealer on all Class A shares of all Oppenheimer funds you purchased
subject to the Class A contingent deferred sales charge. Fund shares purchased
by reinvesting dividends or by exchange of shares from other Oppenheimer fund
accounts on which you paid a sales charge may be exchanged at net asset value
per share at the time of exchange, without sales charge. However, when you
exchange other shares of the Fund for shares of Oppenheimer funds that have a
sales charge, you will be subject to that charge. To exchange shares, you must
meet several conditions:
o Shares of the fund selected for exchange must be available for sale in
your state of residence
o The prospectuses of this Fund and the fund whose shares you want to buy
must offer the exchange privilege
o You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them; after the account is open 7 days, you
can exchange shares every regular business day
o You must meet the minimum purchase requirements for the fund you purchase
by exchange
o Before exchanging into a fund, you should obtain and read its prospectus
Shares of a particular class of an Oppenheimer fund may be exchanged only
for shares of the same class in the other Oppenheimer funds. For example, you
can exchange shares of this Fund only for Class A shares of another fund. In
some cases, sales charges may be imposed on exchange transactions. Please refer
to "How to Exchange Shares" in the Statement of Additional Information for more
details.
Exchanges may be requested in writing or by telephone:
o Written Exchange Requests. Submit an OppenheimerFunds Exchange Request
form, signed by all owners of the account. Send it to the Transfer Agent at the
addresses listed in "How to Sell Shares."
o Telephone Exchange Requests. Telephone exchange requests may be made
either by calling a service representative at 1-800- 852-8457 or by using
PhoneLink for automated exchanges, by calling 1-800-533-3310. Telephone
exchanges may be made only between accounts that are registered with the same
name(s) and address. Shares held under certificates may not be exchanged by
telephone.
You can find a list of Oppenheimer funds currently available for exchange
in the Statement of Additional Information or by calling a service
representative at 1-800-525-7048. That list can change from time to time.
There are certain exchange policies you should be aware of:
o Shares are normally redeemed from one fund and purchased from the other
fund in the exchange transaction on the same regular business day on which the
Transfer Agent receives an exchange request that is in proper form by the close
of The New York Stock Exchange that day, which is normally 4:00 P.M., but may be
earlier on some days. However, either fund may delay the purchase of shares of
the fund you are exchanging into up to seven days if it determines it would be
disadvantaged by a same-day transfer of the proceeds to buy shares. For example,
the receipt of multiple exchange requests from a dealer in a "market-timing"
strategy might require the disposition of securities at a time or price
disadvantageous to the Fund.
o Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange request that
will disadvantage it, or to refuse multiple exchange requests submitted by a
shareholder or dealer.
o The Fund may amend, suspend or terminate the exchange privilege at any
time. Although the Fund will attempt to provide you notice whenever it is
reasonably able to do so, it may impose these changes at any time.
o For tax purposes, exchanges of shares involve a redemption of the shares
of the fund you own and a purchase of shares of the other fund.
o If the Transfer Agent cannot exchange all the shares you request because
of a restriction cited above, only the shares eligible for exchange will be
exchanged.
Shareholder Account Rules and Policies
o Net asset value per share of the Fund will normally be maintained at
$1.00, except under extraordinary circumstances (see "Determination of Net Asset
Value Per Share" in the Statement of Additional Information for further
information).
o The offering of shares may be suspended during any period in which the
determination of net asset value is suspended, and the offering may be suspended
by the Board of Directors at any time the
Board believes it is in the Fund's best interest to do so.
o Telephone transaction privileges for purchases, redemptions or exchanges
may be modified, suspended or terminated by the Fund at any time. If an account
has more than one owner, the Fund and the Transfer Agent may rely on the
instructions of any one owner. Telephone privileges apply to each owner of the
account and the dealer representative of record for the account unless and until
the Transfer Agent receives cancellation instructions from an owner of the
account.
o The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not use
reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise neither the Transfer Agent nor the Fund will be
liable for losses or expenses arising out of telephone instructions reasonably
believed to be genuine. If you are unable to reach the Transfer Agent during
periods of unusual market activity, you may not be able to complete a telephone
transaction and should consider placing your order by mail.
o Redemption or transfer requests will not be honored until the Transfer
Agent receives all required documents in proper form. From time to time, the
Transfer Agent in its discretion may waive certain of the requirements for
redemptions stated in this Prospectus.
o Dealers that can perform account transactions for their clients by
participating in NETWORKING through the National Securities Clearing Corporation
are responsible for obtaining their clients' permission to perform those
transactions and are responsible to their clients who are shareholders of the
Fund if the dealer performs any transaction erroneously or improperly.
o Payment for redeemed shares is made ordinarily in cash and forwarded by
check or through AccountLink (as elected by the shareholder under the redemption
procedures described above) within 7 days after the Transfer Agent receives
redemption instructions in proper form, except under unusual circumstances
determined by the Securities and Exchange Commission delaying or suspending such
payments. For accounts registered in the name of a broker-dealer, payment will
be forwarded within 3 business days. The Transfer Agent may delay forwarding a
check or processing a payment via AccountLink for recently purchased shares, but
only until the purchase payment has cleared. That delay may be as much as 10
days from the date the shares were purchased. That delay may be avoided if you
purchase shares by federal funds wire, certified check or arrange to have your
bank provide telephone or written assurance to the Transfer Agent that your
purchase payment has cleared.
o "Backup Withholding" of Federal income tax may be applied at the rate of
31% from dividends, distributions and redemption proceeds (including exchanges)
if you fail to furnish the Fund a certified Social Security or Employer
Identification Number when you sign your application, or if you violate Internal
Revenue Service regulations on tax reporting of income.
o The Fund does not charge a redemption fee, but if your dealer or broker
handles your redemption, they may charge a fee. That fee can be avoided by
redeeming your Fund shares directly through the Transfer Agent. The Fund will
charge a $10 transaction fee for sending redemption proceeds by Federal Funds
wire.
o To avoid sending duplicate copies of materials to households, the Fund
will mail only one copy of each annual and semi-annual report to shareholders
having the same last name and address on the Fund's records. However, each
shareholder may call the Transfer Agent at 1-800-525-7048 to ask that copies of
those materials be sent personally to that shareholder.
Dividends, Capital Gains and Taxes
Dividends and Distributions. The Fund declares dividends from net investment
income and pays those dividends to shareholders monthly as of a date selected by
the Board of Directors. To effect its policy of maintaining a net asset value of
$1.00 per share, under certain circumstances, the Fund may withhold dividends or
make distributions from capital or capital gains. The Fund intends to be as
fully invested as practicable to maximize its yield. Therefore, dividends will
accrue on newly-purchased shares only after the purchase order is accepted by
the Distributor, as described in "How to Buy Shares."
Capital Gains. The Fund may make distributions annually in December out of any
net short-term or long-term capital gains, and the Fund may make supplemental
distributions of dividends and capital gains following the end of its fiscal
year. Long-term capital gains will be separately identified in the tax
information the Fund sends you after the end of the year. Short-term capital
gains are treated as dividends for tax purposes. Because the Fund normally holds
its investments to maturity, normally the Fund will not pay any capital gains
distributions.
Distribution Options. When you open your account, specify on your application
how you want to receive your distributions. For OppenheimerFunds retirement
accounts, all distributions are reinvested. For other accounts, you have four
options:
o Reinvest All Distributions in the Fund. You can elect to reinvest all
dividends and long-term capital gains distributions in additional shares of the
Fund.
o Reinvest Long-Term Capital Gains Only. You can elect to reinvest
long-term capital gains in the Fund while receiving dividends by check or sent
to your bank account on AccountLink.
o Receive All Distributions in Cash. You can elect to receive a check for
all dividends and long-term capital gains distributions or have them sent to
your bank on AccountLink.
o Reinvest Your Distributions in Another Oppenheimer Fund Account. You can
reinvest all distributions in the same class of shares of another Oppenheimer
fund account you have established.
Taxes. If your account is not a tax-deferred retirement account, you should be
aware of the following tax implications of investing in the Fund. Dividends paid
from short-term capital gains and net investment income are taxable as ordinary
income. Long-term capital gains are taxable as long-term capital gains when
distributed to shareholders. It does not matter how long you held your shares.
Distributions are subject to federal income tax and may be subject to state or
local taxes. Your distributions are taxable when paid, whether you reinvest them
in additional shares or take them in cash. Every year the Fund will send you and
the IRS a statement showing the amount of each taxable distribution you received
in the previous year.
o Taxes on Transactions. Share redemptions, including redemptions for
exchanges, are subject to capital gains tax. A capital gain or loss is the
difference, if any, between the price you paid for the shares and the price you
received when you sold them. Because the Fund's share price will normally remain
fixed at $1.00 per share, it is unlikely under normal circumstances that you
will realize a capital gain or loss on selling your shares (but there can be no
assurance that the Fund's share price will not vary).
o Returns of Capital. In certain cases distributions made by the Fund may
be considered a non-taxable return of capital to shareholders. If that occurs,
it will be identified in notices to shareholders. A non-taxable return of
capital may reduce your tax basis in your Fund shares.
This information is only a summary of certain federal tax information
about your investment. More information is contained in the Statement of
Additional Information, and in addition you should consult with your tax advisor
about the effect of an investment in the Fund on your particular tax situation.
-4-
<PAGE>
Oppenheimer Money Market Fund, Inc.
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Advisor
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
No dealer, broker, salesperson or any other person has been authorized to give
any information or to make any representations other than those contained in
this Prospectus or the Statement of Additional Information, and if given or
made, such information and representations must not be relied upon as having
been authorized by the Fund, OppenheimerFunds, Inc., OppenheimerFunds
Distributor, Inc. or any affiliate thereof. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any of the securities
offered hereby in any state to any person to whom it is unlawful to make such
offer in such state. PR0200.001.1197 Printed on recycled paper
-5-
<PAGE>
Oppenheimer Money Market Fund, Inc.
Two World Trade Center, New York, New York 10048
1-800-525-7048
Statement of Additional Information dated November 26, 1997
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 November 26, 1997.
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.........................................
Financial Information About the Fund
Independent Auditors' Report..................................................
Financial Statements..........................................................
Appendices
Appendix A: Description of Securities Ratings..............................A-1
Appendix B: Industry Classifications.......................................B-1
<PAGE>
ABOUT THE FUND
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and policies of the
Fund are described in the Prospectus. Set forth below is supplemental
information about those policies and the types of securities in which the Fund
may invest, as well as the strategies the Fund may use to try to achieve its
objective. 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 the maximum current income that is
consistent with stability of principal. 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.
o 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.
o 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.
o 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.
o 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 90-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.
o 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.
o 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 ("Investment Company Act"). 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.
o Asset-Backed Securities. These securities, issued by trusts and special
purpose corporations, are backed by pools of assets, primarily automobile and
credit-card receivables and home equity loans, which pass through the payments
on the underlying obligations to the security holders (less servicing fees paid
to the originator or fees for any credit enhancement). The value of an
asset-backed security is affected by changes in the market's perception of the
asset backing the security, the creditworthiness of the servicing agent for the
loan pool, the originator of the loans, or the financial institution providing
any credit enhancement, and is also affected if any credit enhancement has been
exhausted. Payments of principal and interest passed through to holders of
asset-backed securities are typically supported by some form of credit
enhancement, such as a letter of credit, surety bond, limited guarantee by
another entity or having a priority to certain of the borrower's other
securities. The degree of credit enhancement varies, and generally applies to
only a fraction of the asset-backed security's par value until exhausted. If the
credit enhancement of an asset-backed security held by the Fund has been
exhausted, and if any required payments of principal and interest are not made
with respect to the underlying loans, the Fund may experience losses or delays
in receiving payment. The risks of investing in asset-backed securities are
ultimately dependent upon payment of consumer loans by the individual borrowers.
As a purchaser of an asset- backed security, the Fund would generally have no
recourse to the entity that originated the loans in the event of default by a
borrower. The underlying loans are subject to prepayments, which shorten the
weighted average life of asset-backed securities and may lower their return, in
the same manner as described above for prepayments of a pool of mortgage loans
underlying mortgage-backed securities. However, asset-backed securities do not
have the benefit of the same security interest in the underlying collateral as
do mortgage-backed securities.
Other Investment Techniques and Strategies
o 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.
o Loans of Portfolio Securities. To attempt to increase its income, the
Fund may lend its portfolio securities to brokers, dealers and other financial
institutions. The Fund must receive collateral for such loans, which are limited
to no more than 10% of the value of the Fund's total assets and are subject to
other conditions described herein. There are some risks in lending securities.
The Fund could experience a delay in receiving additional collateral to secure a
loan, or a delay in recovering the loaned securities. The Fund presently does
not intend to lend its securities, but if it does, the value of securities
loaned is not expected to exceed 5% of the value of the Fund's total assets.
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, Director, 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.
o 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 advisor 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 California
Municipal Fund, Oppenheimer Capital Appreciation Fund, Oppenheimer Developing
Markets Fund, Oppenheimer Discovery Fund, Oppenheimer Enterprise Fund,
Oppenheimer Global Fund, Oppenheimer Global Growth & Income Fund, Oppenheimer
Gold & Special Minerals Fund, Oppenheimer Growth Fund, Oppenheimer International
Growth Fund, Oppenheimer Municipal Bond Fund, Oppenheimer Multi-Sector Income
Trust, Oppenheimer Multi-State Municipal Trust, Oppenheimer Multiple Strategies
Fund, Oppenheimer New York Municipal Fund, Oppenheimer Series Funds, Inc.,
Oppenheimer U. S. Government Trust and Oppenheimer World Bond Fund, (the "New
York-based Oppenheimer funds"). Ms. Macaskill and 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 Oppenheimer funds as with the Fund.
As of November 1, 1997, 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 (two of the officers of the Fund listed below, Ms.
Macaskill and Mr. Donohue, are trustees of the 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 72 31 West 52nd Street, New
York, NY 10019
General Partner of Odyssey Partners, L.P. (investment partnership)(since 1982)
and Chairman of Avatar Holdings, Inc. (real estate development).
ROBERT G. GALLI, Director*; Age 64
Vice Chairman of OppenheimerFunds, Inc. (the "Manager") (since October 1995);
formerly he held the following positions: Vice President and Counsel of
Oppenheimer Acquisition Corp. ("OAC"), the Manager's parent holding company;
Executive Vice President, General Counsel and a director of the Manager and
OppenheimerFunds Distributor, Inc. (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 and an officer of other Oppenheimer funds.
BENJAMIN LIPSTEIN, Director; Age 74
591 Breezy Hill Road, Hillsdale, N.Y. 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 49
President (since June 1991), Chief Executive Officer (since September 1995) and
a Director (since December 1994) of the Manager; President and director (since
June 1991) of HarbourView; Chairman and a director of SSI (since August 1994),
and SFSI (September 1995); President (since September 1995) and a director
(since October 1990) of OAC; President (since September 1995) and a director
(since November 1989) of Oppenheimer Partnership Holdings, Inc., a holding
company subsidiary of the Manager; a director of Oppenheimer Real Asset
Management, Inc. (since July 1996); President and a director (since October
1997) of OppenheimerFunds International Ltd., an offshore fund manager
subsidiary of the Manager ("OFIL") and Oppenheimer Millennium Funds plc (since
October 1997); President and a director of other Oppenheimer funds; a director
of the NASDAQ Stock Market, Inc. and of Hillsdown Holdings plc (a U.K. food
company); formerly an Executive Vice President of the Manager.
ELIZABETH B. MOYNIHAN, Director; Age 68
801 Pennsylvania Avenue, N.W., Washington, D.C. 20004
Author and architectural historian; a trustee of the Freer Gallery of Art
(Smithsonian Institution), the Institute of Fine Arts (New York University),
National Building Museum; a member of the Trustees Council, Preservation League
of New York State, and of the Indo-U.S. Sub-Commission on Education and Culture.
KENNETH A. RANDALL, Director; Age 70
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), Texan
Cogeneration Company (cogeneration company), Prime Retail, Inc. (real estate
investment trust); formerly President and Chief Executive Officer of The
Conference Board, Inc. (international economic and business research) and a
director of Lumbermens Mutual Casualty Company, American Motorists Insurance
Company and American Manufacturers Mutual Insurance Company.
EDWARD V. REGAN, Director; Age 67
40 Park Avenue, New York, New York 10016
Chairman of Municipal Assistance Corporation for the City of New York; Senior
Fellow of Jerome Levy Economics Institute, Bard College; a member of the U.S.
Competitiveness Policy Council; a director of GranCare, Inc. (health care
provider); a director of River Bank America (real estate manager); Trustee,
Financial Accounting Foundation (FASB and GASB); formerly New York State
Comptroller and trustee, New York State and Local Retirement Fund.
RUSSELL S. REYNOLDS, JR., Director; Age 65
8 Sound Shore Drive, Greenwich, Connecticut 06830
Founder Chairman of Russell Reynolds Associates, Inc. (executive recruiting);
Chairman of Directorship Inc. (corporate governance consulting); a director of
Professional Staff Limited (U.K); a trustee of Mystic Seaport Museum,
International House and Greenwich Historical Society.
DONALD W. SPIRO, Vice Chairman and Director*; Age 71
Chairman Emeritus (since August 1991) and a director (since January 1969) of the
Manager; formerly Chairman of the Manager and the Distributor.
PAULINE TRIGERE, Director; Age 85
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 66
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel, Hogan & Hartson (a law firm); a director of B.A.T. Industries, Ltd.
(tobacco and financial services), Caterpillar, Inc. (machinery), ConAgra, Inc.
(food and agricultural products), Farmers Insurance Company (insurance), FMC
Corp. (chemicals and machinery) and Texas Instruments, Inc. (electronics);
formerly (in descending chronological order) IMC Global Inc. (chemicals and
animal feed), 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 45
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager and Centennial; an officer of other Oppenheimer
funds.
ANDREW J. DONOHUE, Secretary; Age 47
Executive Vice President (since January 1993), General Counsel (since October
1991) and a Director (since September 1995) of the Manager; Executive Vice
President (since September 1993), and a director (since January 1992) of the
Distributor; Executive Vice President, General Counsel and a director of
HarbourView, SSI, SFSI and Oppenheimer Partnership Holdings, Inc. since
(September 1995) and MultiSource Services, Inc. (a broker-dealer) (since
December 1995); President and a director of Centennial (since September 1995);
President and a director of Oppenheimer Real Asset Management, Inc. (since July
1996); General Counsel (since May 1996) and Secretary (since April 1997) of OAC;
Vice President of OFIL and Oppenheimer Millennium Funds plc (since October
1997); an officer of other Oppenheimer funds.
GEORGE C. BOWEN, Treasurer; Age 61
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President (since September 1987) and Treasurer (since March 1985) of
the Manager; Vice President (since June 1983) and Treasurer (since March 1985)
of the Distributor; Vice President (since October 1989) and Treasurer (since
April 1986) of HarbourView; Senior Vice President (since February 1992),
Treasurer (since July 1991) and a director (since December 1991) of Centennial;
President, Treasurer and a director of Centennial Capital Corporation (since
June 1989); Vice President and Treasurer (since August 1978) and Secretary
(since April 1981) of SSI; Vice President, Treasurer and Secretary of SFSI
(since November 1989); Treasurer of OAC (since June 1990); Treasurer of
Oppenheimer Partnership Holdings, Inc. (since November 1989); Vice President and
Treasurer of Oppenheimer Real Asset Management, Inc. (since July 1996); Chief
Executive Officer, Treasurer and a director of MultiSource Services, Inc., a
broker-dealer (since December 1995); an officer of other Oppenheimer funds.
ROBERT J. BISHOP, Assistant Treasurer; Age 39
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); an
officer of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for
the Manager.
SCOTT T. FARRAR, Assistant Treasurer; Age 32
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); Assistant
Treasurer of Oppenheimer Millennium Funds plc (since October 1997); an officer
of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for
the Manager.
ROBERT G. ZACK, Assistant Secretary; Age 49
Senior Vice President (since May 1985) and Associate General Counsel (since May
1981) of the Manager, Assistant Secretary of SSI (since May 1985), and SFSI
(since November 1989); Assistant Secretary of Oppenheimer Millennium Funds plc
(since October 1997); an officer of other Oppenheimer funds.
- ----------------------
* Director who is an "interested person" of the Fund as defined in the
Investment Company Act.
o Remuneration of Directors. The officers of the Fund and certain Directors
of the Fund (Messrs. Galli and Spiro) who are affiliated with the Manager
receive no salary or fee from the Fund. The remaining Directors of the Fund
received the compensation shown below. The compensation from the Fund was paid
during its fiscal year ended July 31, 1997. The compensation from all of the New
York-based Oppenheimer funds includes the Fund and is compensation received as a
director, trustee or member of a committee of the Board during the calendar year
1996.
Total Compensation
Aggregate Retirement Benefit From All New York-
Name and Position Compensation Accrued as Part based Oppenheimer
From the Fund of Fund Expenses funds (1)
Leon Levy None $9,416 $152,750
Chairman and
Director
Benjamin Lipstein None $5,631 $91,350
Study Committee
Chairman, Audit
Committee member
and Director(2)
Elizabeth B. Moynihan None $5,631 $91,350
Study Committee
Member and Director
Kenneth A. Randall None $5,144 $83,450
Audit Committee
Chairman and Director
Edward V. Regan None $4,817 $78,150
Proxy Committee
Chairman, Audit
Committee Member
and Director
Russell S. Reynolds, Jr.None $3,625 $58,800
Proxy Committee
Member and Director
Pauline Trigere None $3,409 $55,300
Director
Clayton K. Yeutter None $3,625 $58,800
Proxy Committee
Member and Director
- ----------------------
(1) For the 1996 calendar year
(2) Committee position held during a portion of the period shown.
o Deferred Compensation Plan. The Board of Directors has adopted a
Deferred Compensation Plan for disinterested directors that enables them to
elect to defer receipt of all or a portion of the annual fees they are entitled
to receive from the Fund. Under this plan, the compensation deferred by a
Director is periodically adjusted as though an equivalent amount had been
invested in shares of one or more Oppenheimer funds selected by the Director.
The amount paid to the Director under this plan will be determined based upon
the performance of the selected funds. Deferral of Directors' fees under this
plan will not materially affect the Fund's assets, liabilities and net income
per share. This plan will not obligate the Fund to retain the services of any
Director or to pay any particular level of compensation to any Director.
Pursuant to an Order issued by the Securities and Exchange Commission, the Fund
may invest in the funds selected by the Director under this plan without
shareholder approval for the limited purpose of determining the value of the
Directors' deferred fee accounts.
o Retirement Plan. The Fund has adopted a retirement plan that provides
for payment to a retired Director of up to 80% of the average compensation paid
during that Director's five years of service in which the highest compensation
was received. A Director 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 Director's retirement benefits will depend on the amount
of the Director'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.
Payments of $14,926 have been made by the Fund as of July 31, 1997.
o Major Shareholders. As of November 1, 1997, no person owned of record or
was known by the Fund to own beneficially 5% or more of the Fund's outstanding
shares except OppenheimerFunds Distributor, Inc. which owns 75,911,490.24 shares
which is 6.93% of the outstanding shares of the Fund.
The Manager and Its Affiliates. The Manager is wholly-owned by Oppenheimer
Acquisition Corp. ("OAC"), a holding company controlled by Massachusetts Mutual
Life Insurance Company. OAC is also owned in part by certain of the Manager's
directors and officers, some of whom also serve as officers of the Fund, and two
of whom (Messrs. Galli and Spiro) serve as Directors of the Fund.
o 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 Investment
Advisory Agreement or by the Distributor under the General Distributor's
Agreement are paid by the Fund. The Investment Advisory Agreement lists examples
of expenses paid by the Fund. The major categories 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 Investment 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 year ended
December 31, 1995, the fiscal period of January 1, 1996 to July 31, 1996 and the
fiscal year ended July 31, 1997, the Fund paid management fees of $3,759,621,
$2,296,019 and $4,413,500, respectively, to the Manager pursuant to the
Investment Advisory Agreement.
The Investment 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 Investment Advisory Agreement. The Investment
Advisory Agreement permits the Manager to act as investment advisor 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
advisor or general distributor. If the Manager shall no longer act as investment
advisor to the Fund, the right of the Fund to use the name "Oppenheimer" as part
of its name may be withdrawn.
o 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.
o 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.
o 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 and may increase the Fund's transaction
costs. 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
o 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 July 31, 1997,
was 4.87% and its "compounded effective yield" was 4.99%.
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.
o 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(TM))
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, Martin Luther King Jr. 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's Board of Directors has established procedures for the valuation
of the Fund's securities, generally as follows: (i) long-term debt securities
having a remaining maturity in excess of 60 days are valued based on the mean
between the "bid" and "asked" prices determined by a portfolio pricing service
approved by the Fund's Board of Directors or obtained by the Manager from two
active market makers in the security on the basis of reasonable inquiry; (ii)
debt instruments having a maturity of more than 397 days when issued, and
non-money market type instruments having a maturity of 397 days or less when
issued, which have a remaining maturity of 60 days or less are valued at the
mean between the "bid" and "asked" prices determined by a pricing service
approved by the Fund's Board of Directors or obtained by the Manager from two
active market makers in the security on the basis of reasonable inquiry; (iii)
money market type debt securities held by a non-money market fund that had a
maturity of less than 397 days when issued that have a remaining maturity of 60
days or less, and debt instruments held by a money market fund that have a
maturity of 397 days or less shall be valued at cost, adjusted for amortization
of premiums and accretion of discounts; and (iv) securities (including
restricted securities) not having readily-available market quotations are valued
at fair value determined under the Board's procedures. If the Manager is unable
to locate two market makers willing to give quotes (see (i) and (ii) above), the
security may be priced at the mean between the "bid" and "asked" prices provided
by a single active market maker (which in certain cases may be the "bid" price
if no "asked" price is available).
In the case of U.S. Government Securities and mortgage-backed securities,
where last sale information is not generally available, such pricing procedures
may include "matrix" comparisons to the prices for comparable instruments on the
basis of quality, yield, maturity and other special factors involved. The
Manager may use pricing services approved by the Board of Directors to price
U.S. Government Securities or mortgage-backed securities for which last sale
information is not generally available. The Manager will monitor the accuracy of
such pricing services, which may include comparing prices used for portfolio
evaluation to actual sales prices of selected securities.
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 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. If you make payments from your bank account to
purchase shares of the Fund, your bank account will be automatically debited
normally four to five business days prior to the investment dates selected in
the Account Application. Neither the Distributor, the Transfer Agent nor the
Fund shall be responsible for any delays in purchasing shares resulting from
delays in ACH transmission.
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.
o 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:
Limited Term New York Municipal Fund Oppenheimer Bond Fund Oppenheimer Bond Fund
for Growth Oppenheimer California Municipal Fund Oppenheimer Capital
Appreciation Fund Oppenheimer Champion Income Fund Oppenheimer Developing
Markets Fund Oppenheimer Disciplined Allocation Fund Oppenheimer Disciplined
Value Fund Oppenheimer Discovery Fund Oppenheimer Enterprise Fund Oppenheimer
Equity Income Fund Oppenheimer Florida Municipal Fund Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund Oppenheimer Global Securities Fund
Oppenheimer Gold & Special Minerals Fund Oppenheimer Growth Fund Oppenheimer
Growth & Income Fund Oppenheimer High Income Fund Oppenheimer High Yield Fund
Oppenheimer Insured Municipal Fund Oppenheimer Intermediate Municipal Fund
Oppenheimer International Bond Fund Oppenheimer International Growth Fund
Oppenheimer International Small Company Fund Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Growth Fund Oppenheimer LifeSpan Income Fund Oppenheimer
Limited-Term Government Fund
Oppenheimer Main Street California Municipal Fund Oppenheimer Main Street Income
& Growth Fund Oppenheimer MidCap Fund Oppenheimer Money Fund Oppenheimer
Multi-Sector Income Trust Oppenheimer Multiple Strategies Fund Oppenheimer
Municipal Bond Fund Oppenheimer New Jersey Municipal Fund Oppenheimer New York
Municipal Fund Oppenheimer Pennsylvania Municipal Fund Oppenheimer Quest Capital
Value Fund, Inc. Oppenheimer Quest Global Value Fund, Inc. Oppenheimer Quest
Growth & Income Value Fund Oppenheimer Quest Officers Value Fund Oppenheimer
Quest Opportunity Value Fund Oppenheimer Quest Small Cap Value Fund Oppenheimer
Quest Value Fund, Inc. Oppenheimer Real Asset Fund Oppenheimer Strategic Bond
Fund Oppenheimer Strategic Income Fund Oppenheimer Total Return Fund, Inc.
Oppenheimer U.S. Government Trust Oppenheimer World Bond Fund Panorama Series
Fund Inc. Rochester Fund Municipals The New York Tax-Exempt Income Fund, Inc.
the following "Money Market Funds":
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
Oppenheimer Cash Reserves
Oppenheimer Money Market 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.
By choosing the Checkwriting privilege, whether you do so by signing the
Account Application or by completing a Checkwriting card, the individuals
signing (1) represent that they are either the registered owner(s) of the shares
of the Fund, or are an officer, general partner, trustee or other fiduciary or
agent, as applicable, duly authorized to act on behalf of such registered
owner(s); (2) authorize the Fund, its Transfer Agent and any bank through which
the Fund's drafts ("checks") are payable (the "Bank"), to pay all checks drawn
on the Fund account of such person(s) and to effect a redemption of sufficient
shares in that account to cover payment of such checks; (3) specifically
acknowledge(s) that if you choose to permit a single signature on checks drawn
against joint accounts, or accounts for corporations, partnerships, trusts or
other entities, the signature of any one signatory on a check will be sufficient
to authorize payment of that check and redemption from an account even if that
account is registered in the names of more than one person or even if more than
one authorized signature appears on the Checkwriting card or the Application, as
applicable; and (4) understand(s) that the Checkwriting privilege may be
terminated or amended at any time by the Fund and/or the Bank and neither shall
incur any liability for such amendment or termination or for effecting
redemptions to pay checks reasonably believed to be genuine, or for returning or
not paying checks which have not been accepted for any reason.
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 on behalf of their customers. The shareholders should contact the
broker or dealer to arrange this type of redemption. The repurchase price per
share will be the net asset value next computed after the Distributor receives
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. Shares are
normally redeemed pursuant to an Automatic Withdrawal Plan three business days
before the date you select in the Account Application. If a contingent deferred
sales charge applies to the redemption, the amount of the check or payment will
be reduced accordingly. The Fund cannot guarantee receipt of a payment on the
date requested 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 as
well as in 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.
o 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.
o 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 current 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 12 months (18 months for shares purchased prior to May 1, 1997)
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.
For accounts established on or before March 8, 1996 holding Class M shares
of Oppenheimer Bond Fund for Growth, Class M shares can be exchanged only for
Class A shares of other Oppenheimer funds. Exchanges to Class M shares of
Oppenheimer Bond Fund for Growth are permitted from Class A shares of
Oppenheimer Money Market Fund, Inc. or Oppenheimer Cash Reserves that were
acquired by exchange from Class M shares. Otherwise no exchanges of any class of
any Oppenheimer fund into Class M shares are permitted.
The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of more than one account. The
Fund may accept requests for exchanges of up to 50 accounts per day from
representatives of authorized dealers that qualify for this privilege. In
connection with any exchange request, the number of shares exchanged may be less
than the number requested if the exchange or the number requested would include
shares subject to a restriction cited in the Prospectus or this Statement of
Additional Information or would include shares covered by a share certificate
that is not tendered with the request. In those cases, only the shares available
for exchange without restriction will be exchanged.
When exchanging shares by telephone, a shareholder must either have an
existing account in, or obtain and acknowledge receipt of a prospectus of, the
fund to which the exchange is to be made. For full or partial exchanges of an
account made by telephone, any special account features such as Asset Builder
Plans, Automatic Withdrawal Plans and retirement plan contributions will be
switched to the new account unless the Transfer Agent is instructed otherwise.
If all telephone lines are busy (which might occur, for example, during periods
of substantial market fluctuations), shareholders might not be able to request
exchanges by telephone and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the "Redemption
Date"). Normally, shares of the fund to be acquired are purchased on the
Redemption Date, but such purchases may be delayed by either fund up to five
business days if it determines that it would be disadvantaged by an immediate
transfer of the redemption proceeds. The Fund reserves the right, in its
discretion, to refuse any exchange request that may disadvantage it (for
example, if the receipt of multiple exchange requests from a dealer might
require the disposition of portfolio securities at a time or at a price that
might be disadvantageous to the Fund).
The different Oppenheimer funds available for exchange have different
investment objectives, policies and risks, and a shareholder should assure that
the Fund selected is appropriate for his or her investment and should be aware
of the tax consequences of an exchange. For Federal income tax purposes, an
exchange transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. 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, Capital Gains 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 "The Oppenheimer
Funds," 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.
-2-
<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 July 31, 1997, the
related statement of operations for the year then ended, the statements of
changes in net assets for the year then ended, the seven-month period ended July
31, 1996 and the year ended December 31, 1995, and the financial highlights for
the year ended July 31, 1997, the seven-month period ended July 31, 1996 and for
each of the years in the four-year period ended December 31, 1995. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of July 31, 1997, 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 July 31, 1997, the results
of its operations for the year then ended, the changes in its net assets for the
year then ended, the seven-month period ended July 31, 1996 and the year ended
December 31, 1995, and the financial highlights for the year ended July 31,
1997, the seven-month period ended July 31, 1996 and for each of the years in
the four-year period ended December 31, 1995, in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick
KPMG Peat Marwick LLP
Denver, Colorado
August 21, 1997
<PAGE>
Statement of Investments July 31, 1997
Face Value
Amount See Note 1
================================================================================
Bankers' Acceptances-1.5%
- --------------------------------------------------------------------------------
BankBoston, N.A.:
5.60%, 10/24/97 $ 5,000,000 $ 4,934,667
5.60%, 12/12/97 5,000,000 4,896,555
5.67%, 12/8/97 5,710,000 5,593,987
----------
Total Bankers' Acceptances 15,425,209
================================================================================
Certificates of Deposit-1.9%
- --------------------------------------------------------------------------------
Societe Generale:
5.65%, 11/14/97 4,000,000 3,934,083
5.68%, 8/21/97 5,000,000 4,999,985
5.72%, 10/21/97 10,000,000 9,992,626
----------
Total Certificates of Deposit 18,926,694
================================================================================
Direct Bank Obligations-3.9%
- --------------------------------------------------------------------------------
Abbey National North America Corp., 5.54%, 1/23/98 10,000,000 9,730,695
- --------------------------------------------------------------------------------
BankBoston, N.A., 5.69%, 9/8/97 5,000,000 5,000,000
- --------------------------------------------------------------------------------
Bankers Trust Co., New York:
5.60%, 11/20/97(1) 5,000,000 4,998,897
5.71%, 4/15/98(1) 10,000,000 10,000,000
- --------------------------------------------------------------------------------
CoreStates Bank, N.V., 5.596%, 12/18/97(1) 5,000,000 4,998,919
- --------------------------------------------------------------------------------
FCC National Bank, 5.62%, 2/20/98(1) 5,000,000 4,998,639
----------
Total Direct Bank Obligations 39,727,150
================================================================================
Letters of Credit-7.2%
- --------------------------------------------------------------------------------
ABN Amro Bank, N.V., guaranteeing commercial paper of Formosa Plastics Corp.
USA-Series A:
5.60%, 9/22/97 10,000,000 9,919,111
5.63%, 8/28/97 10,000,000 9,957,775
- --------------------------------------------------------------------------------
Barclays Bank PLC, guaranteeing commercial paper of Banco Bradesco SA Grand
Cayman Branch:
Series A, 5.54%, 12/1/97 4,000,000 3,924,902
Series B, 5.62%, 12/3/97 10,000,000 9,806,422
- --------------------------------------------------------------------------------
Bayerische Vereinsbank AG, guaranteeing commercial paper of:
Banco Rio de la Plata S.A.-Series A, 5.31%, 8/25/97 5,000,000 4,982,300
Galicia Funding Corp.-Series B, 5.62%, 9/5/97(2) 5,000,000 4,972,681
- --------------------------------------------------------------------------------
Credit Suisse, guaranteeing commercial paper
of: Guangdon Enterprises Ltd., 5.67%, 8/19/97 5,000,000 4,985,825
- --------------------------------------------------------------------------------
Societe Generale, guaranteeing commercial paper of:
Banco Nacionale de Comericio Exterior SNC-Series A,
5.61%, 11/25/97 15,000,000 14,728,850
Nacional Financiera SNC-Series A, 5.75%, 8/18/97 10,000,000 9,972,847
----------
Total Letters of Credit 73,250,713
7 Oppenheimer Money Market Fund, Inc.
<PAGE>
Statement of Investments (Continued)
Face Value
Amount See Note 1
================================================================================
Short-Term Notes-81.5%
- --------------------------------------------------------------------------------
Automotive-2.9% BMW US Capital Corp.:
5.55%, 10/6/97 $20,000,000 $ 19,796,500
5.60%, 8/20/97 10,000,000 9,970,444
-----------
29,766,944
- --------------------------------------------------------------------------------
Banks-0.5%
Bankers Trust Co., New York, 5.54%, 12/11/97 5,000,000 4,898,433
- --------------------------------------------------------------------------------
Broker/Dealers-19.1%
Bear Stearns Cos., Inc.:
5.54%, 12/19/97 5,000,000 4,892,278
5.60%, 8/20/97 5,000,000 4,985,222
5.62%, 9/11/97 5,000,000 4,967,997
5.668%, 7/10/98(1) 5,000,000 5,000,000
5.75%, 4/1/98(1) 10,000,000 10,000,000
5.872%, 3/23/98(1) 15,000,000 15,019,897
- --------------------------------------------------------------------------------
CS First Boston, Inc.:
5.54%, 1/22/98(2) 5,000,000 4,866,117
5.60%, 10/1/97 10,000,000 9,905,111
- --------------------------------------------------------------------------------
Goldman Sachs Group, L.P., 5.62%, 10/6/97 5,000,000 4,948,483
- --------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc.:
5.56%, 11/14/97 5,000,000 4,918,917
8.26%, 8/29/97 12,500,000 12,565,750
5.62%, 11/21/97 5,000,000 4,912,578
5.63%, 8/22/97 5,000,000 4,983,579
5.64%, 9/10/97 5,000,000 4,968,667
5.771%, 6/18/98(1) 5,000,000 5,013,912
- --------------------------------------------------------------------------------
Merrill Lynch & Co., Inc.:
5.54%, 12/12/97 7,500,000 7,346,219
5.55%, 12/17/97 10,000,000 9,787,250
5.64%, 1/8/98(1) 10,000,000 9,999,145
5.68%, 3/18/98(1) 5,000,000 4,999,387
5.68%, 7/20/98(1) 5,000,000 5,000,000
5.70%, 9/19/97(1) 5,000,000 5,000,000
- --------------------------------------------------------------------------------
Morgan Stanley Group, Inc., 5.91%, 9/16/98(1) 7,000,000 7,000,000
- --------------------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co.,
5.812%, 3/24/98 30,600,000 30,600,000
- --------------------------------------------------------------------------------
Republic New York Securities Corp., 6.06%, 4/24/98(1) 12,000,000 12,000,000
-----------
193,680,509
- --------------------------------------------------------------------------------
Commercial Finance-11.8%
CIT Group Holdings, Inc., 5.75%, 3/11/98(1) 10,000,000 10,000,000
- --------------------------------------------------------------------------------
Countrywide Home Loans:
5.60%, 8/13/97 10,000,000 9,981,333
5.62%, 8/14/97 5,000,000 4,989,853
8 Oppenheimer Money Market Fund, Inc.
<PAGE>
Face Value
Amount See Note 1
- --------------------------------------------------------------------------------
Commercial Finance (continued)
FINOVA Capital Corp.:
5.57%, 11/10/97 $ 10,000,000 $ 9,843,731
5.60%, 1/5/98 8,000,000 7,804,622
5.55%, 10/16/97 5,265,000 5,203,312
5.61%, 11/21/97 5,000,000 4,912,733
5.63%, 9/25/97 20,000,000 19,828,736
- --------------------------------------------------------------------------------
Heller Financial, Inc.:
5.71%, 10/10/97(1) 5,000,000 4,999,808
5.72%, 8/27/97 5,000,000 4,979,344
5.73%, 9/9/97 5,000,000 4,968,963
5.75%, 12/15/97 15,000,000 14,674,167
5.75%, 9/4/97 10,000,000 9,945,694
5.75%, 9/8/97 3,000,000 2,981,792
5.65%, 12/22/97 5,000,000 4,907,546
-----------
120,021,634
- --------------------------------------------------------------------------------
Consumer Finance-3.4%
Island Finance Puerto Rico, Inc.:
5.53%, 10/27/97 5,000,000 4,933,179
5.54%, 10/29/97 5,000,000 4,931,519
5.55%, 11/5/97 20,000,000 19,704,000
- --------------------------------------------------------------------------------
Sears Roebuck Acceptance Corp., 5.60%, 8/25/97 5,000,000 4,981,333
-----------
34,550,031
- --------------------------------------------------------------------------------
Diversified Financial-11.4%
Associates Corp. of North America, 5.875%, 8/1/97 40,000,000 40,000,000
- --------------------------------------------------------------------------------
General Electric Capital Corp., 5.85%, 8/1/97 41,330,000 41,330,000
- --------------------------------------------------------------------------------
General Motors Acceptance Corp.:
5.56%, 1/26/98 10,000,000 9,725,089
5.73%, 11/18/97 5,000,000 4,913,254
5.75%, 4/21/98(1) 15,000,000 14,994,461
- --------------------------------------------------------------------------------
Prudential Funding Corp., 5.685%, 5/5/98(1) 5,000,000 4,999,084
-----------
115,961,888
- --------------------------------------------------------------------------------
Electronics-2.2%
Avnet, Inc., 5.60%, 10/10/97 5,000,000 4,945,556
- --------------------------------------------------------------------------------
Mitsubishi Electric Finance America, Inc.,
5.65%, 8/27/97(2) 18,000,000 17,926,550
-----------
22,872,106
- --------------------------------------------------------------------------------
Healthcare/Supplies & Services-0.5%
American Home Products Corp., 5.62%, 9/8/97(2) 5,000,000 4,970,339
- --------------------------------------------------------------------------------
Industrial Services-2.5%
Atlas Copco AB, 5.625%, 8/25/97(2) 5,000,000 4,981,250
- --------------------------------------------------------------------------------
PHH Corp., 5.618%, 1/27/98(1) 20,000,000 19,996,943
-----------
24,978,193
9 Oppenheimer Money Market Fund, Inc.
<PAGE>
Statement of Investments (Continued)
Face Value
Amount See Note 1
- --------------------------------------------------------------------------------
Insurance-6.1%
General American Life Insurance Co.,
5.89%, 8/1/97(1)(3) $20,000,000 $20,000,000
- --------------------------------------------------------------------------------
Jackson National Life Insurance Co.:
5.71%, 3/1/98(1)(3) 30,000,000 30,000,000
5.71%, 8/1/98(1)(3) 5,000,000 5,000,000
- --------------------------------------------------------------------------------
TransAmerica Life Insurance & Annuity Co.,
5.736%, 3/22/98(1)(3) 7,000,000 7,000,000
----------
62,000,000
- --------------------------------------------------------------------------------
Leasing & Factoring-1.0%
American Honda Finance Corp., 5.75%, 7/8/98(1) 10,000,000 10,000,000
- --------------------------------------------------------------------------------
Nondurable Household Goods-1.0%
Avon Capital Corp., 5.64%, 8/26/97(2) 10,260,000 10,219,815
- --------------------------------------------------------------------------------
Savings & Loans-2.0%
Great Western Bank FSB, 5.63%, 9/10/97 20,000,000 19,874,889
- --------------------------------------------------------------------------------
Special Purpose Financial-16.6%
Asset Backed Capital Finance, Inc.:
5.60%, 11/17/97(2) 5,000,000 4,916,000
5.60%, 12/26/97(1)(3) 6,000,000 5,997,946
5.92%, 3/16/98(1)(3) 5,000,000 4,998,606
- --------------------------------------------------------------------------------
Beta Finance, Inc.:
5.71%, 11/26/97(2) 8,000,000 7,851,540
5.65%, 9/15/97(2) 16,000,000 15,887,000
- --------------------------------------------------------------------------------
Corporate Asset Funding Corp., Inc.,
5.53%, 10/10/97(2) 7,000,000 6,924,731
- --------------------------------------------------------------------------------
CXC, Inc.:
5.54%, 11/17/97(2) 5,000,000 4,916,900
5.62%, 9/3/97(2) 5,000,000 4,974,242
- --------------------------------------------------------------------------------
Enterprise Funding Corp.:
5.56%, 12/19/97(2) 3,924,000 3,839,154
5.58%, 12/29/97(2) 5,121,000 5,001,937
5.62%, 8/25/97(2) 4,996,000 4,977,282
5.65%, 12/10/97(2) 4,584,000 4,489,754
5.54%, 12/15/97(2) 4,000,000 3,916,284
5.66%, 12/8/97(2) 3,846,000 3,767,997
5.67%, 8/18/97(2) 7,000,000 6,981,258
- --------------------------------------------------------------------------------
New Center Asset Trust, 5.55%, 12/29/97 10,000,000 9,768,750
- --------------------------------------------------------------------------------
Preferred Receivables Funding Corp.:
5.55%, 12/30/97 5,975,000 5,835,907
5.60%, 11/18/97 5,900,000 5,799,962
5.62%, 9/11/97 5,200,000 5,166,717
5.65%, 12/15/97 10,500,000 10,277,819
- --------------------------------------------------------------------------------
RACERS Series 1996-MM-12-3, 5.668%,
12/15/97(1)(3) 5,000,000 5,000,000
- --------------------------------------------------------------------------------
Sigma Finance, Inc.:
5.58%, 12/24/97(2) 3,317,000 3,242,450
5.61%, 8/27/97(2) 3,570,000 3,555,510
5.63%, 9/5/97(2) 15,000,000 14,917,896
10 Oppenheimer Money Market Fund, Inc.
<PAGE>
Face Value
Amount See Note 1
- --------------------------------------------------------------------------------
Special Purpose Financial-(continued)
SMM Trust 1996-B, 5.738%, 8/4/97(1)(3) $ 10,000,000 $ 10,000,000
- --------------------------------------------------------------------------------
TIERS Series DCMT 1996-A, 5.698%,
10/15/97(1)(3) 5,000,000 5,000,000
--------------
168,005,642
- --------------------------------------------------------------------------------
Specialty Retailing-0.5%
St. Michael Finance Ltd., guaranteed by
Marks & Spencer PLC, 5.61%, 9/11/97 5,000,000 4,968,054
--------------
Total Short-Term Notes 826,768,477
- --------------------------------------------------------------------------------
U.S. Government Obligations-2.5%
- --------------------------------------------------------------------------------
Federal Home Loan Bank, 5.93%, 8/1/97(1) 15,000,000 15,000,000
- --------------------------------------------------------------------------------
Student Loan Marketing Assn., 5.82%, 1/23/98 10,000,000 9,999,281
--------------
Total U.S. Government Obligations 24,999,281
- --------------------------------------------------------------------------------
Foreign Government Obligations-1.1%
- --------------------------------------------------------------------------------
Westdeutsche Landesbank Girozentrale,
5.58%, 12/22/97 11,500,000 11,245,103
- --------------------------------------------------------------------------------
Total Investments, at Value 99.6% 1,010,342,627
- --------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.4 3,597,530
------------ --------------
Net Assets 100.0% $1,013,940,157
============ ==============
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) Floating or variable rate obligation. 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 July 31, 1997. This instrument may
also have a demand feature which allows, on up to 30 days' notice, the recovery
of principal at any time, or at specified intervals not exceeding one year.
Maturity date shown represents effective maturity based on variable rate and, if
applicable, demand feature. (2) Security issued in an exempt transaction without
registration under the Securities Act of 1933. Such securities amount to
$148,096,687, or 14.61% of the Fund's net assets, and have been determined to be
liquid pursuant to guidelines adopted by the Board of Directors. (3) Represents
a restricted security which is considered illiquid, by virtue of the absence of
a readily available market or because of legal or contractual restrictions on
resale. Such securities amount to $92,996,552 or 9.17% of the Fund's net assets.
The Fund may not invest more than 10% of its net assets (determined at the time
of purchase) in illiquid securities. See accompanying Notes to Financial
Statements.
11 Oppenheimer Money Market Fund, Inc.
<PAGE>
Statement of Assets and Liabilities July 31, 1997
================================================================================
Assets
Investments, at value-see accompanying statement $1,010,342,627
- --------------------------------------------------------------------------------
Cash 1,427,959
- --------------------------------------------------------------------------------
Receivables:
Shares of capital stock sold 7,179,054
Interest 3,447,613
- --------------------------------------------------------------------------------
Other 24,118
-------------
Total assets 1,022,421,371
================================================================================
Liabilities Payables and other liabilities:
Shares of capital stock redeemed 6,464,907
Dividends 1,424,437
Shareholder reports 225,900
Transfer and shareholder servicing agent fees 168,352
Directors' fees-Note 1 158,041
Other 39,577
------------
Total liabilities 8,481,214
================================================================================
Net Assets $1,013,940,157
=============
================================================================================
Composition of Net Assets
Par value of shares of capital stock $ 101,408,958
- --------------------------------------------------------------------------------
Additional paid-in capital 912,530,844
- --------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 355
-------------
Net assets-applicable to 1,014,089,579 shares of
capital stock outstanding $1,013,940,157
=============
================================================================================
Net Asset Value, Redemption Price and Offering Price Per Share $ 1.00
See accompanying Notes to Financial Statements.
12 Oppenheimer Money Market Fund, Inc.
<PAGE>
Statement of Operations For the Year Ended July 31, 1997
================================================================================
Investment Income
Interest $56,673,423
================================================================================
Expenses
Management fees-Note 3 4,413,500
- --------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees-Note 3 3,390,471
- --------------------------------------------------------------------------------
Shareholder reports 703,512
- --------------------------------------------------------------------------------
Registration and filing fees 131,307
- --------------------------------------------------------------------------------
Custodian fees and expenses 83,341
- --------------------------------------------------------------------------------
Legal and auditing fees 41,356
- --------------------------------------------------------------------------------
Insurance expenses 7,457
- --------------------------------------------------------------------------------
Other 76,401
-----------
Total expenses 8,847,345
================================================================================
Net Investment Income 47,826,078
================================================================================
Net Realized Gain on Investments 16,805
================================================================================
Net Increase in Net Assets Resulting from Operations $47,842,883
==========
See accompanying Notes to Financial Statements.
13 Oppenheimer Money Market Fund, Inc.
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended
Year Ended July 31, December 31,
1997 1996(1) 1995
=========================================================================================
<S> <C> <C> <C>
Operations
Net investment income $ 47,826,078 $ 24,508,161 $ 44,370,781
- -----------------------------------------------------------------------------------------
Net realized gain (loss) 16,805 (156,737) 639,389
- -----------------------------------------------------------------------------------------
Net increase in net assets
resulting from operations 47,842,883 24,351,424 45,010,170
=========================================================================================
Dividends and Distributions
to Shareholders (47,826,078) (24,508,161) (44,968,631)
=========================================================================================
Capital Stock Transactions
Net increase (decrease) in
net assets resulting from
capital stock transactions-Note 2 (87,656,896) 283,809,275 (111,066,422)
=========================================================================================
Net Assets
Total increase (decrease) (87,640,091) 283,652,538 (111,024,883)
- -----------------------------------------------------------------------------------------
Beginning of period 1,101,580,248 817,927,710 928,952,593
--------------- --------------- -------------
End of period $ 1,013,940,157 $ 1,101,580,248 $ 817,927,710
=============== =============== =============
</TABLE>
1. For the seven months ended July 31, 1996. The Fund changed its fiscal year
end from December 31 to July 31.
See accompanying Notes to Financial Statements.
14 Oppenheimer Money Market Fund, Inc.
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Year Ended July 31, Year Ended December 31,
1997 1996(1) 1995 1994 1993 1992
==========================================================================================
<S> <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
- ------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income and
net realized gain .05 .03 .05 .04 .03 .03
Dividends and distributions
to shareholders (.05) (.03) (.05) (.04) (.03) (.03)
- ------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.00 $ 1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ==== ==== ==== ====
==========================================================================================
Total Return, at Net Asset Value(2) 4.83% 2.80% 5.40% 3.76% 2.71% 3.47%
==========================================================================================
Ratios/Supplemental Data:
Net assets, end of period
(in millions) $1,014 $1,102 $ 818 $ 929 $ 611 $ 692
- ------------------------------------------------------------------------------------------
Average net assets (in millions) $1,011 $ 901 $ 855 $ 804 $ 653 $ 811
- ------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 4.73% 4.68%(3) 5.19% 3.79% 2.65% 3.42%
Expenses 0.87% 0.84%(3) 0.90% 0.82% 0.87% 0.88%
</TABLE>
1. For the seven months ended July 31, 1996. The Fund changed its fiscal year
end from December 31 to July 31. 2. 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. Total returns
reflect changes in net investment income only. 3. Annualized. See accompanying
Notes to Financial Statements.
15 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 by
investing in "money market" securities meeting specific credit quality
standards. The Fund's investment adviser 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
July 31, 1997, a credit in the provision of $50,344 was made for the Fund's
projected benefit obligations, and payments of $14,926 were made to retired
directors, resulting in an accumulated liability of $158,000 at July 31, 1997.
- --------------------------------------------------------------------------------
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.
16 Oppenheimer Money Market Fund, Inc.
<PAGE>
================================================================================
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period.
Actual results could differ from those estimates.
================================================================================
2. Capital Stock
The Fund has authorized 5 billion shares of $.10 par value capital stock.
Transactions in shares of capital stock were as follows:
<TABLE>
<CAPTION>
Year Ended July 31, 1997 Period Ended July 31, 1996(1) Year Ended December 31, 1995
------------------------------- ------------------------------- --------------------------------
Shares Amount Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sold 2,384,393,754 $ 2,384,393,754 1,437,146,578 $ 1,437,146,578 1,772,666,521 $ 1,772,666,521
Dividends and
distributions
reinvested 45,124,419 45,124,419 21,997,805 21,997,805 42,507,860 42,507,860
Issued in connection
with the acquisition of
Connecticut Mutual
Liquid Account-
Note 4 -- -- 73,705,405 73,705,405 -- --
Redeemed (2,517,178,069) (2,517,178,069) (1,249,040,513) (1,249,040,513) (1,926,240,803) (1,926,240,803)
-------------- -------------- -------------- -------------- -------------- --------------
Net increase
(decrease) (87,656,896) $ (87,656,896) 283,809,275 $ 283,809,275 (111,066,422) $ (111,066,422)
============== ============== ============== ============== ============== ==============
</TABLE>
1. The Fund changed its fiscal year end from December 31 to July 31.
================================================================================
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 0.45% on the first
$500 million of average annual net assets with a reduction of 0.025% on each
$500 million thereafter, to 0.375% 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.
17 Oppenheimer Money Market Fund, Inc.
<PAGE>
Notes to Financial Statements-(Continued)
================================================================================
4. Acquisition of Connecticut Mutual Liquid Account
On April 26, 1996, the Fund acquired all of the net assets of Connecticut Mutual
Liquid Account, pursuant to an Agreement and Plan of Reorganization approved by
the Connecticut Mutual Liquid Account shareholders on April 24, 1996. The Fund
issued 73,705,405 shares in exchange for the net assets valued at $73,705,405 on
April 26, 1996. The exchange qualified as a tax-free reorganization for federal
income tax purposes.
18 Oppenheimer Money Market Fund, Inc.
<PAGE>
<PAGE>
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.
A-1
<PAGE>
Appendix B
Corporate Industry Classifications
Aerospace/Defense Air Transportation Auto Parts Distribution Automotive Bank
Holding Companies Banks Beverages Broadcasting Broker-Dealers Building Materials
Cable Television Chemicals Commercial Finance Computer Hardware Computer
Software Conglomerates Consumer Finance Containers Convenience Stores Department
Stores Diversified Financial Diversified Media Drug Stores Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
<PAGE>
Food
Gas Utilities
Gold
Health Care/Drugs Health Care/Supplies & Services Homebuilders/Real Estate
Hotel/Gaming Industrial Services Information Technology 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 Wireless Services
B-1
<PAGE>
Investment Advisor
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
PX 0200.001.1197
